Sh. Salil Kumar, Amritsar. V. Asstt. Commissioner of Income Tax, Amritsar.

ITA 228/ASR/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7776 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 14-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL DHAWANLD
• Assessee Lawyers: K R JAIN LD
• Keywords: Rectification of order; Wrong claim
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. T.S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A NO.228(ASR)/2015 ASSESSMENT YEAR:2010- 11 SH. SALIL KUMAR PROP, M/S. SIDHARTHA CONSTRUCTION 24/2, KASHMIR AVENUE, AMRITSAR. PAN:AEWPK-0538G VS. ASST. CIT, CIRCLE-IV, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. K.R.JAIN (LD. ADV.) RESPONDENT BY: SH. RAHUL DHAWAN (LD. DR.) DATE OF HEARING : 07.08.2017 DATE OF PRONOUNCEMENT: 26.09.2017 ORDER PER N.K.CHOUDHRY (JM): THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE, ON FEELING AGGRIEVED AGAINST THE ORDER DATED 28.02.201 5 PASSED IN APPEAL NO.115/12-13, RELEVANT TO THE ASST. YEAR: 2010-11 BY LD. CIT(A)-2, AMRITSAR. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT THE ORDER OF THE LD. ASST. COMMISSIONER OF INC OME TAX MAKING ADDITIONS/DISALLOWANCES IS WRONG, ILLEGAL AN D AGAINST FACTS. LIKEWISE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED WHILE CONFIRMING THE SAM E. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS W HILE CONFIRMING THE FOLLOWING ADDITIONS: - BANK INTEREST RS.13,4 72/- VAT ACCOUNT RS.25,19,559/- SHOWING LESS CONTRACT RECEIPT RS.6,00,890/- ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 2 RS. 31,33,921/- 3. THAT LD. CIT (A) HAS NOT APPRECIATED THE WRITTEN AN D VERBAL SUBMISSIONS MADE BEFORE HIM AND PROCEEDED TO CONFIRM THE ADDITION ARBITRARILY. 4. THAT LD CIT (A) IS NOT JUSTIFIED WHILE CONFIRMI NG AN ADDITION OF RS.13,472/- ON A/C OF BANK INTEREST WITHOUT APPRECI ATING THE FACT THAT RS.5,000/- AND RS.6, 000/- WERE DEPOSITED IN CURRENT A/C NO. 1146 OUT OF THE CASH FLOW. THESE TW O ENTRIES DO NOT PERTAIN TO INTEREST. 5. THAT DISALLOWANCE OF VAT BY THE AO AND CONFIRMAT ION OF THE ORDER BY LD. CIT(A) IS ILLEGAL AND WITHOUT JUSTIFIC ATION. 6. THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS WHILE CONFIRMING THE ADDITION/DISALLOWANCE OF VAT AMOUNTI NG TO RS.25,19,559/-. 7. THAT THE LEARNED CIT(A) WITHOUT APPRECIATING THE FA CT THAT TDS DEDUCTED, VAT PAID ON PURCHASES OF RAW MATERIAL, OP ENING BALANCE OF VAT AND ENTRY TAX ON RAW MATERIAL ARE DE DUCTIBLE AND HENCE HAVE CONFIRMED THE DISALLOWANCES ARBITRAR ILY. 8. THAT THE LD. AO AND CIT (A) HAVE NOT APPRECIATED TH AT RS.6,00,890/- PERTAINS TO ASSESSMENT YEAR 2009-10 A ND HAVE BEEN DECLARED IN THE INCOME TAX RETURN AND TDS (BEI NG CONTRACTOR) HAVE ALSO BEEN DEDUCTED DURING THE YEAR 2009-10 BUT THE PAYMENT WAS RECEIVED DURING THE YEAR 2010-1 1. HENCE CIT(A) IS NOT JUSTIFIED WHILE CONFIRMING THE ADDITI ON. 9. THAT LD. CIT (A) HAS NOT APPRECIATED THE FACTS OF T HE CASE EXPLANATION OFFERED AND PROCEEDED TO CONFIRM THE AD DITION WHICH HAS ALREADY BEEN ASSESSED DURING THE ASSESSME NT YEAR 2009-10. 3. BRIEF FACTS OF THE CASE ARE AS UNDER : THAT THE ASSESSEE IS A CONTRACTOR AND HAD FILED ITS RETUR N OF INCOME FOR THE ASST. YEAR: 2010-11 ON 09.10.2010 DECLA RING TOTAL INCOME RS.19,63,320/- AND THE SAME WAS PROCESSED U/S 143(1) AND RELEVANT NOTICES HAVE BEEN ISSUED. DURING THE ASSESSMENT PROCEEDINGS, THE A.O ADDED RS.13,472/- ON ACCOUNT OF BAN K INTEREST AND RS.25,19,559/- ON ACCOUNT OF INCORRECT VAT CLAIMED IN P&L ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 3 ACCOUNT AND RS.6,00,890/- AS WRONG DEDUCTION CLAIMED OUT OF TOTAL CONTRACT RECEIPTS. 4. ON FEELING AGGRIEVED AGAINST THE ORDER PASSED BY THE AO, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BY FIL ING THE FIRST APPEAL AND SUBMITTED THAT MAKING FOLLOWING ADDITIONS FOR ASST. YEAR: 2010-11 ARE ILLEGAL, UNJUST AND AGAINST THE FACTS OF T HE CASE. (I) RS. 13,472/- BANK INTEREST. (II) RS. 25,19,559/- VAT ACCOUNT. (III) RS. 6,00,890/- SHOWING LESS CONTRACT RECEIPT. FURTHER, IT WAS ALSO ARGUED THAT THERE WAS NO OCCASION TO MAKE ADDITION AT A SUM OF RS.13,472/- AS BANK INTEREST, BECAU SE RS.6,000/- & RS.5,000/- DEPOSITED ON 16.05.2009 IN CUR RENT ACCOUNT NO.1146 ARE NOT ANY INTEREST BUT DEPOSITS OF CASH AS EVI DENT FROM CASH FLOW STATEMENT . FURTHER THE ASSESSING OFFICER WHILE DISALLOWING VAT FAIL ED TO APPRECIATE THAT TDS DEDUCTED BY THE DEPARTMENT IS A ALLOWABLE DEDUCTION. SIMILARLY, VAT PAID ON PURCHASE IS ALSO DEDUCT ION FOR WHICH, NO PROPER CREDIT WAS ALLOWED AND THE FORMULA APPLIED BY THE AUTHORITIES BELOW IS NOT JUSTIFIED BECAUSE THE APPELLANT IS ENTITLED TO THE VAT DEDUCTION WHICH WAS PAID BY HIM ON PURCHASE AND TAX DEDUCTION AT SOURCE IN THE SHAPE OF VAT AND RIGHTLY DE BITED TO P&L ACCOUNT. IT WAS FURTHER ARGUED THAT THE ASSESSING OFFICER FAILED TO APPRECIATE THAT A SUM OF RS.600,890/- IS AN OLD PAYME NT OF CONTRACT RELATING TO PREVIOUS YEAR ON WHICH THE TAX HAS BEEN DEDUCTED BEING A CONTRACTOR DURING THE ASST. YEAR: 2009-10 BUT PAYMENT W AS RECEIVED FROM THE DEPARTMENT DURING THE ASST. YEAR:2010-11. TH US, TREATING THE SAME AS DEDUCTION CLAIMED OUT OF TOTAL CONTRACT RECEI VED IS UNJUSTIFIED BECAUSE IT RELATES TO EARLIER ASST. YEAR, SO THERE WAS NO JUSTIFICATION IN TAXING THE SAME TWICE IN ASST. YEAR 2009 -10 AND AGAIN ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 4 IN ASST. YEAR 2010-11 AND FINALLY IT WAS PRAYED THAT T HE ORDER PASSED BY THE A.O BEING BAD IN LAW, MAY KINDLY BE QUASHED A ND APPEAL BE ACCEPTED. 5. THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT WITH REGARDS TO THE ADDITION OF RS.13,4 72/- THE ASSESSEE HAS NOT SUBMITTED THE COPES OF HIS CURRENT ACCOUNT NO.1146 TO SUBSTANTIATE HIS CLAIM THAT RS. 6,000/- & RS.5,000/- CREDITED ON 16.05.2009 AND 16.09.2009 RESPECTIVELY WERE DEPOSITS IN CURRENT ACCOUNT AND NOT INTEREST. SECONDLY, WITH REGARDS TO GROUND NO.3 IN RESPECT OF ADDITION TO RS.25,19,559/- ON ACCOUNT OF VAT , THUS, NEITHER THE PURCHASE OF CONTRACT MATERIAL DEBITED IN P & L ACCOUNT N OR TOTAL WORKS OF RS.3,90,81,836/- WAS INCLUSIVE OF VAT. THE APPELLANT HAS WRONGLY CALCULATED THE BALANCE VAT PAYABLE AT RS.5,51,234/- (GI VEN ABOVE) AS THE TOTAL OUTPUT VAT AS PER VAT 20 RETURN OF THE ASSE SSE FOR THE YEAR UNDER CONSIDERATION WAS RS.331,630/- AND NOT RS.551,234/ -. IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT THE APPELLANT HAD MADE WRONG CLAIM OF DEDUCTION RS.48,22,456/- IN THE P&L ACCOUNT AS VAT EXPENSES. AS DISCUSSED ABOVE, THE ADDITION OF RS.25,19,559 /- ON ACCOUNT OF IN CORRECT VAT CLAIMED IN THE P&L ACCOUNT IS CON FIRMED. REGARDING GROUND NO.4 WITH REGARD TO ADDITION OF RS.6,00,890/- ON ACCOUNT OF WRONG DEDUCTION CLAIMED OUT OF TOTAL CONTRACT RECEIPTS. IT WAS OBSERVED BY THE LD. CIT(A) THAT ASSESSEE HAD WRONGLY DEBITED RS.600,890/- IN THE CONTRACT RECEIPT ACCOUNT OF THE YEAR UNDER CONSIDERATION (F.Y.2009-10) BY RS.600,890/- ON 1.04.2009 AND AFTER DEDUCING THE SAME FROM THE GROSS RECEIPTS OF F.Y.2009-10 OF RS.5,91,68,326/-, ARRIV ED THAT AT THE NET CONTRACT RECEIPT OF RS.5,85,67,436/-, WHICH WAS CREDIT ED IN THE P&L ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 5 ACCOUNT OF THE YEAR UNDER CONSIDERATION. THEREFORE, THE APPELLANT HAD WRONGLY REDUCED THE GROSS CONTRACT RECEIPTS OF THE YEAR UN DER CONSIDERATION OF RS.5,19,68,326/- BY RS.600,890/- AND T HEREBY REDUCE THE PROFIT OF THE YEAR UNDER CONSIDERATION BY THAT AM OUNT. ACCORDINGLY, THE ADDITION OF RS.600,890/- IS CONFIRMED. 6. FEELING AGGRIEVED AGAINST THE ORDER PASSED BY THE LD . CIT(A), THE ASSESSEE PREFERRED THE INSTANT APPEAL AND IN RESPECT O F HIS CASE SUBMITTED THAT ADDITION OF RS.13,472/- QUA BANK INTER EST IS UNFOUNDED AS THE SAME WAS MADE WITHOUT CONSIDERING THE PROPER EXP LANATION AND THE DOCUMENTS ALREADY ON RECORD, AS RS.6000/- AND R S.5000/- TOTALING RS.11000/- DEPOSITED IN CURRENT ACCOUNT NO. 114 6 IS NOT ANY INTEREST BUT DEPOSITED IN THE BANK FROM THE CASH FLOW F OR WHICH, COPY OF CASH BOOK AND BANK ACCOUNT IS ATTACHED HEREWITH, THE REFORE THE SAME CANNOT BE TREATED AS INTEREST IN VIEW OF THE STATEM ENT OF BANK ACCOUNT AND CASH BOOK AS WELL. NEXT ISSUE RELATES TO THE VAT ACCOUNT ON ADDITION OF RS.25,19,559/-, AS THE LD. AR SUBMITTED THAT THE ASSESSIN G OFFICER MADE AN ADDITION OF RS.25,19,559 OUT OF THE TOTAL AM OUNT DEBITED TO THE P&L ACCOUNT AMOUNTING TO RS.48,22,456/- WHICH INCLUD ES THE OPENING BALANCE STANDING IN THE BALANCE SHEET OF THE E ARLIER YEAR TO THE TUNE OF RS.980,480/-. IT WAS SUBMITTED THAT THE ASSE SSEE HAD PURCHASED RAW MATERIAL AS A CONTRACTOR AND PAID A SUM OF RS.18,70,772/- AS VAT ON THE TOTAL PURCHASE OF RAW MATE RIAL DURING THE YEAR UNDER CONSIDERATION WHICH THE SUPPLIER OF RAW MATERIAL CHARGED IN THE BILLS AND THE ASSESSEE IS ENTITLED TO INPU T TAX CREDIT TO THE TUNE OF RS.1870772/-. IT WAS ALSO SUBMITTED THAT TD S WAS ALSO DEDUCTED ON THE CONSTRUCTION DONE AS A CONTRACTOR BY THE D EPARTMENT TO THE TUNE OF RS.19,71,267/-. THUS, TOTAL EXPENSES OF VAT DEBITED TO ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 6 THE PROFIT AND LOSS ACCOUNT TO THE TUNE OF RS.48,22,559/ -, THE ASSESSEE IS ENTITLED TO INPUT TAX OF RS.18,70,772/-, THEREFORE , RIGHTLY TRANSFERRED TO P & L ACCOUNT AS EXPENSES. SIMILARLY, TDS TO THE TUNE OF RS.19,71,267/- DEDUCTED BY THE PRINCIPAL ON WHOSE BEHA LF CONTRACT WORK WAS DONE AND DIRECTLY DEPOSITED IN THE GOVT. ACCOUN T, THEREFORE, THE FORMULA ADOPTED BY THE ASSESSING OFFICER IS UNFOUNDED , BASELESS, THAT FORMULA WITH THE ASSESSING OFFICER THAT THE ASSESSEE HA S TO PAY TAX ON THE GROSS RECEIPTS LESS WAGES/LABOUR AND THE EXCESS W ILL BE CARRIED FORWARD FOR NEXT YEAR IF ANY. THE CALCULATION OF WORKS CONTACT IS VERY SIMPLE AS THE ASSESSEE IS ENTITLED TO PAY VAT ON THE GROSS RECEIPTS LESS WAGES/LABOUR @ 12.50% + 10% SURCHARGE TOTAL ING RS.13.75% AND THE TRUE CALCULATION IS AS UNDER:- GROSS RECEIPT RS.5,85,67,436/- LESS: LABOUR/WAGES RS.1,94,85,600/- RS.3,90,81,836/- (A) TAX @ 12.50% ON RS.3,90,81,836/- = RS.4 8,85,230.00 SURCHARGE @ 10 % ON RS.48,85,230/- =RS.4,8 8,523.00 TOTAL OUTPUT TAX PAYABLE RS.53,73,753.00 (A) LESS: (I) ITC BROUGHT FORWARD FROM THE PREVIOUS YEAR = RS.9, 80,480.00 (II) ITC ON PURCHASE DURING THE YEAR = RS.18,70,772.0 0 (III) TDS DEDUCTED BY THE DEPARTMENT ON CONTRACT WORK RS.19,71,267.00 RS.48,22,519.00 BALANCE TAX PAYABLE(A-B) = RS. 5,51,234.00 IT WAS FURTHER SUBMITTED BY THE LD. AR THAT REVENUE A UTHORITY ON THE SAME FACT NEVER MADE ANY ADDITION QUA THE INST ANT ISSUE IN THE EARLIER YEARS AND FURTHER IN THE SUBSEQUENT YEAR I.E. TO F.Y.2011-12, 2012-13, 2013-2014 AND 2015-16 . EVEN OTHERWISE, THE ORDER U/S 143(1) HAVE BEEN PASSED BUT NO ADDITION WAS MADE IN TH IS REGARD. THEREFORE, THE CONSISTENCY, DEMANDS THAT THE REVENUE CANN OT MEET THE DIFFERENT TREATMENT IN ANY YEAR. IT WAS FURTHER SUBMITTED THAT EVEN ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 7 OTHERWISE THE LD. CIT(A) IN THE CASE OF M/S JAGDAMBEY RICE MILLS (A.Y.2011-12) IN APPEAL NO. 140/15-16 VIDE ITS ORDER DATED 02.03.2017 AND SUBSEQUENTLY IN APPEAL NO.26/14-15 RE LEVANT TO THE ASST. YEAR 2012-13 IN THE NAME OF M/S JAGDQMBEY RICE AN D OIL MILLS HOLD THE VAT AS FORM/PART OF THE PURCHASE VALUE AND AL LOWED AS AN ALLOWABLE EXPENSES UNDER THE I.T. ACT AND DELETED THE SAID ADDITION QUA VAT. 7. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDE RS PASSED BY THE AUTHORITIES BELOW AND SUBMITTED THAT THE ORDERS PA SSED ARE WELL REASONS AND BASED UPON LOGIC AND REASONING THEREFORE DO ES NOT REQUIRES TO BE INTERFERED WITH . 8. WE HAVE GONE THROUGH DOCUMENTS, FACTS AND CIRCUMSTANCES OF THE CASE AND RIVAL SUBMISSIONS OF THE PARTIES. FIRST ISSUE RELATES TO DISALLOWANCE OF RS. 13,472/- , ADDITION MADE BY A.O. AS BANK INTEREST. FROM THE BAN K STATEMENT OF CURRENT ACCOUNT NO.1146 AS HAS BEEN PRODUCED BEFORE US , I T CLEARLY REFLECTS THAT ENTRIES OF RS. 6,000/- & RS.5,000/- CREDIT ED ON 16.05.2009 AND 16.09.2009 RESPECTIVELY WERE DEPOSITS IN CURRENT ACCOUNT AND THEREFORE CAN NOT BE TERMED AS INTEREST, HEN CE THE ASSESSE SHALL GET THE RELIEF OF RS. 11000/- OUT OF 13,472 /- . IN RESULT , THE ADDITION OF RS 11000/- STANDS DELETED OUT OF RS. 13 ,472/- . 8.1 SECOND ISSUE RELATES TO THE DISALLOWANCE OF VAT OF RS.25,19,559/- , AS IT REFLECTS FROM THE BALANCE SHEET, THE APPELLANT DEBITED RS.38,63,5289/- IN PROFIT & LOSS ACCOUNT ON ACCOUN T OF VAT AS PER DETAILS BELOW. ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 8 ITC BROUGHT FORWARD FROM THE PREVIOUS YEAR = RS. 9,80,480.00 ITC ON PURCHASE DURING THE YEAR = RS 8,70,772. 00 TDS DEDUCTED BY THE DEPARTMENT ON = R S. 19,71,267.00 CONTRACT WORK THE ASSESSEE ESTIMATED THE VAT PAYABLE AS UNDER. TOTAL GROSS WORK DONE (INCLUDING VAT) RS.5,85,67,4 36/- LESS: LABOUR/WAGES RS.1,94,85,600/- BALANCE RS.3,90,81,836/- VAT PAYABLE 12.50% = RS.48,85,230.00 SURCHARGE @ 10 % ON RS.48,85,230/- = RS.4,88,523. 00 TOTAL OUTPUT TAX PAYABLE RS.53,73,753.00 FURTHER FROM THE VAT FORM 20, THE BREAK UP OF GOODS SOLD UNDER WORK CONTRACT REFLECTS AS UNDER: S.B.KHANNA & CO. PHONE:[phone] S172 FORM VAT-20 ANNUAL STATEMENT BY A TAXABLE PERSON SEE RULE 40 VRN: 03102029917 NAME OF THE PERSON ADDRESS OF THE PERSON PIN CODE EMAIL ID TELEPHONE NUMBER(S) FAX NUMBER(S) FOR PERIOD: FROM 01/04/2009 TO 31/03/2010 SIDHARTH CONSTRUCTION CO., MAJITHA ROAD, AMRITSAR 1 SALES DETAILS AS PER BOOKS AS PER RETURN DIFFERENCE A) GROSS SALES 39081836 .00 22478746.00 16603090 .00 B) LESS: SALES BY THE EXEMPTED UNIT 0.00 0.00 0.00 C) LESS: ZERO RATED SALES 0.00 0.00 0.00 D) LESS: INTER-STATE SALE 0.00 - 115574.00 0.00 - 115574.00 E) LESS: TAX FREE SALES 0.00 0.00 0.00 F) LESS: SALES RETURN, DISCOUNTS 0.00 | 0.00 0.00 G) LESS: TAX ELEMENT INCL. IN SALES OF 0.00 0.00 0.00 H) LESS: PURCHASE VALUE OF SALE OF GOODS FROM EXEMPTED UNITS AND SOLD TO PERSONS OTHER THAN TAX. PERSON I) ANY OTHER DEDUCTIONS J) NET SALES SUBJECT TO VAT 39081836.00 2236172.00 16718664.00 ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 9 2. PURCHASE DETAILS AS PER BOOKS AS PER RETURN DIFFERENCE A) GROSS PURCHASES 31042545.00 22063004.00 8979541.00 B) LESS: IMPORTS FROM OUTSIDE INDIA 0.00 0.00 0.00 C) LESS: INTERSTATE PURCH.S BRANCH TRF -662281.00 -662281.00 0.00 D) LESS: PURCHASES FROM EXEMPT UNITS 0.00 0.00 0.00 E) LESS: TAX FREE PURCHASES 0.00 0.00 0.00 F) LESS: P URCHASES FROM PERSON OTHER THAN TAXABLE PERSON -9099386.00 -119445.00 8979941.00 G) LESS: PURCHASES AGAINST H FORM 0.00 0.00 0.00 H) LESS: PURCHASE LIABLE TO PURCHASE TAX U/S.19(1)& 20 0.00 0.00 0.00 I) LESS PURCHASES NOT ELIGIBLE FOR ITC U/S 13(5) 0.00 0.00 0.00 J) LESS: PURCHASE RETURNS, DISCOUNTS 0.00 0.00 0.00 K) ANY OTHER DEDUCTIONS 0.00 0.00 0.00 1) NET PURCHASES ELIGIBLE FOR ITC 21280878.00 21281278.00 -400.00 3. OUTPUT TAX AS PER BOOKS AS PER RETURN DIFFERENCE A) VAT ON NET TAXABLE SALES 331630.00 701145.00 -369515.00 B) ADD: PURCHASE TAX ON TURNOVER 0.00 0.00 0.00 C) ADD/LESS: PRIOR PERIOD NET ADJUSTMENT OF OUTPUT TAX 0.00 0.00 0.00 D) TOTAL OUTPUT TAX 331630.00 701145.00 -369515.00 PAGE 1 OF 9 (SIDHARTH CONSTRUCTION CO., - F. YR.: 2009-2010) WORK SHEET 1. BREAK UP OF TAXABLE SALES (OTHER THAN UNDER WORK S CONTRACT)AND PURCHASE IN PUNJAB (EXCLUDING CAPITAL GOODS) 1(A) RATE 1(B) GROSS SALES VAT 1(C) GROSS PURCHASE VAT AT 4 % 0.00 0.00 91,16,017.00 364641.00 AT 5 % 0.00 0.00 3,35,376.00 16769.00 AT 12.5 % 0.00 0.00 1,18,29,485.00 1478686.00 SURCHARGE 0.00 10675.00 TOTAL 0.00 0.00 2,12,80,878.00 1870771.00 2. BREAK UP OF GOODS SOLD UNDER WORKS CONTRACT 2(A) GROSS VALUE OF WORK CONTRACT EXECUTED 2(B) TAXABLE VALUE OF LABOUR 2(C)TAXABLE VALUE 2(D) RATES WISE BREAK UP 2(E) OUTPUT TAX 58567436.00 19485600.00 27357285.00 4299002.00 3908184.00 3517365.00 AT 4% AT 5.5% AT 12.5% AT 13.75% 1094291.00 236445.00 488523.00 483638.00 TOTAL 2302897.00 LESS TDS 1971267.00 NET O UTPUT TAX 331630.00 ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 10 (IV) BREAK UP OF ZERO RATED SALES : NOT APPLICABLE A) PRIOR PERIOD ADJUSTMENTS :NOT APPLICABLE B) ANY OTHER ADJUSTMENTS PLEASE SPECIFY DOCUMENTS ATTACHED ------------------ ------------------------ 1. COPY OF TRADING A/C, P&L A/C AND BALANCE SHEET PAGE 9 OF 9 (SIDHARTH CONSTRUCTION CO.- F .YR.2009-2010) AS IT WAS SUBMITTED BY THE LD. AR THAT IN FACT IN FORM NO.16 THERE IS A COLUMN WHICH PRESCRIBES THE SALES DETAILS (I) AS P ER BOOKS (II) AS PER RETURN (III) DIFFERENCE . THAT AS PER BO OKS OF ACCOUNT AND RETURN, DIFFERENCE IS SUPPOSED TO OCCURRED BECAUSE AT TH E INITIAL STAGE, THE APPELLANT HAS TO SHOW THE VAT PAYABLE/PAID AS SHOWN IN THE BOOKS OF ACCOUNT AND ACTUAL FIGURE HAS TO ARRIVE AS PER THE RETURN OF VAT AND EVEN OTHERWISE NOTIONAL INPUT TAX CREDIT CAN B E MENTIONED AND AS PER VAT FORM-20 FOR THE PERIOD 1 ST APRIL, 2009 TO 31 ST MARCH, 2010 IT IS CLEARLY SHOWN THAT AS PER BOOKS OF ACCOUNTS, TH E NET INPUT TAX CREDIT IS RS.18,70,772 AND AS PER RETURN IT IS 19,2 8,729/- AND THERE IS DIFFERENCE OF -57957, THEREFORE, THE OBSERVATION OF THE REVENUE AUTHORITY THAT INPUT TAX CREDIT OF RS.18,70,709 ON IN PUT PURCHASE CANNOT BE DEBITED IN THE P&L ACCOUNT SUFFERS FROM LOGICA L REASONING AS IN THE INSTANT CASE. IT IS NOT IN CONTROVERSY THAT THE ASSESSEE IS FOLLOWING THE SAME MERCANTILE SYSTEM IN THE PREVIOUS YEARS AS WELL AS SUBSEQUEN T YEARS AND HE WAS NEVER BEEN SUBJECTED TO ADDITION IN THE PRE VIOUS ASSESSMENT YEARS FOR EXAMPLE 2009-10 AND SUBSEQUENT YEARS:2 011- 12, 2012-13, 2013-14, 2014-15 AND 2015-16 . EVEN OTHERWISE, IN A.Y. 2011-12, THE ASSESSEE FOLLOWED T HE SAME MERCANTILE SYSTEM OF ACCOUNTING AS IT REFLECTS FROM TH E ANNUAL STATEMENT FILED BY THE ASSESSEE IN VAT FORM-20. ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 11 S.B.KHANNA & CO. PHONE:[phone] 9814153375 S172 FORM VAT-20 ANNUAL STATEMENT BY A TAXABLE PERSON SEE RULE 40 VRN: 03102029917 NAME OF THE PERSON ADDRESS OF THE PERSON PIN CODE EMAIL ID TELEPHONE NUMBER(S) FAX NUMBER(S) FOR PERIOD: FROM 01/04/2010 TO 31/03/2011 SIDHARTH CONSTRUCTION CO., MAJITHA ROAD, AMRITSAR 143Q01 PAN: AFWPK0538G [e-mail] 1 . SALES DETAILS AS PER BOOKS AS PER RETURN DIFFERENCE A) GROSS SALES 16911998.00 12848380.00 4063618.00 B) LESS: SALES BY THE EXEMPTED UNIT 0.00 0.00 0.00 C) LESS: ZERO RATED SALES 0.00 0.00 0.00 D) LESS: INTER-STATE SALE 0.00 0.00 0.00 E) LESS: TAX FREE SALES/SCHEDULE A 0.00 0.00 0.00 F) LESS: SALES RETURN, DISCOUNTS 0.00 | 0.00 0.00 G) LESS: TAX ELEMENT INCL. IN SALES OF 0.00 0.00 0.00 H) LESS: PURCHASE VALUE OF SALE OF GOODS FROM EXEMPTED UNITS AND SOLD TO PERSONS OTHER THAN TAX. PERSON I) ANY OTHER DEDUCTIONS J) NET SALES SUBJECT TO VAT 16911998.00 12848380.00 4063618.00 2. PURCHASE DETAILS AS PER BOOKS AS PER RETUR N DIFFERENCE A) GROSS PURCHASES 12480643.00 10849293.00 1631350.00 B) LESS: IMPORTS FROM OUTSIDE INDIA 0.00 0.00 0.00 C) LESS: INTERSTATE PURCH.S BRANCH TRF 0.00 0.00 0.00 D) LES S: PURCHASES FROM EXEMPT UNITS 0.00 0.00 0.00 E) LESS: TAX FREE PURCHASES 0.00 0.00 0.00 F) LESS: PURCHASES FROM PERSON OTHER THAN TAXABLE PERSON -1876380.00 -245030.00 1631350.00 G) LESS: PURCHASES AGAINST H FORM 0.00 0.00 0.00 H) LESS: PURCHASE LIABLE TO PURCHASE TAX U/S.19(1)& 20 0.00 0.00 0.00 I) LESS PURCHASES NOT ELIGIBLE FOR ITC U/S 13(5) 0.00 0.00 0.00 J) LESS: PURCHASE RETURNS, DISCOUNTS 0.00 0.00 0.00 K) ANY OTHER DEDUCTIONS 0.00 0.00 0.00 1) NET PURCHASES ELIGIBLE FOR ITC 10604263.00 10604263.00 0.00 3. OUTPUT TAX AS PER BOOKS AS PER RETURN DIFFERENCE A) VAT ON NET TAXABLE SALES 1418494.00 721161.00 697333.00 B) ADD: PURCHASE TAX ON TURNOVER 0.00 0.00 0.00 C) ADD/LESS: PRIOR PERIOD NET ADJUSTMENT OF OUTPUT TAX 0.00 0.00 0.00 D) TOTAL OUTPUT TAX 1418494.00 721161.00 697333.00 PAGE 1 OF 8 (SIDHARTH CONSTRUCTION CO., - F. YR. : 2010-2011) ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 12 WORK SHEET 1. BREAK UP OF TAXABLE SALES (OTHER THAN UNDER WORK S CONTRACT)AND PURCHASE IN PUNJAB (EXCLUDING CAPITAL GOODS) 1(A) RATE 1(B GROSS SALES VAT 1(C) GROSS PURCHASE VAT AT 4.00 % 0.00 0.00 5,91,096.00 23643.00 AT 5.00 % 0.00 0.00 20,59,831.00 102992.00 AT 12.50 % 0.00 0.00 79,53,336.00 994167.00 SURCHARGE 0.00 109716.00 TOTAL 0.00 0.00 1,06,04,263.00 1230518.00 2. BREAK UP OF GOODS SOLD UNDER WORKS CONTRACT 2(A) GROSS VALUE OF WORK CONTRACT EXECUTED 2(B) TAXABLE VALUE OF LABOUR 2(C)TAXABLE VALUE 2(D) RATES WISE BREAK UP 2(E) OUTPUT TAX 27368698.00 10456700.00 10992799.00 5919199.00 AT 5.5% AT 13.75% 604604.00 813890.00 TOTAL 1418494.00 LESS TDS 0.00 NET O UTPUT TAX 1418494.00 (V) BREAK UP OF ZERO RATED SALES : NOT APPLICABLE C) PRIOR PERIOD ADJUSTMENTS : NOT APPLICABLE D) ANY OTHER ADJUSTMENTS PLEASE SPECIFY DOCUMENTS ATTACHED ------------------ ------------------------ 1. COPY OF TRADING A/C, P&L A/C AND BALANCE SHEET PAGE 8 OF 8 (SIDHARTH CONSTRUCTION CO.- F. YR.2010-2011) THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PRIN CIPAL OFFICER, HILL VIEW INFRASTRUCTURE (P) LTD. REPORTED AT 384 ITR 45 (P&H) CONSIDERED THE FOLLOWING THE CONSISTENCY OF MERCANTILE SYST EM AND HELD AS UNDER :- 'IF THE ASSESSEE HAD BEEN CONSISTENTLY FOLLOWING PR OJECT COMPLETION METHOD FOR BOOKING REVENUE AND IT IS AN ACCEPTED METHOD OF ACCOUNTING THEREFORE THE REJECTION OF ACC OUNTS NOT JUSTIFIED' . FURTHER THE HONBLE SUPREME COURT OF INDIA IN THE CA SE OF CIT(A) BILHARI INVESTMENT PVT. LTD. REPORTED AT 299 ITR 1 ( SC) CONSIDERED THE ASPECTS OF CONSISTENCY AND WAS PLEASED TO HELD AS UNDER :- ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 13 APPLYING THE ABOVE SAID PRINCIPLES TO THE FACTS OF THE PRESENT CASE, WE FIND THAT HE ASSESSEE BEFORE US HAS BEEN F OLLOWING THE SYSTEMATIC METHOD OF ACCOUNTING FROM YEAR TO YEAR W HICH HAS BEEN ACCEPTED BY THE DEPARTMENT AND NO DEFECTS HAVE BEEN POINTED OUT BY THE DEPARTMENT IN THE METHOD OF ACCOUNTING ADOPT ED BY THE ASSESSE AND THUS, THERE IS NO REASON TO REJECT THE SAME. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT(A) VS. MANHISH BUILD WELL (P) LTD. REPORTED AT 245 CTR 397 (DEL) A PPROVED THE CONSISTENCY OF PARTICULAR METHOD OF ACCOUNTING WHILE HOLDI NG AS UNDER :- WHERE THE ASSESSEE WAS FOLLOWING A PARTICULAR METH OD OF ACCOUNTING CONSISTENTLY, WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT FROM YEAR TO YEAR AND IN THE ABSENCE OF ANY DEFECT BEING POINTED OUT BY THE ASSESSING OFFICER THAT BY FOLLOWING SUCH MET HOD, INCOME HAD ESCAPED ASSESSMENT, WE FIND NO MERIT IN THE ORDER O F ASSESSING OFFICER IN HOLDING THAT PERCENTAGE COMPLETION METHO D SHOULD BE APPLIED TO THE ASSESSEE FOR THE YEAR UNDER CONSIDER ATION. IT IS PREROGATIVE OF THE ASSESSEE TO ARRANGE ITS AFFAIRS IN SUCH A MANNER AND FOLLOW ANY RECOGNIZED METHOD OF ACCOUNTING TO C OMPUTE ITS PROFITS. IN VIEW THEREOF, WE FIND NO MERIT IN THE O RDER OF THE ASSESSING OFFICER ITS PROFITS. IN VIEW THEREOF, WE FIND NO MERIT IN THE ORDER OF THE ASSESSING OFFICER IN RE-COMPUTING THE INCOME IN THE HANDS OF THE ASSESSEE. UPHOLDING THE ORDER OF THE C OMMISSIONER OF INCOME TAX(APPEALS), WE DISMISS THE GROUND OF APPEA L RAISED BY THE REVENUE DEPARTMENT. ALTHOUGH THE ORDER U/S 143(1) HAVE BEEN PASSED IN SUBSEQ UENT A.Y. I.E. 2011-2012, BUT NO ADDITION WAS MADE QUA VA T CLAIMED. IT IS SETTLED PRINCIPLE BY THE VARIOUS COURTS THAT IF ON THE SAME FACTS , DEPARTMENT HAS NOT MADE ANY ADDITION IN THE EARLIER OR SUBSEQUENT YEARS THEN IT IS NOT REASONABLE AND LOGICAL TO MAKE AD DITION ON THE SIMILAR AND IDENTICAL FACTS FOR THE ANOTHER YEAR. AS THE TDS DEDUCTED BY THE DEPARTMENT HAS BEEN SHOWN AS DEBIT ENTRY BY THE ASSESSEE AND ITC TO THE TUNE OF RS.19,71,267/- DEDUCTED BY THE DE PARTMENT AND ITC BROUGHT FORWARD TO THE TUNE OF RS.9,80,480/- HAV E BEEN SHOWN AS EXPENSES BY THE ASSESSEE IN THE P&L ACCOUNT, THEREFORE, IT DOES NOT ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 14 SUFFER FROM IR-REGULARITY, THEREFORE, FORMULA ADOPTE D BY THE ASSESSEE FOR CALCULATING THE VAT IS CORRECT , ESPECIALLY IN VIEW OF THE FACT THAT THE ASSESSEE CASE IS AUDITED UNDER SECTION 44F OF THE ACT AND NO DEFECT OR ERROR POINTED OUT BY THE AUDITOR AND EVEN OTHERWISE THE REVENUE AUTHORITIES HAS NOT DOUBTED THE AUTHENTICITY O F AUDITOR'S REPORT AND ALSO IN VIEW OF THE ORDERS PASSED BY THE LD . CIT(A) IN THE CASE OF JAGDAMBEY RICE AND OIL MILLS (SUPRA). WE FEEL IT APPROPRIATE TO REPRODUCE HEREIN THE OBSER VATION OF THE LD. CIT(A) IN JAGDAMBEY RICE AND OIL MILLS (SUPRA) 6. I HAVE CONSIDERED THE RECTIFICATION ORDER, THE WRIT TEN SUBMISSIONS OF THE APPELLANT AND THE GROUNDS OF APPEAL ARE DISP OSED OFF HEREUNDER;- (I) THE GROUND OF APPEAL NO. 1 AND 2 IS GENERAL IN NATU RE AND REQUIRE NO ADJUDICATION. (II) THE GROUND OF APPEAL NO.3 IS AGAINST ADDITION OF RS 84,242/-. THE ASSESSMENT IN THE CASE WAS COMPLETED AT AN INCOME O F RS104,840/-.IN THE ASSESSMENT PROCEEDINGS IT WAS NO TICED THAT ASSESSEE HAD CLAIMED AND DEBITED RS.84,242/- UNDER HEAD PURCHASE TAX REVERSIBLE IN P&L A/C. THEREFORE THE A O ISSUED NOTICE U/S 154 TO ASSESSEE PROPOSING TO ADD BACK RS .84,242/- AS THIS IS A MISTAKE APPARENT FROM RECORD AS THE PU RCHASE TAX REVERSIBLE IS NOT ALLOWABLE AS A DEDUCTION. THEREFO RE THE AO ADDED BACK RS.84,242/- TO THE TOTAL INCOME. IN THE APPEAL PROCEEDING, THE APPELLANT RELIED ON T HE DECISION OF THE UNDERSIGNED ON THE SAME ISSUE IN ITS APPEAL FOR AY 2012-13 VIDE ORDER IN APPEAL NO. 26/14-15 DATED 27-03-2015. IN THAT APPEAL IN THE WRITTEN SUBMISSIONS THE APPELLANT ARGUED THAT S INCE THE APPELLANT ARE SELLING RICE INTERSTATE AND LEVIED CST @2% BUT ARE PURCHASING PADDY BY PAYING 4% VAT. AT THE TIME OF PURCHASE OF PADDY THE ASSESSEE PAY VAT @4% AND CLAIMED CREDIT FOR IT (SIN CE IT IS NOT KNOWN WHETHER THE PRODUCE WILL BE SOLD INTERSTATE OR IN T HE STATE). FURTHER WHEN RICE IS SOLD INTERSTATE VAT OF 2% (FOR WHICH C REDIT IS NOT ADMISSIBLE) IS REVERSED AND FORMS PART OF THE PURCH ASE VALUE. SUCH VAT HAS TO BE SEPARATELY MENTIONED IN THE TRADING ACCOU NT AS THE CREDIT AND REVERSAL OF VAT OCCURS AT DIFFERENT POINTS OF TIME. THEREFORE THE APPELLANT CLAIMED THAT THE TAX PAID FOR WHICH NO CE NVAT OR TAX CREDIT IS AVAILABLE FORMS PART OF THE PURCHASE VALUE OF GO ODS, HENCE FULLY ALLOWABLE AS AN EXPENSES UNDER I.T. ACT. ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 15 I AM IN AGREEMENT WITH THE CONTENTION OF THE APPELL ANT AND THE ADDITION OF RS.84,242/- ON ACCOUNT OF VAT P AID @ 2% ON INTEREST SALE FOR WHICH NO CENVAT OR TAX CREDIT IS AVAILABLE, FORM PART OF PURCHASE VALUE AND IS AN ALLOWABLE EXP ENSE AND THE ADDITION OF RS.84,242/- IS DELETED. HENCE, WE ARE OF THE OPINION THAT THE ASSESSEE IS ALSO ENTI TLED TO CLAIM THE ENTIRE AMOUNT OF RUPEES (ITC ON PURCHASE) DUR ING THE YEAR AT RS.18,70,772/- AND TDS DEDUCTED BY THE DEPARTMENT AT RS.19,71,267/- AND FURTHER ITC BROUGHT FORWARD TO TH E TUNE OF RS.9,80,480/- AS RIGHTLY CALCULATED AS MENTIONED ABOVE. HENCE, WE ARE INCLINED TO DELETE THE ADDITION OF RS . 25,19,559/- ON ACCOUNT OF INCORRECT VAT CLAIMED. 8.2 NEXT ISSUE RELATES TO ADDITION OF RS.600,890/- ON ACCOUNT OF WRONG DEDUCTION CLAIMED OUT OF TOTAL CONTRACT RECEIPTS AS IT WAS ARGUED BY THE LD. AR THAT ADDITION OF RS.600,890/ - AS LESS CONTRACT RECEIPTS SHOWN IS FACTUALLY INCORRECT AS THE ASSESSIN G OFFICER AND CIT(A) NEVER CONSIDERED THE REPLY OR THE SUBMISSION S OF THE ASSESSEE PROPERLY BECAUSE THE SAID AMOUNT WAS CARRIED FORWAR D REGARDING RECEIVABLE OF LAST YEAR AS THE SAME CAN BE PER USED FROM THE COPY OF THE CONTRACT RECEIPTS FROM THE LEDGER BECAUSE THE FIGURE WAS RELATING TO THE EARLIER YEAR PERTAINS TO THE YEAR EN DING 31 ST MARCH, 2009 AS THE PAYMENT WAS OUTSTANDING, THEREFORE, THE SAME WAS TAKEN AS PENDING BECAUSE THE SAID AMOUNT WAS NEVER RECEIVED U P TO 31 ST MARCH, 2009 AND AMOUNT OF RS.6,20,943/- HAD BEEN REC EIVED ONLY ON 29 TH APRIL, 2009 AND OUT OF WHICH A SUM OF RS.6,00,890/- WAS RELATING TO THE PERIOD ENDING 31 ST MARCH, 2009. WE ARE OF THE CONSIDERED OPINION THE AMOUNT OF RS.6,00,890/- HAS BEEN SPECIFICALL Y SHOWN AS OPENING BALANCE AND VIDE ENTRY DATED 29 TH APRIL,2009 FOR RS.6,20,943/- ITA NO.228 (ASR)/2015 ASST. YEAR : 2010-11 16 REFLECTS AS CREDIT ENTRY, THEREFORE , WE ARE IN AGREEME NT WITH THE AFORESAID SUBMISSION OF THE ASSESSEE TO THE EFFECT THAT THE PAYMENT OF RS.6,00,890/- PERTAINS TO THE PERIOD ENDING 31 ST MARCH, 2009, HOWEVER, THE SAME WAS REALIZED ON 19 TH APRIL, 2009, HENCE, THE ADDITION RS.600,890/- ON ACCOUNT OF WRONG DEDUCTION CLAI MED OUT OF TOTAL CONTRACT RECEIPTS STANDS DELETED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.09. 2017. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED:26.09.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER