M/s. Dewan Chand, New Delhi V. JCIT, New Delhi

ITA 2408/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8820 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 02-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: T P S KANG MS PALAK NENWANI
• Keywords: Opportunity of being heard; TDS
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.2408/DEL/2016 ASSESSMENT YEAR: 2011-12 M/S. DEWAN CHAND S-11, GREATER KAILASH-II, NEW DELHI-110048 PAN NO. AAIFM0046J VS JCIT RANGE-38,CIVIC CENTRE, NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. T. P. S. KANG, ADVOCATE MS. PALAK NENWANI, ADVOCATE RESPONDENT BY MS. ASHIMA NEB, SR. DR DATE OF HEARING: 28/08/2019 DATE OF PRONOUNCEMENT: 16/09/2019 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 09.03.2016 OF THE CIT(A)-20, NEW DELHI RELATING TO A. Y. 2011-12. 2. THE ASSESSEE IN ITS VARIOUS GROUNDS OF APPEAL HA S CHALLENGED THE ORDER OF THE CIT(A) IN CONFIRMING TH E ADDITION OF RS.90,90,120/- MADE BY THE ASSESSING OFFICER BEING THE DIFFERENCE IN THE CONTRACT RECEIPTS SHOWN BY THE AS SESSEE IN THE PROFIT AND LOSS ACCOUNT AND THE CONTRACT RECEIPT RE FLECTED IN THE PAGE | 2 FORM 26AS AND THE ADDITION OF RS.2,14,769/- BEING I NTEREST EARNED FROM CANARA BANK PERTAINING TO A.Y.2011-12 W HICH WAS NOT SHOWN BY THE ASSESSEE. 3. FACTS OF THE CASE, IN BRIEF ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CONSTRU CTION CONTRACT. IT FILED ITS RETURN OF INCOME ON 30.09.2 011 DECLARING TOTAL INCOME OF RS.1,20,34,478/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERV ED FROM FORM NO.26AS THAT THE RECEIPT FROM THE EXECUTIVE EN GINEER, PWD DIVISION B-231 IS REFLECTED AT RS.54,89,832/- W HEREAS THE ASSESSEE IN THE P& L ACCOUNT HAS SHOWN RECEIPT AT RS.34,99,712/-. THUS THERE IS A DIFFERENCE OF RS.19 ,90,120/- WHICH HAS NOT BEEN OFFERED FOR TAXATION. SIMILARLY AS PER FORM 26 AS THE TOTAL INTEREST RECEIVED FROM CANARA BANK IS APPEARING AT RS.14,65,532/- WHEREAS THE ASSESSEE HAS SHOWN IN TEREST FROM CANARA BANK AT RS.12,50,763/-. THUS ASSESSEE H AS NOT AFFORD TO TAX THE DIFFERENCE OF RS.2,14,769/-. THE ASSESSING OFFICER, THEREFORE, CONFRONTED THE SAME TO THE ASSE SSEE. IT WAS SUBMITTED THAT THE DIFFERENCE IN THE FIGURES IS DUE TO REVISION OF TDS REFUND FILED BY THE DEDUCTORS. HOWEVER, ACCORD ING TO THE ASSESSING OFFICER THE ASSESSEE HAS NOT OFFERED BOTH THE AMOUNTS FOR TAXATION. THE ASSESSING OFFICER ACCORDINGLY MA DE ADDITION OF RS.22,04,889/- TO THE TOTAL INCOME OF THE ASSESSEE WHICH IS THE SUBJECT MATTER OF APPEAL. IN APPEAL THE LD. CIT(A) CONFIRMED THE ADDITION BY OBSERVING AS UNDER :- PAGE | 3 5.3 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLAN T AND THE ASSESSMENT ORDER. THE APPELLANT IS REGULARLY FO LLOWING THE MERCHANTS SYSTEM OF ACCOUNTING. THEREFORE, WHATEVE R BE THE ACCRUAL OF INCOME THE SAME IS REQUIRED TO BE DECLARED ACCORDINGLY IN THE BOOKS OF ACCOUNTS ON ACCRUAL BAS IS. THEREFORE, A. O. IS JUSTIFIED ADDING THE RECEIPTS AS PER FORM 26 AS. HOWEVER, THE APPELLANT HAS TO BE GIVEN THE CRED IT FOR THE TDS AS PER SECTION 199 OF THE ACT. THEREFORE, THE A DDITION OF RS.19,19,120/- IS CONFIRMED BY THE A. O. IS DIRECTE D TO GIVE CREDIT OF THE TDS AS PER SECTION 199 OF THE ACT TO BE READ WITH RULE 37 BA OF INCOME TAX RULES, 1962. 6.3 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLAN T AND THE ASSESSMENT ORDER. THE APPELLANT IS REGULARLY FO LLOWING THE MERCHANTILE SYSTEM OF ACCOUNTING. THEREFORE, WHATE VER BE THE ACCRUAL OF INCOME THE SAME IS REQUIRED TO BE DECLARED ACCORDINGLY IN THE BOOKS OF ACCOUNTS ON ACCRUAL BAS IS. THEREFORE, A. O. IS JUSTIFIED IN ADDING THE ACCRUED I NTEREST AS PER FORM 26 AS. HOWEVER, THE APPELLANT HAS TO BE G IVEN THE CREDIT FOR THE TDS AS PER SECTION 199 OF THE ACT. TH EREFORE, THE ADDITION OF RS.2,14,769/- IS CONFIRMED BUT A.O. IS D IRECTED TO GIVE CREDIT OF THE TDS AS PER SECTION 19 OF THE ACT TO BE READ WITH RULE 27 BA OF INCOME TAX RULES 1962. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS MENTIONED THAT THERE IS DIFFE RENCE IN THE PAGE | 4 AMOUNT REFLECTED IN THE P & L ACCOUNT AND THE FORM NO.26 AS. HOWEVER, HE HAS FORGOTTEN TO CONSIDER THE AMOUNT OF WORK IN PROGRESS SHOWN BY THE ASSESSEE IN THE P & L ACCOUNT AND BALANCE SHEET. HE SUBMITTED THAT THE ASSESSEE HAS ACCOUNTED FOR SUCH CONTRACT RECEIPT IN THE SUBSEQUENT YEAR AN D HAS ALSO PAID TAX THEREON. FURTHER THE DIFFERENCE AMOUNT WA S CLEARED BY THE EXECUTIVE ENGINEER ONLY AFTER THE RETURN WAS FI LED AND, THEREFORE, THE ASSESSEE COULD NOT HAVE CONSIDERED T HE SAME IN ITS BOOKS OF ACCOUNT. HE ACCORDINGLY SUBMITTED THAT THE ADDITION SUSTAINED BY THE CIT(A) AMOUNTING TO RS.19,19,120/- ON ACCOUNT OF VARIATION IN CONTRACT RECEIPT BEING PURE LY ON THE BASIS OF FORM NO.26 AS STATEMENT IS UNCALLED FOR. FURTHER THE LD. CIT(A) ALSO WITHOUT CONSIDERING THE FACTUAL ASP ECT HAS SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICE R. SIMILARLY THE ADDITION OF RS.2,14,769/- ON ACCOUNT OF VARIATI ON IN THE INTEREST RECEIPT IS BEING BASED PURELY ON THE BASIS OF FORM NO.26AS STATEMENT IS ALSO UNCALLED FOR ESPECIALLY W HEN THE ASSESSEE, IN THE SUBSEQUENT YEAR, HAS OFFERED SUCH INTEREST INCOME TO TAX. HE ACCORDINGLY SUBMITTED THAT BOTH T HE ADDITIONS MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A) ARE NOT JUSTIFIED. HE ALSO RELIED ON THE DECISION OF H ONBLE KERALA HIGH COURT IN THE CASE JANATHA CONTRACT COMPANY VS. CIT REPORTED IN 105 ITR 627, THE DECISION OF HONBLE DE LHI HIGH COURT IN THE CASE OF PCIT VS. MEHTA CONSTRUCTION CO MPANY AND OTHERS REPORTED IN 101 CCH 0066 AND THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF DR. PRABHU DAYA L YADAV VS. CIT. PAGE | 5 6. LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE LD. CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE AS SESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BE FORE US. WE FIND THE ASSESSING OFFICER MADE ADDITION OF RS.19,1 9,120/- ON ACCOUNT OF DIFFERENCE IN THE CONTRACT RECEIPT SHOWN IN THE P & L ACCOUNT AND THE FORM NO.26 AS IN RESPECT OF THE REC EIPT FROM EXECUTIVE ENGINEER PWD DIVISION B-231. SIMILARLY, T HE ASSESSING OFFICER MADE ADDITION OF RS.2,14,769/- BE ING THE DIFFERENCE IN THE INTEREST INCOME ON THE BASIS OF F ORM NO.26 AS FILED BY CANARA BANK. WE FIND THE LD. CIT(A) UPHEL D BOTH THE ADDITIONS, THE REASONS OF WHICH HAVE ALREADY BEEN R EPRODUCED IN THE PRECEDING PARAGRAPH. IT IS THE SUBMISSION OF TH E LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS SHOWN THE VA LUE OF WORK- -IN-PROGRESS WHICH WAS CERTIFIED BY THE EXECUTIVE E NGINEER SUBSEQUENT TO THE CLOSE OF ACCOUNTS UNDER THE HEAD WORK-IN- PROGRESS. IT IS ALSO HIS SUBMISSION THAT THE TDS CE RTIFICATE WAS OBTAINED ONLY AFTER FINALISATION OF ACCOUNTS AND SU CH DIFFERENCE IN CONTRACT RECEIPT HAS BEEN ACCOUNTED FOR IN THE S UBSEQUENT ACCOUNTING YEAR. THE ASSESSEE HAS NOT SHIFTED THE PROFIT TO THE NEXT YEAR SINCE SUCH PROFIT HAS ALREADY BEEN EMBEDD ED IN WORK- -IN-PROGRESS. PAGE | 6 8. SO FAR AS THE DIFFERENCE IN THE INTEREST INCOME IS CONCERNED IT IS THE SUBMISSION OF THE LD. AR THAT SUCH DIFFER ENCE HAS BEEN ACCOUNTED FOR BY THE ASSESSEE IN THE SUBSEQUENT ASS ESSMENT YEAR SINCE THESE WERE CREDITED BY THE BANK ONLY AFT ER THE FINALIZATION OF THE ACCOUNTS. IT IS ALSO HIS SUBMI SSION THAT THERE IS NO LOSS OF REVENUE SINCE THE ASSESSEE HAS ALREAD Y OFFERED THE INCOME TO TAX IN THE SUBSEQUENT YEAR. IT IS HIS ALT ERNATE SUBMISSION THAT SINCE THE LOWER AUTHORITIES WERE SI LENT ON THE ISSUE OF CLOSING WORK-IN-PROGRESS, THEREFORE, HE HA S NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESS ING OFFICER FOR THOROUGH VERIFICATION. WE FIND MERIT IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. IN OUR OPINION IF THE TDS CERTIFICATE ISSUED AFTER THE CLOSING OF ACCOUNTS AN D FINALIZATION OF ACCOUNTS AND IF THE ASSESSEE HAS SHOWN WORK-IN-PROG RESS WHICH IS EQUIVALENT OR MORE THAN THE AMOUNT CERTIFIED BY THE CONTRACTEE IN A SUBSEQUENT DATE BUT RELATING TO THI S YEAR THEN THE REVENUE AUTHORITIES CAN CONSIDER THE ARGUMENT O F THE ASSESSEE THAT THE PROFIT ELEMENT IS ALREADY EMBEDDE D IN THE CLOSING WORK IN PROGRESS. HOWEVER, THIS PLEA WAS N EITHER ARGUED BEFORE THE LOWER AUTHORITIES NOR CONSIDERED BY THEM ALTHOUGH THE AUDITED ACCOUNTS WERE VERY MUCH AVAILABLE BEFOR E THE LOWER AUTHORITIES. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE WE DEEM IT PROPER TO RES TORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO GRANT ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS CAS E AND DECIDE THE ISSUE AS PER FACT AND LAW. NEEDLESS TO SAY THE ASSESSING OFFICER SHALL GIVE DUE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. PAGE | 7 WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PU RPOSE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 16.09.2019. SD/- SD/- (SUCHITRA KAMBLE) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE:- 16.09.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 29.08.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 02.09.2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS 16.09.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 16.09.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 16.09.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 16.09.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17.09.2019 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER