ACIT, NEW DELHI vs. M/S. BRIJ GOPAL CONSTRUCTION CO., NEW DELHI

This appeal by the Revenue and cross objection of the assessee are preferred against the order of the Ld. CIT(A)-2, New Delhi, dated 30/09/2016 pertaining to Assessment Year 2009-10.

The solitary grievance of the Revenue is that the ld. CIT(A) erred in deleting the additions of Rs.2,07,84,177/- made by the AO on account of provisions of Sales Tax. In its Cross Objection, the assessee has challenged the validity of the order dated 11/08/2015 framed u/s 154 of the Act.

Briefly stated the facts of the case are that the original assessment was framed u/s 143(3) of the Act vide order dated 01/12/2011. The income of Rs.1,37,16,810/- was assessed against returned income of Rs.98,69,500/-. Audit scrutiny revealed that the assessee had been making provisions for Sales Tax each and every year without making actual payment and debiting the same in the trading and Profit & Loss account. During the financial year under consideration, the assessee has debited Rs.2,07,84,177/- on account of provisions for sales tax in the trading account and shown as liability in the balance sheet.

On these facts, the AO issued notice u/s 154 of the Act calling for explanation as to why the aforesaid provision should not be disallowed. On receiving no plausible reply, the AO rectified his assessment order and made the disallowance on account of provisions of sales tax and added a sum of Rs.2,07,84,177/-.

Before the ld. CIT(A), it was strongly contended that the sales tax/works contracts tax @4% was deducted at source by its customers at the time of payment and the assessee had VAT input credit available also on inputs utilised in its construction activities reflected as asset in the balance sheet. It was further explained that the assessee has sufficient credit against sales tax provisions made during the year under consideration, therefore, the action of the AO is uncalled for and disallowance made should be deleted.

The Ld. CIT(A) after considering the facts and the submission held as under:-

Before us, the Ld. DR could not point out any factual error in the findings of the Ld. CIT(A). On the contrary, we find that the Ld.CIT(A) has given categorical findings that a sum of Rs.21,99,686/- which was found to be net excessive, has been duly offered as income in Financial Year 2011-12 relevant to AY 2012-13, which was duly assessed and accepted in the order dated 12/12/2014 framed u/s 143(3) of the Act.

The facts relating to the computation of net excessive in respect of provision for liability of sales tax has been discussed elsewhere and as no factual error has been pointed out, we do not find any reason to interfere with the findings of the ld. CIT(A).

The counsel did not pressed the cross objection and the same is dismissed as not pressed.

Finally, the appeal of the Revenue as well as the Cross Objection of the assessee is dismissed. The order is pronounced in the open court on 02/08/2019