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IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, MUMBAI
BEFORE S/SHRI B.R.BASKARAN (Accountant Member)
.. ,
./I.T.A. No.3319/Mum/2014
( / Assessment Year :2008-09)
M/s Accord V M / Income Tax Officer, Circle Circle
101/102 Makani Centre,
Vs. 19(3)(1),
35, Linking road, Room No.307, 3rd floor,
Bandra (W), Piramal Chambers,
Mumbai-400050 Lalbaug, Parel,
Mumbai-400012
( /Appellant) .. ( / Respondent)
. / . /PAN/GIR No. :AAIFA3018N
/ Appellant by Shri J P Bairagra
/Rspondent by Shri K P P R Murty
/ Date of Hearing
: 5.8.2015
/Date of Pronouncement : 5.8.2015
/ O R D E R
PER BENCH:
The assessee has filed this appeal challenging the order dated
24.2.2014 passed by the ld.CIT(A)-18, Mumbai and it relates to the
assessment year 2008-09.
2. The assessee is aggrieved by the decision of ld.CIT(A) in confirming
the following additions made by the AO:-
(a) disallowance of purchases to the tune of Rs.3,69,688/- and
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(b) addition on account of differences in sundry creditors balance to
the tune of Rs.356,308/-.
3. I heard the parties and perused the record. During the year under
consideration, the assessee had purchased goods to the tune of
Rs.1,71,56,421/-. In order to verify the purchases and also sundry
creditors balances, the AO issued notices under section 133(6) of the Act
to some of the suppliers on random basis requesting them to furnish the
details of transactions made with the assessee. On comparison of the
details received by the AO with the accounts of the assessee, it was
noticed that there was a difference of Rs.3,69,688/- with regard to
purchases of goods and Rs.3,56,308/- with regard to outstanding
balances. The AO asked the assessee to reconcile both the differences.
However, the assessee simply submitted ledger account of the concerned
suppliers and hence the AO assessed both the differences, cited above, as
income of the assessee. Since the assessee furnished certain additional
details before the ld.CIT(A), he called for a remand report from the AO.
However, the AO stood by the addition made by him with the reasoning
that the additional evidences furnished by the assessee are not found to
be reliable. Accordingly, the Ld CIT(A) held that the assessee has failed to
reconcile the differences and accordingly confirmed both the additions.
Aggrieved, the assessee has filed this appeal before the Tribunal.
4. The ld. Counsel appearing for the assessee invited our attention to
the copy of the reconcilation statements furnished in the paper book and
submitted that the sales shown in the suppliers' account in the month of
February, 2008 and March, 2008 has actually been accounted for by the
assessee in the month of April, 2008. Since there was change of
accounting year, the value of purchases and also the outstanding balance
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as on 31.3.2008 has differed and hence the same has resulted in the
differences in purchases account as well as in sundry creditors' balances.
Accordingly, the Ld A.R submitted that there is no omission of any of the
purchases as presumed by the AO. The ld. Counsel for the assessee
submitted that the accounts of the assessee have been duly audited under
the provisions of Income Tax Act and the audit report was also filed by the
assessee. He further submitted that the assessee makes purchases upon
receipt of the orders only and supply the goods on one to one basis and
hence the assessee does not maintain any stock. He further submitted
that the assessee has duly reconciled the differences in purchases account,
which also explains the difference in sundry creditors balances account.
5. He further submitted that the purchases were made by the assessee
on credit and hence the accounting of purchase bills in the succeeding
year has resulted in differences both in purchases account as well as in
Sundry creditors account. Hence the addition made in respect of
difference in sundry creditors balance has resulted in double addition of
the same amount. Accordingly, he submitted that the Ld CIT(A) was not
justified in confirming both the additions and accordingly prayed that both
additions made by deleted.
6. On the contrary, the ld. DR submitted that the assessee did not
furnish proper reconciliation statements before the AO and details
furnished by it before the ld. CIT(A) were not accepted by the AO.
Accordingly, he submitted that, in the absence of proper explanations
forthcoming from the assessee, the ld. CIT(A) has confirmed both the
additions.
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7. Having heard the rival submissions, I agree, in principle, with the
assessee that the addition made towards the difference in sundry creditors
balance has resulted in double addition since the assessee has accounted
for the credit purchases in the subsequent years, meaning thereby, the
difference in purchases account as well as sundry creditors account has
arisen on account of omission to account the credit purchases during the
current year. Thus the difference in purchases account (a debit item) and
difference in Sundry creditors account ( a credit item) is the result of credit
purchases only under double entry system of accounting.
8. It is stated that the assessee does not maintain stock and it places
orders for purchases upon receipt of sales orders. The differences in
purchases listed out by the assessing officer pertained to the months of
Feb & March, 2008 and it is explained that the said purchases have been
accounted in the succeeding year in the month of April, 2008. Thus,
according to the assessee, if one combines both the accounting years,
there should not be any case of omission of purchases as presumed by the
AO. In support of the said submissions, the assessee has furnished
reconciliation statements reconciling the differences in purchases account
which shall have impact in sundry creditors account also. I notice that the
said reconciliation statements have not been considered by tax authorities.
When these facts were put before the ld. DR, both the parties agreed that
this issue may be restored to the file of AO for examining the same afresh
by considering the reconciliation statements furnished by the assessee.
9. Accordingly, I set aside the order of ld. CIT(A) on both the issues
and restore them to the file of the AO with a direction to examine the
issue afresh by duly considering the reconciliation statements and also in
the light of discussions made supra, by affording enough opportunity to
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the assessee. I may make it clear that if the assessee has accounted for
the credit purchases in the succeeding year, there is no question of
making any addition during the year under consideration on account of
purchases as well as sundry creditors.
10. In the result, the appeal of the assessee is allowed for statistical
purposes..
Pronounced accordingly on 5th August 2015.
5th August, 2015
sd
(.. / B.R. BASKARAN)
/ ACCOUNTANT MEMBER
Mumbai: 5th Aug, 2015.
. ../ SRL , Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
6. / Guard file.
/ BY ORDER,
(Asstt. Registrar)
, /ITAT, Mumbai
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