JCIT(OSD), Circle - 10, Kolkata, Kolkata V. Indica Research Pvt. Ltd., Kolkata

ITA 1619/KOL/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70507 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 25-11-2011
• Court: TRIBUNAL
• Department Lawyers: V A RAJU
• Assessee Lawyers: V K PILLAI DIRECTOR
• Section: 143(3)

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NO. 1619/KOL/2011 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2006-07 JOINT COMMISSIONER OF INCOME-TAX (OSD), VS. INDICA RESEARCH PVT. LTD. CIRCLE-10, KOLKATA. (PAN: AAACI5367B) (,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 11.12.2013 DATE OF PRONOUNCEMENT: 19.12.2013 FOR THE APPELLANT: SHRI V. A. RAJU, SR. DR FOR THE RESPONDENT: SHRI V. K. PILLAI, DIRECTOR $0 / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XII, KOLKATA IN APPEAL NO. 362/XII/CIR-10/08-09 DATED 22.09.2011. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-10, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 26.12.2008. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO ON THE BASIS OF DIFFERENCE IN R ECEIPT BETWEEN GROSS SALES IN THE PROFIT & LOSS ACCOUNT AND SALES AS PER LEDGER ACCOUNTS OF PA RTIES. FOR THIS, REVENUE HAS RAISED FOLLOWING THREE GROUNDS: 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) IS CORRECT IN HOLDING THAT THE DIFFERENCE IN RECEIPT BETWEEN T HE GROSS SALES IN P&L ACCOUNT AND THE SALES AS PER ACCOUNT IS DUE TO THE ASSESSEE FOLLOWI NG THE PROJECT COMPLETION METHODS AS PER AS-9 ALTHOUGH THE ASSESSEE HAD NOT DISCHARGED T HE ONUS THAT THE RECEIPT WAS NOT PERTAINING TO THE RELEVANT YEAR. 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS CORRECT IN DELETING THE ADDITION ON ACCOUNT OF SUPPRESSION OF DEBTORS BASED ON THE REPORT OF ASSESSING OFFICER WHICH IS ONLY REPRODUCTION OF THE ARGUMENT OF THE ASSESSEE. 3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS CORRECT IN DELETING THE ADDITION ON ACCOUNT OF SUPPRESSION OF RECEIPTS FROM FOUR COMPANIES WITHOUT BRINGING ANY EVIDENCE OF PROVING THAT THE RECEIPTS WERE REFLECTED IN THE BOOKS OF ACCOUNTS OF OTHER COMPANIES. 2 ITA NO. 1619/K/2011 INDICA RESEARCH PVT. LTD., AY:2006-07 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED DIFFERENCE IN RECEIPTS AFTER GOING THROUGH THE DETAILS OF CLIENT/PARTY-WIS E RECEIPT. ACCORDING TO ASSESSEES ACCOUNTS, ITS TOTAL RECEIPT IS AT RS.3,41,55,499/- BUT IN THE AUDITED ACCOUNTS THE RECEIPT IS AT RS.3,08,86,154/-. AS THERE IS DIFFERENCE IN THE AC COUNTS TO THE EXTENT OF RS. 32,69,345/- THE AO MADE ADDITION. SIMILARLY, THERE IS DIFFERENCE IN D EBTORS ACCOUNT I.E. SUPPRESSION OF DEBTORS AT RS.33,25,098/- AND THIS DIFFERENCE WAS POINTED OUT BY THE AO AFTER RECONCILING THE DEBTORS LIST AND WORK DONE AND AMOUNT RECEIVED AS UNDER: THE RECONCILIATION OF DEBTOR, WORK DONE DURING THE YEAR 2005-06, AMOUNT RECEIPT AND CLOSING BALANCE IS CALCULATED AS UNDER: OPENING BALANCE OF DEBTOR AS PER SCHEDULE-5 OF THE BALANCE . RS.4,24,11,933/- SHEET TOTAL VALUE OF WORK DONE AS PER DETAIL FILED ON 21. 07.2008 . RS.3,41,55,499/- TOTAL RS.7,65,67,432/- LESS: RECEIPT AS PER DETAIL DATED 21.07.2008 RS. 5,73,47,996/- BALANCE RECEIVABLE I.E. DEBTOR ON 31.03.2006 RS. 1,92,19,436/- DEBTOR SHOWN IN THE AUDITED BALANCE SHEET ENCLOSED WITH THE RETURN RS.1,58,94,338/- DIFFERENCE IN DEBTOR RS. 33,25,098/- SIMILARLY, ACCORDING TO AO, THERE IS SUPPRESSION IN RECEIPT AS PER AIR INFORMATION AND DETAILS FILED BY ASSESSEE VIDE LEDGER ACCOUNT AT PAGES 172 TO 173 AND THE RELEVANT DIFFERENCE OF RS.27,59,502/- WAS ADDED BY AO BY OBSERVING AS UNDE R: THE LEDGER ACCOUNT SUBMITTED WHICH IS NOTHING BUT COPY OF THE LEDGER ACCOUNT (PG. 171 TO 173) IMPOUNDED. NO RECONCILIATION FOR NON DISCLOSU RE OF ABOVE RECEIPT IS FILED, HENCE THE TOTAL RECEIPT/BILL RAISED FOR RS.27,59,502/- (I) J OY CO. INDIA PVT. LTD. RS. 8,56,590/- II) DHL EXPRESS (I) PVT. LTD. RS. 13,6 1,040/- III) USHA N/MARTIN TELECOM LTD.RS. 1,79,348 /- IV) FASCEL LTD. RS. 3,62,524/- RS.27,59,502/- IS BEING CONSIDERED AS SUPPRESSION OF RECEIPT AND A DDED TO THE TOTAL INCOME. THIS INFERENCE IS BASED ON THE FACT THAT THESE RECEIPT HAVE NOT BE EN INCLUDED IN THE DETAIL SUBMITTED ON 21.07.2008 AND HAD THE BILL RAISED AS SHOWN ABOVE H AD BEEN INCLUDED THE RECEIPT WOULD HAVE INCREASED FOR THE SIMILAR AMOUNT WHICH ULTIMAT ELY RESULT IN HIGHER SUPPRESSION OF WORK DONE. AGGRIEVED AGAINST THE ADDITION OF THIS DIFFERENCE, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A SKED THE AO TO SUBMIT REMAND REPORT IN VIEW OF THE EVIDENCE SUBMITTED BY THE ASSESSEE IN ITS PA PER BOOK. AO CONSIDERED THE DIFFERENCE IN RECEIPTS AT RS.32,69,345/- AND SUPPRESSION OF DEBTO R AT RS. 33,25,098/- AS EXPLAINED BY GOING THROUGH THE EVIDENCES AT THE TIME OF REMAND PROCEED INGS. THE AO ALSO DETAILED OUT THE SUPPRESSION OF RECEIPTS AS PER AIR INFORMATION AND AS PER ASSESSEES ACCOUNTS AT RS.27,59,502/- AND HE REPORTED IN HIS REMAND REPORT AFTER CONSIDER ING THE CERTIFICATE OF CHARTERED ACCOUNTANT 3 ITA NO. 1619/K/2011 INDICA RESEARCH PVT. LTD., AY:2006-07 THAT THE DIFFERENCE IS RECONCILABLE. THE RELEVANT REPORT OF DCIT, CIRCLE-10, KOLKATA WHICH IS SEEN VIDE REPORT NO. DCIT,CIR-10/KOL/REMAND REPORT/ 2011-12/1016 DATED 17.08.2011 READS AS UNDER: THE ASSESSING OFFICER (AO) HAD MADE ADDITIONS TO THE TOTAL INCOME OF THE ASSESSEE COMPANY ON THREE COUNTS AS MENTIONED BELOW: A) DIFFERENCE IN RECEIPT - ADDITION OF RS. 32,69,34 5/- TO THE TOTAL INCOME THE DIFFERENCE ARISES DUE TO THE DIFFERENCE BETWEEN THE TOTAL VALUE OF INVOICES RAISED (INCLUDING THE VALUE OF SERVICE TAX) AND THE REVENU E INCOME RECOGNIZED BY THE ASSESSEE ON THE BASIS OF WORK COMPLETION METHOD. TH E ASSESSEE HAD BEEN CONSISTENTLY FOLLOWING THE SYSTEM AS PER THE AS-9 ACCOUNTING STA NDARD FOR MERCANTILE SYSTEM OF ACCOUNTING. THE AO HAD CONSIDERED THE AGGREGATE OF PROFORMA INVOICES RAISED DURING THE YEAR AMOUNTING TO RS.3,41,55,499/- (INCLUDING S ERVICE TAX OF RS.25,24,768/-) AS REVENUE FOR THE YEAR INSTEAD OF CONSIDERING THE AMO UNT OF REVENUE RECOGNIZED ON WORK COMPLETION BASIS AMOUNTING TO RS.3,08,86,154/- (EXC LUDING SERVICE TAX). THE ASSESSEE ENCLOSED CERTIFICATE FROM CHARTERED ACCOUNTANT TO S UBSTANTIATE ITS CLAIM. COPY OF CERTIFICATE IS ATTACHED FOR PERUSAL AND CONSIDERATI ON. B) SUPPRESSION OF DEBTOR - ADDITION OF RS.33,25,098 /- TO THE TOTAL INCOME THE ASSESSING OFFICER HAD CONSIDERED RS.33,25,098/- , BEING THE DIFFERENCE BETWEEN THE OPENING BALANCE OF SUNDRY DEBTORS AS ON 31.03.2005 AND THE CLOSING BALANCE OF SUNDRY DEBTORS AS ON 31.03.2006. THE ASSESSEE HAS S UBMITTED THAT THE BALANCES IN RESPECT OF SEVEN SUNDRY DEBTORS AS APPEARING IN THE OPENING BALANCE WHO SUBSEQUENTLY BECOME SUNDRY CREDITORS AS ON 31.03.2006 GIVE RISE TO THE DIFFERENCE OF RS.33,25,098/-. THIS FACT WAS OVERLOOKED BY THE ASSESSINQ OFFICER. C) SUPPRESSION OF RECEIPT AS PER AIR INFORMATION ) DHL EXPRESS (INDIA) PVT. LTD - ADDITION OF RS. 1 3,61,040/- TO THE TOTAL INCOME IN THIS CASE, THE ABOVE PARTY HAD BY MISTAKE MENTIO NED THE ASSESSEE COMPANYS PAN WHILE FILING THE TDS RETURN RESULTING IN THE AMOUNT S THAT WERE ACTUALLY PAID TO ANOTHER COMPANY WITH A SIMILAR NAME, M/S INDICA RESEARCH PR ACTICES & CONSULTING PVT. LTD, GETTING REPORTED IN THE AIR INFORMATION AGAINST THE ASSESSEE COMPANY. IN THIS RESPECT, COPY OF LETTER ISSUED BY DHL EXPRESS (INDIA) PVT. L TD. DATED 05.08.2011 AND COPY OF CERTIFICATE FROM CHARTERED ACCOUNTANT DATED 27TH MA Y, 2011 ARE ENCLOSED FOR PERUSAL AND CONSIDERATION. II) JOYCO INDIA PVT LTD. - ADDITION OF RS.8,56,590/ -TO THE TOTAL INCOME IN THIS RESPECT, COPY OF CERTIFICATE FROM CHARTERED ACCOUNTANT DATED 27TH MAY, 2011 IS ENCLOSED FOR PERUSAL AND CONSIDERATION. III) USHA MARTIN TELECOM LTD - ADDITION OF RS.1,79, 348/- TO THE TOTAL INCOME IN THIS RESPECT, COPY OF CERTIFICATE FROM CHARTERED ACCOUNTANT DATED 27TH MAY, 2011 IS ENCLOSED FOR PERUSAL AND CONSIDERATION. IV) FASCEL LTD - ADDITION OF RS.3,62,524/- TO THE T OTAL INCOME TN THIS RESPECT, COPY OF CERTIFICATE FROM CHARTERED ACCOUNTANT DATED 27TH MAY, 2011 IS ENCLOSED FOR PERUSAL AND CONSIDERATION. THE CIT(A) IN VIEW OF THE ABOVE DELETED THE ADDITIO N. AGGRIEVED AGAINST THE DELETION OF THE ADDITION, REVENUE CAME IN APPEAL BEFORE US. 4 ITA NO. 1619/K/2011 INDICA RESEARCH PVT. LTD., AY:2006-07 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS RECONCILED THE FIGURE S BEFORE THE AO AND AO IN HIS REMAND REPORT AS NOTED ABOVE, HAS CONSIDERED AND GIVEN CATEGORIC AL FINDING THAT THE SAME IS RECONCILABLE. AS REGARDS TO THE DIFFERENCE OF RS.32,69,345/- THE AS SESSEE IS FOLLOWING ACCOUNTING STANDARD AS-9 AND ASSESSEE HAS ACCOUNTED THE RECEIPTS AS SALES ON THE BASIS OF WORK COMPLETION METHOD AND BY RAISING CORRESPONDING BILLS AND THIS SYSTEM IS BEIN G FOLLOWED CONSISTENTLY BY THE ASSESSEE. THIS FACT HAS BEEN ADMITTED BY AO IN HIS REMAND REPORT A ND IN VIEW OF THIS, THE RECONCILIATION IS CORRECT AND CIT(A) HAS RIGHTLY DELETED THE ADDITION . AS REGARDS TO THE SUPPRESSION OF SUNDRY DEBTOR OF RS.33,25,098/-, THE RECONCILIATION STATEM ENT SUBMITTED BY ASSESSEE BEFORE AO, THEREFORE, REMAND PROCEEDINGS HAVE BEEN ACCEPTED BY ASSESSEE AND THERE IS NO DIFFERENCE AS SUCH IN THE SUNDRY DEBTOR AND ACCORDINGLY, CIT(A) A LSO DELETED THE ADDITION. WE CONFIRM THE SAME. 5. COMING TO THE NEXT ADDITION IN RESPECT OF DIFFER ENCE IN RECEIPT OF 4 COMPANIES VIZ., (I) JOY CO. INDIA PVT. LTD., II) DHL EXPRESS (I) PVT. LTD., III) USHA N/MARTIN TELECOM LTD.& IV) FASCEL LTD. IT WAS THE CLAIM OF THE ASSESSEE THAT THERE IS NO TRANSACTION QUA THESE COMPANIES AND ASSESSEE ALSO PRODUCED CHARTERED ACCOUNTANTS CERTI FICATE FROM THESE COMPANIES WHICH WAS EXAMINED BY AO IN HIS REMAND REPORT. THE BASIC FAC T IS THAT THESE RECEIPTS HAVE BEEN ACCOUNTED FOR IN THE BOOKS OF FOUR DIFFERENT COMPANIES AND AO HAS MADE ADDITION WITHOUT VERIFICATION OF THE SAME. NOW DURING THE COURSE OF REMAND PROCEEDI NGS, AO HAS VERIFIED AND IN VIEW OF CHARTERED ACCOUNTANTS CERTIFICATE HAS ALLOWED THE CLAIM OF THE ASSESSEE. WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF CIT(A). REVENUES APPEA L IS DISMISSED. 6. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 7. ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 TH DEC., 2013.. SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19TH DECEMBER, 2013 12 '3' 4 JD.(SR.P.S.) 5 ITA NO. 1619/K/2011 INDICA RESEARCH PVT. LTD., AY:2006-07 $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT JCIT (OSD), CIR-10, KOLKATA 2 ./,- / RESPONDENT INDICA RESEARCH PVT. LTD., 115M, RAS H BEHARI AVENUE, KOLKATA-700 029. 3 . 0' ( )/ THE CIT(A), KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .