The ITO, Ward-1(3), Surat V. M/s. J.N. Tekrawala Construction Ltd., Surat

ITA 3440/AHD/2008

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6878 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-12-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 17-10-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K VOHRA
• Assessee Lawyers: R N VEPARI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI D K TYAGI JUDICIAL MEMBER AND SHRI B P JAIN ACCOUNTANT MEMBER ITA NO.3440/AHD/2009 (ASSESSMENT YEAR:-1998-99) THE INCOME-TAX OFFICER, WARD-1(3), SURAT V/S J N TEKRAWALA CONSTRUCTION LTD., 4-5, PATHIK APARTMENT, PARLE POINT, ATHWALINES, SURAT PAN: AAACJ 6194 R [APPELLANT] [RESPONDENT] REVENUE BY:- SHRI R K VOHRA, DR ASSESSEE BY:- SHRI R N VEPARI, AR DATE OF HEARING:- 08-12-2011 DATE OF PRONOUNCEMENT:- 08-12-2011 O R D E R PER SHRI B P JAIN, AM:- THIS APPEAL BY THE REVENUE ARISES FROM THE ORDER OF LEARNED CIT(A)-I, SURAT, DATED 07 -08-2008 FOR ASSESSMENT YEAR 1998-99. THE REVENUE HAS RAISE D THE FOLLOWING GROUNDS:- [1] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A)-I, SURAT HAS ERRED IN HOLDING THAT T HE A.O. HAS NOT BROUGHT ON RECORD ANY MATERIAL EVIDENCE TO SHOW DELIBERATE AND CONSCIOUS CONCEALMENT ON THE PART OF THE ASSESSEE. [2] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A)-I, SURAT HAS ERRED IN IGNORING THE F ACT THAT THE ASSESSEE HAD RAISED R A BILLS IN RESPECT OF CONTRAC T WORK OF 2 G.T.E.C. IN THE ACCOUNTING YEAR RELEVANT TO AY 1998 -99 AND THEREBY THE PROPER ACCOUNTING YEAR TO CHARGE THE SA ID INCOME IS AY 1998-99 AND NOT AY 2003-04 ON THE BASIS OF P ROJECT COMPLETION METHOD SHOWN BY THE ASSESSEE. [3] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A)-I, SURAT HAS ERRED IN DELETING THE P ENALTY OF RS.4,94,811/- LEVIED BY THE A.O. [4] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF TH E ASSESSING OFFICER ON THIS ISSUE. [5] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFICER B E RESTORED. 2 THE BRIEF FACTS IN THE GROUNDS OF APPEAL ARE THAT THE ASSESSEE BEING A CONTRACTOR HAD DECLARED CONTRACT R ECEIPTS OF RS.61,17,326/- AS PART OF TOTAL CONTRACT VALUE OF RS.4,02,34,138/- AND HAD SHOWN THE RECEIPTS IN DIFF ERENT YEARS I.E. ASSESSMENTS YEARS 1996-97, 1997-98 AND 1998-99 . THE ASSESSEE WAS FOLLOWING PERCENTAGE COMPLETION METHO D IN RESPECT OF CONTRACT WORK OF ESSAR STEEL LTD. BUT ON THE OTHER HAND, THE ASSESSEE WAS CLAIMING PROJECT COMPLETION METHOD FOR THE CONTRACT WORK CARRIED OUT FOR GTEC. THEREF ORE, THE ASSESSEE WAS FOLLOWING TWO SEPARATE METHODS OF ACCO UNTING FOR THE CONTRACT WORKS CARRIED OUT BY IT. THE ACCOU NTING METHOD FOLLOWED BY THE ASSESSEE WAS NOT CONSTANT AN D REGULAR AND, THEREFORE, COULD NOT BE ACCEPTED AS CORRECT ON E. THEREFORE, THE A.O. REJECTED THE BOOKS OF ACCOUNT A ND ESTIMATED THE INCOME OF THE ASSESSEE AT THE RATE OF 8% OF TOTAL ACCRUED RECEIPTS OF RS.1,76,71,807/- AT RS.14,13,74 5/- AND 3 ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THIS ADDITION WAS CONFIRMED BY THE LEARNED CIT(A). 3 THE A.O. INITIATED PENALTY PROCEEDINGS U/S 271(1) (C) OF THE INCOME-TAX ACT, 1961. THE EXPLANATION SUBMITTED BY THE ASSESSEE WAS NOT FOUND SATISFACTORY AND, THEREFORE, HE LEVIED THE PENALTY U/S 271(1)(C) ACCORDINGLY. 4 THE LEARNED CIT(A) VIDE PARA 2.3 OF HIS ORDER OBS ERVED THAT THE A.O. HAS ESTIMATED THE INCOME AT THE RATE OF 8% BECAUSE OF CERTAIN DEFECTS AND THEREFORE, THIS IS A CASE OF ESTIMATION OF INCOME. THE A.O. HAS BROUGHT NO MATER IAL ON RECORD TO SHOW DELIBERATE OR CONSCIOUS CONCEALMENT AND, THEREFORE, RELYING UPON THE DECISION OF THE ITAT, A HMEDABAD BENCH IN THE CASE OF MAYANK DIAMONDS PVT. LTD. IN I .T.A.NO. NO.879/AHD/2004, ORDER DATED 29-06-2007, HE DELETED THE PENALTY SO LEVIED BY THE A.O. 5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. THE LEARNED DR MR. R K VOHRA ARG UED THAT THE EXPLANATION OFFERED BY THE ASSESSEE BEFORE THE A.O. WAS NOT SATISFACTORY AND THE ASSESSEE WAS DECLARING THE INCOME ON PERCENTAGE COMPLETION AS WELL AS PROJECT COMPLET ION METHODS WHICH METHODS ARE NOT CORRECT AND, THEREFOR E, HE PRAYED TO UPHOLD THE PENALTY LEVIED BY THE A.O. 6 ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE AS SESSEE, MR. R N VEPARI ARGUED THAT THE ASSESSEE IS FOLLOWIN G PROJECT COMPLETION METHOD AND THE COMPOSITE CONTRACT WITH GTEC 4 WAS COMPLETED IN THE ASSESSMENT YEAR 2003-04 AND FI NAL ENTRY WAS MADE IN THE ASSESSMENT YEAR 2003-04 ONLY. THERE FORE, THE INCOME WHICH HAS BEEN COMPUTED BY THE A.O. FOR THE ASSESSMENT YEAR 1998-99 HAD ALREADY BEEN DECLARED I N THE ASSESSMENT YEAR 2003-04 AND THIS WAY THE INCOME ARI SING FROM GTEC CONTRACT HAS RESULTED INTO DOUBLE TAXATIO N WHICH IS NOT THE SCHEME OF THE INCOME TAX LAW. SHRI R N VEP ARI FURTHER ARGUED THAT THE ASSESSEE HAS BEEN FOLLOWING PROJECT COMPLETION METHOD AND HAS BEEN DECLARING THE INCOM E UNDER THE SAME METHOD SINCE PAST. THIS PARTICULAR ISSUE C AME UP DURING THE ASSESSMENT OF THE ASSESSEE FOR THE ASSES SMENT YEAR 1992-93 WHERE THE A.O. HAD TAKEN INTO CONSIDERATION THE TRANSACTIONS WITH GTEC LTD. THOUGH WITH REFERENCE T O SOME ANOTHER CONTRACT BUT NO ADDITION HAD BEEN MADE. THI S WAS POINTED OUT TO THE A.O. VIDE ASSESSEES LETTER DATE D 16-02-2005 IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 200 2-03 THAT THE PROFIT OF ENTIRE PROJECT OF GTEC HAD BEEN DECLA RED DURING THE ASSESSMENT YEAR 2003-04 I.E. THE YEAR WHERE THE PROJECT HAS BEEN COMPLETED AND THE ASSESSEE HAD DECLARED TH E INCOME ACCORDINGLY AT RS.17,47,480/-. THEREFORE, THE PROFI T OF THE ENTIRE PROJECT HAVING BEEN DECLARED DURING THE ASSE SSMENT YEAR 2003-04 BY FOLLOWING THE PROJECT COMPLETION ME THOD, WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT IN THE PA ST, THERE CANNOT BE FURTHER ADDITION IN THE MATTER. THE ASSES SEE HAS FURNISHED THE REQUISITE DETAILS AND NOTHING HAS BEE N CONCEALED AND, THEREFORE, THE SAME CANNOT BE A SUBJECT MATTER OF SECTION 271(1)(C) OF THE ACT. SHRI R N VEPARI RELIED UPON THE DECISION 5 OF THE HONBLE SUPREME COURT IN THE CASE OF T ASHOK PAI REPORTED IN 292 ITR 11 THAT ONUS TO ESTABLISH THE C ONCEALMENT, REMAINS WITH THE REVENUE AND THE REVENUE CANNOT MER ELY RELY UPON THE ADDITIONS / DISALLOWANCES IN THE ASSESSMEN T ORDER TO LEVY THE PENALTY. 7 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THAT THE ASSESSEE HAS BEEN FOLLOWING THE PROJECT COMPLETION METHOD IN THE CASE OF TRANSACTIONS WITH GTEC LTD. THIS FACT H AS BEEN ACCEPTED BY THE DEPARTMENT IN THE ASSESSMENT MADE O F THE ASSESSEE FOR THE ASSESSMENT YEAR 1992-93, IS ALSO N OT UNDER DISPUTE. THEREFORE, ONCE THE ASSESSEE HAVING DECLAR ED THE INCOME ON THE ENTIRE PROJECT OF GTEC FOR THE ASSESS MENT YEAR 2003-04, THE ASSESSEE CANNOT BE TAXED AGAIN ON ACCR UAL BASIS. THIS WILL TANTAMOUNT TO DOUBLE TAXATION WHICH IS NO T THE SCHEME OF THE INCOME TAX LAW. MOREOVER, THE A.O. HA S MADE THE ASSESSMENT ON ESTIMATION OF INCOME AND NO PENAL TY U/S 271(1)(C) CAN BE LEVIED ON ESTIMATION BASIS ESPECIA LLY WHEN THE ASSESSEE HAD SUBMITTED THE EXPLANATION AND NOTH ING HAS BEEN CONCEALED THEREIN BY THE ASSESSEE. THE ASSESSE E HAVING FURNISHED ALL THE PARTICULARS AND REQUISITE DETAILS , HAVING CONCEALED NOTHING, THEN, THE ONUS TO ESTABLISH CONC EALMENT REMAINS WITH THE DEPARTMENT. IN THE PRESENT CASE, T HE DEPARTMENT HAS NOT ESTABLISHED THAT THE ASSESSEE HA D FURNISHED INACCURATE PARTICULARS OR HAD CONCEALED THE INCOME AND, THEREFORE, NO PENALTY CAN BE LEVIED U/S 271(1)(C) O F THE ACT IN THE PRESENT CIRCUMSTANCES AND FACTS OF THE CASE AND IN VIEW OF 6 THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CA SE OF T ASHOK PAI (SUPRA). THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) WHO HAS RIGHTLY CANCELLED THE PENALTY LEVIED BY THE A.O. THUS, ALL THE GROUNDS OF APPEAL ARE DISMISSED. 8 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08-12-2011 SD/- SD/- (D K TYAGI) (B P JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 09-12-2011 COPY OF THE ORDER FORWARDED TO: 1. J N TEKRAWALA CONSTRUCTION LTD., 4-5, PATHIK APARTMENT, PARLE POINT, ATHWALINES, SURAT 2. THE INCOME-TAX OFFICER, WARD-1(3), SURAT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS)-I, SURAT 5. THE DR, AHMEDABAD 6. THE GUARD FILE