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DCIT Cir-1(1) Kol. Vs. M/s Lexicon Auto Ltd. Page 2

2. Whether on the facts and din the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.9,93,901/- based upon assessee's reconciliation which was not reconciled before the AO.

3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs.2,08,115/- relying upon the case law, and overlooking the fact that the assessee company failed to deposit the employee's contribution to PF / ESI within the due date provided in the IT Act.

4. The assessee was entitled to 1% incentive remuneration from TML on the basis of monthly collection made by it on behalf of said company. The assessee has shown incentive remuneration for ₹5 49,815/- only whereas Form 26AS was reflecting the incentive remuneration of ₹87,01,516/- only. Thus, there was difference of ₹81,51,702/- as observed by the AO. On question by the AO about the aforesaid mismatch, the assessee submitted that as per the agreement with TML, there was a penalty clause of 15% of the finance amount to be levied on the assessee in the event of non-recovery of hire charges amount. The assessee also submitted that besides 15% penalty there was a clause for the penalty @ 100% of finance amount if the party fails DCIT Cir-1(1) Kol. Vs. M/s Lexicon Auto Ltd. Page 3 to pay single installment to TML and if the party fails to register the vehicle showing hypothecation clause of TML.

Accordingly, the Ld. CIT(A) after considering the submissions of assessee deleted the addition made by AO by observing as under:-

"After careful consideration, it is found that the AO has disallowed the entire amount of Rs.8151702/- which was claimed as deduction towards dealers liability on the ground that the liability to collect / recover the amount from customers was not ascertainable; party-wise details of amount defaulted and subsequent recovery from customer was not verifiable and that the actual DCIT Cir-1(1) Kol. Vs. M/s Lexicon Auto Ltd. Page 4 liability was not ascertainable and could not the said to be crystallized during the previous year.

8. We have heard the rival contentions of both the parties and perused the material available on record. In the instant case, difference was observed by AO between the amount of income shown by assessee vis-à-vis the income shown in the Form 26AS. Thus, the amount of difference was added to the total income of assessee. However, Ld. CIT(A) deleted the addition made by the AO after having reliance on the reconciliation statement furnished by assessee during appellate proceedings. Now, the grievance of Revenue is that additional evidence in the form of reconciliation statement has been admitted by Ld. CIT(A). However, we note that necessary DCIT Cir-1(1) Kol. Vs. M/s Lexicon Auto Ltd. Page 5 clarification about the mismatch in the amount of income shown by assessee was duly supplied before AO as evident from the assessment order, which is reproduced hereunder:-