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Income Tax Appellate Tribunal, “B”, BENCH KOLKATA
Before: SHRI N.V.VASUDEVAN, JM & SHRI WASEEM AHMED, AM
�नधा�रती क� ओर से /Assessee by : Shri Tarapada Kar, FCA राज�व क� ओर से /Revenue by : Shri Sallong Yadeen, Sr.DR सुनवाई क� तार�ख / Date of Hearing : 13/05/2016 घोषणा क� तार�ख/Date of Pronouncement 05/07/2016 आदेश / O R D E R PER WASEEM AHMED (A.M): The assessee has preferred this appeal against the order dated 27- 2-2013, passed by ld. Commissioner of Income Tax(Appeals)-Durgapur, relating to assessment year 2008-2009, on the following grounds :- 1. That how far the CIT (A) is correct in affirming the value of stock as determined by is lower authority Rs.24,84,791/- when he has done mistakes apparently by applying mathematical formula without considering the actual consumption rate of Bitumen 4.907 M.T. per KM and the calculation of works completed during the year under assessment.
Before coming to the specific issue of the case, let us understand the brief history of the case. The assessee in the present case is a partnership firm and engaged in the business of road construction. The assessee during the year has done several work such as cleaning work, annual maintenance, bridge work and road construction etc. Some of the work was given to outsiders on the sub-contract basis. The assessee during the year has performed for different kind of road construction activity including new road construction for R.E.O. Dumka. The dispute in the instant case relates to the new road construction work of REO Dumka. The contract value of such REO Dumka road work is of Rs.4,25,20,980/-. The assessee has raised this bills for this work contract as under :-
Sl.No. Date of Bill Bill Value(Rs.) 1 29.06.2007 18,53,606/- 2. 21.07.2007 12,00,000/- 3. 13.12.2007 85,00,000 4. 04.01.2008 10,00,000/- 5. 14.02.2008 82,03,141/- 6. 28.03.2008 50,00,000/- The assessee during the assessment proceedings submitted that the raw material, namely, Bitumen was used for all the road work activity, which was executed by the assessee at its own. A total value of the Bitumen purchased during the year was of Rs.49,83,057/-, which was purchased @29,500/- per M.T. It was informed to the AO that the usage of Bitumen per KM is 4.907 per MT. The AO accordingly divided the total purchase of Bitumen between two periods i.e. 1st April 2007 to 12th February 2008 and 13th February 2008 to 31st March, 2008. Accordingly, purchase of Bitumen shown upto the date of 12th February 2008 is of Rs.23,21,266/- and 2008 is of Rs.26,61,791/-.
Now, coming to the specific issue of the case, the AO observed that only one single bill was raised on the date i.e. 28-3-2008 between the period beginning from 13-02-2008 and upto 31-3-2008 for Rs.50 lakhs, which was pertaining to R.E.O. Dumka road activity. The AO further observed that this bill was for six kilometres road construction. The AO also observed that Bitumen required for 6 KM road is only of Rs.1,77,000/- (29,500/- x 6 km). The AO accordingly observed that the Bitumen purchased during the aforesaid period is of Rs.26,61,791/- and it was utilised only for Rs.1,77,000/- but there was no closing stock shown in the trading account of the assessee. Accordingly the AO sought clarification from the assessee by issuing notice as to why the Bitumen for Rs.24,84,791/- should not be treated as income on account of suppressed closing stock. In compliance to the notice, the assessee submitted that the total job for the construction of REO Dumka road was of 26.50 km and the bills during the year were raised only for 16.05 km.
The bills are raised to the contractee on the basis of different stages of work completed by the assessee and not on the basis of completion of certain kilometre. The observations of the AO for road construction of 6 km against the bill raised for Rs.50 lakhs is not correct. The actual road construction was done i.e. 16.05 kms. Accordingly Bitumen of Rs.23,23,420/- was utilised for the construction of REO Dumka road. But in the instant case, use of Bitumen was more as its consumption depends upon the surface of the land. Accordingly to maintain parallel and smooth surface, the quantity of larger Bitumen was utilised. Besides above, exact consumption of Bitumen on the basis of above calculation as observed by the AO can never be the practical for the reasons as stated above.
However, the AO asked the assessee to explain the difference with necessary evidence after getting the same certified by contractee. But the assessee failed to produce the documents as desired by the AO, therefore, the AO opined that closing stock of Bitumen of Rs.24,84,791/- has been suppressed by not disclosing the same in the balance sheet and added the total income of the assessee.
Aggrieved assessee preferred appeal to ld. CIT(A), who has confirmed the order of AO by observing as under :-
“ I find that the A.O. is making an assumption here that since the appellant has raised a bill of Rs.55,00,000/- as on 28.03.2008, he has constructed only 6 kilometre of roads as on that date. This goes against his own finding in the assessment order that in all 26.5 kilometer of road was constructed. If what the A.O. says is to hold good then examination of the bills raised before 28.03.2008 would become relevant as, by the A.O's own logic, it would show how much of construction had been done till those dates. I do not find any analysis on such details in the assessment order. Without doing such analysis extrapolation on the basis of a single figure to the exclusion of all other will vitiate the exercise. The A.O's calculation, therefore, in my opinion, clearly suffers from such lacuna. On the other hand, the appellant's submission before me also shows that the entire bitumen purchase could not have been consumed. As per the appellant's calculation, the consumption of Bitumen would have been Rs.23,23,420/-, which leaves a balance of Rs.3,38,371/- given that purchases from 13.02.2008 to 31.03.2008 were of the order of Rs.26,61,791/-. The appellant has tried to explain that figure by stating that the quantum of consumption of bitumen depends on the surface of land and some areas need larger quantity, as also that the price of bitumen estimated by the A.O. was incorrect and instead of Rs.29,500j- per metric ton It was Rs.30,641/- per metric ton.
The A.O. is seen to have made his addition because no evidence from the appellant regarding the length of the construction was submitted. At the appellate stage also the appellant has not submitted any fresh evidence. Further, as per its own calculation, there should have been a closing stock of bitumen left in the end of the year. Though the appellant has tried to explain this by stating that the quantity of bitumen consumed depends on the nature of the road and also that the prices of the bitumen were higher than that estimated by the A.O., actually no evidence for the same has been put forward. Under the circumstances, I am unable to accept the appellant's assertions. The addition made is therefore confirmed. This ground of appeal is therefore dismissed.”
5. Aggrieved by the order of learned CIT(A) assessee is in second appeal before us.
6. At the outset, it was observed that lower authorities have passed very cryptic order. All the facts have not been brought on record for proper adjudication of the case. Before us also, ld. AR failed to prove anything contrary to the findings of ld. CIT(A). We find that the CIT(A) has given his clear findings that the AO erred by recording that 26.5 km road was constructed at one place and at other place that for the bill raised on 28-3- 2008 for Rs.50 lakhs only 6 km road has been constructed. On the other hand, ld. AR before us, vehemently opposed the observations of AO by stating that 16.05 km road in total was constructed for REO Dumka road.
We also find that the ld. CIT(A) has clearly recorded that the order of AO suffers from lacuna but ld. CIT(A) did not bother to call the remand report from the AO. In view of the above and in the interest of justice and fair- play, we deem it fit to restore this issue to the file of AO for fresh adjudication in the light of aforesaid discussion and de-novo. It is also important to note that the assessee will cooperate in the assessment proceedings. Hence, this ground of appeal of the assessee is allowed for statistical purposes.
7. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on this 05/07/ 2016.
Sd/- Sd/- (N.V.VASUDEVAN) (WASEEM AHMED) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER कोलकाता Kolkata; �दनांक Dated 05/07/2016 �.कु.�म/pkm, �न.स/ PS/*Dkp आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ�/The Appellant –M/s Concrete, Sen Raleigh Rd, Apear Garden (West) Asansol-4, Burdwan, Pin 713304 2. ��यथ�/The Respondent.-DCIT, Circle-2, Asansol Dist. Burdwan 3. आयकर आयु�त(अपील) / The CIT(A), Kolkata 4. आयकर आयु�त / CIT �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कोलकाता / DR, ITAT, Kolkata 5. 6. गाड� फाईल / Guard file. स�या�पत ��त //True Copy// आदेशानुसार/ BY ORDER,