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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI ARUN KHODPIA
आदेश / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee firm is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 21.03.2023, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 29.12.2016 for the assessment year 2014-15. The assessee has assailed the impugned order on the following grounds of appeal:
“1. That on the facts and circumstances of the case the learned A.O. has erred in making addition of Rs.10,08,710/- on the grounds of alleged difference in receipts as per books of accounts and Form No.26AS, which is wrong contrary to the facts & evidences on record and arbitrary and the learned C.I.T.(A) NFAC has erred in maintaining the addition, which is wrong, unjustified and without appreciation of the reconciliation statement submitted.
2. That the addition of Rs.10,08,710/- in A.Y. 2014-15 is bad in law & fact as the same has already been taxed in A.Y.2013-14.
3. That the appellant craves leave to add, amend or alter the grounds of appeal at the time of hearing.”
Succinctly stated, the assessee firm, which is engaged in the business of erection, machining, and fabrication works, had filed its return of income for A.Y.2014-15 on 31.03.2016, declaring an income of Rs.50,51,650/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act.
During the assessment proceedings, it was observed by the A.O. that while the gross receipts of the assessee from M/s. Thermax Ltd., as per Form 26AS, was shown at Rs.60,74,715/-, but the assessee firm had credited the same in its books
3 Dutta Engineering Works Vs. DCIT-1(1), Bhilai of accounts at Rs.43,23,770/-. On being queried about the aforesaid discrepancy, the assessee, based on a detailed reconciliation statement, stated that the receipt in books was more than the receipt disclosed in his Form 26AS. Elaborating on his aforesaid claim, it was submitted by the assessee, viz. (i). that part of the receipts was accounted for as mobilization advance: Rs.7,32,229/-, on which tax had been deducted at source; and (ii) that the amounts of Rs.8,35,790 and Rs.1,72,920/- forming part of receipts were accounted for as its income in the immediately preceding year i.e. F.Y.2012-13. In order to fortify his aforesaid claim that part of receipts was accounted for in the preceding year, the assessee placed on record a copy of his ledger account for F.Y.2012-13, as per which receipts were credited on 28.03.2013 of Rs.9.28,656/- and Rs.1,92,135/-. However, the aforesaid explanation of the assessee did not find favor with the A.O for the following reasons:
“a. The amounts mentioned in the ledger account and the amounts mentioned in the reconciliation statement and in 26AS are not matching. b. The assessee has booked income on 28/03/2013 and the date of credit mentioned against amount displayed in 26AS is 28/05/2013. i. e. after two months from the date of entry in your accounts. c. The assessee has not furnished any external evidence in support of his claim. Like confirmation of accounts or certificate from the party. d. The assessee might having the knowledge of difference in accounts at the time of finalization of accounts and at the time of audit of accounts, as accounts are audited and finalized long back and there must be some correspondence regarding difference and request for rectification of the same with the party but no such correspondence is furnished by the assessee. e. The assessee has furnished only copy of ledger account from their own accounts which cannot be treated as credible evidence in case of difference. f. The assessee has also accepted in reply that there is difference of Rs 6/-. It is arrived even after assuming the figures mentioned in 26AS.”
4 Dutta Engineering Works Vs. DCIT-1(1), Bhilai As the time limitation for framing of the assessment was fast approaching, therefore, the A.O without making any further inquiry, held the amount which the assessee claimed to have been accounted for in the immediately preceding year, i.e. Rs.10,08,710/- i.e. [Rs.8,35,790/- (+) Rs.1,72,920/-] as income of the assessee for the year under consideration. Accordingly, the A.O. vide his order passed u/s.143(3) dated 29.12.2016 determined the income of the assessee at Rs.60,61,030/-.
Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success. The CIT(Appeals) observed that it was the claim of the assessee before him that the impugned difference of Rs.10,08,710/-, viz. (i) pertaining to P.O No.29102 of M/s. Thermax Ltd.: Rs.8,35,790/-; and (ii) pertaining to P.O No.29010 of M/s. Thermax Ltd: Rs.1,72,920/- had emerged for the reason that while he had accounted for the said receipt on 28.03.2013, i.e., the date of billing but M/s. Thermax Ltd. had booked the said amount on 28.05.2013, i.e., during the year under consideration A.Y.2014-15, and deducted tax at source on the same. For the sake of clarity, the claim of the assessee explaining the aforesaid deficiency before the CIT(Appeals) is culled out as follows:
“Receipt of Rs. 8,38,790/- pertains to P.O.No.29102 against which the assessee has already declared receipt of Rs. 9,28,656/- in A.Y.2013-14 and the receipt of Rs.1,72,920/- pertains to P.O.No.29010 of Thermax Ltd; Pune against which receipt of Rs. 1,92,135/- has already been declared in A.Y.2013-14. We are enclosing herewith ledger copy of Thermax Ltd; P.O.No.29012 & P.O.No.29010 and Erection and Fabrication A/c from our books of accounts for A.Y 2013-14 which is marked as ANNEXURE-A-1 (Collectively) Page No.4 to 9.)”
5 Dutta Engineering Works Vs. DCIT-1(1), Bhilai However, the explanation filed by the assessee did not find favor with the CIT(Appeals), who upheld the view taken by the A.O by observing as under:
6 Dutta Engineering Works Vs. DCIT-1(1), Bhilai
The assessee, being aggrieved with the order of the CIT(Appeals), has carried the matter in appeal before us.
We have heard the ld. Authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.
Controversy involved in the present appeal lies in a narrow compass, i.e., sustainability of the addition of Rs.10,08,710/- made by the A.O. towards suppressed contract receipts accounted for by the assessee firm as against those reflected in its 7 Dutta Engineering Works Vs. DCIT-1(1), Bhilai Form 26AS. As observed by us hereinabove, it is the claim of the assessee that the impugned variance/difference in receipts disclosed in its books of account as against that gathered by the A.O as per Form 26AS was on the fact that while the assessee firm had accounted for the said short receipts in its books of account on 28.03.2013, i.e., date of billing but M/s. Thermax Ltd. (supra) had booked the same in its books of account on 28.05.2013, i.e., during the year under consideration, A.Y.2014-15, and deducted tax at source on the said amount.
The Ld. Authorized Representative (for short ‘AR’) of the assessee firm drew our attention towards the reconciliation of the aforesaid discrepancy, Page 32 of APB, which reads as under:
On the basis of the aforesaid facts, it was submitted by the Ld. AR that now, when the impugned discrepancy in the receipts had duly been reconciled, and the entire amount had been offered for tax by the assessee firm, therefore, the addition made by the A.O. without appreciating the correct factual position was liable to be vacated.
8 Dutta Engineering Works Vs. DCIT-1(1), Bhilai
Admittedly, it is a matter of fact borne from the assessment order that the assessee firm had maintained its accounts as per the mercantile system of accountancy. Based on the aforesaid method of accountancy followed by the assessee firm, the accounting for the aforesaid amount of contract receipts of Rs.10,08,710/- (supra) on the date on which the bill was raised by it on M/s. Thermax Ltd. is found to be in order. As the A.O., while framing the assessment, had admittedly, due to paucity of time, not deliberated upon the aforesaid explanation of the assessee, therefore, in our considered view, the matter in all fairness requires to be restored to his file. Needless to say, the A.O. shall, in the course of the set-aside proceedings, afford a reasonable opportunity of being heard to the assessee firm, which shall remain at liberty to substantiate its claim on the basis of fresh documentary evidence. Thus, the Grounds of appeal No.1 & 2 raised by the assessee firm are allowed for statistical purposes in terms of our aforesaid observations.
Before parting, we may herein observe that in case the A.O is of the view that the aforesaid amount of Rs.10,08,710/- (supra), i.e., as claimed by the assessee firm to have been offered for tax in the immediately preceding year, i.e., A.Y.2013-14 is to be subjected to tax during the year under consideration, i.e., A.Y.2014-15, then he shall carry out appropriate adjustments in respect of the taxes realized by the department on the said amount in the aforesaid preceding year, i.e., A.Y.2013-14. Our aforesaid view is fortified by the judgment of the Hon’ble Supreme Court in the case of Income-tax Officer V/s. Bachu Lal Kapoor [1966] 60 ITR 74 (SC).
9 Dutta Engineering Works Vs. DCIT-1(1), Bhilai
The Ground of appeal No.3, being general, is dismissed as not pressed.
In the result, the appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in open court on 19th day of October, 2023.