Jubaraj Chatterjee, Howrah vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH "B", KOLKATA

[Before Hon'ble Sri P.K.Bansal, AM & Hon'ble Sri Mahavir Singh, JM] ITA No.45/Kol/2012 Assessment Year : 2007-08 (APPELLANT ) - (RESPONDENT) Shri Jubaraj Chatterjee D.C.I.T., Circle-48, Kolkata -versus- Kolkata (PAN:ACKPC 0308 H)

For the Appellant: None For the Respondent: Shri Kalyan Nath, JCIT,Sr.DR

Date of Hearing : 18.05.2015 Date of Pronouncement : 20.05.2015

ORDER

Per Shri P.K.Bansal, AM

This appeal has been filed by the assessee against the order of ld. CIT(A)- XXX, Kolkata dated 29.07.2011 for A.Yr. 2007-08.

2. The assessee even though has taken four grounds of appeal but the only issue involved has been taken in ground no.1 which consists of his grievances in respect of two additions of Rs.1,45,186/- and Rs.3,28,263/- which reads as under :-

"1. For that the reasons and explanations which have been derived and adduced by the ld. CIT(Appeals)-XXX, Kolkata with a view to confirming the addition of Rs.1,45,186.00 & Rs.3,28,263.00 under the heads receipt of Commission and Cessation of liability respectfully by his order is neither applicable nor justified and so not tenable."

3. None appeared on behalf of the assessee. Even though the case was adjourned today at the request of the assessee on 13.05.2015 but the assessee had moved an application for adjournment dated 18th May. Since we do not find any plausible reason for adjourning the case, we therefore reject the adjournment and decide to dispose off after hearing the ld. DR.

4. In regard to the first grievance relating to the addition of Rs.1,45,186/- the facts relating to this case are that AO noted that from the statement of the commission that ITA No.45/Kol.2012 2 Shri Jubaraj Chatterjee A.Yr.2007-08

the assessee has received a sum of Rs.7,42,128/-but in the profit and loss account the assessee has shown the same at Rs.5,96,942/-. He, therefore, added the difference of Rs.1,45,186/- as the income of the assessee relating to the impugned assessment year. The assessee went in appeal before the l.dCIT(A). CIT(A) sustained the addition.

5. After hearing the ld. DR we noted that the assessee has submitted before the AO as well as the ld. CIT(A) that for the source of income relating to the commission the assessee was following the cash system of accounting but for other income the assessee was following mercantile system of accounting. According to the assessee before the ld. CIT(A) that the commission income has been accounted for by him on cash basis and to the extent it was received during the impugned assessment year only that income has been accounted for the rest of amount were not received during the impugned assessment year. Neither AO nor the First Appellate Authority agreed with the plea of the assessee and took a view that if the assessee following the mercantile system of accounting it cannot heave separate system of account for separate source of income under the same head "income". In our opinion section 145 of the Act does not prohibit the assessee to follow the different system of accounting in respect of different source of income under the same head "income". The only condition as has been stipulated u/s 145(1) is that the system of accounting must be regularly followed by the assessee. We, therefore, set aside the order of ld. CIT(A) and restore the issue to the file of AO with the direction that the AO shall verify whether the income of Rs.1,45,186/- has been included in the commission income shown in the succeeding year as has been shown by the assessee on cash basis. The AO should accept the income from the commission at Rs.5,46,942/- in case a sum of Rs.1,45,186/- has already been taken into account in A.Yr.2008-09. This grievance of the assessee is statistically allowed.

6. The second grievance of the assessee is relating to the addition of Rs.3,28,263/- made by AO u/s 41(1) of the IT Act. The facts relating to this issue are that according to the assessee as per the settlement between the assessee and M/s.Micro Ink Agro the said sum on 19.04.2004 has already been written off for ITA No.45/Kol.2012 3 Shri Jubaraj Chatterjee A.Yr.2007-08

A.Yr.2005-06 and it cannot be added again in the impugned assessment year. The AO took a view that the liability ceased during the A.Yr.2007-08 has been ceased by virtue of mutual agreement between the assessee and Micro Ink. Therefore he added the same u/s 41(1) of the Act. When the matter came before ld. CIT(A), CIT(A) dismissed the said ground.

7. We have heard the ld. DR and carefully considered the submission. It is not denied that the agreement was signed during A.Yr.2005-06 and as per the agreement between the assessee and M/s Micro Ink Agro the liability was ceased at Rs.3,28,263/- The ld. CIT(A) sustained the addition during the impugned year only. Therefore the liability has been ceased during the impugned assessment year. Since the settlement has arrived at during the A.yr.2005-06 therefore in our opinion the liability can be remitted during A.yr.2005-06. We, accordingly set aside the order of ld. CIT(A) and delete the addition of Rs.3,28,263/-.

8. In the result the appeal of the assessee is statistically allowed.

Order pronounced in the court on 20.05.2015.

Sd/- Sd/- [Mahavir Singh ] [P.K.Bansal] Judicial Member Accountant Member

Date: 20.05.2015. R.G.(.P.S.)

Copy of the order forwarded to:

1. Shri Jubaraj Chatterjee, 46A/14, Shibpur Road, Howrah-711 102.

2 D.C.I.T., Circle-48, Kolkata.

3. CIT Kolkata 4. CIT(A)-XXX, Kolkata.

5. CIT(DR), Kolkata Benches, Kolkata.

True Copy,

By order,

Deputy /Asst. Registrar, ITAT, Kolkata Benches ITA No.45/Kol.2012 4 Shri Jubaraj Chatterjee A.Yr.2007-08