Tribunal held that in the absence of any material brought by the revenue authorities that the assessee has received amount more than the professional fees which has been declared by him in the P&L account and when the professional income declared by the assessee far exceeds the professional fees shown in the AIR information, then additions solely based on the AIR information are not sustainable.
AO has stated that as per AIR information, assessee has received total fees amounting to Rs.59,28,900. AO has made the addition of Rs.59,28,900 on the ground that assessee has neither filed the break up of his paty-wise professional fees, nor has given a statement as to reconcile the professional fees alongwith the bank statements to show that all entries in the AIR have been offered to tax. Being aggrieved, assessee filed appeal before ld CIT(A).
Ld CIT(A) has confirmed part addition stating that assessee could not reconcile all entries, details of which are given by him at page 8 of the impugned order and has confirmed the addition relating to 8 entries. It is relevant to state that on the basis of entries of details stated to be reconciled aggregate to Rs.36,8 1,000 out of 59,28,900. Therefore, addition confirmed by ld CIT(A) on account of not able to reconcile the entries of AIR information aggregates to Rs.22,47,900.
During the course of hearing, assessee submitted that professional fees returned by assessee for the assessment year under consideration is of Rs.5,64,91,441, which is far more than the details reflected in the AIR information of Rs.59,28,900. He submitted that all his professional receipts were deposited in one bank account and all fees are received by cheques which came from the client directly or from the instructing advocates, in case they have collected the amounts from the clients. He submitted that identical issue of non-reconciliation of professional fees with AIR information has been decided by the Tribunal in his own case for assessment year 2006-07 in I.T.A. No.527/M/2010 vide order dated 8.12.2010 and furnished a copy of the said order to substantiate his submission. He submitted that the basis on which the said entry has been made in the assessment year under consideration is identical to assessment year 2006-07. He submitted that the addition made in the facts and circumstances of the case is not justified.
On the other hand, ld D.R. did not dispute above submission of the assess save and except relying on the order of ld CIT(A).
We have considered submissions of ld representatives of parties and perused orders of authorities below as also the copy of remand report placed at pages 6-8 of PB. We have also gone through earlier order of the Tribunal dt.8.12.2010 (supra). We observe that AO made the addition of Rs.59,28,900 on the ground that assessee could not furnish party-wise details of professional fees receipts and non-reconciliation of professional fees receipts with AIR information. However, ld CIT(A) sustained the addition in part on the ground that some of the entries of AIR information could not be reconciled as per remand report of AO. However, we find sufficient force in the submission of assessee that assessee received total professional fees of Rs.5,64,91,441 in the assessment year under consideration, which is far more than the details reflected in the AIR information at Rs.59,28,900. Assessee admitted before the authorities below that reconciliation of professional receipts is not possible. The department has not disputed the fact that amounts deposited in the bank account are accounted for in the accounts of the assessee as professional fees and books of account of assessee are duly audited. We observe that similar issue came up for consideration in assessee’s own case for assessment year 2006-07 and the Tribunal on similar facts and circumstances has deleted the addition as sustained by ld CIT(A) vide para 8.2 of the said order which reads as under:
“8.2, We find sufficient force in the above submissions of the assessee. Admittedly, the revenue has not controverted the submissions of the assessee before the Assessing Officer during the assessment proceedings as well as remand proceedings that all professional fees received are by way of cheques and all such cheques have been deposited in his Oriental Bank of Commerce Account, South Extension Branch, New Delhi (vide letter addressed to Assessing Officer on 8. 10.208). Therefore, in absence of any contrary material brought by the revenue authorities that the assessee has received amount more than the professional fees than what has been declared by him, no addition should have been made. It is also a fact that the professional income declared by the assessee far exceeds the professional fees as per AIR information. There may be so many reasons such as low deduction of tax, non-deduction of tax, deduction on account of reimbursement of expenses etc., for which the figure as per the AIR may not tally with the income declared by the assessee on account of professional fees from various clients. Further, it has categorically been explained by the assessee that it is not practically possible to give detailed party use breakup of fees receipts since the assessee received his fees either from the clients or from the instructing advocates or CAs, if they have collected the amounts from the clients. Similar explanation have been accepted the past in scrutiny assessment and no addition has been made, a fact already brought on record. In this view of the matter, we find sufficient force in the submissions made by the assessee that no addition is called for on this account. Accordingly, we set aside the order of the CIT(A) and direct the AO to delete the addition.”
Since facts and the basis for making the addition in assessment year under consideration are identical to assessment year 2006-07, we, following the reasoning as given by the Tribunal in preceding assessment year in the case of assessee viz 2006-07, hold that the addition sustained by ld CIT(A) is not justified and same is deleted.