The ACIT,Bharuch Circle, Bharuch V. M/s. Ravi Builders, Bharuch

ITA 1367/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8853 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANTONY PARIATH
• Keywords: Business income; TDS; FORM 26AS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 1367 & C.O. NO. 177/AHD/2013 (ASSESSMENT YEAR: 2009-10) ASSISTANT COMMISSIONER OF INCOME TAX, BHARUCH CIRCLE, BHARUCH M/S. RAVI BUILDER B-2, SANJAY COLONY, B/H. COLLEGE, BHOLAV, BHARUCH. V/S V/S M/S. RAVI BUILDER B-2, SANJAY COLONY, B/H. COLLEGE, BHOLAV, BHARUCH. ASSISTANT COMMISSIONER OF INCOME TAX, BHARUCH CIRCLE, BHARUCH (APPELLANT) (RESPONDENT) PAN: AAKFR2474F APPELLANT BY : SHRI ANTONY PARIATH,SR. D .R. RESPONDENT BY : SHRI BANDISH SOPARKAR, A.R. ( )/ ORDER DATE OF HEARING : 23 -03-201 7 DATE OF PRONOUNCEMENT : 24 -03-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NO. 1367/AHD-2013 & C.O. NO. 177/AHD/2013 ARE A PPEALS BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE PREFERR ED AGAINST THE ORDER OF THE LD. CIT(A)-VI, BARODA DATED 18.02.2013 PERTAINI NG TO A.Y. 2009-10. ITA NO. 1367 & C.O. NO. 177/AHD/2013 . A.Y.2009-10 2 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE ADDITION OF RS. 78,65,717/- MADE ON ACCOUNT OF CLOS ING STOCK BY ERRONEOUSLY TERMING THE SAME AS SUPPRESSION OF SALES. 3. THE ASSESSEE IS A PARTNERSHIP FIRM DRAWING INCOME F ROM INDUSTRIAL CONSTRUCTION BUSINESS. THE RETURN FOR THE YEAR WAS FILED ON 30.09.2009 DECLARING TOTAL INCOME OF RS. 34,59,300/-. 4. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED SERVED UPON THE ASSESSEE. 5. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. N OTICED THAT THE ASSESSEE HAS SHOWN CLOSING STOCK/WORK-IN-PROGRESS AS NIL. TH E A.O. FURTHER FOUND THAT THE ASSESSEE HAS DEBITED DIRECT EXPENSES OF RS . 4,88,08,040/- UNDER THE HEAD DIRECT EXPENSES AND PURCHASES OF RS. 1,6 7,21,025/- UNDER THE HEAD PURCHASES. THE DIRECT EXPENSES HAVE BEEN FU RTHER CATEGORIZED AS RS. 1,86,61,879/- UNDER THE HEAD TRANSPORTATION O F MATERIAL (OTHERS), RS. 1,13,07,998/- UNDER THE HEAD TRANSPORTATION OF MAT ERIAL SEZ, RS. 3,62,307/- UNDER THE HEAD HIRE CHARGES-JCB, RS. 1 ,34,82,728/- UNDER THE HEAD LABOUR CHARGES AND RS. 49,93,127/- UNDER THE HEAD LABOUR & WAGES. THE A.O. WAS OF THE OPINION THAT SINCE THE TRANSPORTATION OF MATERIAL EXPENSES HAVE BEEN CATEGORIZED AS SEZ AND OTHERS. THE OTHER DIRECT EXPENSE SHOULD ALSO HAVE BEEN CATEGORIZED UN DER THE ABOVE CATEGORY. THE A.O. FURTHER ASKED THE ASSESSEE TO FU RNISH THE DETAILS OF EXPENSES SITE WISE AS THE SAME HAVE TO BE CONSIDERE D IN THE PROPORTION AS ITA NO. 1367 & C.O. NO. 177/AHD/2013 . A.Y.2009-10 3 TO THE SALES IN SEZ TO THE TOTAL SALES. THE ASSESSE E WAS FURTHER ASKED TO EXPLAIN AS TO WHY THE BOOKS OF ACCOUNTS SHOULD NOT BE REJECTED. 6. THE ASSESSEE STRONGLY CONTENDED THAT IT HAS APPLIED ALL THE MATERIALS AT THE RESPECT SITES DURING THE YEAR UNDER CONSIDERATION; THEREFORE, THE CLOSING STOCK IS NOT DISCLOSED IN THE P & L ACCOUNT. HOWEVE R, THE DETAILS OF DIRECT EXPENSES SITE WISE WERE NOT FULLY FURNISHED. AFTER CONSIDERING THE DETAILED SUBMISSIONS OF THE ASSESSEE, THE A.O. OBSERVED AS U NDER:- 7.1 IN VIEW OF THE ABOVE FACTUAL AND LEGAL POSITION, IT IS HELD THAT: A. THE ASSESSEE IS REQUIRED TO SHOW CLOSING STOCK AS P ER MERCANTILE SYSTEM OF ACCOUNTING AND THE ASSESSEE HAS FAILED TO DISCLOSE CLOSING STOCK IN ITS ACCOUNT. THEREFORE, THE CORRECT PROFIT CANNOT BE DEDUCED. B. THE ASSESSEE HAS RIGHTLY DEBITED EXPENSES AMOUNTING TO RS. 1,13,07,948/- UNDER THE HEAD SEZ EXPENSES. C. THERE WAS NO ERROR IN ACCOUNTING OF THE NON-SEZ EXP ENSES OF RS.57,58,730/- HAVING BEEN DEBITED TO SEZ EXPENSES. D. THE ASSESSEE HAS CONVENIENTLY MADE CORRECTIONS IN S OME OF THE INVOICES. E. OTHER DIRECT EXPENSES AMOUNTING TO RS.3,55,59,187/ - HAVE RIGHTLY BEEN PROPORTIONED TO THE SEZ EXPENSES ON THE BASIS OF RA TIO OF SEZ SALES TO THE TOTAL SALES IN ABSENCE OF INABILITY SHOWN BY THE ASSESSEE IN FURNISHING THE RELEVANT DETAILS. F. AS PER THE AUDIT REPORT AND IN VIEW OF NON SUBMISSI ON OF RELEVANT SITE WISE DATA, IT IS PROVED THAT THE ASSESSEE HAS NOT MAINTAINED S TOCK REGISTER. G. THE ASSESSEE HAS INDIRECTLY CLAIMED LOSS IN SEZ SIT ES IN THE GUISE OF NON DISCLOSURE OF CLOSING STOCK. 7. THE A.O. COMPUTED THE CLOSING STOCK AT RS. 78,65,71 7/- AND MADE THE ADDITION OF THE SAME TO THE TOTAL INCOME OF THE ASS ESSEE. ITA NO. 1367 & C.O. NO. 177/AHD/2013 . A.Y.2009-10 4 8. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND ASSAILED THE ASSESSMENT ORDER. 9. THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE A.O. AND AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE CIT( A) HELD AS UNDER:- I HAVE PERUSED THE FINDINGS OF THE A.O, WRITTEN SU BMISSIONS OF THE APPELLANT AND THE REMAND REPORT. DURING THE COURSE OF THE REMAND PROCEEDINGS, APPELL ANTS CLAIMS WERE FOUND TO BE CORRECT IN RESPECT OF POSTING OF CARTING EXPENSE S. IT IS CLEAR FROM THE REMAND REPORT THAT THE APPELLANT HAS POSTED NON-SEZ SITE C ARTING EXPENSES IN SEZ SITES. IT WAS A CASE OF INTERLACING BETWEEN THE TWO ACCOUNTS WITH SIMILAR EXPENSES HEAD NAMES BUT UNDER DIFFERENT GROUPS. THE A.O. HAS POINTED OUT NINE INSTANCES WHICH HE CL AIMS THAT THE APPELLANT HAS INCREASED SEZ EXPENSES IN ORDER TO SHOW ARTIFICIAL LOSS OUT OF SUPPRESSED SALES OF SEZ SITES. HOWEVER, THE APPELLANT HAS PROVED THAT T HERE WAS NO SUCH INTENTION. IT WAS MERELY CLERICAL MISTAKE OF POSTING A SIMILAR EX PENSE UNDER DIFFERENT GROUP. THIS FACT IS RE-AFFIRMED BEYOND DOUBT BY THE REMAND REPORT FROM DCIT BHARUCH, WHO HAS EXAMINED THE AUTHENTICITY OF EACH AND EVERY BILL AND CLASSIFIED ALL CARTING EXPENSES. I HAVE ONE MORE REASON NOT TO SUSTAIN THI S ADDITION. THE AMOUNT OF SALES IS REFLECTED IN FORM 26AS ALSO MATCHES WITH THE AMOUNT OF SALES AS REPORTED BY THE APPELLANT. THERE IS NO DISCREPANCY WITH REGA RD TO SALES AMOUNT AS PER 26AS AND SALES AS PER BOOKS. IT IS A SETTLED POSITI ON OF LAW THAT THE ADDITION CAN NOT BE MADE ON THE BASIS OF SURMISES, CONJECTURES A ND SUSPICIONS. THERE HAS; TO BE A CONCRETE AND VERIFIABLE BASIS FOR ANY ADDITION . MERELY BECAUSE SOME ENTRIES HAVE BEEN POSTED IN A WRONG ACCOUNT GROUP DOES NOT GIVE THE AO REASONS TO REJECT ENTIRE BOOKS OF ACCOUNT AND ARRIVE AT A HUGE FIGURE OF SO CALLED SUPPRESSED SALES. ITA NO. 1367 & C.O. NO. 177/AHD/2013 . A.Y.2009-10 5 IN VIEW OF THE ABOVE ADDITION MADE BY THE A.O. OF R S. 78,65,717/- ON ACCOUNT OF SUPPRESSION OF SALES IS HEREBY DELETED. THIS GROUND IS ALLOWED. 10. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. THE LD . D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. PER CONTRA, THE LD. COUNS EL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AU THORITIES. 11. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. IT WOULD BE PERTINENT TO MENTION THE MAIN FI NDING GIVEN BY THE A.O. IN THE REMAND REPORT:- 'DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD CLAIMED TRANSPORTATION EXPENSES OF RS.1,13,07,998/- FOR SEZ SITES IN ITS B OOKS OF ACCOUNT. BUT NOW, THE ASSESSEE IS CLAIMING THAT IT WAS A MISTAKE BY THE A CCOUNTANT. HE COULD NOT DISTINGUISH TRANSPORTATION COST FOR THE SEZ SITES AND OTHER SITES. THE ASSESSEE COULD NOT PRODUCE ALL THE RECEIPTS/DELIVERY CHALLAN S FOR TRANSPORTATION COST. WHILE VERIFYING THE BILLS OF THE TRANSPORTERS, IT IS FOUND THAT WHITE INK HAS BEEN USED ON SOME BILLS, (ALL THESE THINGS HAVE BEEN WRITTEN IN THE REMARK COLUMN OF THE ENCLOSURE-1 AND ENCLOSURE-2 AGAINST EACH ITEM). THE UNDERSIGNED ASKED TO CLARIFY THAT WHY WHILE INK HAS BEEN USED ON SOME BILLS OF T HE TRANSPORTERS. THE ASSESSEE EXPLAINED THAT THIS WHITE INK HAS BEEN PLACED BY TH E TRANSPORTERS THEMSELVES. THE ASSESSEE IS ALSO REPEATEDLY IMPRESSING UPON T HE FACT THAT HE HAS ALSO PRODUCED THE STATEMENTS OF THE TRANSPORTERS ATTAC HED TO THE BILL, WHICH HAS BEEN DULY SIGNED BY THEM. FURTHER, THE ASSESSEE IS CLARIFYING THAT THOSE DISSIMILAR MATERIALS SUCH AS BLACK STONE, SAND, KAPCHI, METAL ETC. HAVE BEEN BILLED IN A SINGLE BILL OF TRANSPORTER. THE STATEMENTS OF THE BILLS PR ODUCED BY RESPECTIVE TRANSPORTERS DISPLAYS TRIPS INVOLVED FOR TR ANSPORTING THE MATERIAL. THE STATEMENT ALSO MENTIONS THE SITE FOR EACH TRIP. TH IS HAS BEEN EMPHASIZED IN REMARKS. SUCH AS BILL NO 56 OF SHREE JAY BHATHUJIDA DA TRANSPORT IS A BILL FOR ITA NO. 1367 & C.O. NO. 177/AHD/2013 . A.Y.2009-10 6 MATERIALS OF BLACK STONE, SAND, KAPCHI, METAL AND Q UARPSOIL. SAME IS THE CASE WITH BILL NO 88 \OF SHREE JAY BHATHUJIDADA TRANSPOR T FOR BLACK STONE AND GREET AT THE SAME TIME. AFTER VERIFICATION OF EACH BILL IT I S FOUND THAT THE SUM TOTAL OF TRANSPORTATION/CARTING COST IN NON-SEZ SITES WHICH WERE WRONGLY GROUPED INTO SEZ SITES IS RS. 42,53,489/-. DURING VERIFICATION OF THE BILLS PRODUCED BY THE AS SESSEE,, IT IS FOUND THAT BILL NO 02 OF RS.19,03,000/- BILL NO 4 OF RS.L9,24,000/ BIL L NO 6 OF RS.16,70,425/- OF A.K. CONSTRUCTION WHICH TOTALS TO RS.54,97,425/-ARE IN T HE NATURE OF PURCHASE BUT WRONGLY DEBITED IN TRANSPORTATION COST. THE SAME HA S BEEN VERIFIED FROM THE RESPECTIVE ORIGINAL BILLS OF THE A.K. CONSTRUCTION. ON VERIFICATION IT IS FOUND THAT THE CARTING EXPENSE FOR SEZ SITES COMES TO RS. 15,5 7,084/-. 12. A PERUSAL OF THE AFOREMENTIONED FACTUAL FINDINGS IN THE REMAND REPORT SUGGESTS THAT THE A.O. ERRED IN REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 13. INSOFAR AS THE CORRECTION IN THE BILLS/VOUCHERS UND ER THE HEAD CARTING EXPENSES IS CONCERNED, WE FIND THAT IN THE REMAND REPORT ITSELF, THE A.O. HAS ACCEPTED THAT THE ASSESSEE HAS POST NON-SEZ SIT ES CARTING EXPENSES IN SEZ SITES. THIS OMISSION OF THE ASSESSEE WAS VERIFI ED BY THE A.O. DURING THE REMAND PROCEEDINGS WHEREIN THE A.O. HAS EXAMINED TH E AUTHENTICITY OF EACH AND EVERY BILL. FURTHER, ASSESSEE BEING A CONT RACTOR, THE SALES FIGURE OF THE ASSESSEE ALSO TALLIES WITH THE SALES AMOUNT AS PER FORM 26AS WHICH IS A RETURN FOR TDS BY THE PAYERS WHICH MEANS THAT THERE IS NO DISCREPANCY SO FAR AS SALES IS CONCERNED. ITA NO. 1367 & C.O. NO. 177/AHD/2013 . A.Y.2009-10 7 14. CONSIDERING THE FACTS IN TOTALITY, WE DO NOT FIND A NY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). APPEAL FILED BY THE REV ENUE IS ACCORDINGLY DISMISSED. C.O. NO. 177/AHD/2013 FOR A.Y.2009-10 15. THE LD. COUNSEL FOR THE ASSESSEE DID NOT SERIOUSLY CONTESTED THE CROSS OBJECTION OF THE ASSESSEE. THEREFORE, THE SAME IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 24 - 03- 20 17 SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY A CCOUNTANT MEMBER AHMEDABAD: DATED 24/03/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD