M/s. U.P.Rajkiya Nirman Nigam Ltd., Lucknow V. Dy. Commissioner of Income Tax-6 , Lucknow

ITA 102/LKW/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92134 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 27-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR ANAND KUMAR AGARWAL
• Assessee Lawyers: B P YADAV COST ACCOUNTANT
• Keywords: Opportunity of being heard; Rule of consistency; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 147; 145; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 102 TO 103 /LKW/201 3 ASSESSMENT YEAR: 2006 - 07 & 2009 - 10 M/S U.P. RAJKIYA NIRMAN NIGAM LTD., VIBHUTI KHAND , GOMTI NAGAR, LUCKNOW PAN:AA ACU5701F VS D CIT RANGE 6 , LUCKNOW (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI B. P. YADAV, COST ACCOUNTANT DEPARTMENT BY DR. ANAND KUMAR AGARWAL, CIT DR DATE OF HEARING 28/04/2015 DATE OF PRONOUNCEMENT 1 5 /06/2015 O R D E R PER A. K. GARODIA, A.M. T H ESE ARE ASSESSEES APPEAL S DIRECTED AGAINST T WO SEPARATE ORDER S OF LEARNED CIT (A) I I LUCKNOW BOTH DATED 10 .0 1 .201 3 FOR A.Y. 20 0 6 0 7 & 2009 10.BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE . 2. FIRST WE TAKE THE APPEAL FOR A.Y. 200 6 0 7 : - 3 . THE GROUNDS ARE AS UNDER : - (1) THE LD CIT (A) I I LUCKNOW (HEREINAFTER REFERRED TO AS THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN DISMISSING THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE NOTICE ISSUED U/S 148 OF THE I. T. ACT, 1961 BY HOLDING THAT THE A.O. WAS JUSTIFIED IN INITIATING PROCEEDINGS U/S 147 READ WITH SECTION 148 OF THE I. T. ACT, 1961 . (1.2) ON THE FACTS STATED IN STATEMENT OF FACTS, THE LD CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O. IN INITIATING 2 PROCEEDINGS U/S 148 OF THE I. T. ACT, 1961 AGAINST THE APPELLANT. (2.1) THE LD CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE A DDITION OF RS. 308,44,159/ - IN THE HANDS OF THE APPELLANT AND FAILED TO APPRECIATE THAT THE ASSESSEE HAS RECOGNIZED INCOME ON TENDER WORK AS PER AS 7. (2.2) THE ON THE FACTS STATED IN STATEMENT OF FACTS, THE LD CIT (A) WAS NOT JUSTIFIED IN CONFIRMING T HE ADDI TION OF RS. 308,44,159/ - AND HENCE MAY KINDLY BE ORDERED TO BE DELETED . (3) THE LD CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THE RULE OF CONSISTENCY WHICH SAYS THAT THE MATTER ACCEPTED BY THE DEPARTMENT IN PREVIOUS YEARS CONSISTENTLY CANNOT BE DISPUTED IN SUBSEQUENT YEAR. (4) THE LD CIT (A) ERRED ON FACTS AND IN LAW IN NOT PROVIDING THE APPELLANT THE PROPER, ADEQUATE OR SUFFICIENT OPPORTUNITY TO HAVE ITS SAY OR TO MAKE NECESSARY COMPLIANCES OF THE REASONS RELIED UPON BY HIM IN DISMISSING THE APPEAL OF THE APPELLANT. (5) THE APPELLANT RESERVES ITS RIGHT TO ADVANCE SUCH OTHER GROUNDS BEFORE OR AT THE TIME OF HEARING WHICH IT MAY CONSIDER FIT AND APPROPRIATE FOR WHICH IT CRAVES LEAVE TO AMEND, ALTER OR MODIFY THE G ROUNDS WITH KIND PERMISSION OF THE BENCH. 4 . LEARNED AR OF THE ASSESSEE SUBMITTED THAT ON PAGE 74 OF THE PAPER BOOK IS THE COPY OF REASONS RECORDED BY THE A.O. FOR I NITIATING REASSESSMENT PROCEEDINGS. HE ALSO SUBMITTED THAT ON PAGE 94 OF THE PAPER BOOK IS THE BALANCE SHEET FOR THE YEAR ENDED ON 31.03.2006. HE ALSO SUBMITTED THAT ON PAGES 2 TO 3 OF THE PAPER BOOK IS ORIGINAL ASSESSMENT ORDER DATED 24.12.2008. HE SUBMITTED THAT IN THE FACTS O F THE PRESENT CASE, IT I A CASE OF CHANGE OF OPINION AND THEREFORE, REOPENING I NOT VALID. ON MERIT ALSO, HE SUBMITTED THAT WHEN THE ACCRUED INCOME IS APPEARING IN THE BALANCE SHEET AS AN ASSET, IT IS IMPLIED THAT IT WAS TAKEN IN TO INCOME BY THE ASSESSEE AND THEREFORE, THERE IS NO CASE OF ANY ADDITION ON THIS ASPECT . LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 3 5 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND FORCE IN THIS SUBMISSION OF THE LEARNED AR OF THE ASSESSEE THAT T HE INCOME IN DISPUTE IS ALREADY INCLUDED IN THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AND THEREFORE, THE ADDITION IS NOT JUSTIFIED. IN THE P & L ACCOUNT AS APPEARING ON PAGE 90 OF THE PAPER BOOK, AN AMOUNT OF RS. 220,52, 97,046/ - IS INCLU DED IN INCOME UNDER THE HEADING VALUE OF WORK DONE (TENDER). THIS IS ADMITTED POSITION THAT THE ASSESSEE IS FOLLOWING DOUBLE ENTRY ACCOUNTING SYSTEM. UNDER THIS SYSTEM, BOTH SIDES I.E. DEBIT SIDE & CREDIT SIDE OR ASSETS SIDE AND LIABILITY SIDE HAS TO TAL LY. IF AN ITEM IS APPEARING IN ASSET SIDE OF THE BALANCE SHEET, IT IS IMPLIED THAT THE CORRESPONDING CREDIT ENTRY IS ALREADY ACCOUNTED FOR AS AN INCOME OR AS A LIABILITY. IN THE BALANCE SHEET, ONLY LIABILITY APPEARING IS CURRENT LIABILITIES & PROVISIONS AS PER SCHEDULE 6A & 6B ON PAGE 95 OF THE PAPER BOOK. THIS INCLUDES ADVANCE FROM CLIENTS DEPOSIT WORKS RS. 822,68,10,309/, TENDER WORKS RS. 134,87,58,536/, SUNDRY CREDITORS RS. 119,84,21,527/ - , AND PROVISION FOR VARIOUS EXPENSES RS . 40,32,47,540/ - , TOTAL RS. 1139,64,59,586/ - . THIS IS NEITHER A CASE OF THE A.O. NOR COMING OUT FROM THE BALANCE SHEET THAT CORRESPONDING CREDIT IS APPEARING A LIABILITY IN THE BALANCE SHEET. HENCE, THE ONLY CONCLUSION WHICH CAN BE DRAWN IS THAT THE CORRESPONDING CREDIT IS INCLUDED I N THE INCOME AND THAT PORTION OF INCOME, WHICH IS STILL TO BE REALIZED FROM THE CUSTOMER IS APPEARING IN ASSETS SIDE OF THE BALANCE4 SHEET. THEREFORE, THE INCOMER IS ALREADY ACCOUNTED FOR AND THERE CANNOT BE ANY ADDITION ON THIS ACCOUNT. WE, THEREFORE, DEL ETE THIS ADDITION . 6. SINCE THE ISSUE ON MERIT IS DECIDED IN FAVOUR OF THE ASSESSEE, THE ISSUE REGARDING VALIDITY OF REASSESSMENT HAS BECOME OF ACADEMIC INTEREST ONLY AND HENCE, WE DO NOT ENTER INTO THIS ISSUE OF ACADEMIC INTEREST . 7 . IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS ALLOWED IN THE TERMS INDICATED ABOVE . 8 . NOW WE TAKE THE APPEAL FOR A.Y. 200 9 1 0: - 4 9. THE GROUNDS ARE AS UNDER: - (I) THE LD CIT (A) II LUCKNOW (HEREINAFTER REFERRED TO AS THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE A.O. IN REJECTING THE BOOKS OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145 (3) OF THE I. T. ACT, 1961. (II) THE LD CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.18,79,46,937/ - MADE BY THE LD. AS SESSING OFFICER IN THE HANDS OF THE APPELLANT BY WAY OF ESTIMATING THE PROFIT ON TOTAL VALUE OF WIP SHOWN IN THE BALANCE SHEET AND COMPLETELY FAILED TO APPRECIATE THE FACTS THAT THE REVENUE ON THE WIP ALREADY STOOD RECOGNIZED AS PER AS 7. (III) THE LD CIT (A) ERRED ON FACTS AND IN LAW IN NOT PROVIDING THE APPELLANT THE PROPER, ADEQUATE OR SUFFICIENT OPPORTUNITY TO HAVE ITS SAY OR TO MAKE NECESSARY COMPLIANCES OF THE REASONS RELIED UPON BY HIM IN DISMISSING THE APPEAL OF THE APPELLANT. (IV) THE APPELL ANT RESERVES ITS RIGHT TO ADVANCE SUCH OTHER GROUNDS BEFORE OR AT THE TIME OF HEARING WHICH IT MAY CONSIDER FIT AND APPROPRIATE FOR WHICH IT CRAVES LEAVE TO AMEND, ALTER OR MODIFY THE GROUNDS WITH KIND PERMISSION OF THE BENCH. 10. LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE PROFIT & LOSS ACCOUNT IS APPEARING ON PAGE 22 OF THE PAPER BOOK. HE POINTED OUT THAT AS PER THE SAME, VALUE OF WORK DONE (TENDER) IS RS. 192,27,90,266/ - - . HE FURTHER SUBMITTED THAT ON PAGE 28 OF THE PAPER BOOK IS SCHEDULE 8 CONTAINING DETAILS OF VALUE OF WORK DONE (TENDER) AND IT INCLUDED WIP RS. 41,75,65,988/ - . THEREAFTER, HE SUBMITTED THAT DETAILS OF WIP RS. 41,75,65,988/ - IS AVAILABLE ON PAGES 69 71 AND 72 78. HE ALSO SUBMITTED THAT IN ANY CASE, THE MATTER MAY BE RESTORED TO A.O. AND THE ASSESSEE WILL ESTABLISH THAT THE WIP STOCK INCLUDED PROFIT. LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 11 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT ON PAGE NO. 25 OF HIS ORDER, IT IS NOTED BY THE LEARNED CIT (A) THAT IN CASE OF TWO CONTRACTS, THE ASSESSEE HAS ACCOUNTED FOR CENTAGE @ 7% AND IN ONE CASE AT 5 6.9%. IN S PITE OF THIS, HE HAS CONFIRMED ENTIRE ADDITION MADE BY THE A.O. AT 12.5%. IT HAS TO BE SEEN AS TO WHETHER THE CENTAGE RECEIVABLE IS UNIFORM AT 12.5% OR IT IS VARYING. IT IS ALSO TO BE SEEN THAT WHERE CENTAGE IS ACCOUNTED FOR BY THE ASSESSEE AND THE SAME IS LOWER THAN THE CENTAGE ACTUALLY RECEIVABLE THAN TO THE EXTENT THE CENTAGE IS LESS ACCOUNTED FOR, IF ANY, AN ADDITION IS TO BE MADE. WE FEEL THAT IN VIEW OF THIS DISCUSSION AND THE OBSERVATION OF THE AUDITORS REPRODUCED BY CIT (A) WHERE IT IS STATED BY THE AUDITORS THAT FOR CONSTRUCTION CONTRACT ENTERED INTO ON OR AFTER 01.04.2003, THE ASSESSEE HAS ADOPTED THE POLICY OF RECOGNIZING THE REVENUE AS PER STAGE OF WORK IN PROGRESS AS PER AS 7, THE ASSESSEE DESERVES AN OPPORTUNITY TO ESTABLISH THE CLAIM THAT WI P IS INCLUDING PROFIT. HENCE, WE SET ASIDE THE ORDER OF LEARNED CIT (A) AND RESTORE THE MATTER TO A.O. FOR A FRESH DECISION IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 12 . IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 13 . IN THE COMBINED RESULT, APPEAL FOR ASSESSMENT YEAR 200 6 - 07 IS ALLOWED & 200 9 - 10 IS ALLOWED FOR STATISTICAL PURPOSES . (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAG E) SD/. SD/. (SUNIL KU MAR YADAV) ( A. K. GARODIA ) JUD ICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 5 /0 6 /201 5 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR