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2016 (3) TMI 48 - ITAT VISAKHAPATNAM

2016 (3) TMI 48 - ITAT VISAKHAPATNAM - TMI - Addition on account of suppressed/unaccounted turnover - Held that:- The assessee has accounted all the receipts and reconciled the TDS certificate to the books of accounts and explained the reasons for the difference in turnover. The assessee further contended that the difference was accounted in the subsequent years and to this effect, filed necessary reconciliation statement. On verification of the paper book filed by the assessee, we find that the .....

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rejected the books of accounts maintained by the assessee. The A.O. simply quantified the difference between books of accounts and form 26AS. The assessee has explained the difference by furnishing necessary reconciliation. Therefore, we are of the opinion that the A.O. was not correct in making additions, towards difference in turnover without pointing out any mistakes in books of accounts, that too based on form 26AS. Therefore, we direct the A.O. to delete the additions towards difference in .....

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ade on the payments which has been paid during the financial year. Therefore, we direct the A.O. to delete the additions made u/s 40(a)(ia) of the Act - Decided in favour of assessee - I.T.A.No.655&656/Vizag/2013, ITA No.1/Vizag/2014 - Dated:- 22-1-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri I. Kamasastry, AR For The Respondent : Shri G. Guruswamy, DR ORDER PER G. MANJUNATHA, Accountant Member: These appeals filed by the assessee a .....

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40/-. A search and seizure operation was conducted in the group cases of M/s. Maha Maruthi Logistics Pvt. Ltd., group of cases, Visakhapatnam on 4.2.2010. Consequent to the search, the assessee s case was notified to Central circle vide notification no. F.No. CIT(C)/CR/VSP/Centralization/2010-11 dated 18.2.2011. Consequent to the search, notice u/s 153A of the Income-Tax Act, 1961 (hereinafter called as the Act ) dated 29.12.2010 was issued to the assessee calling for return of income for the as .....

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,53,769/-.Therefore, issued a show cause notice and asked to explain why the same should not be treated as income of the assessee. In reply, the assessee submitted that the excess turnover quantified by you is because of the difference between the turnover accounted in the books of accounts and turnover as per the TDS certificates. The assessee further submitted that the excess turnover represents the advance received from the parties, on which the parties have deducted TDS as per the law. But, .....

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t admission of receipts to the extent of ₹ 25,53,769/-, therefore, the difference is added to the income of the assessee. 3. Similarly, the A.O. noticed that the assessee has debited various expenditures, on which TDS provisions are attracted, therefore, asked to furnish whether TDS has been deducted wherever applicable. In reply, the assessee submitted that as far as advertisement charges is concerned, these expenses are actually incurred towards daily allowances paid to drivers, trip exp .....

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l bench decision of ITAT, Visakhapatnam in the case of M/s. Merilyn Shipping and Transports Vs. ACIT in ITA No.477/Vizag/2008 dated 29.3.2012 no disallowance can be made for the amounts paid during the financial year. The A.O. after considering the explanations of the assessee disallowed the amount u/s 40(a)(ia) of the Act. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A) the assessee reiterated the arguments taken before the A.O. The as .....

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bill is raised. To this effect furnished partywise reconciliation statement, explaining the reasons for difference. Similarly, as far as the disallowance u/s 40(a)(ia) of the Act is concerned, the assessee contended that the amounts incurred under these heads has been already paid during the same financial year and nothing is payable at the end of the balance sheet date. Therefore, no disallowance can be made u/s 40(a)(ia) of the Act as held by the ITAT, Visakhapatnam bench in the case of M/s. M .....

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nting to ₹ 9,03,936/-, amount paid to A. Ravi Prasad amounting to ₹ 3 lakhs, u/s 40(a)(ia) of the Act and confirmed the additions made under the head advertisement charges and finance charges. 5. Aggrieved by the CIT(A) order, the assessee is in appeal before us and raised the following grounds: 1. The Ld. CIT(A) is not at all correct in upholding the assessment even though the assessment is not pending as on the date of search and none of the additions to the returned income are bas .....

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ollowing amounts: i. Advertisements - ₹ 6,96,040. ii. Financial Charges - ₹ 5,29,800. 5. The appellant craves leave to add to, amend or alter any or all of the above grounds of appeal. All the grounds of appeal are without prejudice to each other. 6. From ground nos.1&2, the assessee has challenged the validity of assessment proceedings. During the course of hearing, the A.R. of the assessee did not press the ground nos.1&2, challenging the validity of the assessment. Therefo .....

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d that the assessee has filed a reconciliation statement wherein she has explained the reasons for the difference and contended that the difference is mainly on account of advance from customers which was not recognized as income of the year. The assessee is following mercantile system of accounting wherein she is accounting all income and expenditure on accrual basis. The difference represents advance, received from customers which was accounted in subsequent years. Therefore, the same cannot b .....

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was not recognized as income for the year. The assessee further submitted that it is the usual practice that the customers have paid advance and deduct TDS on such advances. The assessee is following mercantile system of accounting wherein she is accounting all receipts and expenditure on accrual basis as and when bill is raised. The assessee has accounted all the receipts and reconciled the TDS certificate to the books of accounts and explained the reasons for the difference in turnover. The as .....

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essee contended that she is following mercantile system of accounting and recognized the income on accrual basis. The A.O. has not pointed out any mistakes in the method of accounting followed by the assessee. He never rejected the books of accounts maintained by the assessee. The A.O. simply quantified the difference between books of accounts and form 26AS. The assessee has explained the difference by furnishing necessary reconciliation. Therefore, we are of the opinion that the A.O. was not co .....

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essee has failed to deduct TDS, therefore, disallowed u/s 40(a)(ia) of the Act. It was the contention of the assessee that the expenditure incurred under these heads has been paid within the financial year and nothing is outstanding at the end of the balance sheet date. Therefore, no disallowance can be made u/s 40(a)(ia) of the Act, in view of the special bench decision of ITAT Visakhapatnam in the case of M/s. Merilyn Shipping & Transports Vs. ACIT (2012) 136 ITD 23. The Ld. D.R. strongly .....

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The A.O. was of the opinion that the above expenditure attract TDS, but the assessee has failed to deduct TDS, therefore, disallowed the amount. The contention of the assessee is that the expenditure incurred under these heads has been paid during the same financial year and nothing is outstanding at the end of the balance sheet date and hence no disallowance can be made u/s 40(a)(ia) of the Act. Ld. A.R. during the course of hearing submitted that the issue involved in this appeal is squarely c .....

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ered the issue, and after considering the revenue objection with regard to special bench decision of M/s. Merilyn Shipping & Transports (supra) and also considering the ratio of Hon ble A.P. High Court decision in the case of Janpriya Engineering Syndicate decided the issue in favour of the assessee. The relevant portion is reproduced hereunder: We have carefully considered the rival submissions and perused the record. Consistent with the view taken by the ITAT Special Bench Visakhapatnam an .....

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the fact with regard to paid and payable. The CIT(A) has recorded finding of the fact that the expenditure incurred under these heads have been already paid during the financial year. Therefore, considering the facts and circumstances of the case and also respectfully following the coordinate bench decision in ITA No.657/Vizag/2010 (supra), we are of the opinion that no disallowance can be made on the payments which has been paid during the financial year. Therefore, we direct the A.O. to delet .....

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