The DCIT, Circle-9, Ahmedabad V. M/s Florence Construction, Ahmedabad

ITA 3428/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57216 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 30-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAMIR TEKRIWL

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , !', #$ # % BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.3428/AHD/2009 ( ( ( ( ( / / / / ASSESSMENT YEAR : 2006-07) THE DICT CIR.9 AHMEDABAD / VS. M/S.FLORENCE CONSTRUCTION SANT KUTIR NR.N.T.HOUSE OPP.ASHRAM ROAD POST OFFICE AHMEDABAD ) #$ ./*+ ./ PAN/GIR NO. : AABFF 2749 Q ( ), / // / APPELLANT ) .. ( -.), / RESPONDENT ) ), / # / APPELLANT BY : SHRI SAMIR TEKRIWL, SR.D.R. -.), 0 / # / RESPONDENT BY : -NONE- 1 0 '$ / / / / DATE OF HEARING : 29/02/2012 23( 0 '$ / DATE OF PRONOUNCEMENT : 2/3/12 #4 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHI CH HAS EMANATED FROM THE ORDER OF THE CIT(A)-XV AHMEDABAD DATED 06/ 11/2009 AND THE SUBSTANTIVE GROUND ARGUED BEFORE US IS GROUND NO.1; REPRODUCED BELOW:- 1) THE LD.COMMISSIONER OF INCOME-TAX(A)-XV, AHMEDAB AD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF ADVANCE RECEIPT OF RS.2242650/-. ITA NO.3248/AHD /2009 DCIT VS. M/S.FLORENCE CONSTRUCTION ASST.YEAR - 2006-07 - 2 - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T.ACT DATED 31/12/2008 WERE THAT A RETURN OF LOSS OF RS.43,58,620/- WAS FILED. THE ASSESSEE-F IRM WAS STATED TO BE ENGAGED IN THE BUILDING CONSTRUCTION BUSINESS. IT HAS ALSO BEEN NOTED BY THE AO THAT THERE WERE DIFFERENCES AMONG THE PARTNE RS AND THEY WERE INVOLVED IN A CIVIL AS WELL AS CRIMINAL LITIGATION. IT HAS ALSO BEEN NOTED BY THE AO THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE WAS IN RECEIPT OF AN AMOUNT OF RS.2,91,00,000/- FROM M/S.S HARMA CAR PVT.LTD. AS PER TDS CERTIFICATE. AGAINST THE SAID AMOUNT, T HE ASSESSEE HAS CLAIMED A LIABILITY OF RS.8,04,474/- TOWARDS SERVICE TAX. AS PER AO, THE NET AMOUNT OF RECEIPT OUGHT TO BE RS.2,97,42,650/-. WH EREAS IN THE PROFIT & LOSS ACCOUNT THE ASSESSEE HAD SHOWN A RECEIPT OF RS .2,75,00,000/-. THE DIFFERENCE BETWEEN THE TWO, I.E. RS.22,42,650/- ( RS.2,97,42,650 RS.2,75,00,000 ) WAS HELD AS AN INCOME NOT OFFERED FOR TAXATION. THE SAME WAS ACCORDINGLY TAXED. THE MATTER WAS CARRIE D BEFORE THE FIRST APPELLATE AUTHORITY. 3. BEFORE LD.CIT(A), IT WAS PLEADED AS UNDER: A) SIMPLY BECAUSE THE RETURN OF INCOME FOR AY 2007 -08 WAS NOT FILED BY THE APPELLANT CANNOT MAKE THE RECEIPTS OF RS.22,42,650 AS CHARGEABLE TO TAX IN AY 2006-07. IT WAS STATED TH AT THE FIRM WAS CARRYING THE BUSINESS OF DEVELOPING A COMMERCIAL CO MPLEX CALLED FLORENCE IN WHICH IT IS CUSTOMARY TO RECEIVE MONEY IN ADVANCE AND THE EXECUTION OF WORK WILL TAKE PLACE LATER. BILLS FOR THE WORK DONE ARE THEREFORE SUBSEQUENTLY RAISED GENERALLY AT THE END OF THE YEAR WHEN THE ENGINEER/SUPERVISOR WOULD GIVE THE REPORT OF WORK DONE. IT IS ONLY THEN THE RECEIPT BECOMES CHARGEABLE TO T AX. B) THAT THE APPELLANT FIRM HAD ACCOUNTED FOR ALL T HE PAYMENTS RECEIVED FROM TWO PARTIES I.E. SHARMA CARS PVT.LTD. & REAL STRIPS ITA NO.3248/AHD /2009 DCIT VS. M/S.FLORENCE CONSTRUCTION ASST.YEAR - 2006-07 - 3 - PVT.LTD.) AND THAT THE ALLEGED DISCREPANCY ARISES O NLY BECAUSE OF THE BILLS FOR RS.2.39 CRORE (NET OF SERVICE TAX) RA ISED AGAINST AFORESAID TWO PARTIES THOUGH TOTAL PAYMENTS RECEIVE D DURING THE YEAR ARE RS.2.91 CRORE AS PER TDS CERTIFICATES. C) THAT THE APPELLANT HAD ACCOUNTED FOR IN ITS P&L ACCOUNT AS INCOME ONLY THE RECEIPTS AS PER BILLS RAISED AGAINS T THE SHARMA CARS PVT.LTD. IN ACCORDANCE WITH THE METHOD OF ACCO UNTING FOLLOWED BY THE FIRM AND TERMS AND CONDITIONS OF TH E CONTRACT WITH SHARMA GARS PVT.LTD. D) THAT THERE WAS DISPUTE AMONGST THE PARTNERS IN CIVIL COURT AND THE BOOKS OF ACCOUNTS WERE NOT AVAILABLE WITH THE A PPELLANTS PARTNER. THEREFORE NO RETURN FOR AY 2007-08 COULD BE FILED BY THE FIRM. AS THE RETURN HAD NOT BEEN FILED FOR VALID R EASONS IN AY 2007-08 THE AO COULD NOT HAVE DRAWN ADVERSE INFERE NCE SO AS TO TAX ANY PARTICULAR RECEIPTS EARLIER TO THE DATE OF ACCRUAL. E) THAT THERE WAS N ACCRUAL OF ANY INCOME WITH REG ARD TO RS.22,42,650 BECAUSE THE AMOUNTS WERE RECEIVED FROM SHARMA CARS PVT.LTD. TOWARDS THE FIRST AND SECOND FLOORS A LLOTTED TO IT. THAT ADVANCE RECEIPT CANNOT BE CONSIDERED AS INCOME AT THE TIME WHEN IT IS RECEIVED BECAUSE IT WOULD BE CONSIDERED AS INCOME ONLY UPON BILL RAISED BY THE APPELLANT. 3.1. AFTER GOING THROUGH THE SUBMISSIONS, LD.CIT(A) HAS HELD THAT SINCE THE ASSESSEE HAD FOLLOWED MERCANTILE SYSTEM OF ACCO UNTING, THEREFORE AN ADVANCE COULD NOT BE TAXED AND THAT THE APPELLANT W ILL NOT GET THE CREDIT OF TDS IN THE NEXT YEAR ON DECLARATION OF INCOME, R ELEVANT PARA-7 IS AS UNDER;- 7. AFTER GOING THROUGH RIVAL SUBMISSIONS IT IS SE EN THAT THE ADVANCE CANNOT BE INCLUDED IN THE INCOME AS THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. IN THIS CASE THER EFORE THE ADDITION MADE BY THE AO CONSIDERING ADVANCE INCOME IS DIREC TED TO BE ITA NO.3248/AHD /2009 DCIT VS. M/S.FLORENCE CONSTRUCTION ASST.YEAR - 2006-07 - 4 - DELETED. HOWEVER SAME TIME APPELLANT WILL NOT GET CREDIT OF TDS ON THIS AMOUNT AS INCOME IS GOING TO BE OFFERED IN THE NEXT YEAR. 4. NOW THE REVENUE IS BEFORE US. ON THE DATE O F HEARING, NO ONE HAS APPEARED FROM THE SIDE OF THE RESPONDENT-ASSESSEE. WE HAVE NOTICED THAT AS PER THE DIRECTIONS, REVENUE HAS SERVED A NOTICE ON THE RESPONDENT. IN THIS REGARD, A REPORT HAS BEEN FURNISHED BY DCIT, C IR-9, AHMEDABAD DATED 21/02/2012 THAT THE NOTICE WAS DULY SERVED ON ONE OF THE PARTNERS OF THE ASSESSEE. SINCE NO ONE HAS APPEARED FROM TH E SIDE OF THE ASSESSEE, THEREFORE, WE HAVE PROCEEDED EX-PART QUA THE ASSESS EE, AFTER HEARING LD.DR. MR. SAMIR TEKRIWAL, LD.DR HAS ARGUED THAT N O RETURN FOR A.Y. 2007-08 WAS FILED BY THE ASSESSEE. SINCE NO RETURN IN THE SUBSEQUENT YEAR HAS BEEN FILED BY THE ASSESSEE, THEREFORE IT W AS WRONG ON THE PART OF LD.CIT(A) TO GRANT RELIEF WITH THE DIRECTION NOT TO GIVE THE CREDIT OF TDS ON THE INCOME GOING TO BE OFFERED IN THE NEXT YEAR. 5. WE FIND FORCE IN THE SUBMISSION OF LD.DR. I T APPEARS THAT LD.CIT(A) WHILE GIVING RELIEF HAS OVERLOOKED ONE OF THE FACT THAT NO RETURN FOR AY 2007-08 WAS FILED BY THE ASSESSEE. IT IS ALSO NOT CLEAR WHETHER THEREAFTER ANYTIME THE ASSESSEE HAS FILED THE INCOME-TAX RETUR N. RATHER THE CORRECT PROCEDURE OUGHT TO BE TO ASK FOR THE BASIS OF SHOWI NG RECEIPT OF RS.2,75,00,000/- AS AGAINST THE RECEIPT OF RS.2,97, 42,650/-. LD.CIT(A) SHOULD HAVE ENQUIRED ABOUT THE RECONCILIATION OF TH E SAID DIFFERENCE. AT PRESENT THE DIFFICULTY IS THAT THE RESPONDENT-ASSES SEE HAS CHOSEN NOT TO APPEAR. THEREFORE, WE ARE ALSO NOT IN A POSITION TO GIVE A CORRECT FINDING ON FACTS. IN THE INTEREST OF JUSTICE, WE DEEM IT P ROPER TO RESTORE THIS ISSUE ITA NO.3248/AHD /2009 DCIT VS. M/S.FLORENCE CONSTRUCTION ASST.YEAR - 2006-07 - 5 - BACK TO THE FILE OF LD.CIT(A) TO BE DECIDED DE NOVO AS PER LAW. REVENUES GROUND IS ALLOWED BUT FOR STATISTICAL PUR POSES. 6. IN THE RESULT, APPEAL OF THE REVENUE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES ONLY. SD/- SD/- ( ANIL CHATURVEDI ) ( MUKUL KR . SHRAWAT ) ACCOUNTANT MEMBER JUDI CIAL MEMBER AHMEDABAD; DATED 2/ 3 /2012 5'.., .../ T.C. NAIR, SR. PS #4 0 -6 7#6( #4 0 -6 7#6( #4 0 -6 7#6( #4 0 -6 7#6(/ COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. 8 / CONCERNED CIT 4. 8() / THE CIT(A)-XV, AHMEDABAD 5. 6;< - , , / DR, ITAT, AHMEDABAD 6. <= >1 / GUARD FILE. #4 #4 #4 #4 / BY ORDER, .6 - //TRUE COPY// ? ?? ?/ // / * * * * ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION..29.2.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.2.12 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 2.3.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2.3.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER