2018 (9) TMI 1299 - AT - Income Tax

Tribunal allows appeal, rejects tax addition due to lack of evidence and verification

Rawmet Commodities Pvt. Ltd. Versus D.C.I.T., CIR – 12 (1), Kolkata

Rawmet Commodities Pvt. Ltd. Versus D.C.I.T., CIR – 12 (1), Kolkata - TMI Issues Involved:1. Addition of Rs. 34,56,797/- made by the A.O. on account of alleged concealed consultancy fees.2. Confirmation of the addition by the Ld. CIT(A).3. Tribunal's decision on the appeal filed by the assessee.Issue-wise Detailed Analysis:1. Addition of Rs. 34,56,797/- by the A.O. on Alleged Concealed Consultancy Fees:The assessee, a company engaged in consultancy services related to export-import ores, filed its return of income declaring a total income of Rs. 72,03,329/-. During the assessment proceedings, the A.O. found discrepancies in the Foreign Inward Remittance Certificates (FIRCs) issued by HSBC, indicating excess payments received against invoices. The A.O. treated the excess amount of US$ 73237.23 (equivalent to Rs. 34,56,797/-) as concealed consultancy fees, leading to an addition to the total income of the assessee.2. Confirmation of the Addition by the Ld. CIT(A):The Ld. CIT(A) confirmed the addition made by the A.O., stating that the assessee had under-reported its income by suppressing the gross amount received from Sudamin Metal GmBH. The CIT(A) rejected the assessee's explanation that the excess amount was adjusted in the subsequent year and found the claim of credit note issuance to be unsubstantiated. The CIT(A) upheld the A.O.'s decision, concluding that there was under-reporting of income by the assessee.3. Tribunal's Decision on the Appeal Filed by the Assessee:The Tribunal examined the arguments and evidence presented by both sides. The assessee's counsel argued that the excess amounts received were against multiple invoices, not just the ones mentioned in the FIRCs. The counsel provided documentary evidence, including copies of invoices and bank statements, to support the claim that there was no concealment of income.The Tribunal found merit in the assessee's submissions and noted that the A.O. and CIT(A) had failed to properly verify the explanations and documentary evidence provided by the assessee. The Tribunal emphasized that the revenue authorities could not be given a second chance for verification, especially after a lapse of more than 15 years. Consequently, the Tribunal deleted the addition of Rs. 34,56,797/- and allowed the appeal of the assessee.Conclusion:The Tribunal allowed the appeal of the assessee, deleting the addition of Rs. 34,56,797/- made by the A.O. and confirmed by the Ld. CIT(A), based on the detailed examination of documentary evidence and the failure of the revenue authorities to properly verify the assessee's explanations.