M/s Concrete, Burdwan V. D.C.I.T Cir - 2,Asansol, Asansol

ITA 1000/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4616 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEEN
• Assessee Lawyers: TARAPADA KAR

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI N.V.VASUDEVAN, JM & SHRI WASEEM AHMED, AM ./ ITA NO.1000/KOL/2013 ( / ASSESSMENT YEAR :2008-2009) M/S CONCRETE, SEN RALEIGH ROAD APEAR GARDEN (WEST), ASANSOL-4, BURDWAN, PIN-713304 VS. DY.CIT, CIRCLE-2, ASANSOL ./ ./PAN/GIR NO. : AADFC 7360 C ( /APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI TARAPADA KAR, FCA /REVENUE BY : SHRI SALLONG YADEEN, SR.DR / DATE OF HEARING : 13/05/2016 /DATE OF PRONOUNCEMENT 05/07/2016 / 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(AP PEALS)-DURGAPUR, RELATING TO ASSESSMENT YEAR 2008-2009, ON THE FOLLO WING 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 F ORMULA WITHOUT CONSIDERING THE ACTUAL CONSUMPTION RATE OF BITUMEN 4.907 M.T. PER KM AND THE CALCULATION OF WORKS COMPLETED DURING TH E YEAR UNDER ASSESSMENT. 2. 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 ITA NO.1000/KOL/13 M/S CONCRETE 2 PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF ROA D CONSTRUCTION. THE ASSESSEE DURING THE YEAR HAS DONE SEVERAL WORK SUCH AS CLEANING WORK, ANNUAL MAINTENANCE, BRIDGE WORK AND ROAD CONSTRUCTI ON ETC. SOME OF THE WORK WAS GIVEN TO OUTSIDERS ON THE SUB-CONTRACT BAS IS. 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 CONSTRUCTI ON WORK OF REO DUMKA. THE CONTRACT VALUE OF SUCH REO DUMKA ROAD WORK IS O F RS.4,25,20,980/-. THE ASSESSEE HAS RAISED THIS BILLS FOR THIS WORK CO NTRACT 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 SUBM ITTED 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 VA LUE OF THE BITUMEN PURCHASED DURING THE YEAR WAS OF RS.49,83,057/-, WH ICH WAS PURCHASED @29,500/- PER M.T. IT WAS INFORMED TO THE AO THAT T HE USAGE OF BITUMEN PER KM IS 4.907 PER MT. THE AO ACCORDINGLY DIVIDED THE TOTAL PURCHASE OF BITUMEN BETWEEN TWO PERIODS I.E. 1 ST APRIL 2007 TO 12 TH FEBRUARY 2008 AND 13 TH FEBRUARY 2008 TO 31 ST MARCH, 2008. ACCORDINGLY, PURCHASE OF BITUMEN SHOWN UPTO THE DATE OF 12 TH FEBRUARY 2008 IS OF RS.23,21,266/- AND ITA NO.1000/KOL/13 M/S CONCRETE 3 THEREAFTER FOR THE PERIOD BEGINNING FROM 13 TH FERBUARY 2008 TO 31 ST MARCH, 2008 IS OF RS.26,61,791/-. 3. NOW, COMING TO THE SPECIFIC ISSUE OF THE CASE, T HE 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 I S 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 N O CLOSING STOCK SHOWN IN THE TRADING ACCOUNT OF THE ASSESSEE. ACCORDINGLY THE AO SOUGHT CLARIFICATION FROM THE ASSESSEE BY ISSUING NOTICE A S 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 NOTI CE, THE ASSESSEE SUBMITTED THAT THE TOTAL JOB FOR THE CONSTRUCTION O F REO DUMKA ROAD WAS OF 26.50 KM AND THE BILLS DURING THE YEAR WERE RAIS ED 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 C ORRECT. THE ACTUAL ROAD CONSTRUCTION WAS DONE I.E. 16.05 KMS. ACCORDINGLY B ITUMEN OF RS.23,23,420/- WAS UTILISED FOR THE CONSTRUCTION OF REO DUMKA ROAD. BUT ITA NO.1000/KOL/13 M/S CONCRETE 4 IN THE INSTANT CASE, USE OF BITUMEN WAS MORE AS ITS CONSUMPTION DEPENDS UPON THE SURFACE OF THE LAND. ACCORDINGLY TO MAINTA IN PARALLEL AND SMOOTH SURFACE, THE QUANTITY OF LARGER BITUMEN WAS UTILISE D. BESIDES ABOVE, EXACT CONSUMPTION OF BITUMEN ON THE BASIS OF ABOVE CALCUL ATION AS OBSERVED BY THE AO CAN NEVER BE THE PRACTICAL FOR THE REASONS A S STATED ABOVE. HOWEVER, THE AO ASKED THE ASSESSEE TO EXPLAIN THE D IFFERENCE 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 BITU MEN OF RS.24,84,791/- HAS BEEN SUPPRESSED BY NOT DISCLOSING THE SAME IN T HE BALANCE SHEET AND ADDED THE TOTAL INCOME OF THE ASSESSEE. 4. 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 THA T DATE. THIS GOES AGAINST HIS OWN FINDING IN THE ASSESSMENT ORDER THA T 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 WOUL D SHOW HOW MUCH OF CONSTRUCTION HAD BEEN DONE TILL THOSE DATES . I DO NOT FIND ANY ANALYSIS ON SUCH DETAILS IN THE ASSESSMENT ORDE R. WITHOUT DOING SUCH ANALYSIS EXTRAPOLATION ON THE BASIS OF A SINGL E FIGURE TO THE EXCLUSION OF ALL OTHER WILL VITIATE THE EXERCISE. T HE A.O'S CALCULATION, THEREFORE, IN MY OPINION, CLEARLY SUFFERS FROM SUCH LACUNA. ON THE OTHER HAND, THE APPELLANT'S SUBMISSION BEFORE ME AL SO SHOWS THAT THE ENTIRE BITUMEN PURCHASE COULD NOT HAVE BEEN CON SUMED. AS PER THE APPELLANT'S CALCULATION, THE CONSUMPTION OF BIT UMEN 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 O F BITUMEN DEPENDS ON THE SURFACE OF LAND AND SOME AREAS NEED LARGER QUANTITY, AS ALSO THAT THE PRICE OF BITUMEN ESTIMAT ED BY THE A.O. WAS INCORRECT AND INSTEAD OF RS.29,500J- PER METRIC TON IT WAS RS.30,641/- PER METRIC TON. ITA NO.1000/KOL/13 M/S CONCRETE 5 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 APPE LLANT HAS NOT SUBMITTED ANY FRESH EVIDENCE. FURTHER, AS PER ITS O WN CALCULATION, THERE SHOULD HAVE BEEN A CLOSING STOCK OF BITUMEN L EFT IN THE END OF THE YEAR. THOUGH THE APPELLANT HAS TRIED TO EXPLAIN THIS BY STATING THAT THE QUANTITY OF BITUMEN CONSUMED DEPENDS ON TH E NATURE OF THE ROAD AND ALSO THAT THE PRICES OF THE BITUMEN WERE H IGHER THAN THAT ESTIMATED BY THE A.O., ACTUALLY NO EVIDENCE FOR THE SAME HAS BEEN PUT FORWARD. UNDER THE CIRCUMSTANCES, I AM UNABLE T O ACCEPT THE APPELLANT'S ASSERTIONS. THE ADDITION MADE IS THEREF ORE CONFIRMED. THIS GROUND OF APPEAL IS THEREFORE DISMISSED. 5. AGGRIEVED BY THE ORDER OF LEARNED CIT(A) ASSESSE E IS IN SECOND APPEAL BEFORE US. 6. AT THE OUTSET, IT WAS OBSERVED THAT LOWER AUTHOR ITIES HAVE PASSED VERY CRYPTIC ORDER. ALL THE FACTS HAVE NOT BEEN BRO UGHT ON RECORD FOR PROPER ADJUDICATION OF THE CASE. BEFORE US ALSO, LD. AR FA ILED TO PROVE ANYTHING CONTRARY TO THE FINDINGS OF LD. CIT(A). WE FIND THA T 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 FO R THE BILL RAISED ON 28-3- 2008 FOR RS.50 LAKHS ONLY 6 KM ROAD HAS BEEN CONST RUCTED. ON THE OTHER HAND, LD. AR BEFORE US, VEHEMENTLY OPPOSED THE OBSE RVATIONS 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 RECORD ED THAT THE ORDER OF AO SUFFERS FROM LACUNA BUT LD. CIT(A) DID NOT BOTHER T O CALL THE REMAND REPORT FROM THE AO. IN VIEW OF THE ABOVE AND IN THE INTERE ST OF JUSTICE AND FAIR- PLAY, WE DEEM IT FIT TO RESTORE THIS ISSUE TO THE F ILE OF AO FOR FRESH ADJUDICATION IN THE LIGHT OF AFORESAID DISCUSSION A ND DE-NOVO. IT IS ALSO ITA NO.1000/KOL/13 M/S CONCRETE 6 IMPORTANT TO NOTE THAT THE ASSESSEE WILL COOPERATE IN THE ASSESSMENT PROCEEDINGS. HENCE, THIS GROUND OF APPEAL OF THE AS SESSEE 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/ - (N.V.VASUDEVAN) SD/ - (WASEEM AHMED) ' / JUDICIAL MEMBER #' / ACCOUNTANT MEMBER KOLKATA ; %& DATED 05/07/2016 . .()/PKM , . / PS/*DKP $%& '& / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, KOLKATA 1. / THE APPELLANT M/S CONCRETE, SEN RALEIGH RD, APEAR GARDEN (WEST) ASANSOL-4, BURDWAN, PIN 713304 2. / THE RESPONDENT.-DCIT, CIRCLE-2, ASANSOL DIST. BURDWAN 3. . ( ) / THE CIT(A), KOLKATA 4. . / CIT 5. /01 2 , 2 , / DR, ITAT, KOLKATA 6. 13 / GUARD FILE. / //TRUE COPY//