AHLUWALIA ERECTORS & FABRICATORS PRIVATE LIMITED,JAIPUR vs. ACIT, KOTA

आयकरअपीलीय अधिकरण] जयपुरन्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A ” JAIPUR MkWa- ,l-lhrky{eh] U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihy la-@ITA. No. 433/JP/2022 fu/kZkj.ko"kZ@AssessmentYear :2017-18 M/s. Ahluwalia Erectors &Fabricatrs (P) Ltd. cuke The ACIT Vs. Kota E-77, IPIA, Kota- 324 005 (Raj) LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAHCA 0089 K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Mahendra Gargieya, Advocate jktLo dh vksjls@Revenue by : Shri A.S. Nehra Addl. CITa lquokbZ dh rkjh[k@Date of Hearing : 03/08/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 11 /10/2023 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM

This appeal filed by the assessee is directed against the order of ld. CIT(A) dated 19-10-2022, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2017-18.

‘’1. The impugned order u/s 143(3) dated 25.12.2019 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be quashed.

2. Rs. 24,00,000/-: The CIT(A) erred in law as well as on the facts of the case in confirming impugned addition made by the AO on account of the cash deposits of Rs. 24,00,000/- in the Punjab National Bank, Beawar Branch during the demonetization period on different dates ignoring the facts available on record and the detailed submissions made. The impugned addition so made being contrary to the provisions of law and facts of the case and contrary hence, the same kindly be deleted in full. 3.1 Rs.80,85,610/-: the ld. CIT(A) erred in law as well as on the facts of the case in setting aside the issue in hand to the file of the AO for reconciliation of the receipts based on the receipts shown in the books of accounts and those shown in the TDS form 26AS in as much as the ld. Firstappellate authority was having no jurisdiction to set aside an issue and was supposed to have finally adjudicated upon the issue in hand after obtaining remand report before passing the final appellate order. Thus, the due and prescribed process of law has not been followed. Hence, the impugned order to this extent deserves to be quashed. The impugned addition of Rs.80 85,610- deserves to be completely deleted on this ground alone. 3.2 The Id. CIT(A) erred in law as well as on the facts of the case in considering that the difference shown in the regularly maintained books of accounts which were not even rejected and those shown in TDS form 26AS could not be taken in cognizance by considering such difference as income. However, such an approach by the ld, lower authorities, in principle, is contrary to the provisions of law and facts in as much as mens because there is a difference between the two, no income have accrued or arisen to the assessee. Therefore, receipts as declared must have been accepted without making/permitting any variation therein. The impugned addition of Rs.80,85,610/- deserves to be completely deleted on this ground also 4.Rs. 26,35,358/-: The ld. CIT(A) erred in law as well as on the facts of the case in summarily confirming the huge disallowance made by the AO out of the Temporary Labour Expenses incurred and claimed by the appellant by simply observing that no reply was filed but unfortunately ignoring the submissions and other evidences placed on record. The disallowance so made and confirmed being totally contrary to the provisions of law deserves to be deleted in full.

‘’4.1 Rs.80,20,010/: the ld. CIT(A) erred in law as well as on the facts of the case in setting aside the issue in hand to the file of the AO to call for reconciliation statement from the Appellant and restrict the disallowance to the amount of Service Tax as shown as expenditure in P&L Account, which remains unpaid before the due date of filing the return in as much as the ld. First Appellate Authority was having no jurisdiction to set aside an issue and was supposed to have finally adjudicated upon the same in after obtaining remand report before passing the final appellate order. Thus, the due and prescribed process of law has not been followed. Hence, the impugned order to this extent deserves to be quashed. The impugned addition of Rs 80,20,010/- deserves to be completely deleted on this ground alone. 4.2 The Id. CIT(A) erred in law as well as on the facts of the case appreciating that the unpaid amount of service tax of Rs.80,20,090 was never debited to the P&L Account and consequently, when no deduction was claimed there is no question of making any disallowance u/s. 43 B of the Act. The P&L Account and other supporting evidences were available on the record of the CIT(A) The very invoking of s.43B of the Act must have been deleted here by itself." 2.2. To this effect, the ld. AR took support of Hon’ble Supreme Court decision in the case of NTPC Ltd. VS. CIT 229 ITR 383 (SC) to admit the above ground purely as legal ground and it does not require any investigation for which the Bench consider it as being purely a legal ground in the interest of equity and justice.

4. Apropos Ground No. 2 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:-

5.2.1 Ground No. 2: Addition on account of cash deposit during demonetization period: The appellant had deposited cash of Rs. 24 lakh in Punjab National Bank, Beawar Branch in specified Bank Notes during the demonetization period. The AO noted that the appellant had been withdrawing cash on daily basis from the first day of demonetization. Hence, the explanation that the SBNs were out of cash-in-hand was not accepted by the AO. He added this amount. 5.2.2 The appellant has explained that it had daily cash requirement atdifferent sites for which cash used to be withdrawn. Further, it is claimed that in Kota Branch there was huge rush to deposit old currency, hence the appellant has deposited old currency in Beawar Branch. 5.2.3 The explanation that cash in old currency remained with the appellant till one month after start of demonetization and that the cash was sifted from Kota to Beawar appears absurd. Further, immediately after the deposit of cash on 6thDec 2016, the appellant has utilized the amount for payment of Service Tax.Apparently the appellant wanted to pay the tax with the SBN, but once theamount has been credited in the bank account of the appellant, it will have toexplain the source as well as face the consequences, if any. The amount ofcash deposited can not be accepted to be representing the cash-in-hand on08.11.2016 due to the above reasons. This ground is rejected.’’ 4.1 During the course of hearing, the ld. AR of the assessee submitted that the assessee had fully explained the source of cash deposit of Rs.24.00 lacs made in the bank account on 6-12-2016 for which the ld. AR of the assessee has filed the detailed written submission as under:-

Submissions: 1.1 Source fully explained and established: Atthe outset it is submitted that the Assessee has duly and fully explained the source of cash deposit of Rs. 24,00,000 /- made in the bank account on 06.12.2016 with the help of the regularly maintained cash book on day to day basis. It is not denied that the said cashbook produced before the AO for financial year 2016-17 (AY 2017- 2018) (PB 26-30), which shows that there was sufficient cash in hand available on the eve of the cash deposit i.e.05.12.2016 at Rs. 29,68,475.47hence immediately thereafter, on the next day, i.e. 06.12.2016 the Assesse was able to make deposit of cash in PNB Beawar branch. Prior to this deposit also, the Assessee was in the practice of making regular cash deposits and withdrawals in the other bank accounts in genuine and normal course of business. This contention is fully supported from the entire cashbook. Continued with the same practice, there has been a closing balance of cash in hand on 31.03.2017 of Rs. 11,67,820.96.Thus, it is not that immediately after cash deposit, the cash balance went down. 1.2.1 Regular Accounts-Binding Evidence: The Assessee is a Pvt. Ltd. Company and hence has been maintaining regularbooks of accounts including both financial and quantitative records, (wherever required), under the provisions of the Companies Act ,2013. The same were subject to the statutory audit under the Companies Act, 2013. Notably, there is no adverse remark made by the statutory auditors (PB 3-15). Moreover, the accounts of the Assessee was also audited under sec. 44AB of the Act and in the Tax Audit Report (TAR)(PB16), no adverse remark was made by the ld. Tax Auditor. Closing cash in hand of Rs. 11,67,820.96 is duly reflected in the audited Balance Sheet (PB 3-15), as on 31.03.2017. These audited financial statement and also the Tax Audit Report, were duly uploaded along with the Income Tax Return and were available before the AO. The cashbook so maintained, was also admittedly produced before the ld. AO as stated by him at pg. 3 para 5.1 of the Assessment Order. 1.2.2 It is now well settled that the regularly maintained books of accounts,is an admissible evidence under Indian Evidence Act, 1872.The authorities below do not dispute this legal position and the facts narrated herein above. In other words, it is not at all disputed that there did exist the sufficient availability of larger amount of cash in hand with the Assessee before the subjected cash deposit was made. The AO/CIT(A) did not disbelieve or did not doubt or even did not reject the accounts. However, the only objection raised by the AO was that no sufficient evidence proving that the Assesse was having cash in hand at Beawar and that no separate accounts were maintained at different locations showing availability of cash at Beawar were submitted, are nothing more than a suspicion.Neither the Income Tax Act. 1961 nor the Income Tax Rule ,1962 requires from a businessman to essentially maintain the books of accounts at all the sites nor there is any prescribed format under Rule 6F of the Rules. But at the same time, since the assessed at the relevant point of time had undertaken labor job with Shri Cements ltd., a site office was maintained at “Ras Babra” near Beawar, and to disburse wage payments and to meet with the need of day to day expenses some cash was used to be kept there. In any case, however, it was a part of overall cash in hand of the Head Office at Kota. This way, the first three objections raised by the AO in para 4.3 stands duly answered. 2.Human Probabilities support: 2.1The surrounding circumstances and human probabilities play an important role and, in this case, strongly support the contention of the Assessee, in as much as soon after demonetization was declared, no one was ready to accept payment in cash, logically, legally and rightly so, because the old currency had become the non- acceptable (currency) and was not otherwise permissible to be used. At the same time, the Central Government had granted relaxation that such notes could be deposited back in the bank account till 31- 12-2016. It is under this background that the Assessee in the best business interest, as a best judge, found it better to deposit back such old currency in the bank itself otherwise had it continue with it, the same could have become completely an illegal tender which, the assesse was not even supposed to legally keep it. Because keeping an illegal tender is also an offence under RBI Act. 2.2 During the period of demonetization, it was a matter of common knowledge that in comparatively big cities like Kotait was quite difficult to make deposits or withdraw cash from bank branch due to heavy rush and chaos. Accordingly, the Assessee decided to take cash available at Kota Head Office and part of the cash from Ras Babra site. Thus, taking together the total amount of Rs.24 lakhs was deposited at PNB, Beawar. In his view this was the best decision by a businessman in those circumstances. The AO can’t interfere. 2.3 He could not be expected to establish the fact of physical movement of cash from Kota to Beawar, in a microscopic manner showing the exact date, time and place as to when it was done. Otherwise also it was not practically possible to prove. 3.Onus on the AO- not discharged: 3.1. Unless the availability of the cash is proved to have been utilized elsewhere or is proved to be non-existent prior to the deposits in bank, the AO was not legally justified to suspect and make addition. Pertinently, the AO, in this case, did not deny the availability of cash (atleast at Kota). 3.2 What is apparent is Real – Onus not discharged: It is a settled law that what is apparent is real unless controverted. The onus lay upon the person, who alleges that what is apparent is not real. Kindly refer CIT (Central) v/s Daulat Ram Rawatmull (1973) 87 ITR 349 (SC), followed in CIT v/s Bedi & Co. Pvt. Ltd. (1998) 230 ITR 580 (SC). In the present case, the AO has proceeded on mere suspicion, surmises and conjectures. No contrary evidenceis on brought on record to show/ disprove the vital fact and contention that the Assessee did and that sufficient cash was available with it and thus, failed to show that what is apparent was not real. In any case, the AO could not disprove the availability of the cash so withdrawn or that the cash so withdrawn stood utilized elsewhere. Hence, apparent was real. 3.3 Mere suspicion not sufficient:It is well settled that suspicion howsoever strong, cannot take place of reality. Kindly refer Dhakeshwari Cotton Mills v/s CIT (1954) 26 ITR 775 (SC).

5. Further S. 69/ 69A requires an explanation from the assessee and once given, it has to be objectively tested. A good proof cannot be converted into no proof. Moreover, discretion conferred upon the AO has to be exercised judiciously as held in CIT vs Smt. P.K. Noorjahan (1999) 237 ITR 0570 (SC): “As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in Parliament, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under s. 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the ITO under s. 69 to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case. In the instant case, the Tribunal has held that the discretion had not been properly exercised by the ITO and the AAC in taking into account the circumstances in which the assessee was placed and the Tribunal has found that the sources of investments could not be treated as income of the assessee. The High Court has agreed with the said view of the Tribunal. There is no error in the said finding recorded by the Tribunal. There is thus no merit in these appeals and the same are accordingly dismissed. — CIT vs. Smt. P.K. Noorjehan (1980) 15 CTR (Ker) 138: (1980) 123 ITR 3 (Ker) :42R.1622, affirmed.” Thus, it was fully established beyond all reasonable doubts that there was sufficiency of cash available and in absence of any evidence of utilization thereof elsewhere, the same was deposited in the bank. 6.Supporting Case Laws on availability of funds: The Hon’ble High Courts and the Tribunals in different factual situations have considered the availability of the cash when the Dept. failed to establish that such cash which was made available in hands of the assessee because of the withdrawal from the banks or sale proceeds of the jewellery and so on, utilized elsewhere, held that no addition can be made. 6.1 In the case of PCIT vs. Dilip Kumar Swami [2019] 106 taxmann.com 59 (Raj)(DPB 14-16) it was held that “Assessee filed his return declaring certain taxable income - In course of assessment, Assessing Officer noted that assessee had deposited certain amount in his bank account - On being enquired about source of said deposit, assessee explained that it represented amount received from various purchasers against sale of goods i.e., tractors and accessories thereof - Assessing Officer accepted assessee’s explanation and completed assessment - Commissioner taking a view that cash deposits not being satisfactorily explained, passed a revisional order setting aside assessment - Tribunal, however, set aside revisional order so passed - It was noted that order passed by Assessing Officer that deposits stood reconciled was preceded by a proper inquiry - It was also found that assessee had produced statement of bank account, copies of bills issued to purchasers of tractors as also books of account showing entries of deposits made in bank - Moreover, Assessing Officer had recorded a categorical finding that entries in bank account were verifiable from cash book and also bills produced by assessee - Whether in view of aforesaid, Tribunal was justified in setting aside revisional order passed by Commissioner - Held, yes”. The principal propounded in the above case directly applies in the present case. 6.2. Apex court decision in the case of Mehta Parikh & Co. vs. CIT [1956] 30ITR 181 (SC) (DPB 1-10)also directly support the facts of the present case in as much as in that case also, the assessee was in possession of 61 high denomination currency notes on 12.01.1946, when such currency notes were demonetized. The assessee at the time was established availability of currency notes with the help of regularly maintain cash book showing opening cash in hand on 01.01.1946 and further receipt thereafter, apart from affidavits of the payer. The authorities below rejected the contention alleging the same to be impossible for the one reason or other and was upheld by the high court also. However, the Hon’ble apex court decided the issue in favour of the assessee mainly relying upon controverted by the department). The Hon’ble court held that: the entries in the cash book (as also the fact that contents of the affidavits were not “It has to be noted, however, that beyond these calculations of figures, no further scrutiny was made by the Income-tax Officer or the Appellate Assistant Commissioner of the entries in the cash book of the appellants. The cash book of the appellants was accepted and the entries therein were not challenged. No further documents or vouchers in relation to those entries were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party. The appellants took it that the affidavits of these parties were enough and neither the Appellate Assistant Commissioner, nor the Income-tax Officer, who was present at the hearing of the appeal before the Appellate Assistant Commissioner, considered it necessary to call for them in order to cross-examine them with reference to the statements made by them in their affidavits. Under these circumstances it was not open to the Revenue to challenge the affidavits. correctness of the cash book entries or the statements made by those deponents in their ---------xxxxxx--------xxxxxx------xxxxxx------- A mere calculation of the nature indulged in by the Income-tax Officer or the Appellate Assistant Commissioner was not enough, without any further scrutiny, to dislodge the position taken up by the appellants, supported as it was, by the entries in the cash book and the affidavits put in by the appellants before the Appellate Assistant Commissioner. ---------xxxxxx--------xxxxxx------xxxxxx------- To put the matter in a nut-shell, the accounts of the appellant have been accepted by the Tribunal as genuine, and it is impossible to say, having regard to the cash balance as shown therein, that the notes in question could not have been included therein. The Tribunal observes that it is unlikely that so many high denomination notes would have been held as part of the cash on hand for a sucha large number of days. That, no doubt, is highly suspicious; but the decision of the Tribunal must rest not on suspicion but on legal testimony”. In the present case also, the AO has raised a similar allegation in Para.4.3 V 6.3. Kindly refer CIT v/s P.V. Bhoopathy (2006) 205 CTR 495 (Mad) (DPB 11-13) held: “Appeal (High Court)—Substantial question of law—Income from undisclosed sources—AO did not accept various sources of income explained by the assessee and made additions under ss. 68 and 69 in respect of difference between the investments and the sources accepted by him—Tribunal accepted the explanation of the assessee vis-a-vis availability of funds with the assessee from the sale proceeds of jewellery belonging to his mother- in-law, receipt from a party and also the amount of opening balance and savings from earlier years and deleted all the additions—Findings recorded by the Tribunal are purely findings of fact—There is no reason to interfere with the same—No substantial question of law arises—CIT vs. Pradeep Shantaram Padgaonkar (1983) 143 ITR 785 (MP) relied on” 6.4. Also refer CIT vs Kulwant Rai (2007) 210 CTR 380 (Delhi) para 16- 17(DPB 17-22) Read held “Search and seizure—Block assessment—Computation of undisclosed income—Cash found during search—Assessee had withdrawn Rs. 2 lakh from bank some time back and there is no material with the Department to show that this money had been spent and was not available with the assessee—Tribunal has found that the withdrawals shown by the assessee are far in excess of cash found during the course of search— In the absence of any material to support the view that the entire cash withdrawals must have been spent by the assessee, Tribunal was justified in holding that the addition was not sustainable—Order of the Tribunal does not give rise to a substantial question of law” In this case, cash was found on search carried out on 04.02.2001 and was explained to be out of the cash withdrawal in Dec-2000. 6.5. Also refer Anand Prakash Soni v/s DCIT (2006) 101 TTJ 97 (Jd) para 5-6 “Search and seizure—Block assessment—Computation of undisclosed income—Cash found during search—Assessee is entitled to furnish cash flow statement to explain the transactions when no books of account are maintained—In such circumstances it becomes the duty of the AO to verify the balance sheet and cash flow statement with the necessary material including the details already filed along with the returns in the past—Assessee explained that the cash found at the time of search was withdrawn from the bank some time back which was partly used for purchasing gold and part of the amount was given by the assessee to his wife—There is nothing to suggest the utilization of the withdrawal amount elsewhere—Said withdrawal is duly reflected in the cash flow statement and closing cash balance is more than the amount found at the time of search—Thus, addition cannot be sustained” 6.6. Lastly sec.115BBE can’t be invoked because it is admittedly a case of business income. Hence, the entire addition deserves to be deleted in full.’’ 4.2 On the other hand, the ld. DR supported the order of the lower authorities. 4.3 We have heard both the parties and perused the materials available on record. In this case, it is noted that the AO made an addition of Rs.24.00 lacs because there was no sufficient evidence whatsoever on record which according to him proves that the assessee was having cash in hand at ‘’Beawar’’ as against at Kota Head Office. The assessee was not maintaining any separate set of books account at different locations and the argument made by the assessee that the cash in hand was available at ‘’Beawar’’ was not accepted by the AO being no evidence on record. The ld. AO in the absence of required details and documents that the cash was deposited out of the cash in hand available with the assessee was not accepted for want of proper supporting documents/proof. The AO on verification of bank statement of Beawar PNB Branch, submitted by the assessee, noted that there is no cash transaction in the said bank account which is further evidence that the assessee was not having any cash in hand in ‘’Beawar’’ PNB Branch. Thus the AO considering the facts and circumstances of the case, intotality noted that the cash deposit (SBN Notes) during demonetization period cannot be from the explained and disclosed sources and the same is required to be treated as deposited of undisclosed income of the assessee. The ld. CIT(A) had confirmed the action of the AO with the narration as under:-

‘’5.2.3 The explanation that cash in old currency remained with the appellant till one month after start of demonetization and that the cash was shifted from Kota to Beawar appears absurd. Further, immediately after the deposit of cash on 6th Dec 2016, the appellant has utilized the amount for payment of Service Tax. Apparently the appellant wanted to pay the tax with the SBN, but once the amount has been credited in the bank account of the appellant, it will have to explain the source as well as face the consequences, if any. The amount of cash deposited cannot be accepted to be representing the cash-in-hand on 08.11.2016 due to the above reasons. This ground is rejected.’’ 4.3.1 The Bench has also taken into consideration the submissions of the ld. AR of the assessee but it did not find appealing to consider his submission in favour of the assessee as the assessee immediately after the deposit of cash on 6th Dec. 2016, had utilized the amount for payment of service tax. Apparently, the assessee wanted to pay the tax with the SBNbut once the amount has been credited in the bank account of the appellant, it will have to explain the source as well as face the consequences, if any. The amount of cash deposited cannot be accepted to be representing the cash-in-hand on 08.11.2016 due to the above reasons. Hence in the present facts and circumstances of the case, the assessee glumly failed to justify the genuineness of the cash on hand viz a vizits use for payment of service tax, if the assessee was having the cash why the government dues are not discharged and kept the cash on hand and not only that the filmy reasons provided by the assessee of shifting the cash on hand from one place to another is also not justified with the corroborative evidence. Thus,we are not inclined to interfere in the order of the ld. CIT(A). Thus Ground No. 2 of the assessee is dismissed.

5. Apropos Ground No. 3.1 & 3.2 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:-

‘’5.3.1 Ground No. 3 Addition of Rs. 80,85,610/- on account of difference in turnover as per financials and Form 26AS: The AO analyzed in detail the receipts of the appellant as shown in the financials as against the receipts as per Form 26AS and noted that in respect of receipts from M/s Sanghi Industries, there is substantial difference in the receipts shown and as per Form 26AS. The AO held that the appellant had not shown turnover to the extent of Rs. 80,85,610/- and added this amount. On the other hand, the appellant has claimed that the difference was due to calculation method in the financials, the appellant had taken the receipts on the basis of bills raised, whereas in Form 26 AS the receipt is on the basis of TDS deducted. Further, it has been claimed that in Form 26 AS, TDS is deducted on Gross amount inclusive of Service Tax @ 15% whereas in the books net turnover is taken, The appellant has given a chart showing figures of 3 years to show that actually the amount of receipt shown in financials is higher than that in Form 26 AS. 5.3.2 I have considered the facts of the case. The appellant has claimed TDS on the basis of Form 26 AS and at the same time has shown less receipt from M/s Sanghi Industries. The appellant should be given one opportunity to reconcile the receipts as per Form 26 AS and the financials and particularly to show that the receipts as well as TDS credit from this party have been duly considered in a different year. This ground is considered allowed for statistical purpose. 5.1 During the course of hearing, the ld. AR of the assessee filed following detailed written submission praying therein to delete the impugned addition.

Submissions: 1. CIT (A) cannot set aside: The law of sec.251, after amendment, as prohibited the CIT(A) to set aside any matter to the assessing officer though he may confirm, reduce, enhance or unless assessment but he can’t send the entire matter back to the AO with review to dispose the ground taken before him. In this case, CIT(A) send the matter to the AO and thus, acted beyond the jurisdiction. Therefore, the ground is required to be restored to the file of CIT(A) for a decision afresh on merits in as much as otherwise also, all the relevant details to adjudicate and decide the ground taken, are already available on record. 2.Supporting Case laws 2.1 In the case of CIT(Central), Cochin v. P. Premkumar [2017] 87 taxmann.com 268 (Kerala) (DPB 23-35), it was held: “47.All the above precedents examined, we reckon that the holding of Dhirendra Nath, Onkarmal, and Bhopal Sugar Industries is unmistakable. Under the amended section 251 of the Act, the Appellate Commissioner may confirm, reduce, enhance, or annul the assessment. But he cannot refer the case back to the Assessing Officer for making a fresh assessment; nor can he direct the Officer to decide in accordance with his directions.” 2.2 In the case of Sapphire Land Development (P.) Ltd. v. DCIT [2023] 147 taxmann.com 50 (Mumbai- Trib) (DPB 36-47),it was held: “14.It is an established position of law about the powers of the Ld. CIT (A) as discussed (supra), based on above, Ld. CIT (A) can confirm, reduce, enhance or annul the assessment, but he cannot remand the matter back to the file of AO. Direction of Ld. CIT(A) in directing the AO to re-verify claim of Long Term Capital Loss of Rs. 7,82,60,511/- will tantamount to remand of matter back to the file of AO which is not permissible in the eyes of law. If required and Ld. CIT(A) deemed it fit to confirm, reduce, enhance or annul the assessment, he may ask for a report from the AO to act. Hence, this action of Ld. CIT (A) is bad-in-law and not sustainable. Hence, this ground of appeal raised by assessee is allowed.” 3.On merits 3.1 No real income merely based on form 26AS: Attheoutset, the authorities below proceeded on a serious misconception of law because no income accrues merely because in form 26AS, the payer has deducted tax on a higher amount than what the assessee has booked in his account. The assessee can’t control the action of a third party. The third party follows its own accounting system by which the assessee is not bound. The assessee has been constantly following accrual system of accounting wherein the income is recognized only when invoice is raised. It is not disputed in this case that the assesse raised the invoices in the next financial year on 1.04.2017 & 7.04.2017(PB 36-37) falling in A.Y. 2018-19 and not in the subjected year 2017-18. Accordingly, the assessee has credited the income in A.Y. 2018-19 and debited the account of M/s Sanghi Industries Ltd in the next year as shown in ledger account (PB 38) whereas, no such amount was debited in the account of that party in the current year as per ledger account (PB 45). The other reason of difference was the difference in the calculation method in as much as in form 26AS, the payer has deducted the tax on the gross amount inclusive of service tax @ 15% whereas the assessee in its account has booked net turnover only (i.e. exclusive of services). 3.2. No suppression of receipts/income: It isn’t denied that the assessee has accounted for the entire income received/ receivable as per its own consistent method of accounting either in the current year or in the later year. The chart of 3 years submitted before the authorities below and reproduced at pg.5 of CIT(A) order (PB 25 or 35) shows that every year the assessee has booked more revenue in its accounts then what was shown in form 26AS. In A.Y.2015-16 assessee declared excess income of Rs.53.18 Lakh, in A.Y. 2016

17. Rs. 87.68 Lakh and even in the current year the assessee booked excess income of Rs.48.65 lakhs. 3.3. Supporting case laws: In ITO v Star Consortium 127 taxmann 681 (Kol) (2021), (DPB 50-53) it was held: “Section 68 of the Income-tax Act, 1961 - Cash credit (Verification of genuineness) Assessment year 2009-10 - Assessee firm was engaged in business of handling, maintaining, cleaning of aircrafts etc. - Assessing Officer observed from a perusal of Form 26AS that assessee had received payment from different sources/airlines and since there was a difference between amount shown as turnover by assessee and as reflected in Form 26AS, Assessing Officer asked assessee to explain difference - Assessee explained that discrepancy occurred due to wrong data/information filed by payee Airlines - Assessee stated that ground handling business was taken over by another company and alleged amount related to said company Assessee submitted that goof- up took place in office of TDS deductor while filling From 26AS as assessee's PAN had been entered wrongly for period which services were not claimed to have been rendered by assessee firm and relevant bills were not claimed to have been raised by assessee firm on Airlines - However, according to Assessing Officer, assessee delayed in submitting details during assessment proceedings and, thus, he made additions to income of assessee - Commissioner(Appeals) deleted addition, holding that Form 26AS alone could not lead to addition of income if claims were made of wrong data entry/information and lack of corresponding services by deductee to deductor - Whether only a mismatch between TDS certificate (26AS) and turnover shown by assessee in its profit and loss account could not be sole basis on which entire addition of difference could have been brought to tax - Held, yes Whether view taken by Commissioner(Appeals) seemed to be a plausible view and, accordingly, his action of deleting addition was to be confirmed - Held, yes [Para 6]. [In favour of assessee] 6. ……...We note that only because there is a mismatch between TDS certificate (26AS) and turnover shown by the assessee in its P& L account cannot be the sole basis on which the entire addition of the difference could have been brought to tax. Therefore, on the facts and circumstances discussed above we find the view of the Ld. CIT(A) to be a plausible view and accordingly his action of deleting Rs. 2,14,35,593/- is confirmed and therefore, the appeal of the revenue stands dismissed. 7. ……. the Ld. CIT(A) should have first of all rejected the audited books of account produced by the assessee in accordance to Section 145 of the Income Tax Act, 1961 (hereinafter referred to as the Act) which the Ld. CIT(A) has not admittedly done. So the estimation of Ld. CIT(A) fails being bad in law. Therefore, we direct the deletion of estimated amount.” 3.4. The CIT(A) agreed in principle but sent for verification. This order attained finality as no appeal by the AO. Hence, the impugned addition deserves to be completely deleted.’’ 5.2 On the other hand, the ld. DR supported the order of the ld. CIT(A). 5.3 We have heard both the parties and perused the materials available on record. During the course of assessment proceedings, the AO made an addition of Rs.80,85,610/- in the hands of the assessee by observing as under:- ‘’5.4 Under the circumstances as stated above as there is substantial variation in the receipt shown by the assessee and there is no alternate except to addition on account of revenue from operation by the difference amount of Rs.80,85,610/- 5.5 It is pertinent to mention that the assessee has booked expenses during the year in respective heads to execute this order of M/s. Sanghi Industries Ltd. Ahemdabad. Further the assessee has not shown the inventory under the head ‘’Finished Goods or work in progress. Therefore, it is clear that expenses were booked/claimed during the year but income not taken into account. It is clear from Tax Audit Report’s accounting note of Revenue Policies at No. 13(f) that the income shall be account for on accrual basis, therefore, it was supposed to include the amount of Rs.80,85,610/- in receipts of this year which the assessee has not done. 5.6 Accordingly, an addition of Rs.80,85,610/- is being made under this head to the total income of assessee. After this addition, total income under this head comes to Rs. 92,47,097/- (Rs.11,61,487/-) as declared by the assessee + Rs.80,85,610/- as above addition) 5.4 In first appeal, the ld. CIT(A) has confirmed the action of the AO. From the records, it is noted that the assessee had claimed TDS on basis of Form 26 AS and at the same time has shown less receipt from M/s Sanghi Industries. Hence, there is a substantial difference in the receipts shown as per Form 26AS. The Bench noted that the ld. CIT(A) has rightly restored this issue with following narration.

‘’The appellant should be given one opportunity to reconcile the receipts as per Form 26 AS and the financials and particularly to show that the receipts as well as TDS credit from this party have been duly considered in a different year. This ground is considered allowed for statistical purpose. 5.5 Taking into consideration the above facts and circumstances, we do not find any infirmity in the order of the ld. CIT(A) on the issue in question. Thus Ground No. 3.1 & 3.2 of the assessee are dismissed.

‘’5.3.4 Ground No. 4 - Disallowance of temporary labour charges :-

The AO had sought certain specific details pertaining to temporary labour wages. However, as the details were not furnished, the expenses were disallowed. The appellant claims that sample vouchers demanded by the AO had been produced. The claim of the appellant does not seem to be correct in the facts. The disallowance is confirmed.’’ 6.1 During the course of hearing, the ld. AR of the assessee submitted that entire disallowance of Rs.26,35,358/- should be deleted for which the ld. AR of the assessee put forth the following submissions.

‘’The AO wrongly made the disallowance out of temporary expenses of Rs. 26,35,358/-alleging no reply was filed but ignoring that the assesse did file a reply vide letter dated 11.12.2019 pr.7(PB 23) and even produced sample vouchers. The audited accounts containing these comparative details (PB13), was also filed with ROI. The CIT(A) don't dispute these facts yet confirmed the disallowance without any application of mind. He even ignored that such expenses came down sharply to Rs.2.27 Cr only. This year against Rs.5.42 Cr last year. There is no valid basis at all and authorities below proceeded on mere suspicion, the entire disallowance allowed in full.’’ 6.2 In first appeal, the ld.CIT(A) has confirmed the action of the AO for which the ld. DR supported the order of the ld. CIT(A).

6.3 After hearing both the parties and perusing the materials available on record, the Bench noted that the AO made an addition of Rs.26,35,358/- being the payments to temporary Labour as per details hereunder:-

05-04-2016 Temporary Labour Rs.11,24,560/- 12-04-2016 Temporary Labour Rs. 3,86,,238/- 05-04-2016 Temporary Labour Rs. 11,24,560/- It is also noted that the assessee was show caused on 01-12-2019 for which the assessee did not comply with this show cause. Since the assessee did not any reply on this issue which shows that the assessee has nothing to say on payment of wages made and according to the AO, the expenses appeared relating to previous year and the same could not be allowed in the year under assessment. Thus the AO made disallowance of Rs.26,35,358/- u/s 37(1) of the Act and added to the total income of the assessee and the ld. CIT(A) has confirmed the action of the AO holding that the AO had sought certain specific details pertaining to temporary labour wages and the details were not supplied by the assessee which were disallowed. The Bench feels that in the interest of equity and justice, the Ground No. 4 of the assessee is restored to the file of the AO to decide it afresh for which the assessee will produce the documents relating to labour payments (supra) and if it is found correct then the relief may be granted to the assessee. The assessee is also directed to produce the relevant bills, vouchers, and other concerning papers in order to settle the issue in question. Thus Ground No. 4 of the assessee is allowed for statistical purposes.

3.3“On perusal of details and reply filed by the Assessee the following facts are observed: i. As per details filed by Assessee vide reply uploaded on 11.12.2019, the Govt. Dues includes Service Tax payable for the financial year 2015-16 at Rs.17.20,570/- and Service Tax payable for financial year 2016-17 of Rs.82,90,520/- totaling to Rs.80,20,090/-. This is discussed in detail in below para ii. For above payable dues Assessee stated that these outstanding dues are of two years which are pending due to some disputes. The reply of Assessee is not correct and acceptable because as per documents provided by Assessee shows that for F.Y. 2015-16 opening balance of Service Tax was Rs.06,10,570/-, out of which during the year Assessee deposited Rs.68,90,000/- on various dates and only amount of Rs.17.20,570/- remains payable. Which clearly tells that there was no dispute and Assessee deposited Service Tax on regular interval during the year Assessee also not produced any documentary evidence of dispute, therefore, the reply of Assessee is not tenable. Similarly, for financial year

2016-17 (A.Y. 2017-18) Assessee shown liability of Rs.68,90,191/- which after reducing input credit of Rs.5,90,671/- remains payable of Rs.62.99520/- From above, it clear that at the end of the Financial Year Total Service Tax amount remains payable of Rs.80,20,090/- (1720570+ 6299520) which the Assessee has not deposited. (By typographical mistake amount of Govt. Dues was taken Rs.82,89,602/- instead of Rs 80,20,090/-) iii In the absence of the required details and information to, the outstanding amount of government dues amounting Rs. 80,20,090/- remained unexplained, unverifiable and unpaid by the Assessee within the stipulated time as per provision of section 43B of the Income Tax Act 1961. Therefore, I have considered that the total outstanding statutory dues are related to service tax and are required to be disallowed u/s. 43B of the Income Tax Act, 1961 treating the same as unpaid. 3.4 Therefore, I make a disallowance of Rs. 80,20,090/- u/s. 438 of the Income Tax Act, 1961 and add to the total taxable income of the Assessee company.”

8.1 In the first appeal the ld. CIT (A) decided the issue by observing as under:-

5.1.3 “I have considered the reasoning of the assessing officer and the explanation offered by the appellant. As per the provisions of section 43B. Payments in respect of taxes and Government dues can be claimed as expenditure only on actual payment on or before the due date of return. This section has been enacted to enforce that taxes and Government dues are actually paid when the same is claimed as expenditure, including in respect of Assessee who maintain accounts on mercantile basis. The AO has disallowed the amount by noting that Government dues have remained unpaid hence the same was disallowed. On the other hand, the appellant has applied for Dispute Resolution Scheme under Sabka Vishwas Scheme of CBIC. In these circumstance, what is pertinent is how much expenditure has been debited in the account of the appellant. If it has debited and claimed Service Tax payment as expenditure, then the same would be allowed only if paid before the due date of filing of return. However, if the same has not been claimed in the P&L account/return, then no such disallowance is required to be made. The AO may call for a reconciliation statement from the appellant and restrict the disallowance to the amount of Service Tax showed as expenditure in the P & L Account, which remained unpaid before the due date of return. This ground is considered allowed.”

8.2 The ld. AR of the assesssee has submitted the following written submissions

1.1 At the outset, the provision of Sec. 43B cannot be made applicable on the facts of the present case in as much as the Assessee used to collect/credit the amount of the service tax receivable from the customer which is credited to a separate account namely Service Tax @14.5% (7,10,085.34/-) (PB II-48) and Service Tax @15% (61,80,106.15/-) (PB II-49) and thereafter the balances were transferred to Service Tax Payable Account for the different years like service tax payable (2016-17) and service tax payable (2015-16). Accordingly, the Assessee credited service tax payable account (FY 2015-16) (PB II-46) which is related to AY 2016-17 wherein Rs. 17,20,570/- was credited. Similarly, the service tax payable (FY 2016-17) of Rs. 62,99,520/-(Net of Input Adjustment) (PB II-47) relating to AY 2017-18, under consideration was credited as payable. In other words, the amount of service tax collected/credited was directly taken to the service tax payable account in the balance sheet, however, there was no occasion for the Assessee nor the Assessee ever taken such item to the Profit & Loss Account (PB 1 - 4). In other words, the Assessee made no claim at all in the P&L Account of the service tax payable, if any, during the year. Once admittedly no claim was made, there can’t be any question of allowance or disallowance and consequently Sec.43B could not have been invoked. 1.2. Interestingly, the AO himself has accepted this contention in principle when in para 5.1.3, he concluded that the Sec. 43B has been enacted to enforce that the Government taxes and dues are actually paid if the same are claimed as an expenditure. The ld. CIT (A) also, while sending the matter back has similarly concluded that only when an expenditure is debited in the account then disallowance under section 43B can be made. “However, if the same has not been claimed in the P&L account written, then no such disallowance is required to be made”. The audited P&L Account and Balance Sheet were admittedly available before both the lower authorities and it is evidently clear from a perusal of the P&L account that no claim on account of service tax was ever made by the Assessee, neither in this year nor in the past. In fact, the Assessee was receiving the money as a trustee for and on behalf of Central Government on one hand and making the payment/was supposed to make the payment to the Central Government. But simply because the Assessee could not/did not make any payment of service tax which remained payable at the end of the year could not be disallowed in view of the substantive and admitted fact that in the P&L account no claim as such was made by the Assessee. The provisions of Sec.43B itself presupposes that some claim is made by the Assessee and the same is otherwise allowed under the provisions of the Act then only, a disallowance can be made, if so required thereunder. 2.After setting aside, the AO has completed the second round wherein the set aside Assessment Order has been passed u/s 143(3)/250 on dated 19.10.2022 (PB II-56 to 59). However, observing that out of the subjected disallowance of Rs. 80,20,090/-, the disallowance to the extent of Rs.17,20,570/- was not repeated for the reason that the same related to (FY 2015-16) AY 2016-17 and not to this year, but the balance amount of Rs. 62,99,520/- was disallowed. Interestingly, in the set aside order, the AO has further fuled the fire by creating a confusion based on the wrong appreciation of the facts in as much as what the AO contended therein is that the total turnover as per the Sales Account Ledger submitted by the Assessee was Rs. 5,28,88,139/- where from, reducing the amount of the service tax payable, the net turnover shown by the Assessee in the P&L accountis Rs.4,59,97,948/- (PB4). Considering this fact, he inferred that claim of the Assessee that he did not debit the Service Tax in the P&L account is incorrect. However, the facts admitted by the AOshows that in the P&L account the Assessee had shown the turnover of Rs. 4. 59 cr. only. It is not the case that the amount of Rs 5.28 cr. was credited first and thereafter the amount of Service Tax Rs.68,90,191/- was reduced. In fact, a perusal of the sales account ledger 15%(4,11,00,807/-) (PB II- 51 to 54) and 14.5% (48,97,140/-) (PB II -55) do not at all show the total amount of turnover as wrongly stated by the AO. Thus, the jurisdictional fact as claimed by the Assessee that it never debited the amount of Service Tax payable of (Rs. 80,20,090/-and now Rs. 62,99,520/-) is duly and fully established on record, there is no contrary material brought or record by the AO. These facts or circumstances shows that the Sec.43B was wrongly invoked hence the entire disallowance deserves to be deleted.

3. Supporting Case laws: 3.1 CIT v. Noble & Hewitt (I) (P.) Ltd. (2008) 305 ITR 324 (Delhi HC) (DPB 48-49) held that, “In our opinion since the assessee did not debit the amount to the Profit & Loss Account as an expenditure nor did the assessee claim any deduction in respect of the amount and considering that the assessee is following the mercantile system of accounting, the question of disallowing the deduction not claimed would not arise. Learned counsel for the revenue submits that the assessee has sought to evade tax under the mercantile system of accounting. We are of the view that it is not for the revenue authorities to tell the assessee how to maintain its accounts”. 3.2 ACIT v. Real Image Media Technologies (P.) Ltd. (2008) 114 ITD 573 ITAT Chennai, 2008 held that, “16. If there is no liability to make the payment to the credit of Central Government because of non- receipt of payments from the receiver of the services, then it cannot be said that such service tax has become payable in terms of clause (a) of section 43B because that clause specifically mentions "sum payable by the assessee.

8.4 After hearing both the parties and perusing the materials available on record, the Bench does feel to interfere in the order of the ld. CIT(A) as the decision of the ld. CIT(A) is based on the fact that the assessee has not placed the relevant details on record and he has already directed the ld. AO to call for the details and considered the addition accordingly. Hence, this additional ground of the assessee is dismissed.

9.0 In the result, the appeal of the assessee is partly allowed as indicated hereinabove. Order pronounced in the open court on 11 /10/2023 Sd/- Sd/- ¼MkWa-,l-lhrky{eh½ ¼ jkBksMdeys'kt;UrHkkbZ ½ (Dr. S. Seethalashmi) (RATHOD KAMLESH JAYANTBHAI) U;kf;dlnL;@Judicial Member ys[kk lnL; @Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 11/10/2023. Mishra आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Ahluwalia Erectors & Fabricators (P) Ltd. izR;FkhZ@The Respondent- ACIT , Kota 2. 3. vk;djvk;qDr@CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 5. xkMZQkbZy@Guard File {ITA No. 433/JP/2022} vkns'kkuqlkj@ By order,

सहायकपंजीकार@Aेेज. त्महपेजतंत