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TMI Blog2024 (12) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of the Ld. Sr. DR that this issue requires verification reconciliation of receipts as per 26AS vis- -vis receipts as per the books of account/Profit Loss Account of the appellant/assessee. We therefore, set aside this issue and remit the issue of addition back to the file of the AO to be decided afresh after proper reconciliation and verification. Appellant/assessee should ensure compliances during the set-aside proceeding before the AO. - Shri Vikas Awas Thy, Judicial Member And Shri Avdhesh Kumar Mishra, Accountant Member For the Appellant : Sh. Pranav Yadav, Adv. For the Respondent : Ms. Maninder Kaur, Sr. DR ORDER PER AVDHESH KUMAR MISHRA, AM This appeal for the Assessment Year (hereinafter, the AY ) 2011- 12 filed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn in the ITR vis- -vis the receipts as per the Form 26AS of the appellant/assessee. 3. The brief facts of the case giving rise to this appeal are that the appellant/assessee, a partnership firm, is engaged in the business of supplying manpower to Mahindra Mahindra across the country. It is a HR Consultancy firm. It entered into a contract of supply of manpower to Mahindra Mahindra from 01.12.2005. Later on, the contract was modified as per the terms of agreement dated 09.09.2008. The Form 26AS of the appellant/assessee shows that its receipts/ receivables, during the relevant year from Mahindra Mahindra, are Rs. 5,78,40,774/- as the TDS had been done on the sum of Rs. 5,78,40,774/-; whereas the appellant/assessee has shown the receipts agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... With respect to disallowance of bonus and gratuity shown payable aggregating to Rs. 13,49,827/- (6,34,757 + 7,15,070/-), the Ld. AR submitted that the entire liability under the head bonus and gratuity shown as payable had not been claimed as expenses during the relevant year. Hence, this sum shown as payable could not be disallowed and added back into the income of the appellant/assessee. 4.1 As far as the addition of Rs. 68,03,907/- due to the difference between receipts as per 26AS and receipts credited in Profit Loss account, it was submitted by the Ld. AR that the amount has been taxed on hypothetical basis as the appellant/assessee had recorded each receipt in its books of account and there was nothing unaccounted receipts from Mahind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 35,48,330/-(Dr.) Remarks From the above, it is apparent, the A.O.'s action of making addition is misconceived. Due to addition made by A.O., the account of appellant with Mahindra has not resulted into reconciliation. Instead, the difference has been enhanced to Rs. 1,08,58,700/-. 6.4. The appellant has duly accounted for the various amounts (of reimbursement as well as professional/service charges) on accrual basis and in accordance with method of accounting regularly employed by the appellant. No discrepancy or defect has been pointed by A.O, in the books of accounts of the appellant. The same methodology has been accepted in the assessments made u/s 143(3) for the earlier years. Without appreciating the facts of the case correctly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt (Rs.) -Balance of Mahindra as per Assessee's Book 18,44,830/- (Dr.) -Balance of appellant as per Mahindra's Book 96,63,595/-(Dr.) Difference 1,15,08,425/- 5. On the contrary, the Ld. Senior Departmental Representative (hereinafter Sr. DR ) argued the case vehemently. She submitted that the Gratuity of Rs. 71,375/- claimed as expense had been paid to the unapproved Gratuity Account; thus, the same could not be allowed as per the law. She further contended that since the appellant/assessee had maintained its account on mercantile basis; therefore, its income/ expenditure had to be debited/credited to the Profit Loss Account on accrual basis. Therefore, the receipt of amount/cash system could not determine the taxability of income i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f-serving reconciliation statement should not be relied upon. For this issue, she submitted that it required verification reconciliation of receipts as per 26AS vis- -vis receipts as per the books of account/ Profit Loss Account of the appellant/assessee. Thus, the same might be remitted to the AO. 6. We have heard both the parties at length and have perused the material available on the record. The disallowance of Gratuity of Rs. 71,375/- has been made on the reasoning that it was paid to an unapproved account. We find merit in the finding of lower Authorities; hence, the same is upheld based on the reasoning in the impugned order. 7. On the issue of disallowance of Bonus gratuity of Rs. 13,49,827/- (6,34,757 + 7,15,070/-) shown payable in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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