DCIT, Circle - 33, Kolkata, Kolkata V. M/s. M & M Associates & Sumi construction, North 24 Parganas

ITA 1200/KOL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9184 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 11-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S I BARA
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [ () , , , . .. . ! ! ! !. .. . , ,, , '# ] ]] ] [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE S RI C. D. RAO, AM] % / I.T.A NO. 1200/KOL/2010 &' ()/ ASSESSMENT YEAR : 2005-06 DY. COMMISSIONER OF INCOME TAX -VS.- M/S. M & M ASSOCIATES & SUMI CONSTRUCTION CIRCLE-33, KOLKATA. 24-PARGANAS(N). [PAN : AAHFM 964 9 J] [ +, /APPELLANT ] [ -.+,/ RESPONDENT ] +, / FOR THE APPELLANT : SHRI S. I . BARA -.+, / FOR THE RESPONDENT : SHRI SUBHAS AGARWAL '/ /ORDER . .. . ! ! ! !. .. . , ,, , '# PER C. D. RAO, A. M. THIS APPEAL FILED BY THE REVENUE IS PREFERRED AGAIN ST THE ORDER OF CIT(A)-XX, KOLKATA DATED 04.03.2010, PERTAINING TO ASSESSMENT YEAR 20 05-06. 2. THE GROUND OF APPEAL OF THE REVENUE READS AS UN DER :- THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE, TO TH E FACT THAT THE VALUATION OF WORK IN PROGRESS WAS INCLUDED IN THE C ONTRACT EXECUTION EXPENSES. SO THE A.O. HAS RIGHTLY ADDED BACK THE DI FFERENCE OF VALUATION OF WORK IN PROGRESS AS PER P&L ACCOUNT & ANNEXURE B. 3. BRIEF FACTS OF THE ISSUE ARE THAT WHILE DOING AS SESSMENT U/S. 147/143(3) OF THE ACT, ASSESSING OFFICER HAS MADE AN ADDITION OF RS.34,31, 053/- ON ACCOUNT OF VALUATION OF WORK-IN- PROGRESS BY OBSERVING THAT DURING THE COURSE OF ASS ESSMENT PROCEEDINGS U/S. 143(3), THE DETAILS ITA NO. 1200/KOL/20 10 2 BREAK UP OF VALUATION OF WORK-IN-PROGRESS IN RESPEC T OF KHARAGOPUR TO JALTALA ROAD WORK WAS AS UNDER :- 1) MATERIALS A) BALLAST RS.12,62,334.00 B) DUST & SERING RS. 1,26,233.00 2) LABOUR CHARGES RS. 8,09,997.00 3) ROLLER CHARGES RS. 1,15,715.00 RS.23,14,279.00 FROM THE ABOVE DETAILS, IT IS VERY MUCH EVIDENT THA T ASSESSEE HAS SUBMITTED VALUATION OF EACH AND EVERY ITEM OF WORK-IN-PROGRESS AND AFTER THAT S IMPLY STATED THAT IT WAS A TYPOGRAPHICAL MISTAKE. THE LD. AUTHORISED REPRESENTATIVES SUBMIS SION IS NOT AT ALL ACCEPTABLE ON THE GROUND THAT NO SUPPORTING EVIDENCE WAS FURNISHED TO PROVE THAT THE VALUATION OF WORK-IN-PROGRESS WAS DULY INCLUDED IN THE CONTRACT EXECUTION EXPENSES OF RS.2,27,89,792/- AS CLAIMED BY HIM. UNDER THE CIRCUMSTANCES, SUM OF RS.34,31,053/- BEING THE UNEXPLAINED DISCREPANCY IN VALUATION OF WORK-IN-PROGRESS IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3.1 ON APPEAL, THE LD. CIT(A) HAS DELETED THE SAME BY OBSERVING AS UNDER :- I HAVE PERUSED THE ASSESSMENT ORDER AND CONSIDERED THE SUBMISSION OF THE APPELLANT. I HAVE ALSO CONSIDERED THE SUBMISSION DA TED 20.01.2009, WHICH WAS FILED BEFORE THE AO. IT WAS EXPLAINED BEFORE THE AO THAT THERE WAS A TYPOGRAPHICAL ERROR IN THE VALUE OF THE WORK-IN-PROGRESS FILED DU RING THE COURSE OF ORIGINAL ASSESSMENT. IT WAS ALSO EXPLAINED THAT THE VALUE OF THE WORK-IN- PROGRESS WAS ACTUALLY INCLUDED IN THE CONTRACT EXECUTION AMOUNT OF RS.2,27,89,792/-. THE BOOKS OF ACCOUNT, BANK STATEMENT AND DETAILS OF CONTRACT EXECUTED ACCOUNT WERE PRODUCED BEFORE THE AO. THE PAYMENT CERTIFICATES, A ND, THE COMPLETION CERTIFICATE WERE ALSO FILED. THE AO DID NOT FIND ANY DEFECT IN THE AUDITED BOOKS OF THE APPELLANT. MOREOVER, THE OPENING WORK-IN-PROGRESS O F RS.57,45,332/- HAS BEEN SHOWN AS CLOSING WORK-IN-PROGRESS IN THE PRECEDING YEAR, WHICH IS APPARENT FROM THE P&L A/C OF THE RELEVANT YEARS. I FIND SUBSTANCE IN THE ARGUMENT THAT, ONCE THE CLOSING WORK-IN-PROGRESS OF THE PRECEDING YEAR HAS BEEN ACCEPTED, THE OPENING WORK-IN-PROGRESS OF THIS YEAR CANNOT BE DISPUTED. T HE DECISION OF THE AO IS NOT BASED ON PROPER FINDINGS. THE AO HAS FAILED TO PROP ERLY ANALYZE THE MATERIAL ON RECORD. THE EXPLANATION AND ALSO THE EVIDENCE, FILE D BY THE APPELLANT SEEM TO HAVE BEEN SUMMARILY REJECTED MORE ON GROUND OF PRESUMPTI ON THAN ON FACTUAL GROUND. IN VIEW OF THE ABOVE, I FIND NO JUSTIFICATION FOR THE ADDITION OF RS.34,31,053/- GROUND NO. 2 IS ALLOWED. AGGRIEVED BY THIS, NOW THE REVENUE IS IN APPEAL BEF ORE US. ITA NO. 1200/KOL/20 10 3 4. AT THE TIME OF HEARING, LD. DEPARTMENTAL REPRESE NTATIVE APPEARING ON BEHALF OF REVENUE HAS HEAVILY RELIED ON THE ORDER OF ASSESSING OFFICE R AND FURTHER CONTENDED THAT ASSESSEE IS UNABLE TO SUBSTANTIATE WHETHER THERE IS ANY WORK-IN -PROGRESS AS ON 31.03.2005 OR NOT. THEREFORE, HE REQUESTED TO SET ASIDE THE ORDER OF A SSESSING OFFICER AND RESTORE THAT OF LD. CIT(A). 5. ON THE OTHER HAND, LD. COUNSEL APPEARING ON BEHA LF OF ASSESSEE BY REFERRING TO CONTRACT ACCOUNT FOR THE YEAR ENDING 31.03.2004, BALANCE SHE ET AS ON 31.03.2004, WORK-IN-PROGRESS AS ON 31.03.2004, DETAILS OF CONTRACT EXECUTED, PAYMENT C ERTIFICATE AND COMPLETION CERTIFICATE WHICH WERE PLACED AT PAGES 2 TO 11 SUBMITTED THAT INSPITE OF THE CLINCHING EVIDENCES FURNISHED BEFORE THE ASSESSING OFFICER VIDE COVERING LETTER DATED 20 .11.2009, TO PROVE THAT THERE WAS NO WIP REMAINING IN RESPECT OF THE CONTRACT FOR CONSTRUCTI ON OF KHAMARPARA TO JHALTALA ROAD, ASSESSING OFFICER MADE ADDITION OF RS.34,31,053/- (THOUGH THE VALUE REFLECTED IN THE STATEMENT FILED ERRONEOUSLY WAS RS.23,14,279/-) IN RESPECT OF VALUA TION OF PURPORTED CLOSING WIP. THE LD. CIT(A) HAS CORRECTLY DELETED THE ADDITIONS MADE VID E PARA 7 OF HIS ORDER AFTER GIVING A FINDING THAT ALL THESE DOCUMENTS REFERRED TO ABOVE WERE AVA ILABLE WITH THE ASSESSING OFFICER AND THAT THE ASSESSING OFFICER FAILED TO PROPER ANALYSE THE MATERIAL ON RECORD AND THAT THE EVIDENCE FILED HAS BEEN SUMMARILY REJECTED ON THE GROUND OF PRESUM PTION. THE LD. COUNSEL PRAYED THAT THE APPEAL OF THE DEPARTMENT MAY PLEASE BE DISMISSED. 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, IT IS OBSERVED THAT ASSESSEE HAS EXECUTED W ORK-IN-PROGRESS OF CONSTRUCTION OF KHAMARPARA TO JHALTALA ROAD AND OTHER ITEMS SUCH AS CONSTRUCTION OF GOPALNAGAR-CHOWBERIA- UKRA ROAD, HORTICULTURE BUILDING, SANITARY & PLUMBI NG JOB & MISCELLANEOUS JOBS, WHICH IS APPEARING FROM THE DETAILS OF WORK COMPLETED DURING THE YEAR 2004-05, PLACED AT PAGE 7 OF PAPER BOOK. IT IS FURTHER OBSERVED THAT ASSESSEE IS ABLE TO ESTABLISH THAT CONSTRUCTION OF KHAMARPARA TO JHALTALA ROAD HAS BEEN COMPLETED DURI NG THE FINANCIAL YEAR AND THERE IS NO WORK-IN-PROGRESS IN RESPECT OF THE SAID WORK. ALL T HE DOCUMENTS IN SUPPORT OF THIS HAS BEEN FILED BEFORE THE ASSESSING OFFICER AND LD. CIT(A). HOWEVER, IN OUR CONSIDERED OPINION, ASSESSEE HAS NOT BROUGHT ANY MATERIAL ON ACCOUNT OF OTHER CONSTRUCTION ACTIVITIES UNDERTAKEN BY THE ASSESSEE WHETHER THERE IS ANY WORK-IN-PROGRESS AS ON 31.03.2005 OR NOT. AT THE SAME TIME ITA NO. 1200/KOL/20 10 4 FROM THE AUDITED ACCOUNTS, ASSESSING OFFICER HAS PO INTED OUT THAT THERE IS WORK-IN-PROGRESS AS ON 31.03.2005 AT RS.23,14,279/-, THE DETAILS AS REC ORDED AT PAGE 1 OF THE ASSESSMENT ORDER. IN THIS CONNECTION, WE CONSIDER IT APPROPRIATE TO ABST RACT THE WRITTEN SUBMISSION FILED BEFORE ASSESSING OFFICER, PLACED AT PAGE 6 OF THE PAPER BO OK, WHICH IS AS UNDER:- 01. DURING COURSE OF HEARING IN RESPECT OF ASSESS MENT PROCEEDING OF OUR SCRUTINY CASE U/S 143(3) FOR THE ASSESSMENT YEAR 20 05-2006, WE HAVE SUBMITTED A DETAIL OF VALUATION OF WORK-IN-PRO GRESS AS ON 31.03.2005 IN RESPECT OF OUR SITE AT KHAMARPARA TO JHALTALA ROAD WORK FROM 0.00 KM TO 7.00 KM. THE HEADING VALUATION OF WORK IN PROGRESS WAS A TYPOGRAPHICAL MISTAKE. 02. IN FACT, OUR WORK AT THE ABOVE SITE HAD ALREAD Y BEEN COMPLETED DURING THE RELEVANT FINANCIAL YEAR. 03. THAT THE AMOUNT OF RS.23,14,179/- AS BEING SHO WN AS VALUATION OF WORK IN PROGRESS WAS DULY INCLUDED IN CONTRACT EXEC UTED AMOUNT OF RS.2,27,89,792/- AS SHOWN IN CREDIT SIDE OF CONTRAC T ACCOUNT SUBMITTED WITH RETURN OF INCOME FURNISHED EARLIER. 04. THAT WE ARE ENCLOSING HEREWITH DETAIL OF CONT RACT EXECUTED ACCOUNT FOR YOUR KIND PERUSAL. FROM THE SAID DETAI L, YOUR HONOUR WILL FIND THAT DETAIL OF KHAMARPARA TO JHALTALA RO AD WORK FROM 0.00 KM TO 7.00 KM. AMOUNTING TO RS.23,14,279/- HAS ALRE ADY BEEN INCLUDED THERE (ANNEXURE A). 05. SIR, SINCE THE SAID AMOUNT OF RS. 23,14,279/= IS NOT OUTSIDE THE BOOK AND IT IS ONLY A TYPOGRAPHICAL MISTAKE, IT CAN NOT BE REDUCED FROM OPENING BALANCE OF WORK IN PROGRESS AMOUNTING TO RS . 57,45,332/= AND A SUM OF RS( 57,45,332 - 23,14,279 )= RS 34,31, 053/- CAN NOT BE UNDISCLOSED INCOME, 06. WE ARE ALSO ENCLOSING HEREWITH OUR PAYMENT CER TIFICATES AND COMPLETION CERTIFICATE IN RESPECT OF ABOVE SITE. (A NNEXURE B & C). 07. THE PAYMENT WAS RECEIVED BY ACCOUNT PAYEE CHEQ UES AND CAN BE VERIFIED FROM OUR BANK STATEMENT. 08. SINCE WE HAVE GOT COMPLETION CERTIFICATE IN RE SPECT OF SAID SITE THE SAME CAN NOT BE SHOWN AS WORK IN PROGRESS. 6.1 ON CAREFUL PERUSAL OF THE ABOVE, ASSESSEE HIMSE LF HAS ACCEPTED IN PARA-1 THAT DETAILS OF VALUATION WORK-IN-PROGRESS AS ON 31.03.2 005 IN RESPECT OF SITE AT KHAMARPARA TO ITA NO. 1200/KOL/20 10 5 JHALTALA ROAD WORK FROM 0.00 KM. TO 7.00 KM. AND HE ADING VALUATION OF WORK-IN-PROGRESS IS A TYPOGRAPHICAL MISTAKE . THIS INDICATES THAT THERE IS ONLY A TYPOGRAPHICAL MISTAKE IN THE HEADING ITSELF, THERE IS NO MISTAKE IN SHOWING THE WORK-IN-PROGRESS AS ON 31.03.2005. LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE HAS PRO VED BEYOND DOUBT THAT THERE IS NO WORK-IN- PROGRESS AGAINST THE WORK OF KHAMARPARA TO JHALTAL A ROAD. BUT, HOWEVER, AT THE SAME TIME, HE COULD NOT ESTABLISH THAT THERE IS NO WORK-IN-PROGRE SS IN RESPECT OF OTHER WORKS UNDERTAKEN BY THE ASSESSEE AS ON 31.03.2005. KEEPING IN VIEW OF THESE FACTS, WE FIND NO JUSTIFICATION ON THE PART OF THE LD. CIT(A) TO DELETE THE SAME BY OBSERVING THAT ASSESSING OFFICER HAS FAILED TO PROPERLY ANALYSE THE MATERIAL ON RECORD. THE EXPLANATION, AN D ALSO THE EVIDENCE, FILED BY THE ASSESSEE SEEM TO HAVE BEEN SUMMARILY REJECTED MORE ON GROUND OF PRESUMPTION THAN ON FACTUAL GROUND. THIS IS NOT CORRECT. THEREFORE, WE SET ASIDE THE OR DER OF LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AF RESH AS PER LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IT IS FURTH ER OBSERVED THAT IF THE WORK-IN-PROGRESS AS ON 31.03.2005 IS NOT EXPLAINED PROPERLY BY THE ASSESSE E, THEN ASSESSING OFFICER IS ENTITLED TO ADD WORK-IN-PROGRESS AS ON 31.03.2005 TO THE INCOME OF THE ASSESSEE AS THE SAME IS NOT RECORDED IN THE BOOKS OF ACCOUNT. ASSESSING OFFICER IS NOT CORR ECT IN ADDING THE DIFFERENCE IN OPENING WORK- IN-PROGRESS WHICH WAS ALREADY RECORDED IN THE BOOKS OF ACCOUNT WITH THAT OF CLOSING WORK-IN- PROGRESS WHICH WAS NOT RECORDED IN THE BOOKS OF ACC OUNT AS PRESENTLY DONE BY THE ASSESSING OFFICER. WE ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. '/ 0 1& 2 3 ORDER PRONOUNC ED IN THE COURT ON 31. 03. 2011. SD/- SD/- [ , ] [ . .. . ! ! ! !. .. . , ,, , '# ] [ MAHAVIR SINGH ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUNTANT MEMBER (!#) DATED : 31ST MARCH, 2011. ITA NO. 1200/KOL/20 10 6 '/ 4 -5 6'5(/ COPY OF THE ORDER FORWARDED TO: 1. +, /APPELLANT- DY. COMMISSIONER OF INCOME TAX, CIRCL E-33, 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-700 071. 2 -.+, / RESPONDENT : M/S. M & M ASSOCIATES & SUMI CONSTRU CTION, P.O. KANCHARAPARA, NORTH 24-PARGANAS, PIN-743145. 3. /&/ THE CIT, 4. /& ()/ THE CIT(A), KOLKATA. 5. <2 -&/ DR, KOLKATA BENCHES, KOLKATA [.5 -/ TRUE COPY ] [KKC >? &@A B /SR.PS] '/&1/ BY ORDER , A /DEPUTY/ASSTT REGISTRAR.