M/s Tantia EDCL JV, Kolkata V. ITO, Ward 10(1), Kol, Kolkata

ITA 290/KOL/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3999 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 14-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH KOLKATA BEFORE SHRI S. S. GODARA, JM & DR. A.L. SAINI, AM ITA NO.290/KOL/2017 (ASSESSMENT YEAR: 2011-12) M/S. TANTIA EDCL JV DD-30, SECTOR-1, SALT LAKE CITY, KOLKATA VS. ITO, WARD-10(1), KOLKATA ./ ./PAN/GIR NO. : AACAT 0272 E ( /APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY : NONE REVENUE BY : SHRI A. BHATTACHARJEE, ADDL. CIT / DATE OF HEARING : 12/07/2018 /DATE OF PRONOUNCEMENT: 08/10/2018 / O R D E R PER DR. A. L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2011-12, IS DIRECTED AGAINST THE ORDER PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-15, KOLKATA IN APPEAL NO.430/CIT(A)-15/15-16/10(1)/R&T/KOL, DATED 18.11.2016, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. THAT THE CIT(A) ERRED ON FACTS AND IN LAW, IN UPHOLDING THE ADDITION OF RS 66,04,644/- AND THEREBY FAILED TO APPRECIATE THAT DIFFERENCE OF RS 66,04,644/ - IN THE 26AS STATEMENT AND INCOME AS SHOWN IN P&L STATEMENT AND CORRESPONDING EXPENSE OF RS 61,39,568/- WAS DULY ACCOUNTED FOR BY THE APPELLANT IN THE NEXT FINANCIAL YEAR. M/S. TANTIA EDCL JV ITA NO.290/KOL/2017 ASSESSMENT YEAR: 2011-12 2 2. THAT THE CIT (A) FAILED TO APPRECIATE THAT ADDITION HAS RESULTED IN DOUBLE TAXATION OF SAME INCOME DURING AY 2011-12 AS WELL AS DURING AY 2012-13. 3. WITHOUT PREJUDICE, THE ADDITION DURING THE YEAR, ON ACCOUNT OF DIFFERENCE IN 26AS STATEMENT AND INCOME AS SHOWN IN P&L A/C CANNOT EXCEED THE PROFIT ELEMENT OF RS.5,33,876/ - I.E. SUB-CONTRACTOR PAYMENT OF RS.61,39,568/ - SHOULD BE ALLOWED TO BE SET OFF AGAINST INCOME OF RS.66,04,644/ - 4. THAT THE CIT(A) ERRED ON FACTS AND IN LAW, IN UPHOLDING DISALLOWANCE OF RS 26,94,101/- ON ACCOUNT OF COMMISSION PAID, AND THEREBY FAILED TO APPRECIATE THAT COMMISSION EXPENSE HAS BEEN INCURRED FOR BUSINESS PURPOSE. 5. THAT THE EXPLANATIONS GIVEN, EVIDENCE PRODUCED AND MATERIAL PLACED AND MADE AVAILABLE ON RECORD HAVE NOT BEEN PROPERLY CONSIDERED AND JUDICIALLY INTERPRETED AND THE SAME DO NOT JUSTIFY THE ADDITION MADE. 6. THAT THE ADDITION / DISALLOWANCE MADE ARE ILLEGAL, UNJUST AND BAD IN LAW AND ARE BASED ON MERE SURMISES AND CONJUNCTURES AND THE SAME CANNOT BE JUSTIFIED BY ANY MATERIAL ON RECORD. 7. THAT THE CIT(A) ERRED ON FACTS AND IN LAW, IN UPHOLDING AND AO ERRED ON FACTS AND IN LAW, IN CHARGING INTEREST U/S 234C AT 2,57,005/- AND U/S 234D AT 2,89,992/-, WHICH ARE WRONG UNJUST AND ARBITRARY AND NEEDS RE-CALCULATION. 8. THE ASSESSEE CRAVES LEAVE TO ALTER, AMEND OR WITHDRAW ALL OR ANY OBJECTIONS HEREIN OR ADD ANY FURTHER GROUNDS AS MAY BE CONSIDERED NECESSARY EITHER BEFORE OR DURING THE HEARING. 3. AT THE TIME OF HEARING NONE APPEARED ON BEHALF OF ASSESSEE IN SPITE OF ISSUANCE OF NOTICE FOR HEARING MORE THAN ONE OCCASION AND LD. DEPARTMENTAL REPRESENTATIVE (DR), WAS PRESENT FOR THE APPELLANT REVENUE. IN THE ABSENCE OF ANY APPEARANCE BY THE ASSESSEE, THE APPEAL IS BEING DISPOSED OF EX PARTE QUA THE ASSESSEE, AFTER HEARING LD. DR FOR THE REVENUE ON MERITS IN TERMS OF RULE 24 OF THE INCOME TAX APPELLATE, TRIBUNAL, 1963. 4. GROUND NO. 1, 2 AND 3 RAISED BY THE ASSESSEE RELATES TO DIFFERENCE OF RS. 66,04,644/ - IN THE 26AS STATEMENT AND INCOME AS SHOWN IN PROFIT AND LOSS ACCOUNT. 5. LD DR FOR THE REVENUE SUBMITTED THAT THERE ARE MANY REASONS WHICH CONTRIBUTE TO THE DIFFERENCE BETWEEN FORM NO.26AS STATEMENT AND INCOME AS M/S. TANTIA EDCL JV ITA NO.290/KOL/2017 ASSESSMENT YEAR: 2011-12 3 SHOWN IN PROFIT AND LOSS ACCOUNT. FOR EXAMPLE, WHEN THE ASSESSE RECEIVES AN ADVANCE FROM THE PARTY, THE SAID ADVANCE IS SHOWN IN THE LIABILITY SIDE OF THE BALANCE SHEET AS A LIABILITY, TILL THE WORK IS EXECUTED ( OR SERVICE PROVIDED). WHEN THE WORK IS EXECUTED OR SERVICES ARE PROVIDED AGAINST THE SAID ADVANCE, AS PER THE TERMS AND CONDITIONS THEN SUCH ADVANCE WOULD GET CONVERTED IN INCOME, THE SAID INCOME THEN SHOWN IN THE PROFIT AND LOSS ACCOUNT. THE DIFFERENCE MAY ALSO ARISE BETWEEN FORM NO.26AS STATEMENT AND INCOME AS SHOWN IN PROFIT AND LOSS ACCOUNT WHEN METHOD OF ACCOUNTING OF BOTH THE PARTIES IS DIFFERENT, SAY ASSESSEE FOLLOWS ACCRUAL BASIS OF ACCOUNTING BUT THE PARTY WITH WHOM THE TRANSACTION HAS BEEN DONE, FOLLOWS CASH SYSTEM OF ACCOUNTING. THEREFORE, THE DIFFERENT METHODS OF REVENUE RECOGNITION MAY ALSO CREATE DIFFERENCE BETWEEN FORM NO.26AS STATEMENT AND INCOME AS SHOWN IN PROFIT AND LOSS ACCOUNT. THEREFORE, TAKING INTO ACCOUNT THESE REASONS OF DIFFERENCES, AS EXPLAINED ABOVE, WE ARE OF THE VIEW THAT A RECONCILIATION STATEMENT MAY BE PREPARED BY THE ASSESSEE, EXPLAINING THE REASONS OF DIFFERENCES BETWEEN FORM NO.26AS STATEMENT AND INCOME AS SHOWN IN PROFIT AND LOSS ACCOUNT AND MAY BE SUBMITTED BEFORE THE ASSESSING OFFICER FOR HIS PERUSAL. THEREFORE, WE SET ASIDE THE ORDER OF LD CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE THE ISSUE AFTER TAKING INTO ACCOUNT THE RECONCILIATION STATEMENT. WE ALSO DIRECT THE ASSESSEE TO SUBMIT A RECONCILIATION STATEMENT, EXPLAINING THE REASONS OF DIFFERENCES BETWEEN FORM NO.26AS STATEMENT AND INCOME AS SHOWN IN PROFIT AND LOSS ACCOUNT. THE STATISTICAL PURPOSES, THE APPEAL OF THE ASSESSEE, ON THIS ISSUE, IS ALLOWED. 6. GROUND NOS.4, 5 AND 6 RELATE TO DISALLOWANCE OF RS. 26,94,101/- ON ACCOUNT OF COMMISSION PAID. AFTER HEARING THE LD DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE NOTE THAT ASSESSEE HAD CLAIMED COMMISSION PAYMENT AS A BUSINESS EXPENDITURE TO THE TUNE OF RS.26,94,101/-. THE COMMISSION WAS PAID TO M/S M/S. TANTIA EDCL JV ITA NO.290/KOL/2017 ASSESSMENT YEAR: 2011-12 4 TANTIA CONSTRUCTION PVT. LTD. DURING THE ASSESSMENT PROCEEDINGS, THE LD AO HAD MADE SOME ENQUIRY BUT THERE WAS NO EVIDENCE THAT ANY SERVICES WERE RECEIVED AGAINST PAYMENT SO MADE BY ASSESSEE. CONSEQUENTLY, THE SAID AMOUNT WAS DISALLOWED. IN APPEAL PROCEEDINGS ALSO ASSESSEE HAD NOT EXPLAINED THE NATURE OF SERVICES RENDERED BY M/S TANTIA CONSTRUCTION PVT. LTD. AS NO JUSTIFICATION FOR COMMISSION PAYMENT HAS BEEN FURNISHED, THEREFORE ADDITION TO THE TUNE OF RS. 26,94,101/- WAS CONFIRMED BY LD CIT(A). AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. WE NOTE THAT IMPUGNED ORDER IS AN EX PARTE AND ASSESSEE COULD NOT PLEAD HIS CASE BEFORE THE LD CIT(A) THEREFORE, WE ARE OF THE VIEW THAT ONE MORE OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE TO PLEAD HIS CASE AND SUBMIT RELEVANT DOCUMENTS TO PROVE HIS BONA FIDE BEFORE THE LD ASSESSING OFFICER. THEREFORE, WE SET ASIDE THE ORDER OF LD CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE THE ISSUE AFRESH. WE ALSO DIRECT THE ASSESSEE TO SUBMIT THE RELEVANT DOCUMENTS AND EXPLANATION BEFORE THE LD AO TO PROVE HIS BONA FIDE. STATISTICAL PURPOSES, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. GROUND NO. 7 RAISED BY THE ASSESSEE RELATES TO INTEREST UNDER SECTION 234C AND 234D OF THE ACT. WE NOTE THAT THIS GROUND RAISED BY THE ASSESSEE IS CONSEQUENTIAL IN NATURE AND DOES NOT REQUIRE ADJUDICATION. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 08/10/2018. SD/- (S. S. GODARA) SD/- (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED:08/10/2018 RS, SR. PS M/S. TANTIA EDCL JV ITA NO.290/KOL/2017 ASSESSMENT YEAR: 2011-12 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT- M/S. TANTIA EDCL JV 2. / THE RESPONDENT.- ITO, WARD-10(1), KOLKATA 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. [ / GUARD FILE. //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA .