The ITO, Ward-5(1), Baroda V. M/s. Radiant Engineers, Baroda

ITA 229/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6921 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-12-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 28-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL R SHAH
• Keywords: Reopening of assessment
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA, VICE PRESIDENT & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO. 229 / AHD/ 20 1 1 & C.O. NO. 37/AHD/2011 (A SSESSMENT YEAR: 2005 - 06) THE ITO, WARD - 5(1), BARODA V/S M/S. RADIANT ENGINEERS D - 28, SARDAR ESTATE, AJWA ROAD, BARODA (APPELLANT) (RESPONDENT) M/S. RADI ANT ENGINEERS D - 28, SARDAR ESTATE, AJWA ROAD, BARODA V/S THE ITO, WARD - 5(1), BARODA (APPELLANT) (RESPONDENT) PAN: AACFR 0784L APPELLANT BY : SHRI NIMESH YADAV, SR. D.R. RESPONDENT BY : SHRI ANIL R. SHAH, A.R. ( )/ ORDER DATE OF HEARING : 12 - 12 - 2014 DATE OF PRONOUNCEMENT : 19 - 12 - 2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - V, BARODA DATED 1.11.2010 FOR A.Y. 2005 - 06 AND AGAINST WHICH THE ASSESSEE HAS ALSO FILED THE C.O. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. ITA NO 229/AHD/11 & C.O. NO. 37/A/11 . A.Y. 2005 - 06 2 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF SITE AND SOFT FABRICATION, ERECTION AND ENGINEERING OF PLANT ETC. A SSESSEE FILED ITS RETURN OF INCOME FOR A . Y . 2005 - 06 ON 28.10.2005 DECLARING TOTAL INCOME OF RS 4 , 53 , 790/ - . THE ASSESSMENT WAS INITIALLY FRAMED U/S 143(3) VIDE ORDER DATED 20.3.2007 AND THE TOTAL INCOME WAS DETERMINED AT RS . 5 , 50 , 470/ - . SUBSEQU ENTLY, THE CASE WAS REOPENED BY ISSUING NOTICE U/S 148 ON 30.3.2009 AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) R . W . S . 148 OF THE ACT VIDE ORDER DATED 30.10.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS 24 , 63 , 550/ - . A GGRIEVED BY THE ORDER OF AO, A SSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO VIDE ORDER DATED 1.11.2010 GRANTED SUBSTANTIAL RELIEF TO THE A SSESSEE . AGGRIEVED BY THE AFORESAID ORDER OF CIT, REVENUE IS NOW IN APPEAL BEFORE US AND ASSESSEE HAS ALSO FILED A CO. THE GROUNDS RAISED BY THE R EVE NUE READS AS UNDER : - L(I), ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 18,88,234/ - ON ACCOUNT OF MOBILIZATION ADVANCE RECEIVED BY THE ASSESSEE. L(II). THE CIT(A) ERRED IN NOT APPRECIAT ING THE FACT THAT ACCOUNTING PRACTICE CANNOT OVERRIDE ANY PROVISION OF THE INCOME - TAX. UNDER THE MERCANTILE SYSTEM, INCOME AND EXPENDITURE ARE RECORDED AT THE TIME OF THEIR OCCURRENCE DURING THE PREVIOUS YEAR. HENCE, THE ASSESSEE SHOULD HAVE ACCOUNTED FOR THE RECEIPTS SHOWN IN THE GUISE OF MOBILIZATION ADVANCE DURING THE YEAR UNDER CONSIDERATION. THUS, THE AO RIGHTLY ADDED THE MOBILIZATION ADVANCE TO THE TOTAL INCOME OF THE ASSESSEE TREATING IT AS PART OF RECEIPTS. 2. THE APPELLANT CRAVES TO ADD TO, AMEND O R ALTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. 4. ON THE OTHER HAND, THE GROUNDS RAISED BY THE A SSESSEE IN ITS CO READS AS UNDER: - 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND IN FACT IN HOLDING THAT SEC. 148 OF THE ACT APPLIES TO THE FACTS OF THE CAS E AND THAT ASSESSMENT WAS CORRECTLY REOPENED UNDER 147 OF THE ACT IT IS SUBMITTED BY YOUR APPELLANT THAT INCOME HAS NOT ESCAPED ASSESSMENT OR UNDER ASSESSED AND THAT THE REASONS RECORDED FOR REOPENING THE ASSESSMENT DOES NOT HAVE ANY DIRECT BEARING OR NEXU S WITH THE INCOME ALLEGED TO HAVE BEEN ESCAPED AND THEREFORE THE REOPENING OF ASSESSMENT ORDER PASSED THEREUNDER AND DEMAND RAISED REQUIRES TO BE CANCELLED 2. WITHOUT PREJUDICE TO ABOVE IT IS SUBMITTED THAT THE LEARNED CIT(A) HAS PASSED SPEAKING ORDER AND HAS RIGHTLY HELD THAT 'MOBILIZATION OF ADVANCE' OF RS. 18,88,244 WAS NOT ASSESSABLE AS INCOME IN THE YEAR UNDER APPEAL AND HAS RIGHTLY DELETED THE SAID ADDITION MADE BY THE ASSESSING OFFICER. SINCE THE SAID INCOME HAS NEITHER ACCRUED NOR RECEIVED AND ALREADY ASSESSED IN A. Y. 06 - 07 THE ADDITION MADE BY THE ASSESSING OFFICER IN THE YEAR UNDER APPEAL ALSO AMOUNTS TO DOUBLE TAXATION WHICH IS AGAINST JUSTICE & EQUITY AND THEREFORE THE ADDITION WAS NOT LIABLE TO BE MADE BY THE ASSESSING OFFICER. ITA NO 229/AHD/11 & C.O. NO. 37/A/11 . A.Y. 2005 - 06 3 IT IS THEREFORE SUB MITTED THAT THE CROSS OBJECTION OF APPELLANT BE ALLOWED AND RELIEF CLAIMED BE ALLOWED. YOUR APPELLANT RESERVES THE RIGHT TO ADD, AMEND OR WITHDRAW ANY OR ALL GROUNDS OF APPEAL. 5. WE FIRST TAKE UP REVENUE S APPEAL IN ITA NO 229/AHD/2011 6. A.O NOTICED THAT ASS ESSEE HAD RECEIVED MOBILIZATION ADVANCE AS PER THE TERMS OF CONTRACT AND ON WHICH TDS WAS DEDUCTED BY THE PAYER BUT THE MOBILIZATION ADVANCE WAS NOT CONSIDERED AS PART OF GROSS RECEIPTS BY THE ASSESSEE. THE ASSESSEE WAS ASKED TO S HOW CAUSE AS TO WHY THE MO BILIZATION ADVANCE BE NOT INCLUDED IN THE GROSS RECEIPTS TO WHICH THE ASSESSEE INTERALIA SUBMITTED THAT IT WAS CREDITED AS WORK IN PROGRESS ON PERCENTAGE BASIS AS IT WAS FOLLOWING COMPLETION METHOD OF ACCOUNTING AND FURTHER THE AMOUNT HAS BEEN RECEIVED IN SUBSEQUENT YEAR AND WAS REFLECTED IN THE SALES IN SUBSEQUENT YEAR. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO AS HE WAS OF THE VIEW THAT THE MOBILIZATION ADVANCE SHOULD HAVE BEEN INCLUDED IN THE GROSS RECEIPTS FOR THE YEAR UN DER CONS IDERATION. HE THEREFORE ADDED THE MOBILIZATION ADVANCE OF RS 18 , 88 , 234 / - TO THE INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF AO, THE MATTER WAS CARRIED BEFORE CIT (A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE REMAND REPORT AND ASSESSE E'S RESPONSE TO REMAND REPORT DELETED THE ADDITION BY HOLDING AS UNDER: - 6.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. IT IS OBSERVED THAT IN THE ORIGINAL SCRUTINY ASSESSMENT PRIMA FACIE THERE - IS NO OPINION OFFERED BY THE AO IN REGARD TO MOBILIZATION ADVANCES OR THE WORK IN PROGRESS. IN MY HUMBLE OPINION THUS THE REOPENING CANNOT BE TERMED AS CHANGE IN OPINION OF THE AO AS THERE WAS NO OPINION IN THE FIRST PLACE ON THE SAID ISSUE OF TAXAB ILITY OR OTHERWISE OF MOBILIZATION ADVANCE. THE REOPENING IS THUS IN ORDER. ON MERITS, HOWEVER, IT IS OBSERVED THAT APPELLANT HAD PROVIDED ALL THE DETAILS OF BILLS AND ALSO THE METHOD ADOPTED FOR DECLARING THE INCOME. THE APPELLANT IS A CONTRACTOR AND IS R IGHTLY FOLLOWING THE PERCENTAGE COMPLETION METHOD AS PER AS - 7. IT HAS ALSO DECLARED THE 75% OF THE CONTRACTED AMOUNT I.E. RS.20.42 LAKHS AS INCOME AS ON 31/03/2005 WHICH IS VERY MUCH IN LINE WITH THE MATCHING CONCEPT AND IN FACT THE ENTIRE MOBILIZATION ADV ANCE HAS BEEN ACCOUNTED FOR AGAINST THE RUNNING BILLS. THE ARGUMENTS OF THE APPELLANT HAVE ALSO NOT BEEN CHALLENGED IN THE REMAND REPORT BY THE AO. IN VIEW THEREOF ON MERITS THERE IS NO JUSTIFICATION FOR THE ADDITION OF RS.18,88,234/ - WHICH IS DIRECTED TO BE DELETED. GROUND NO. 3 IS ALLOWED. ITA NO 229/AHD/11 & C.O. NO. 37/A/11 . A.Y. 2005 - 06 4 7. AGGRIEVED BY THE ORDER OF CIT(A), R EVENUE IS NOW IN APPEAL BEFORE US. 8. BEFORE US, LD DR SUPPORTED THE ORDER OF AO AND ON THE OTHER HAND LD AR REITERATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES AND FURTHER SUBMIT TED THAT THE MOBILIZATION ADVANCE HAS BEEN INCLUDED IN THE SALES OF NEXT YEAR AND THE TAX HAS ALSO BEEN PAID AND FURTHER THE SAME HAS ALSO BEEN ACCEPTED BY THE REVENUE DEPARTMENT. HE THUS SUPPORTED THE ORDER OF CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE DELETING THE ADDITION HAS NOTED THAT THAT THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IN ACCOUNTING OF MOBILIZATION ADVANCE WAS CORRECT. BEFORE US, R EVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF CIT(A) NOR COULD IT CONTROVERT THE SUBMISSIONS OF LD AR ABOUT THE OFFERING OF MOBILIZATION OF ADVANCE AS PART OF INCOME IN SUBSEQUENT YEAR AND IT BEING ACCEPTED BY THE DEPARTMENT . IN VIEW OF THE AFORESAID FACTS WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF R EVENUE IS DISMISSED. 10. THUS THE APPEAL OF REVENUE IS DISMISSED. WE NOW TAKE UP ASSESSEE S CO NO. 37/AHD/2011 11. GROUND NO 1 IS CHALLENGING THE REOPENING OF ASSESSMENT: ITA NO 229/AHD/11 & C.O. NO. 37/A/11 . A.Y. 2005 - 06 5 12. WE WHILE DECIDIN G THE APPEAL OF THE REVENUE HEREINABOVE HAS DISMISSED THE APPEAL OF REVENUE AND DECIDED THE ISSUE ON MERITS IN FAVOUR OF ASSESSEE , WE ARE OF THE VIEW THAT THE PRESENT GROUND HAS BECOME ACADEMIC AND THEREFORE THE SAME IS DISMISSED. 13. GROUND NO 2 OF C . O IS IN TERCONNECTED WITH THE GROUND RAISED BY R EVENUE AND IT IS SUPPORTING THE ORDER OF CIT(A). WE WHILE DECIDING THE APPEA L OF THE REVENUE HEREINABOVE HAVE DISMISSED THE GROUND OF REVENUE AND DECID ED THE ISSUE IN FAVOUR OF ASSESSEE A ND THUS THE PRESENT GROUND OF ASSESSEE IS ALSO DISMISSED. 14. IN THE RESULT THE APPEAL OF R EVENUE AND CO OF A SSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 19 - 12 - 201 4 . SD/ - SD/ - (G.C.GUPTA ) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY 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,AHMEDABAD