Shri Kanubhai Ramjibhai Makwana, Anand V. The ACIT.,Anand Circle, Anand

ITA 2050/AHD/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3653 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 11-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANTOSH KARNANI
• Assessee Lawyers: MRS ARTI N SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD, C BENCH BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.2050/AHD/2012 [ASSTT.YEAR 2009-2010] SHRI KANUBHAI RAMJIBHAI MAKWANA PROP: M/S.K.R. MAKWANA G, RANGOLI COMPLEX BHALEJ ROAD ANAND 388 001. PAN: ACYPM 8211 D VS ACIT, ANAND CIRCLE ANAND. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : MRS.ARTI N. SHAH REVENUE BY : SHRI SANTOSH KARNANI, SR.DR / DATE OF HEARING : 04/04/2016 / DATE OF PRONOUNCEMENT: 01/06/2016 !'#/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF T HE ASSESSEE AGAINST ORDER OF THE LD.CIT(A)-IV, BARODA DATED 13. 6.2012 PASSED IN THE ASSTT.YEAR 2009-10. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.2,51,158/-. ITA NO.2050/AHD/2012 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WA S RUNNING A PROPRIETORSHIP CONCERN IN THE NAME OF K.R.MAKWANA W HICH WAS ENGAGED IN THE CIVIL CONSTRUCTION ACTIVITY. HE HAS FILED H IS RETURN OF INCOME ELECTRONICALLY ON 30.9.2009 DECLARING TOTAL INCOME AT RS.27,02,230/-. THE LD.AO HAS SELECTED THE CASE OF THE ASSESSEE FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSU ED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVE ALED THAT DURING F.Y.2008-09, THE ASSESSEE WAS AWARDED A CONTRACT BY MADHYA GUJARAT VIJ CO. LTD. (MGVCL FOR SHORT). THE TOTAL VALUE OF THE WORK ORDER WAS RS.50,45,700/-. THE ASSESSEE HAS SUB-LET THE S AID WORK TO M/S.M.V.MANDAVIYA. THE WORK DONE DURING THE YEAR I N TERM OF VALUE WAS OF RS.11,76,517/- AND RS.14,79,015/-. TWO BILL S TO THE EFFECT WERE RAISED. THE ASSESSEE HAS MADE PAYMENT OF RS.10,85, 083/- AND RS.13,80,464/- TO M/S.M.V.MANDAVIYA. THERE WAS A D IFFERENCE OF RS.1,13,054/- AND RS.1,27,667/-. ACCORDING TO THE ASSESSEE, HE HAS CREDITED THE ACCOUNT OF M/S.M.V. MANDAVIYA ON ACCRU AL BASIS OF ACCOUNT. HOWEVER, M/S.M.V.MANDAVIYA RECOGNIZED THE REVENUE ON RECEIPT BASIS, AND THEREFORE, THERE WAS A DIFFERENC E BETWEEN RECEIPTS SHOWN BY M/S.M.V.MANDAVIYA AND PAYMENTS MADE BY THE ASSESSEE. THE DIFFERENCE IS TO THE TUNE OF RS.2,40,721/- (RS. 1,13,054/- PLUS RS.1,27,667/-. ACCORDING TO THE ASSESSEE, HE HAS DE DUCTED THE TDS AND SHOWN THE LIABILITY TO PAY. ON THE OTHER HAND, M/S .M.V. MANDAVIYA RECOGNIZED ONLY THOSE PAYMENTS WHICH HE HAS RECEIVE D. THE ACCOUNTS ITA NO.2050/AHD/2012 3 WHICH HAVE NOT BEEN ACTUALLY CREDITED IN THE ACCOUN T OF M/S.M.V. MANDAVIYA WERE CONSIDERED BY THE AO AS PAID. 4. UNDER SIMILAR ANALOGY, THE AO HAS FURTHER FOUND A DIFFERENCE OF RS.11,437/- WITH REGARD TO K.JATIN & CO. THUS, ACC ORDING TO THE AO A DIFFERENCE OF RS.2,52,158/- EXISTS BETWEEN THE PAYM ENTS ALLEGED TO HAVE BEEN MADE BY THE ASSESSEE VIS--VIS THE RECEIPTS HA VE RECEIVED. THE ASSESSEE COULD NOT EXPLAIN THE DIFFERENCE, AND ACCO RDINGLY, THE AO HAS MADE ADDITION. 5. ON APPEAL, THE ASSESSEE HAS CONTENDED THAT HE HA S BEEN DEBITING THE EXPENDITURE ON MERCANTILE SYSTEM OF ACCOUNTANCY . HE HAS CREDITED ACCOUNT AND LIABILITY TO PAY HAS BEEN RECOGNIZED. THE DIFFERENCE IS THE RESULT OF NON-ACCOUNTING ON THE PART OF THE RECIPIE NTS ON THE BASIS OF ACCRUAL SYSTEM OF ACCOUNTING. SINCE, THEY ARE RECO GNIZING RECEIPTS ON ACTUAL BASIS, AND THIS IS THE REASON THE DIFFERENCE IS AVAILABLE BETWEEN THE BOOKS. THE LD.FIRST APPELLATE AUTHORITY DID NOT AC CEPT THIS CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NO T FILED COPY OF LEDGER ACCOUNT OF M/S.M.V. MANDAVIYA IN THE BOOKS OF THE A SSESSEE, WHICH HAS BEEN CERTIFIED BY THE PROPRIETOR. SIMILARLY, THE A SSESSEE FAILED TO SUBMIT EVIDENCE THAT M/S.M.V. MANDAVIYA HAS RECOGNIZED THE OUTSTANDING AMOUNT TOWARDS THE ASSESSEE. 6. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THAT IN SUBSEQUENT YEARS, THE ACCOUNTS HAVE BEEN RECONCILED . THE PAYMENTS HAVE BEEN MADE WHICH HAVE BEEN RECOGNIZED AS DUE IN THIS YEAR. THE WORK ITA NO.2050/AHD/2012 4 LASTED DURING THE FINANCIAL YEAR 2008-09, 2009-10 A ND 2010-11. ULTIMATELY, NOTHING REMAINED WITH THE ASSESSEE. IT IS A MERCANTILE METHOD OF ACCOUNTANCY FOLLOWED BY THE ASSESSEE. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORI TIES BELOW. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THERE IS NO DISPUTE BETWEEN THE PARTIES THAT THE ASSESSEE TOOK A CONTRACT FROM MGVCL, WHICH WAS SUB- LET TO THE M/S.M.V. MANDAVIYA. THE CONTRACT LASTED FOR FOUR Y EARS. ACCORDING TO THE ASSESSEE HE HAS BEEN SHOWING THE PAYMENT ON MER CANTILE BASIS BY CREDITING THE ACCOUNTS OF SUB-CONTRACTOR. ON THE O THER HAND, THE SUB- CONTRACTOR HAS BEEN RECOGNIZING THE RECEIPT ON ACTU AL BASIS, AND THIS LEAD TO A DIFFERENCE BETWEEN THE BOOKS OF PAYER VIS--VI S PAYEE. ACCORDING TO THE ASSESSEE HE HAS ULTIMATELY MADE PAYMENT AND RECONCILED THE ACCOUNTS IN SUBSEQUENT YEARS. FACED WITH THIS SITU ATION, WE REMIT THE ISSUE TO THE FILE FOR AO FOR VERIFICATION. THE LD. AO SHALL VERIFY THE FACT THAT WHETHER THE PAYMENT WHICH HAVE BEEN SHOWN AS O UTSTANDING IN THIS YEAR HAVE BEEN ACTUALLY PAID TO M/S.M.V. MANDAVIYA OR NOT. IF THE ASSESSEE ESTABLISHES SUCH PAYMENTS IN THE SUBSEQUEN T ASSESSMENT YEARS, THEN, NO ADDITION OUGHT TO BE MADE IN THIS YEAR. I N CASE THE PAYMENT HAS NOT BEEN DEMONSTRATED BY THE ASSESSEE BY WAY OF PLA USIBLE EVIDENCE, THEN AN INFERENCE WOULD BE MADE THAT THE AMOUNT OF DIFFERENCE HAVE NOT BEEN PAID BY THE ASSESSEE, AND THEREFORE, EVEN ON M ERCANTILE SYSTEM OF ACCOUNTING, HE IS NOT ENTITLED FOR THE EXPENSES TO THIS EXTENT. THE AO ITA NO.2050/AHD/2012 5 SHALL CARRY OUT THIS EXERCISE AFTER PROVING REASONA BLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 1 ST JUNE, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER