M/S SHRI JEEN MATA BUILDCON PVT. LTD.,JAIPUR vs. INCOME TAX OFFICER, WARD-4-2, JAIPUR

The hearing of the matter was scheduled through Video Conferencing by both the parties in view of prevalent government guidelines on account of ongoing COVID-19 pandemic situation in the country.

The ld. AO further erred in law as well as on the facts of the case in charging interest u/s 234A, 234B, 234C & 234D of the Act and as also in withdrawing interest u/s 244A of the Act. The appellant totally denies its liability of charging and withdrawal of any such interest. The interest so charged/withdrawn, being contrary to the provisions of law and facts, kindly be deleted in full.

The relevant facts, as culled out from the records is that, the assessee company is engaged in the business of labour contractor supplier with machinery under affordable housing policy for the year under consideration. The assessee company filed its return of income declaring income at Rs. 5,21,007/- on 30.03.2015 through e-filing portal and the same was processed u/s 143(1) of the Income Tax Act, 1961. Later on, the case was selected for scrutiny through CASS due to difference in turnover between 26AS and books of account. In the assessment proceedings, the Assessing Officer has observed that turnover declared by the assessee for the year under consideration at Rs. 67,84,050/-. Whereas the turnover as reflected as per 26AS is Rs. 86,62,800/- the difference of Rs. 18,78,750/- is added back in case of the contract received from M/s Sidhi Vinayak Affordable Homes. Considering that the party has also booked that amount in their books as confirmed under enquiry made u/s 133(6) of the Act. In another case addition in respect of M/s Bhairav Township Pvt. Ltd, the Assessing Officer has observed that there is a difference between income offered and expenses booked. Therefore, he has derived the figure of addition at Rs. 15,23,978/- being the difference of the expenses booked and income offered, the same is derived as under:- “A.Y Income Expenses 2011-12 37,80,000/- 6,04,000/- 2012-13 10,70,00,00/- 15,39,99,78/- 1,44,80,000/- 1,60,03,978/- A B B-A 15,23,978/- (Short declared turnover)”

While dealing with the ground for these two additions, the ld. CIT(A) observed in his order at para 4.3 and has confirmed the addition by observing as under:- “4.3 I have gone through the assessment order, statement of facts, grounds of appeal and written submission carefully. It is seen that the addition has been made by the AO after verification of the information available in Form No. 26AS of the appellant and result of enquiries conducted u/s 133(6) with M/s Sidhi Vinayak and M/s Bhairav Township Pvt. Ltd. The appellant has not furnished any documentary evidence to substantiate the submission made by it. Therefore, In view of the facts

The ld. CIT(A) has also confirmed the finding of the AO in respect of the lumpsum addition of Rs. 2 lac without giving any separate findings.

Being aggrieved from the order of the ld. CIT(A), the assessee has moved an appeal before the Co-ordinate Bench wherein the contentions of appellant as appearing in paper book are as under:- “1. Accounts not rejected by the AO: At the outset it is submitted that the assessee has maintained proper books of account which are duly audited u/s 44AB of the IT. Act. Complete books of accounts along with purchase bills, contract receipts bills, vouchers and other registers maintained by the assessee were produced before the AO in the course of assessment proceedings as admitted by him at top of the Pg-2.

Before us, the Revenue has relied upon two case laws as under:- • Rah Jajharia E to E JV [2017] of the ITAT, Kolkata dated 21.12.2017.

We have considered the rival submissions. The ld. AR of the assessee argued that merely there is a difference in the 26AS and the books results, there cannot be an addition to returned income the books of account of the assessee duly audited. AO has not found any single defect in the books of accounts that has been produced before the Assessing Officer. The assessment completed u/s 143(3) of the Act. Even, the inquiry made u/s 133(6) has properly been explained by the AR of the assessee in the assessment proceedings and reply is reproduced in the assessment order. The main contentions is that the other party has booked the expenses, that cannot be the reason while making the assessment in the case of the assessee, when the contract receipt got reflected in the subsequent year as per regular method of accounting followed. Surprisingly one addition is based on 26AS amount and amount in books and another from the expenses booked by the assessee and income of two years comparison. This shows how the additions were made by followings choose & pick. It is only elementary that information as per data base of the Revenue authorities cannot be, by itself, a legally sustainable basis for making addition to the income of the assessee and that such imports are based starting point for appropriate inquiry which in this case made and explained by the assessee & reconciliation to that want also made. There is nothing more than this information input which has been put against the assessee. We have noted that the audited books of accounts and reconciliation and the various entities contract amount offered for tax over a period & time. Only difference between the contract value of each party matches over a period of time irrespective of the year offered by the assessee and therefore, grievance of the Revenue that the assessee has not offered correct income is fully explained by the assessee by filing the chart at page No. 5 of the assessee’s written submissions which is reproduced hereinbelow. Reconciliation Chart as per Assessee F.Y. Siddhi Vinayak Bhairav Township As per Books As per 26AS Variance As per Books As per 26AS Variance 2011-12 38,00,000 10,00,000 28,00,000 2012-13 67,84,050 86,62,800 (18,78,750) 1,07,00,000 1,40,00,000 (33,00,000) 59,99,625 59,99,625 - 15,00,000 10,00,000 5,00,000 2013-14 36,47,947 20,62,500 15,85,447 - - 2014-15 95,911 - 95,911 - - 2015-16 Net 1,65,27,533 1,67,24,925 (197,392) Variance 1,60,00,000 1,60,00,000 -

The income offered for both the parties, in respect of which the addition made almost reconciled and offered for in the regular books, AO has not rejected the book results. Therefore, it is not required to disturb the books result which has been audited by an independent auditor. Thus, the addition made for an amount of Rs. 18,78,750/-, Rs. 15,23,978/- totaling to Rs. 34,02,728/- as per ground No. 1 are deleted on the basis of finding discussed herein above.

As regards the lumpsum disallowance of Rs. 2,00,000/- , the observe of the ld. CIT(A) at para 5.3 is as under:-

The ld. DR has not placed anything contrary to this and vehemently contended the observation of the AO. In the light of these observation that there are no defects in the books, bills and voucher no addition can be made. Not only that which expenses to what extent can be considered as private as assessee being an artificial person is not spelt out from the order of lower authorities. The chart suggest that the same are at reduced figure compared to last year. Considering the material evidences and facts placed before us, we delete the lumpsum addition of Rs. 2,00,000/- and thus the ground No. 2 is allowed.

Thus, Ground Nos. 1 and 2 are allowed and assessee get relief accordingly and ground No. 3 is consequential for levy of interest if any in accordance with law.