Munshi Ram Sharma, New Delhi vs Assessee

This appeal by the assessee is directed against the order passed by the

CIT(A) on 26.12.2013 in relation to the Assessment Year 2002-03.

2. The first ground is against the confirmation of addition of

Rs.8,74,439/- made by the AO.

ITA No.619/Del/2014 2

3. Briefly stated, the facts are that the original assessment in this case

was completed under 143(3) on 24.3.2005 in which total income was

determined at Rs.10,60,920/-. The major addition to the total income was

of Rs.8,74,439/- towards difference of the balance in the books of the

assessee and M/s Metro Tyres Ltd., from whom the assessee was earning

freight charges. The assessee went in appeal against the original

assessment order and the Tribunal restored the matter to the CIT(A) for

reconsideration. The CIT(A) vide his order dated 15.11.2007 deleted this

addition, against which the Revenue approached the Tribunal. The

Tribunal, vide its order dated 17.7.2009, in second round, restored the

matter to the file of AO for deciding this issue afresh and directing the

assessee to file reconciliation statement duly supported by relevant

vouchers, bank statement and documentary evidence explaining the reasons

for the difference. In the instant third round of proceedings, the assessee

submitted before the AO that the accounting entries for all the transactions

were duly reflected in the books of the assessee for assessment year 2001-

02 and 2002-03. The difference of Rs.8,74,429/- was stated to be not on

account of any wrong accounting entries made in these years, but, of earlier

period. It was further stated that the original difference stood at ITA No.619/Del/2014 3

Rs.9,29,250/- as on 31.3.2000 which stood reduced to Rs.8,74,429/- as on

31.3.2002. The AO noticed from the copy of account received from M/s

Metro Tyres that they paid Rs.35,37,337/-, whereas the assessee had shown

to have received only a sum of Rs.26,62,908/-. In the absence of the

assessee furnishing any satisfactory explanation, the AO made an addition

to the tune of Rs.8.74 lac. The assessee contended before the ld. CIT(A)

that his accountant made a wrong entry and the amount of Rs.8,74,439/-

was actually introduced as capital in cash which was received by him on

family settlement in the period relevant to assessment year 2000-01, but,

the Accountant wrongly credited the account of M/s Metro Tyres instead of

the capital account of the assessee. The assessee did not dispute about the

closing balance of Rs.35.37 lac which was receivable from this party. The

ld. CIT(A) upheld the view taken by the AO.

4. Having heard the rival submissions and having perused the relevant

material available on record, it is noticed that it is the third round of the

proceedings before the Tribunal. Admittedly, there is a difference of

Rs.8.74 lac. Whereas the assessee had shown to have received a sum of

Rs.26.62 lac from M/s Metro Tyres Ltd., on the other hand, this company is ITA No.619/Del/2014 4

confirming to have paid Rs.37.37 lac to the assessee towards freight.

Despite the Tribunal allowing sufficient opportunity, the assessee

miserably failed to prove his case before the authorities. It was contended

that the said sum of Rs.8.74 lac was actually his capital contribution which

was inadvertently taken to the account of M/s Metro Tyres by the

Accountant instead of the capital account. On being called upon by me to

demonstrate this mistake with reference to the copy of account of M/s

Metro Tyres, the ld. AR failed to point out any such wrong posting of entry

to the account of M/s Metro Tyres instead of the capital account. In my

considered opinion, the assessee has not given any tenable explanation in

support of the difference in the amount received by the assessee from M/s

Metro Tyres towards the freight charges. It is further an admitted fact that

the amount outstanding at Rs.37.37 lac at the end of the year in the case of

Metro Tyres Ltd., was received by the assessee in the subsequent year. As

such, I am of the considered opinion that the ld. CIT(A) was justified in

sustaining the addition. This ground is not allowed.

5. The only other ground is against the charging of interest of

Rs.29,024/- u/s 234D of the Act. The ld. AR contended that interest u/s

234D ought not to have been charged.

ITA No.619/Del/2014 5

6. I do not find any reason to disturb the view taken by the ld. CIT(A).

Explanation 2 inserted to section 234D by the Finance Act, 2012 with

retrospective effect from 1.6.2003 provides that the provisions of this

section was also apply to an assessment year commencing before the first

day of June, 2003 if the proceedings in respect of such assessment year is

completed after the said date. Since the assessment proceedings in this case

were completed after the 1st June, 2003, I hold that the interest is rightly

chargeable.

7. In the result, the appeal is dismissed.

The decision was pronounced in the open court on 18th June, 2015.

Sd/-

(R.S. SYAL) ACCOUNTANT MEMBER

Dated: 18th June, 2015.

dk

Copy forwarded to

1. Appellant

2. Respondent

3. CIT

4. CIT(A)

5. DR Dy. Registrar, ITAT, New Delhi