A.S. NUTECH ELECTRICALS PVT. LTD.,DELHI vs. ITO, NEW DELHI

Brief facts of the case are that the assessee is a company engaged in the business of Electrical contracts. For the assessment year 2012-13, it has filed its return of income on 28/9/2012 declaring an income of Rs.9,10,970/-. During the course of assessment, learned Assessing Officer noticed that the assessee had shown total Revenue receipts to the tune of Rs. 5,92,39,842/- as per its Profit and Loss Account whereas receipts to the tune of Rs. 8,72,86,922/-were to be found in AS-26. Assessee contended before the ld. Assessing Officer that the assessee was working as a contractor of L&T Ltd at various sites and as on 31/3/2012, L&T made an adjustment of Rs. 2,85 11,426/-in their books of accounts in respect of various works after making deduction of TDS to the tune of Rs.5,70,228/-; that as against those provisions neither any work was done by the assessee nor any amount was received by them during the financial year 2011-12; that, however, the assessee passed an entry in its books of accounts in respect of the TDS affected by the L&T Ltd, by creating a liability under the had “Advance TDS received-L&T” in “other current liabilities” in the Balance Sheet as on 31/3/2012; that it is only in the financial year 2012-13 the assessee received a sum of Rs. 1,93,00,756/-against those works from the work in respect of which the provision was created by L&T Ltd; that at the time the assessee had included such an amount in the income statement without claiming any TDS of Rs.3,92,131/- and adjusted such contract receipts against advance TDS received-L&T Ltd shown under the head of other current liabilities; that the assessee claimed the entire TDS of Rs. 5,70,228/- in assessment year 2012-13 on the advice of the auditor that if such TDS of Rs. 5,70,228/-on provision made by the L&T Ltd was not claimed in the return, it will not be available for claim in succeeding years; and that the assessee also did not claim any expenditure in respect of Rs. 2,85,11,426/-provisioned by L&T.

Learned Assessing Officer did not consider any of these contentions raised by the assessee and observed that in terms of section 198 of the Income Tax Act, 1961 (for short “the Act”) all the sums deducted in accordance with the provisions of the chapter shall, for the purpose of computing the income of the assessee, be deemed to be income received, and therefore, the difference between the declared income and the receipts to be found in AS-26 shall be brought to tax. He accordingly made an addition of Rs. 2,18,47,080/-to the income of the assessee.

Aggrieved by such an addition, assessee preferred an appeal before the Ld. CIT(A) and raised all the contentions that were taken before the ldAssessing Officer. Assessee further pleaded that while filing the return of income for assessment year 2012-13 in form No. ITR 6, there was no column in the return form ITR 6 to show the TDS amount to be carried forward to next period, which was subsequently modified to include a new column regarding the claim of TDS and carry forward of TDS to next period. Assessee further submitted that it had claimed TDS inadvertently that if the same was not claimed in return for the assessment year 2012-13, the same could not be claimed in the following years as advised by their auditor.

Ld. CIT(A) recorded all the contentions of the assessee in his order but dismissed the appeal holding that once the assessee had claimed the credit of TDS of Rs. 5,70,228/-, the assessee was bound to disclose the receipts of Rs. 2,80,47,080/-which the assessee has not done; that the provision made by the L&T in their books of accounts with reference to Rs.2,85,11,426/- was made with the consent of the assessee and M/s L&T had claimed that much expenditure in his books of accounts for the work executed; and, therefore, the contract receipts to the extent of Rs. 2,80,47,080/-which are reflected in the AS-26 of the assessee was the undisclosed income of the assessee as the same has to be taxed in the hands of the assessee for the assessment year 2012-13.

In this appeal, assessee contends that whether or not the L&T Ltd, having created the provision to the tune of Rs. 2,85,11,426/-, has not made any payments to the assessee in that year, and as a matter of fact out of this amount of Rs. 2,85,11,426/-, L&T had adjusted a sum of Rs.1,93,00,756/-in the assessment year 2013-14 which the assessee had declared in the returns without claiming any TDS because they have adjusted the TDS amount of Rs. 3,92,131/- relatable to this payment of Rs. 1,93,00,756/-out of the advance TDS received-L&T. Assessee further contends that in respect of such provisioned amount, assessee has not claimed any expenditure.

It is submitted by the Ld. AR that all these things are verifiable facts and it is not possible for the assessee to compel the L&T Ltd to reveal the details in respect of the provisioned amount to the tune of Rs. 2,85,11,426/- whereas the learned Assessing Officer could have opted such information from L&T Ltd to reach a just conclusion.

From the record and the impugned order, we find that the assessee has been contending so in the proceedings before the learned Assessing Officer and the Ld. CIT(A)also. These are for the authorities try to look into this matter from the angle of L&T Ltd. Whether not the assessee received any amounts during the financial year 2011-12 and whether or not any work was done by the assessee during that period relatable to such provisioned amount is a verifiable fact. We find every reason with the submissions of the Ld. AR that L&T being a giant company, is not cooperating with the assessee in providing the requisite details in respect of the provisioned amount and therefore it is only the learned Assessing Officer who could cause verification of the same by calling upon the L&T Ltd to furnish such details.

Since all the endeavour of the authorities under the Income Tax Act, 1961 is to determine the just tax liability of the assessee, we are of the considered opinion that this is a fit case to set aside the impugned order and to remand the matter to the file of the assessing officer with a direction to verify the details relating to the provisioned amount as to whether the assessee did any work relatable to provisioned work and received any payments during the financial year 2011-12 and to take a fresh view. With this view of the matter we set aside the impugned order and direct the learned Assessing Officer to verify the details of the provisioned amount securing them from L&T Ltd in the light of the contentions raised by the assessee and to take a fresh view on this aspect. We accordingly allow the grounds of appeal for statistical purpose.

In the result, appeal of the assessee is allowed for statistical purpose Order pronounced in the Open Court on 12th December, 2019.