BABY ENGINEERING ELECTRICAL MECHANICAL STORES,BURDWAN vs. ITO, WARD - 2(1), DURGAPUR, DURGAPUR

The Assessee is a partnership firm. It carries on business as a contractor. The assessee executes several work for defence and air force department, Government of India. For A.Y.2008-09 the assessee filed return of income on 30.09.2008 declaring total income of Rs.56,820/-. Assessment was completed determining the total income of the assessee by an order passed u/s 143(3) of the Income Tax Act, 1961 (Act) of Rs.7,13,670/- and ultimately this assessment was set aside by the Hon’ble ITAT in by order dated 31.10.2012 directing the AO to re-do the assessment after affording the assessee opportunity to substantiate its return of income.

As we have already stated that the assessee filed return of income on 30.09.2008 declaring total income of Rs.56,820/-, in the return of income so filed the gross contractual receipts declared by the assessee was Rs.61,15, 991/-. Subsequently the assessee filed a revised return declaring gross contract receipts of Rs.65,23,880/-. Thus there was an increase in the gross contract receipts by Rs.4,07,889/-compared with the original return of income and the revised return of income filed by the assessee. The AO found that both the accounts have been audited by the same Chartered accountant. According to the AO the assessee did not explain the reasons for discrepancy in the gross contract receipts so declared. The AO did not accept the revised return of income but nevertheless brought to tax a sum of Rs.4,07,889/- which was the difference in the gross contract receipts filed in the original return of income and the revised return of income.

Before the CIT(A) the assessee submitted that the assessee realized the mistake in the gross contract receipt declared on comparison of various documents like bills raised, gross bill amount, TDS and other adjustments after taking measurements of work by the government authority. This was the reason why the discrepancy in the gross contract receipt as declared by the assessee in the revised return of icome. The assessee submitted that at best it is only 8% of the sum of Rs.4,07,889/- that could be added as income of the assessee and not the entire gross contract receipts of Rs.4,07,889/-.

The CIT(A) however rejected the contentions of the assessee by observing as follows :- “As the A.O. has not considered the revised return of income which was filed after issuance of notice u/s 143(2) and the addition of Rs. 4,07,889/- was made over the return income of the original return and revised return of income shown by the appellant including Rs. 4,07,889/- was ignored by the A.O. due to the reason that the appellant filed its return of income only after issuance of notice u/s. 143(2) which was almost after one year from the filing of original return. The A.O. also noticed that the appellant has shown audit date of even revised balance sheet on same as of the original audited return. The A.O had bonafide reasons to believe that the date of revised audit is not same . Had it been so the revised Engg.Electrical Mechanical Stores A.Y.2008-09 3

Aggrieved by the order of CIT(A) the assessee has preferred the present appeal before the Tribunal.

I have heard the submissions of the ld. Counsel for the assessee and the ld. DR. The ld. Counsel for the assessee reiterated the submissions made before CIT(A). The ld. DR relied on the order of the CIT(A). 9. I have considered the rival submissions. It is found from the order of the AO that in the revised return of income filed except for a variation in the gross contract receipt all other figures remained the same including the total income declared. In such circumstances the conclusion of CIT(A) that the assessee had declared a sum of Rs.4,07,889/- in the revised return of income and therefore the assessee cannot have any grievance is not correct. Even assuming the worse scenario that the income declared by the assessee is without considering the gross contract receipt of Rs.4,07,889/- the addition that could be made can only be 8% of the gross contract receipts of Rs.4,07,889/- which is a presumptive rate of taxation for assessee’s contract business. In my view adding the entire sum of Rs.4,07,889/- would be gross injustice. The addition is therefore restricted to 8% of Rs.4,07,889/-. Thus the appeal of the assessee is partly allowed. 10. In the result the appeal of the assessee is partly allowed. Order pronounced in the Court on 03.01.2018. Sd/- [ N.V.Vasudevan ] Judicial Member Dated : 03.01.2018. [RG Sr.PS] Engg.Electrical Mechanical Stores A.Y.2008-09 4 Copy of the order forwarded to:

Baby Engineering Electrical Mechanical Stores, Panagarh Bazar, New Kanska Road, Burdwan, West Bengal-713148.

I.T.O., Ward-2 (1), Durgapur. 3. C.I.T.(A- Durgapur. 4. C.I.T.-Durgapur. 5. CIT(DR), Kolkata Benches, Kolkata.