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Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
Before: SHRI H. S. SIDHU & SHRI PRASHANT MAHARISHI
Per Prashant Maharishi, Accountant Member
1. This appeal is filed by assessee against order of Ld. CIT (Appeals)-2, Faridabad dated 18.07.2014 for A. Y. 2009-10 raising following grounds of appeal :
That the assessment order is bad in law and against the facts and circumstances of the case.
That Ld. Assessing officer had erred in law by passing assessment order under section 144 of the Income Tax Act 1961. 1
That the first notice u/s 143(2) of the said act was received back unserved, in the Income Tax Office Gurgaon, and the same was served on the assessee after stipulated time duration.
That the Hon’ble CIT (A) had errered in maintaining addition of Rs 51, 36,751 into the income of the appellant on account of Gross receipts. 5. That the Hon’ble CIT(A) had errered in maintaining addition of Rs 2,01,462, into the income of the appellant regarding WCT Payments. 6. That the order of the Ld. Assessing officer is liable to be quashed, on other grounds too which the appellant craves to add leaves to take at the time of hearing of this appeal. 7. That appellant craves to add, amend modify, alter or substitute all or any of the grounds mentioned herein above. 8. The brief fact of the case is that assessee is a partnership firm carrying the business of Civil Contractor. But filed its return of income or AY 2009-10 on 29.09.2009 at Rs. 294986/-. The assessment u/s 144 of the IT Act was passed on 23.11.2011 at Rs.7706990/-. During assessment proceedings the Ld. Assessing Officer asked the various details but same were not produced before the Assessing Officer. Therefore, he made an addition of Rs.5136754/- on account of difference in gross receipts as per books of accounts and form No. 26AS. He further made an addition of Rs.201462/- on account of works contract taxes not deposited. He further disallowed 1/5th of the total expenditure on conveyance, Labor welfare to the rent, salary and wages. He further disallowed 1/5th of total purchases shown by the assessee. 9. Assessee aggrieved with the order of the Ld. Assessing Officer file an appeal before Ld. CIT (A). Assessee challenged that notice u/s 143 (2) of the Act was not served on the assessee it was further contested that notice was not served on the assesse. The Ld. CIT (A) rejected the contention of the assessee. He held that as assessee has appeared in response to notice u/s 143 (2) of the Act it cannot be said that notice was not served on the assessee. He further upheld addition of Rs.5136751/- on account of understatement of gross receipts and disallowance of Rs. 201462/- on account of works contract tax as assessee did not produce any proof of the same. With respect to the disallowance on account of various expenditure and purchase he deleted the same. Aggrieved by the order of the Ld. CIT (A) assessee has preferred appeal before us. 10. The first ground of appeal
is general in nature and therefore, dismissed.
11. The second ground of appeal is that the Ld. Assessing Officer has passed assessment order u/s 144 of the Act. We do not find any infirmity in the order of the Assessing Officer passed u/s 144 of the Act because of the reason that at each and every stage assessee has failed to submit the requisite details. Therefore, on the perusal of the order itself it is apparent that because of non cooperation by the assessee the Assessing Officer did not have any alternative but to pass an order u/s 144 of the Act. In view of this ground No. 2 of the appeal is dismissed.
12. Ground No. 3 of the appeal is that notice u/s 143 (2) of the Act was not served on the assessee during the prescribed time.
The Ld. AR submitted that the same facts as submitted before the Ld. CIT (A). The Ld. DR relied on the order of the Ld. CIT (A).
We have carefully considered the rival contentions. The brief facts of the case shows that impugned assessment year are A. Y. 2009-10. Therefore, the first notice u/s 143 (2) could have been issued and served on the assessee on or before 30.09.2010. It was the contention of the assessee that notice is issued on 28.09.2010 received back by the Assessing Officer as unserved on 01.10.2010 and further on 04.10.2010 the same notice was served on the appellant on 07.10.2010 by calling Sh. Naresh Yadav personally to the income tax office. Therefore, the argument of the assessee is that no notice was served on the assessee. However, on reading assessment order it is apparent that according to the Assessing Officer statutory notice u/s 143 (2) were issued to the assessee on 28.09.2010 and which was duly served upon the assessee. However there was no mention that on which date this notice were served.
The same was also objected by the assessee before the Assessing Officer. In the remand report of the Assessing Officer at para No. 23.2 stated that notice were sent at the correct address of the assessee however same were not received by the assessee and therefore, it was personally given to the assessee on 07.10.2010. The Ld. Assessing Officer has also mentioned that notice which have been stated to have been received back undelivered were not found on the assessment record of the assessee. It is also the claim of the Assessing Officer that assessee had not mentioned about any change in its address. The Ld. CIT (A) has noted in para No. 3.3 that as per assessment record the first notice u/s 143 (2) of the Act was issued on 28.09.2010 and was delivered through speed post at two addresses. On verification of the assessment record by him he held that one of the two notices came back unserved. He further noted that the order sheet and record on 07.10.2010 in response to notice u/s 143 (2) issued on 28.09.2010 Sh. Naresh remained present. Therefore, according to him assessee complied with the first notice on 07.10.2010 therefore it cannot be said that notice were not served to the assessee in time. In view of the above facts we do not find any merit of the ground No. 3 of the appeal of the assessee and accordingly we uphold the order of the ld CIT (A) on that ground.
With respect to ground No. 4 and 5 of the appeal of the assessee wherein addition on account of Rs.5136751/- on account of gross receipts and Rs.201462/- on account of works contract taxes are challenged. The Ld. AR submitted that assessee has shown the gross receipts of Rs.14444516/- and according to VAT return also the above receipt was shown. Assessee submitted ledger account along with bank accounts and therefore submitted that the gross receipts shown by the assessee in its books is correct. Further with respect to difference in form No. 26AS it was submitted that it is due to error of the tax deductor. It was further stated that the Ld. Assessing Officer has also not correctly appreciated the form No. 26AS ignoring the unmatched entries. In view of this it was submitted that addition of Rs. 5136751/- is erroneous.
The Ld. DR vehemently supported the order of the Assessing Officer and CIT (A). 17. We have carefully considered the rival contentions. According to the books of account of the assessee gross receipt was Rs.14444516/- whereas according to form No. 26 AS the gross receipt was Rs.19581270/-. During the assessment proceedings and before the Ld. CIT (A) it was stated that there are unmatched entries in Form No. 26AS. The difference in the turnover shown by assessee in its books of accounts as well as per Form No. 26AS can be on account of many reasons. One of the reasons may be the wrong posting by the tax deductor. It may also be because of advance paid by the principal to the contractor. Undoubtedly it may also be on account of turnover not shown by the assessee. Further merely there is a difference between the gross turnover as per books of accounts and gross receipts as per Form No. 26AS the addition cannot be made. In fact such the difference would be the first trigger point for making further enquiries. In the present case the assessee has not made any attempt to reconcile the difference. Furthermore no reconciliation shown to us by the assessee also. Further the arguments of the assessee cannot be ignored that there are certain unmatched entries in form no 26AS. In view of this we set aside this ground of appeal back to the file of the Ld. Assessing Officer with a specific direction to the assessee to produce the confirmed ledger accounts of the assessee from the books of accounts of its principal to show that there is no difference in the payment shown by the principal to the assessee with gross receipts shown by the assessee in its books of accounts. The assessee must also produce the detailed reconciliation between gross receipts as per books of accounts and gross receipt as per Form No. 26AS. On submission of such information the Ld. Assessing Officer may inquire the correctness of the facts from the principal by issuing notice u/s 133 (6), if he so desires, and if he finds that the difference is arising because of the unmatched transaction really not pertaining to the assessee but is on account of wrong posting by the deductor then the addition may be deleted. Accordingly, ground No. 4 of the appeal of the assessee is allowed in terms of our above direction.
18. Ground No. 5 of the appeal is with respect to addition on account of Work Contractor Tax of Rs. 201462/-. The above disallowance made by the Assessing Officer on account of the fact that assessee has failed to show proof of payment of the Work Contractor Tax. The Ld. CIT (A) also confirmed it.
19. Before us the Ld. AR submitted that assessee has declared turnover of Rs. 14444516/- and 4% Work Contractor Tax there on is Rs. 577780/-. The VAT paid according of the turnover is Rs. 376318/- and therefore, the sum of Rs. 201462/- is payable. It was stated that according to the VAT law as assessee is a Work Contractor Tax is required to be paid by the principal and not the contractor. Hence, assessee submitted that there cannot be any addition on account of the same as nothing is payable by assessee.
The Ld. DR vehemently contested the arguments of the Ld. AR and submitted that if no Work Contractor Tax is payable by the assessee then why it is shown as payable in the credit side of the balance sheet by assessee. He further refers to the balance sheet of the assessee at page No. 38 of the paper book wherein this liability was shown as outstanding. He further referred to page No. 41 of the paper book wherein in the tax audit report also the assessee has shown VAT liability payable.
We have carefully considered the rival contentions and also perused the balance sheet of the assessee which is placed at page No. 38 of the paper book wherein Work Contractor Tax payable of Rs. 201462/- is shown as liabilities. In view of this, argument of the Ld. AR and annual accounts of the assessee gives different picture. As it is not clear that how liabilities are shown in the books of accounts as payable when the AR of the assessee is denying that Works Contract Tax is at all payable by the assessee. Even in the tax audit report also the tax auditor has also shown the VAT liability as outstanding u/s 43 B of the Act. In view of the above facts we set aside the ground No. 5 of the appeal to the file of the Ld. Assessing Officer with the direction to the assessee to produce the complete reconciliation of the Work Contractor Tax payable shown in the books of accounts as well as the VAT returns filed by the assessee. The Ld. Assessing Officer may examine the claim of the assessee and then decide the issue on merit after giving the opportunity of hearing to the assessee. Ground No.5 of the appeal of the assessee is allowed as above.