ACIT, Circle-46, Kolkata, Kolkata V. M/s. Universal Knitting, Howrah

ITA 1115/KOL/2012

• Counselvise Citation: 111523514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2013
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 31-07-2012
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA LD
• Assessee Lawyers: SUBASH AGARWAL LD
• Section: 143(3)

Judgement Text

, B , , INCOME TAX APPELLATE TRIBUNAL, BENCH- B KOL KATA ( ) BEFORE . , SHRI R.C. SHARMA, ACCOUNTANT MEMBER !' /AND #$ '# , SHRI MAHAVIR SINGH, JUDICIAL MEMBER '% / ITA NO. 1115/KOL/2012 A.Y 2007-08 A.C.I.T, CIRCLE-46, KOLKATA - !' - - VERSUS - . M/S. UNIVERSAL KNITTING PAN: AABFU4289Q ( () / APPELLANT ) ( *+() / RESPONDENT ) () /FOR THE APPELLANT //SHRI P.DAM KANUNJNA, LD.JCIT/ SR.DR *+() / FOR THE RESPONDENT: / SHRI SUBASH AGARWAL, ADVOCATE, LD.AR -'!. / 0 /DATE OF HEARING : 04-12--2013 12 / 0 /DATE OF PRONOUNCEMENT:04-12-2013S / ORDER . , SHRI R.C. SHARMA, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST T HE ORDER PASSED BY THE LD. CIT(A), DATED 22/03/2012 FOR THE ASSESSMENT YEAR 2007-08, IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE I.T ACT 1961. 2. FOLLOWING TWO GROUNDS HAVE BEEN TAKEN BY THE REV ENUE:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A)-XXX, KOLKATA ERRED IN DELETING THE ADDITI ON OF RS.10,68,924/- IN VIOLATION OF RULE 46A OF INCOME T AX RULES, 1962. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A)-XXX, KOLKATA ERRED IN DELETING THE ADDITI ON OF RS.6,57,778/- MADE IN RESPECT OF DISCREPANCY NOTICE D IN SUNDRY DEBTORS/SUNDRY CREDITORS IN VIOLATION OF RULE-46A O F INCOME TAX RULES 1962. ITA NO.1115/KOL/2012-B-AM 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND PERUSE D THE RECORD. FACTS IN BRIEF ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONTRACTUAL WORK. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE AO DISALLOWED RS. 10,68 ,924/- ON ACCOUNT OF T.D.S JOB WORK CHARGES. AS PER THE AO, THE ASSESSEE HAS RECE IVED TOTAL SUM OF RS.4,75,76,042/- AS PER TDS CERTIFICATE, WHEREAS ASSESSEE HAS DISCLO SED INCOME OF RS.4,65,07,118 AS JOB CHARGES. HENCE, DIFFERENCE AMOUNT OF RS. 10,68,924/ - WAS ADDED BY THE AO. 4. VIDE THE IMPUGNED ORDER, THE LD.CIT(A) HAS DELET ED THE ADDITION, AFTER HAVING THE FOLLOWING OBSERVATIONS:- 3.1 IN APPEAL IT HAS BEEN SUBMITTED THAT THE AO GR OSSLY ERRED IN MAKING THE SAID ADDITION WHICH IS ARBITRARY. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT SUBMITTED A D ETAILED STATEMENT SHOWING THE AMOUNT OF TDS DEDUCTED BY THE PARTIES A ND THE AMOUNT OF INCOME STATED IN SUCH CERTIFICATES. IT WAS FURTHER SUBMITTED THAT :- FROM THE SAID STATEMENT IT IS FULLY CLEAR THAT THE DIFFERENCE OF RS.10,68,924/- IS DUE TO THE FACT THAT THE PAYERS H AVE DEDUCTED TDS FROM THE BILL AMOUNT INCLUSIVE OF SERVICE TAX AND EDU. CESS WHEREAS THE SAID COLLECTION OF SERVICE TAX AND EDU . CESS IS NOT INCOME OF THE APPELLANT BUT HAS TO BE CREDITED TO CURRENT LIABILITIES FOR DEPOSIT INTO GOVT. ACCOUNT. A RECONCILIATION ST ATEMENT WHICH RECONCILES THE SAID DIFFERENCE IS ENCLOSED TO CLEA R THE SAID ERROR OF JUDGMENT AND MARKED WITH THE LETTER D (C ) FROM THE SAID RECONCILIATION STATEMENT, IT IS VERY MUCH CLEAR THAT THE APPELLANT HAS ALSO NOT ACCEPTED AND CLAIME D DEDUCTION OF RS.89,011, WHICH WAS DEDUCTED BY THE PARTIES FROM THE BILLS RAISED BY THE APPELLANT. HAD THE APPELLANT CLAIMED SUCH DEDUCTION, ITS INCOME WOULD HAVE BEEN LOWER BY THE SAID AMOUNT. 3.2 THE SUBMISSION OF THE APPELLANT VIS--VIS THE R ECONCILIATION FILED BY IT HAS BEEN CONSIDERED. THE SAME IS REPRODUCED AS UNDER:- TOTAL AMOUNT AS PER TDS CERTIFICATE 4,75,76,042/ - LESS: SERVICE TAX AND EDUCATION CESS ON WHICH TDS WAS DEDUCTED BY THE PAYERS, BUT WAS NOT RE QUIRED TO BE CREDITED TO P/L A/C AS SERVICE TAX COLLEC TION IS A LIABILITY. 42,85,587/- 4,32,90,455/- ADD: THE TOTAL AMOUNT OF BILL INCLUDING SERVICE T AX AND EDUCATION CESS RAISED BY THE ASSESSEE DUR ING 31.03.2007 FOR WHICH TDS CERTIFICATES HAVE NOT BEEN RECEIVED 33,32,984/- LESS: SERVICE TAX AND EDUCATION CESS THEREON 2,05 ,333/- ITA NO.1115/KOL/2012-B-AM 3 31,27,651/- 4,64,18,106 ADD: DEDUCTION MADE BY THE PAYERS, BUT NOT ACCEPT ED BY THE ASSESSEE 89,011 TOTAL CREDIT AS PER P/L A/C 4,65,07 ,117 FROM THE ABOVE IT IS SEEN THAT THE DISCREPANCY IN R ECEIPTS IT IS SEEN THAT THE DISCREPANCY IS FIRSTLY TOWARDS SERVIC E TAX COLLECTION, WHICH CANNOT BE CONSIDERED AS PART OF THE TURNOVER OF THE APPELLANT. THEREFORE, THE A.O WAS NOT JUSTIFIED IN ADDING TH E AMOUNT OF RS.10,68,924/- TO THE INCOME OF THE APPELLANT AND T HE ADDITION MADE BY THE AO IS DELETED (RELIEF OF RS.10,68,924/-) 5 AGAINST THE ABOVE ORDER OF THE LD.CIT(A), THE REV ENUE IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND C AREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS CLEAR FROM THE FIND INGS OF THE LD.CIT(A) THAT DIFFERENCE IN JOB WORK CHARGES CREDITED TO P/L ACCOUNT WAS ON ACC OUNT OF SERVICE TAX AND EDUCATION CESS, ON WHICH THE DEDUCTOR HAS DEDUCTED TAX AT S OURCE. SUCH SERVICE TAX AND EDUCATION CESS ARE NOT THE INCOME OF THE ASSESSEE. AND THE A SSESSEE IS REQUIRED TO PAY THE SAME TO GOVT. TREASURY. THUS, THE AMOUNT OF SERVICE TAX AND EDUCATION CESS AS PAID BY CONTRACTEE ARE NOT INCOME OF ASSESSEE, THEREFORE, SAME IS NOT LIABLE TO BE INCLUDED IN ASSESSEES INCOME WE FURTHER FIND THAT NO ADDITION AL EVIDENCE IN CONTRAVENTION OF RULE 46A OF THE I.T RULES 1962 WAS FILED BEFORE THE LD.C IT(A). ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LD.CIT( A) IN DELETING THE SAME. THE SAME IS HEREBY UPHELD. 7. THE AO HAS ALSO ADDED AN AMOUNT OF RS.6,57,778/ - TOWARDS DISCREPANCY IN SUNDRY DEBTORS AND SUNDRY CREDITORS. 8. VIDE THE IMPUGNED ORDER, THE LD.CIT(A) HAS DELET ED THE SAME, AFTER HAVING THE FOLLOWING OBSERVATIONS:- 4.1 IN APPEAL IT WAS SUBMITTED THAT DURING THE CO URSE OF ASSESSMENT PROCEEDING A RECONCILIATION STATEMENT R ECONCILING THE SAID DIFFERENCE WAS SUBMITTED TO THE AO. FURTHER TH AT FROM THIS RECONCILIATION STATEMENT IT IS VERY MUCH EVIDENT TH AT CERTAIN AMOUNTS ITA NO.1115/KOL/2012-B-AM 4 WERE WRONGLY SHOWN UNDER OTHER HEADS INSTEAD OF SHO WING THEM, UNDER SUNDRY CREDITORS AND/OR SUNDRY DEBTORS. T HEREFORE, THERE WAS NO JUSTIFICATION FOR THE ADDITION OF RS.6,57 ,778/-. IN SUPPORT OF ITS ABOVE SUBMISSION THE APPELLANT FILED COPIES OF RECONCILIATION STATEMENT FILED IN ASSESSMENT PROCEEDINGS. 4.2 THE APPELLANTS SUBMISSION IN APPEAL HAVE BEEN CONSIDERED AND IT IS SEEN THAT THE DISCREPANCY IN RESPECT OF S UNDRY CREDITORS WAS ON ACCOUNT OF UNSECURED LOAN OF RS.90,000/- IN THE NAME OF NIRMALA TODI WAS WRONGLY INCLUDED IN THE LIST OF SUNDRY CRE DITORS SUBMITTED BEFORE THE AO., WHEREAS IT WAS PART OF UNSECURED LOAN. FURTHER, CUSTOMS DUTY PAYABLE OF RS.31,958/- WAS NOT INCLUDE D IN THIS LIST. THEREFORE, AFTER ADJUSTING ABOVE AMOUNTS, THE AMOU NT OF SUNDRY CREDITORS AS PER LIST GIVEN TO A.O OF RS.1,80,79,44 4.94 WOULD COME TO RS.1,80,21,402.94 AS PER BALANCE SHEET. SIMILARLY , IN RESPECT OF SUNDRY DEBTORS IT IS SEEN THAT THE LIST DID NOT IN CLUDE WORKS CONTRACT TAX OF RS.5,99,736/- IN THE DETAILS FILED BEFORE TH E AO WHEREAS THIS AMOUNT WAS INCLUDED IN THE FIGURES SHOWN IN THE BAL ANCE SHEET, THEREBY RESULTING IN THE DISCREPANCY NOTICED BY TH E AO. THEREFORE, CONSIDERING THE ABOVE SUBMISSION OF THE APPELLANT R ECONCILING THESE DISCREPANCIES AS ABOVE IT IS SEEN THAT THERE IS NO DISCREPANCY IN RESPECT OF THE ABOVE AMOUNTS. IT IS THEREFORE HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF THE DIFFERENCE I.E . OF RS.6,57,778/- AND THE SAME IS DELETED. (RELIEF RS.6,57,778/-). 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FO UND THAT THE LIST SUBMITTED BY THE ASSESSEE BEFORE THE AO, BOTH IN RESPECT OF SUN DRY DEBTORS AND SUNDRY CREDITORS ARE CORRECTED BY WAY OF RECONCILIATION STATEMENT. WE FU RTHER FOUND THAT INADVERTENTLY, ASSESSEE HAD SHOWN UNSECURED LOAN OF RS.90,000/-IN THE NAME OF NIRMALA TODI IN THE LIST OF SUNDRY CREDITORS AND INCLUDED OF RS.31,958/ - ON ACCOUNT OF CUSTOMS DUTY PAYABLE IN THE LIST OF SUNDRY CREDITORS. SIMILARLY, WORKS CONTRACT TAX OF RS.5,99,736/- WAS INCLUDED IN THE FIGURE OF BALANCE SHEET IN THE LIS T OF SUNDRY DEBTORS. AS PER THE RECONCILIATION STATEMENT FILED BEFORE THE AO, WE FI ND THAT THE DISCREPANCY WAS EXPLAINED FULLY. AFTER RECORDING DETAILED FINDINGS IN PARA 4.2 IN THE APPELLATE ORDER, THE LD.CIT(A) HAS DELETED THE SAME. HOWEVER, NO ADDITIONAL DOCUME NT WAS FILED BEFORE THE LD.CIT(A) IN CONTRAVENTION OF RULE 46A OF THE I.T RULES 1962. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) IN DELETING THE SAME. WE UPHOLD THE SAME. ITA NO.1115/KOL/2012-B-AM 5 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AS STATED ABOVE. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT 04-12 -2013 SD/- SD/- ** PRADIP SPS / *3 4325 / COPY OF THE ORDER FORWARDED TO: 1. . () / THE APPELLANT : ACIT,, CIR-46 5 GOVT PL (W), KO L-1. 2 *+() / THE RESPONDENT- M/S. UNIVERSAL KNITTING P-89 B ENARAS RD, SALKIA, HOWRAH 711108. 3 4. . ' / THE CIT, ' ( )/ THE CIT(A) 5 . !67 *' / DR, KOLKATA BENCH 6 . GUARD FILE . +3 */ TRUE COPY, '-/ BY ORDER, # '8 /ASSTT REGISTRAR ( #$ '# , ) ( MAHAVIR SINGH, JUDICIAL MEMBER) ( . , ) ( R.C. SHARMA, ACCOUNTANT MEMBER ( (( ( 0 0 0 0 ) )) ) DATE 04-12-2013