TaxTMI 
TaxTMI 
2016 (10) TMI 4
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....ssessee by issuing a show cause notice to explain difference of Rs. 33,80,000/- and as to why the same was not credited in the profit and loss account whereas the corresponding TDS on the said amount was duly claimed by the assessee in its return of income. The assessee in reply to the show cause notice submitted before the AO that it had wrongly claimed TDS of Rs. 76,591/- which was deducted on a contract which was never executed and ultimately cancelled. No confirmation letter from DLF Services Limited was filed by the assessee to corroborate its averments that the said income never materialized and the contract was ultimately cancelled. Finally, the AO added the difference of Rs. 33,80,000/- to the total income of the assessee by noting that the assessee failed to prove the fact of not having performed the contract. 3. During the appellate proceedings before the First Appellate Authority, the ld. CIT(A) also dismissed the appeal of the assessee on this ground that the assessee took credit of TDS on an amount of Rs. 33,80,000/- which proved that the corresponding income also accrued to the assessee which was not accounted for by the assessee in the books of account and shown in ....
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.... that as the said DLF Services Ltd. have ceased to be the client of the appellant they are not cooperating with the appellant and providing the appellant confirmations to say that the concerned amount was not paid to the appellant as the corresponding work had not been done. However, no documents to establish the validity of the statement and the affidavit have been filed which would go to prove that the amount of Rs. 33,80,000/- was never received by the appellant. The appellant has stated that it is filing a copy of the contract as signed with DLF Services Ltd. which would clear the issue. However, the same has not been done. In fact, what has been filed is a letter dated 5/12/2008 which states that the actual contract and the legal terms are being finalized and pending the same the commercial terms of understanding is being captured in the letter. According to the said letter, it is also noticed that DLF Services Ltd. will pay the appellant the due amount within 22 days of the appellant raising a Performa invoice in the activity month. The appellant has submitted the said letter with a rider stating that if the said amount of Rs. 33,80,000/- is treated as receipt then only 2.75%....
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....f of the same. It is a well known fact that no TDS can be claimed without corresponding income. The very fact that the appellant has claimed tax deducted at source benefit would go to show that there did arise a corresponding income in the case of the appellant which the appellant has not booked as the receipt in its Profit and Loss Account. Therefore, the action of the AO in making the said addition is upheld and confirmed. This ground of appeal as raised by the appellant is dismissed." 4. The ld. AR submitted before us that the AO chose to make addition on the basis of AIR information which showed an entry that the DLF Services Limited had deduced tax of Rs. 76,591/- on the total sales of Rs. 33,80,000/- whereas as a matter of fact the said contract never executed and materialized and income was not accrued in favour of the assessee though admitting that the claim of TDS was made in the return of income by the assessee but the same was reversed and revised the movement the assessee reconciled AIR data and the said claim of TDS was reversed immediately. It was also argued that the AO has not made any further inquiry from DLF Services Limited in order to verify the AIR informatio....
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....unt which was not verified by the AO at all. Similarly the ld CIT(A), the ld.CIT(A) confirmed the action of the AO on the ground that the TDS of Rs. 76,591/- was deducted on the sales of Rs. 33,80,000/- which proved that the assessee had made the sale to M/S DLF Services Ltd is also wrong.In view of these facts as discussed above, we are of the considered opinion that the order by the ld. CIT(A) cannot be sustained and we ,therefore, set aside the order of ld. CIT(A) and direct the AO to delete the addition of Rs. 33,80,000/-. 7. At the time of hearing, the ld. AR did not press ground No.1.1.2, therefore dismissed as not pressed. 8. The issue raised in the ground of appeal No.1.1.3 has been taken care of in the ground no.1.1.1, therefore need not to be adjudicated upon. Accordingly dismissed as infructuous. 9. The issue raised in ground no.1.2.1 is with regard to confirmation of addition of Rs. 6,22,705/- by the ld. CIT(A) as made by the AO in respect of provisions for sundry balances written off. During the course of assessment proceedings, the AO found that the assessee has debited provisions for sundry balances written off to the tune of Rs. 6,22,705/- in the profit and loss ....
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....t than what the appellant as now claimed in its letter filed on 7.12.2012. Besides this, complete supporting documents for the final statement made to be accepted have also not been furnished. Complete bad debts accounts have not been submitted. Neither have the accounts of ONGC and RBI submitted in spite of opportunities given. Keeping the totality of circumstances in view, it transpires that the appellant is not at all alert in maintaining its accounts. Accordingly, various statements are being made which are mutually contradictory and cannot thus be accepted. This ground of appeal therefore would need o be dismissed and the action of the AO would need to be confirmed". 10. The ld. AR vehemently submitted before us that the provisions of sundry balances written off were of Rs. 6,22,705/- were not provisions but actual bad debts written off on account of non-payment of service tax by ONGC and RBI. The ld. AR attempted to explain the issue by drawing our attention to page No.21 of the paper book i.e. Schedule -12 under the head "operating and general expenses" in which the last second item was provisions for doubtful debts Rs. 5,86,721/- and last first item was miscellaneous expen....