The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) held that no addition should be made when commissions earned from consignment sale of food grains are reflected in profit and loss account. The Assessee, Keshar Devi, was running business under the name and style of M/s Grah Lakshmi Trading Co and involved in Trading in Food Grains items and commission Agents. During the assessment proceedings, the assessee submitted a list o f parties from whom he has made sales and purchases out of which certain parties were selected by the AO and notices u/s 133(6) o f the Act dated 20 .02.2015 were issued to the parties. After analyzing the declared sale AO observed that the assessee has not declared sales of Rs. 25,57,22,855/- remained unverifiable.

Accordingly, addition of Rs. 25,57,22,855/- was made in the hand of assessee. Aggrieved, the assessee filed an appeal before the CIT(A) who deleted the addition. Therefore the revenue filed another appeal before the tribunal. Rano Jain, Counsel for the assessee a relied on the order of the CIT(A) and argued that the ld. CIT(A) has given relief after examination of the facts and after obtaining the remand report from the Assessing Officer. Sanjay Kumar, Counsel for the revenue, argued that assessee has deliberately reduced the sale of Rs. 25 ,57 ,22 ,855/- from his sale account merely passing entry in central sale and local sale as purchase without giving name and address o f the parties from whom it was purchased and this amount was also not included in the purchase o f the assessee. It was observed by the Tribunal that the As per normal accounting practice and accounting standard consignment sales is not included in the turnover of the assessee.

The goods received on consignment basis belongs to the consignor and assessee was entitled for commission thereon. The difference of Rs. 25 ,57,22 ,855/- added by the AO is no thing but consignment sales is transferred from sales account to consignments sales (purchase for sale) on which commission has been shown by the assessee. Thus the bench confirmed that engaged in the trading as well as consignment sales in food grains.Hence  trading as well as consignment sales in food grains have been accepted  and no addition has been made in the earlier and subsequent years. Subsequently the tribunal observed that  ledger of the consignment sales and the commission earned and therefore has been duly reflected in the P&L account. After reviewing the submissions of both parties the two-member bench of Dr. B. R. R. Kumar (Accountant Member) and Saktijit Dey (Vice President) dismissed the appeal filed by the revenue.