Arvind Kumar Nand Kumar Limited, Kolkata V. I.T.O.,Ward-9(1), Kolkata

ITA 285/KOL/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6134 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 17-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

1. ITA No. 285/Kol/2019 A.Y 2012-13 Arvind Kumar Nand Kumar Ltd. IN THE INCOME TAX APPELLATE TRIBUNAL BENCH “C” KOLKATA Before: Shri Rajpal Yadav, Vice President (KZ) and Shri Girish Agrawal, Accountant Member आयकर अपील सं.य/ ITA No. 285/Kol/2019 Assessme nt Ye ar :2012-13 Arvind Kumar Nand Kumar Ltd 30 Kali Krishna Tagore Street,Kolkata-700 007. PAN: AACCA 6319F बनाम V/s. ITO, Ward 9(1), Aaykar Bhawan,P-7 Chowringhee Square, Kolkata-700 069. अपीलाथ /A ppella nt .. यथ /Re sponde nt अपीलाथ क ओर से/By Appellant None यथ क ओर से/By Respondent Shri Divakar Chakraborty, Addl.CIT, Ld.DR स ु नवाई क तार ख/Date of Hearing 15-03-2022 घोषणा क तार ख/Date of Pronouncement 24 -03-2022 आदेश /O R D E R Per Girish Agrawal, Accountant Member : This appeal by the assessee is arising out of the order passed by the Commissioner of Income-tax (Appeals), [in short, the ld. CIT(A)]-3, Kolkata in Appeal No.168/CIT(A)-3/W-9(1)/Kol/15-16 dated 29-01-2019 against the assessment order passed by the Assessing Officer [( in short, the ld.AO), I.T.O., Ward-9(4), Kolkata] u/s. 143(3) of the Income-tax Act, 1961 ( hereinafter referred to as, the ‘Act’) dated 28-03-2015 for the assessment year 2012-13. 2. ITA No. 285/Kol/2019 A.Y 2012-13 Arvind Kumar Nand Kumar Ltd. 2. The only ground in this appeal relates to confirmation of addition of Rs.6,70,929/- in respect of write off on deferred sales treated by the ld.AO as contingent liability on account of bank guarantee. 3. Brief facts as culled out from the records are that the assessee had filed its return of income on 30-09-2012 declaring a loss of Rs. 11,45,306/-. In the course of assessment the AO noted that in the Tax Audit Report ( TAR ) in Form 3CD clause 17(a)(3) and observed that “Company has debited contingent liability of Rs.670929/- relates to bank guarantee on account of performance guarantee issued by SBBJ(State Bank o Jaipur & Bikaner) in favour of different electricity companies”. Ld. AO held that this amount in question was nothing but a contingent liability based on Auditors’ observations given in Form 3CD. Accordingly, he disallowed the claim as not deductible and added back the same to the total income of the assessee. Aggrieved, the assessee went into appeal before the ld. CIT(A). Before him the assessee had made its submissions. The ld. CIT(A) considering the same confirmed the impugned addition as made by the ld.AO. 4. Aggrieved by the above order of the ld. CIT(A), now the assessee is in appeal before us. 5. None appeared on behalf of the assessee. However, indexed paper books containing relevant documents have been placed on record by the assessee, by referring to which, we are inclined to take up the matter for its meritorious disposal. 6. We have heard the Ld. Sr. DR, who relied on the orders of the ld. CIT(A) and the ld.AO. We have gone through the paper book details and material placed on record and found that the assessee has contended that the AO has made the said disallowance on the basis of observations made by the auditors given in Form 3CD without going into the details of the claim as made by the assessee to its P & L account. The assessee through its submission has contended that contingent liability of Rs.670929/- was not debited to the P & L account by the assessee. The auditor has wrongly stated in its audit report vide clause 17(a)(3) of the TAR(Tax Audit Report) that the assessee company has debited an amount of 3. ITA No. 285/Kol/2019 A.Y 2012-13 Arvind Kumar Nand Kumar Ltd. Rs.6,70,929/- during the financial year (FY) ended on 31-03-2012 as contingent liability. The assessee further submitted that the AO is duty bound to find out the correctness or completeness of accounts of assessee, but solely relied on the auditors’ remark for making the addition, which in fact was deferred sales written off from the outstanding bills. The assessee had placed on record its 39 th Annual Report for the FY 2011-12 relevant to A.Y under consideration containing copy of audited financial statement. We have gone through the said annual report and on our perusal of Note-23 forming part of the audited financial statements at page 27 of the paper book, it is noted that amount of Rs. 6,70,929/- is a claim on deferred sales under the head ‘other expenses’. The assessee had claimed the deferred sales as write off in its audited financial statement, which is in respect of 10% retention money of the invoices raised by it on various electricity companies. 7. Considering the facts and material on record and perusing the audited financial statements, we find that the AO and the ld. CIT(A) both have proceeded with wrong observations of the tax auditor given in the TAR (Tax Audit Report), which when corroborated with the claim made in the audited financial statement deserves to be deleted. The correct position on the claim made by the assessee is reflected in the audited financial statement forming part of the paper book, wherein it has claimed it as write off in respect of deferred sales relating to retention money on the invoices raised by it on various electricity companies. It is not the case of claim of contingent liability debited to the P & L account as held by the authorities below. In view of appraisal of correct facts as oozing out from the material on record, we are inclined to delete the disallowance made by the ld. AO and confirmed by the ld. CIT(A). Accordingly, the appeal of assessee is allowed. 8. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 24 th March, 2022 Sd/- Sd/- ( RAJPAL YADAV) (GIRISH AGRAWAL) Vice President (KZ) Dated 24 -03-2022 Accountant Member *PP. Sr. PS 4. ITA No. 285/Kol/2019 A.Y 2012-13 Arvind Kumar Nand Kumar Ltd. Copy of the order forwarded to: 1.Assessee – M/s. Arvind Kumar Nand Kumar Limited 30 Kali Krishna Tagore Street, Kolkata-700 007. 2.Revenue –I.T.O., Ward 9(1), Aaykar Bhawan, P-7 Chowringhee Sq., Kolkata- 700 069.. 3.CIT, Kolkata. 4. CIT(A) 5. DR, ITAT, Kolkata, (sent through e-mail).. True Copy By Order Assistant Registrar ITAT, Kolkata Bench, Kolkata