DCIT, Circle-10, Kolkata, Kolkata V. M/S. Shelter Infra Projects Ltd., Kolkata

ITA 1657/KOL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1351 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 12-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: K K KHEMKA; P C NA
• Keywords: Rejection of books of accounts
• Section: 145

Judgement Text

ITA NO.1657/KOL/2016 M/S SHELTER INFRA PROJECTS LTD . A.Y.2007-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & SHRI S.S.VISWANETHRA RAVI, JM ] ITA.NO.1657/KOL//2014 ASSESSMENT YEAR : 2007-08 D.C.I.T., CIRCLE-10, -VERSUS- M/S SHELTER I NFRA PROJECTS LTD. KOLKATA KOLKATA (PAN: AABCC 2304 F) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.DASGUPTA, ADDL. CIT(D R) FOR THE RESPONDENT: SHRI K.K.KHEMKA, ADVOCATE & SHR I P.C.NAYAK, AR DATE OF HEARING : 04.01.2018. DATE OF PRONOUNCEMENT : 14.03.2018. ORDER PER J.SUDHAKAR REDDY, AM: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX-(A)-XII, KOLKATA RELATI NG TO A.Y.2007-08. 2. THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND REAL ESTATE. THE REVENUE IS IN APPEAL ON THE FOLLOW ING GROUNDS :- 1.(I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CIT(A) IS ERRED BOTH ON FACTS AS WELL AS ON LAW IN DELETING THE ADDITION OF RS. 1,00,00,000/- WHEN LD. CIT{A) HIMSELF AGREED THAT THERE WAS IRREGULARITY I N NOT MAINTAINING THE ACCOUNTS AS PER AS-7 OF 1983 OR AS-7 OF 2002. 1.(II) THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE DELETION OF RS. L,00,00,000/- WAS UNJUSTIFIED ON THE GROUND THAT NO SUCH ADDITION WAS MADE IN ANY OTHER YEAR I.E. APPLYING THE PRINCIPLES OF RES- JUDICATA. 2(I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE CLT(A) WAS UNJUSTIFIED IN DELETING THE ADDITION OF RS. 31,71,419/- WHICH WAS CONSIDERED AS INCOME DUE TO THE FACT THAT CORRESPONDING EXPENDITURE WAS BOOKED BY THE ASSESSEE-COMPANY FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 3. THE CIT{A) HAS ERRED BOTH IN LAW AND FACTS IN DI RECTING TO ALLOW CREDIT FOR TDS AMOUNTING TO RS. 5,94,955/- ON MOBILIZATION ADV ANCE WHICH IS IN CONTRAVENTION OF THE PROVISIONS OF SECTION 199(1). ITA NO.1657/KOL/2016 M/S SHELTER INFRA PROJECTS LTD . A.Y.2007-08 2 4. THAT THE APPELLANT CRAVES LEAVE TO ADD ADDITIONA L GROUND{S) OR ALTER OR MODIFY ANY OF THE GROUNDS AT THE TIME APPELLATE PROCEEDING S. 3. AFTER HEARING THE RIVAL CONTENTIONS , CONSID ERING THE PAPERS ON RECORD AND ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAWS CITED WE HOLD AS FOLLOWS : GROUND NO.1 IS AGAINST THE ADHOC ADDITION OF RS.1,0 0,00,000/- MADE TO THE GROSS PROFIT DECLARED BY THE ASSESSEE, BY REJECTING THE BOOKS OF THE ASSESSEE AND INVOKING SECTION 145 OF THE ACT. THE LD. CIT(A) DEL ETED THIS ADDITION BY OBSERVING THAT ALL THE ISSUES RAISED BY THE AO DURING THE COU RSE OF ASSESSMENT AND THE NUMEROUS DOUBTS RAISED ABOUT THE INTEGRITY AND MAINTENANCE O F ACCOUNTS AS SUGGESTED AND THAT THE AO FALLS SHORT OF ESTABLISHING ANY MATERIAL DEF ICIENCY IMPACTING THE ESTIMATION OR DETERMINATION OF INCOME CONTAINED IN THE CONTRACTUA L RECEIPTS. ON FACTS HE HELD THAT THE AO HAS NOT MADE A CASE THAT THE ASSESSEE HAS UN DERSTATED ITS EXPENDITURE OR THAT IT HAS UNDERSTATED ITS INCOME. HE ALSO CAME TO THE CON CLUSION THAT, THE REPORT OF THE AUDITOR DOES NOT JUSTIFY THE AO TO COME TO A CONCL USION THAT THERE ARE MATERIAL DEFECTS IN THE ACCOUNTS. HE CONCLUDED THAT THE AO IS WRONG ON FACTS, IN COMING TO THE CONCLUSION THAT THERE ARE DEFICIENCIES IN THE BOOKS OF ACCOUNTS LISTED BY THE AO. HE ALSO DISCUSSED THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE AND HELD THAT THE AO HAS NOT DISPUTED OR RAISED ANY OBJECTION ABOUT T HE PROFIT COMPUTED BY THE ASSESEE ON VARIOUS PROJECTS. HE HELD THAT THE REJECTION OF BOOKS OF ACCOUNTS WAS WRONGLY DONE. HE ALSO POINTED OUT THAT THE METHOD OF ACCOUNTING F OLLOWED BY THE ASSESSEE IN THE EARLIER YEARS AND ALSO IN THE LATER ASSESSMENT YEAR S HAS NOT BEEN DISTURBED BY THE AO AND THUS DISTURBING THE ASSESSMENT IN THE IMPUGNED ASSESSMENT YEAR WOULD NOT BE CORRECT ON THE PRINCIPLES OF CONSISTENCY. HE POINTE D OUT THAT THE ADDITION IN QUESTION IS 10% OF THE GROSS CONTRACT RECEIPTS AND WHEN CONSIDE RED WITH THE PROFIT DECLARED BY THE ASSESSEE, G.P. WOULD WORK OUT TO 19% , WHICH IS MUC H HIGHER THAN THE PERCENTAGE OF PROFIT DECLARED IN THE EARLIER YEARS. HE DELETED TH E ADDITION. 4. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT CO NTROVERT THIS FACTUAL FINDING OF THE LD. CIT(A). WE ALSO AGREE WITH THIS FACTUAL FINDING OF THE LD. CIT(A). THUS WE UPHOLD HIS ORDER AND DISMISS GROUND NO.1 OF THE REV ENUE. ITA NO.1657/KOL/2016 M/S SHELTER INFRA PROJECTS LTD . A.Y.2007-08 3 5. GROUND NO.2 IS AGAINST THE DELETION OF RS.31,71, 419/- MADE ON THE GROUND THAT THE ASSESSEE HAS DONE CERTAIN WORKS BUT HAS NOT BIL LED FOR THE SAME. THE ASSESSEE HAD DISCLOSED THIS AMOUNT IN THE BALANCE SHEET AS AN AS SET UNDER THE HEAD WORK DONE BUT NOT BILLED. THIS WAS DONE AFTER TAKING THIS AMOUN T AS CONTRACT RECEIPTS. THE LD. CIT(A) HELD THAT THIS IS A CASE OF DOUBLE ADDITION. THE LD. DR COULD NOT CONTROVERT THE SAME. HENCE WE UPHOLD THE ORDER OF THE FIRST APPELL ATE AUTHORITY AND DISMISS GROUND NO.2 OF THE REVENUE. 6. GROUND NO.3 IS ON THE ISSUE OF ALLOWABILITY OF C REDIT OF TDS AMOUNTING TO RS.5,94,955/- ON MOBILISATION ADVANCE, ON THE GROUN D THAT THIS IS IN CONTRAVENTION OF THE PROVISION OF SECTION 199(1) OF THE ACT. THE LD. CIT(A) DIRECTED THE ALLOWANCE OF TDS CREDITED ON THE GROUND THAT, IT WAS CONSISTENTL Y BEING DONE OVER THE YEARS. 7. ADMITTEDLY THIS MOBILISATION ADVANCE HAS NOT BE EN DISCLOSED AS INCOME BY THE ASSESSEE. IT HAS NOT BEEN DECLARED AS INCOME OF TH E ASSESSEE DURING THIS YEAR. SECTION 199(3) OF THE ACT READS AS FOLLOWS :- 199(3) THE BOARD MAY, FOR THE PURPOSES OF GIVING CREDIT IN RESPECT OF TAX DEDUCTED OR TAX PAID IN TERMS OF THE PROVISIONS OF THIS CHAPTER, MAKE SUCH RULES AS MAY BE NECESSARY, INCLUDING THE RULES FOR THE PU RPOSES OF GIVING CREDIT TO A PERSON OTHER THAN THOSE REFERRED TO IN SUB-SECTION (1) AND SUB-SECTION (2) AND ALSO THE ASSESSMENT YEAR FOR WHICH SUCH CREDIT MAY BE GI VEN. RULE 37BA(3)(II) OF THE IT RULES READS AS FOLLOWS : - WHERE TAX HAS BEEN DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT AND THE INCOME IS ASSESSABLE OVER A NUMBER OF YEARS, CR EDIT FOR TAX DEDUCTED AT SOURCE SHALL BE ALLOWED ACROSS THOSE YEARS IN THE SAME PRO PORTION IN WHICH THE INCOME IS ASSESSABLE TO TAX. 8. IN VIEW OF THE ABOVE PROVISION, CREDIT OF TAX DE DUCTED AT SOURCE ON A SUM OF MONEY WHICH IS NOT OFFERED AS INCOME BY THE ASSESSE E DURING THE YEAR, CANNOT BE GRANTED. THUS THIS ORDER OF THE FIRST APPELLATE AUT HORITY IS HEREBY REVERSED. THE ASSESSEE MAY CLAIM CREDIT OF TDS IN ACCORDANCE WITH LAW IN THE YEARS IN WHICH THE ITA NO.1657/KOL/2016 M/S SHELTER INFRA PROJECTS LTD . A.Y.2007-08 4 SAID MOBILISATION ADVANCE IS OFFERED AS INCOME. THU S GROUND NO.3 OF THE REVENUE IS ALLOWED. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOW ED IN PART. O RDER PRONOUNCED IN THE COURT ON 14.03.2018. SD/- SD/- [S.S.VISWANETHRA RAVI] [ J.SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14.03.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.M/S SHELTER INFRA PROJECTS LTD., DN-1, SALT LAKE, SECTOR-V, KOLKATA-91. 2. D.C.I.T., CIRCLE-10, KOLKATA. 3. C.I.T.(A)- XII, KOLKATA 4. C.I.T-IV, KOLKA TA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES