ITO, WARD - 10(4), KOLKATA, KOLKATA vs. M/S. TCJ MERCANTILE PVT. LTD., KOLKATA

This appeal of the revenue arises out of the order of the Learned CITA in Appeal No.562/XII/10(4)/10-11 dated 20-12-2011 for the Asst Year 2006-07 passed against the order of assessment framed by the Learned AO u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).

1 C-AM M/s. T C J Mercantile P.Ltd for Rs. 21,44,400/- and had accounted the same as its business receipts in Asst Year 2007-08 and claimed the TDS . The said contract receipt of Rs. 21,44,400/- was duly subjected to deduction of tax at source by M/s Arvind Construction Co Pvt Ltd. The Learned AO formed an opinion that the assessee had claimed TDS on the subject mentioned receipt in Asst Year 2006-07 and accordingly brought to tax the corresponding receipt of Rs. 21,44,400/- as income in Asst Year 2006-07 as against the income offered in Asst Year 2007-08 by the assessee. On first appeal, the Learned CITA deleted the said addition. Aggrieved, the revenue is in appeal before us on the following grounds:-

1. Whether, on the facts and in the circumstances of the case, ld.CIT(A) is correct in deleting the unaccounted receipt where the assessee claimed TDS without offering corresponding income for taxation.

2. Whether, on the facts and in the circumstances of the case, ld.CIT(A) is correct in deleting the addition of unaccounted accrued income on which TDS was claimed by the assessee in spite of following mercantile system of accounting. 3.2. The Learned DR vehemently supported the order of the Learned AO. In response to this, the Learned AR referred to various relevant pages of the paper book filed by him. The Learned AR argued that the assessee had raised a bill only on 3.4.2006 on M/s Arvind Construction Co. Pvt Ltd and the said party had also received the invoice of the assessee only in April 2006 and the payment has been made by the party to the assessee only in April 2006 after duly subjecting the same to deduction of tax at source in April 2006 only. These facts are quite evident from the TDS certificate issued by the party which is forming part of the paper book filed for Asst Year 2007-08. The Learned AR argued that the assumption based on which the Learned AO proceeded to make this addition that the TDS has been made by the party in Asst Year 2006-07 and claimed by the assessee without offering the corresponding income in Asst Year 2006-07 is factually incorrect. He further argued that the assessee had duly offered the subject mentioned receipt of Rs. 21,44,400/- and claimed TDS thereon only in Asst Year 2007-08.

2 C-AM M/s. T C J Mercantile P.Ltd 3.3. We have heard the rival submissions and perused the materials available on record. We find from the paper book containing pages 1-41 filed by the Learned AR that M/s Arvind Construction Co. Pvt Ltd had duly received in April 2006 the invoice dated 3.4.2006 raised by the assessee . We also find that the payment for the same had been received by the assessee after TDS in April 2006. We find that the assessee has duly accounted for t his receipt in its profit and loss account in consonance with the mercantile system of accounting regularly employed by it. We also hold that the assessee had not claimed the TDS on the subject mentioned receipt in Asst Year 2006- 07 as stated by the Learned AO and instead claimed the same with offer of corresponding income in Asst Year 2007-08. Hence we find no infirmity in the order of the Learned CITA in this regard. Accordingly, the grounds 1 & 2 raised by the revenue are dismissed.

4.1. The brief facts of this issue is that the assessee had made purchases of E.Sulphur from Mahanagar Udyog and other parties for Rs. 1,57,38,279/- and purchase of cement from Syam Kumar & Sons and M/s Brahmaputra Sales Agency for Rs. 32,05,795/-. The Learned AO disbelieved the contentions of the assessee and disallowed the same by treating the same as bogus purchases. On first appeal, the Learned CITA deleted the entire addition on the ground that from the detailed paper book filed by the assesseee, it is found that the all the payments for purchases have been made by the assessee by way of account payee cheques and the assessee had also derived income in the form of sales of those sulphur and cement. Aggrieved, the revenue is in appeal before us on the following ground:- 3.” Whether, on the facts and in the circumstances of the case, ld.CIT(A) is correct in deleting the addition towards bogus purchase

3 C-AM M/s. T C J Mercantile P.Ltd of Sulphur and Cement despite the failure on the part of the assessee to prove that the same were purchased and utilized for repairing of road.

4.2. The Learned DR vehemently supported the order of the Learned AO. In response to this, the Learned AR took us to the relevant pages of the paper book submitted by him before us containing pages 1 to 41 and pleaded that no interference is called for in the Learned CITA order.

4.3. We have heard the rival submissions and perused the materials available on record. We find that the paper book filed by the assessee contained complete details of purchases made by the assessee from different parties together with the details of sales made out of such purchases. The said paper book also contained the details of payments made to those suppliers for purchases made by the assessee by account payee cheques. We have perused the entire paper book filed by the assessee in this regard. We also observe that the Learned CITA had called for a remand report from the Learned AO with regard to the production of these documents and the Learned AO did not offer any comments on the same. We also find that the suppliers have been produced before the Learned AO under summons proceedings u/s 131 of the Act. Just because the suppliers had not brought their books of accounts during the course of summons proceeding, we hold that the assessee could not be faulted with. Hence we find no infirmity in the order of the Learned CITA and accordingly the ground no. 3 raised by the revenue is dismissed.