PANCHGANGA ISPAT P. LTD.,NAVI MUMBAI vs. ACIT, PANVEL CIRCLE, NEW PANVEL

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ITA 1631/MUM/2020Status: DisposedITAT Mumbai11 January 2022AY 2008-098 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Form 26AS is a statement of tax deducted and not a definitive statement of income. The assessee's adherence to the completed contract method and reconciliation of entries with Form 26AS, along with audited accounts showing higher income, justified the deletion of the addition.

What were the facts?

The assessee, a contractor, filed its return showing a loss. The Assessing Officer made an addition of ₹72,78,238/- by estimating profit at 7.5% on contract value, citing a mismatch between Form 26AS and the profit and loss account. The CIT(A) confirmed the addition.

What were the issues?

Whether an addition can be made solely based on a difference between Form 26AS and the books of account when the assessee follows a recognized accounting method and provides reconciliation.

Which sections of the Income-tax Act were involved?

Section 144,Section 203AA,Section 194C,Section 211

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: Shri Dharmesh Shah, AR Shri R A Dhyani, DR

For Appellant: Shri Dharmesh Shah, AR
For Respondent: Shri R A Dhyani, DR
Hearing: 04.01.2022Pronounced: 11.01.2022

Date of hearing : 04.01.2022 Date of Pronouncement: 11.01.2022 ORDER PER PRASHANT MAHARISHI, AM:

1.

This appeal is filed by Panchganga Ispat Pvt. Ltd. (assessee) against the order of the Commissioner of Income Tax (Appeals)-2 [in short CIT(A)] Thane, dated 17.02.20 for Assessment Year 2008-09. By this order, the appeal of the assessee field against the assessment order passed on 26.11.2010 under section 144 of the Income- tax Act by the Asst. Commissioner of Income tax, Panvel Circle, Panvel (the learned Assessing Officer) was dismissed. Thus, aggrieved assessee has raised the solitary ground of appeal against confirmation of addition of ₹72,78,238/- estimating the profit rate of 7.5% on the total contract value of ₹9,70,43,181/-.

3. Genesis of the addition shows that Assessing Officer noted that the gross receipts as per Form No.26AS with respect to the contract work of Billpower Limited is shown of ₹9,70,43,181/- whereas, the gross receipts credited in the profit and loss account of the assessee is merely 41,47,577/-. Further, the assessee company has claimed the TDS credit of ₹21,96,868/-. In absence of any explanation learned Assessing Officer estimated the profit rate at the rate of 7.5% on the contract value shown in Form No.26As at ₹9,70,43,181/- and estimated the business income at ₹72,78,238/-.

4. Aggrieved with that assessee preferred the appeal before the learned CIT (A). The assessee submitted several details before the learned CIT (A), who admitted the additional evidences filed by the assessee and after obtaining, the remand report from the Assessing Officer and rejoinder of assessee thereon confirmed the addition. Therefore, the assessee is aggrieved and has preferred this appeal before us.

6. The Ld DR Submitted that assessee has not at all co- operated with the Assessing Officer, therefore, LD CIT (A) has confirmed the addition, and therefore, the matter is to be restored back for verification to the file of the lower authorities.

7.

We have carefully considered the rival contentions. The facts are in a narrow compass that assessee is a company who is a contractor following completed contract method as its accounting policy for recognizing revenue. This method is permitted as per AS 9 issued by the Institute of Chartered Accountants of India. In case of the completed

8.

Coming to the facts in the present case,

ii. Contract continued in more than one year, till its completion assessee continued to show expenditure in work in progress account. iii. Gross receipt shown in form no 26 AS of the assessee in the year in which sum is received is reconciled with the gross receipts recorded in the books of accounts for two accounting periods iv. Annual accounts of both the accounting periods produced i.e. for FY 20007-08, FY 2008-09, which are audited, follows same accounting policy, and total turnover shown in both the period exceeds sum shown in form no 26 AS for F Y 2007-08. v. Each and every entry in Form No.26AS has been shown to be recorded in the books of account and gross receipt during the continuation of the contract, vi. Bills and copy of account of principla shows that all sums received are accounted for in the account of principal

Thus, we do not find any reason to uphold the orders of the lower authorities. Assessee has submitted details before the lower authorities i.e. Commissioner of Income Tax (Appeals), the statement showing reconciliation was also before the learned CIT (A) and before the learned

10.

In the result, the appeal of the assessee is partly allowed.

Order pronounced in the open court on 11.01.2022

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