B.S.Consultancy Services, North 24 Parganas V. ITO, Ward -51(1) Kol., Kolkata

ITA 345/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1512 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MIRAJ D. SHAH

Judgement Text

1 ITA NO.345/KOL/2017 B. S. CONSULTANCY SERVICES, AY 2012-13 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA () BEFORE .., /AND . ' # $% % , ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] / I.T.A NO. 345/KOL/2017 / ASSESSMENT YEAR: 2012-13 B. S. CONSULTANCY SERVICES (PAN: AAJFB4067H) VS. INCOME-TAX OFFICER, WARD-51(1), KOLKATA ( )* /APPELLANT ) ( +,)* / RESPONDENT ) DATE OF HEARING 19.06.2017 DATE OF PRONOUNCEMENT 06.09.2017 FOR THE APPELLANT/ )* SHRI MIRAJ D. SHAH, ADVOCATE FOR THE RESPONDENT/ +,)* SHRI NICHOLAS MURMU, JCIT / ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-15, KOLKATA DATED 06.12.2016 FOR AY 2012-13. 2. THE FIRST GROUND OF APPEAL IS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.5,17,925/- ON ACCOUNT OF ALLEGED SUP PRESSION OF SERVICE VALUE RECEIVED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI RM IS ENGAGED IN ROAD SURVEY CONSULTANCY (PLANNING & DESIGNING OF NEW ROAD CONST RUCTION). THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS .18,78,030/-. THE CASE WAS SUBSEQUENTLY SELECTED FOR SCRUTINY THROUGH CASS. THE REASON FOR SELECTION OF SCRUTINY ASSESSMENT WAS HIGH RATIO OF REFUND. THE AO NOTED THAT AS PER 26A S, THE ASSESSEE RECEIVED FOR SERVICE VALUE AT RS.1,80,00,135/- WHEREAS THE ASSESSEE IN ITS P&L ACCOUNT UNDER THE HEAD SERVICE VALUE HAS SHOWN AT RS.1,78,05,625/-. THE AO NOTED THAT T HE ASSESSEE HAD SHOWN RECEIPT FROM SOME PARTIES WHICH ARE NOT REFLECTED IN FORM 26AS A ND AT THE SAME TIME THERE WERE CERTAIN 2 ITA NO.345/KOL/2017 B. S. CONSULTANCY SERVICES, AY 2012-13 RECEIPTS IN FORM 26AS WHICH WERE CORRECTLY REFLECTE D IN THE ACCOUNTS OF THE ASSESSEE. AFTER ANALYSING THE RECONCILIATION PROVIDED BY THE ASSESS EE, THE AO FOUND OUT THREE DISCREPANCIES OF RS.3,30,258/-, RS.1,60,043/- AND RS.27,624/- RES PECTIVELY AND HE ADDED THE TOTAL SUM OF RS.5,17,925/- TO THE INCOME OF THE ASSESSEE. AGGRI EVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO CONFIRM TH E SAME. AGGRIEVED, THE ASSESSEE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US THE MAIN PLEA OF THE ASSESSEE IS T HAT THE RECEIPT IN THE RETURN IS SHOWN AFTER NETTING OF SERVICE TAX AND, THEREFORE, THE DIFFEREN CE IN RECEIPT SHOWN IN FORM 26AS VIS--VIS THAT SHOWN IN THE RETURN CANNOT JUSTIFY THE ADDITIO N MADE BY THE AO. ACCORDING TO THE LD. AR, BASED ON THE AIR INFORMATION ADDITION CANNOT BE MADE. ACCORDING TO THE LD. AR, THE ASSESSEE HAS NO CONTROL OVER FORM 26AS WHICH IS GEN ERATED BY THE DEPARTMENT AFTER THE PAYER MAKES THE PAYMENT IN THE NAME OF ASSESSEE IN GOVERNMENT ACCOUNT; AND IF FORM 26AS IS TO BE BELIEVED AND THE ASSESSEES BOOKS OF ACCOUNT IS TO BE DISBELIEVED THEN THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO CONFRONT THE PAYER WHO MADE THE CREDIT IN THE ASSESSEES NAME WHICH FORMED THE BASIS OF GENERATIO N OF FORM 26AS, WHICH IS NOT TALLYING WITH THE BOOKS OF ACCOUNT OF THE ASSESSEE. ADMITTE DLY, THE ASSESSEES BOOKS OF ACCOUNT ARE AUDITED AND THE AO COULD NOT FIND ANY DISCREPANCY I N THE SAME. MERELY BECAUSE THE 26AS WHEN COMPARED WITH THE SERVICE VALUE AS REFLECTED I N THE P&L ACCOUNT OF THE ASSESSEE CANNOT BE THE GROUND TO MAKE THE ADDITION. IN SUCH CASES, WE SHOULD TAKE NOTE THAT THE ASSESSEE HAS NO CONTROL OVER THE FORM 26AS WHICH IS GENERATED BY THE DEPARTMENT WHEN THE PAYER CREDITS THE TAX DEDUCTED AT SOURCE ELECTRONIC ALLY BY ENTERING THE PAN DETAILS OF THE ASSESSEE, WHERE MISTAKE DURING ENTERING THE PAN DET AILS OR FIGURES CANNOT BE RULED OUT. THE ASSESSEE MAINTAINED ITS BOOKS OF ACCOUNT IN THE REG ULAR BUSINESS WHICH IS AUDITED AND HAS RECEIVED ITS RECEIPTS THROUGH BANKING CHANNEL. IN SUCH A SCENARIO, IN ORDER TO DISBELIEVE THE ASSESSEES P&L ACCOUNT WHEN THERE IS DISCREPANCY WI TH FORM 26AS, THEN IT IS THE BOUNDEN DUTY OF THE AO TO GIVE OPPORTUNITY TO THE ASSESSEE TO CONFRONT THE PAYER AND TO FIND OUT THE CORRECT FIGURE, WITHOUT DOING SO, THE ADDITION MADE SIMPLY BELIEVING THE FORM 26AS WILL BE 3 ITA NO.345/KOL/2017 B. S. CONSULTANCY SERVICES, AY 2012-13 AN ARBITRARY EXERCISE OF POWER WHICH CANNOT BE SUST AINED AND, THEREFORE, WE DIRECT DELETION OF THE SAME. THIS GROUND OF APPEAL OF ASSESSEE IS A LLOWED. 5. GROUND NO.2 OF THE APPEAL OF ASSESSEE IS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF 20% OF THE SITE EXPE NSES CLAIMED BY THE ASSESSEE AND THUS, ADDING A SUM OF RS.4,16,104/-. 6. BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE ROAD SURVEY CONSULTANCY (PLANNING AND DESIGNING OF NEW ROAD CON STRUCTION) AND WAS ENGAGED IN THE SAID CONSULTANCY SURVEY WORK IN THE HILLY AREAS FOR THE NORTH EASTERN REGION. THE WORK INVOLVED SURVEY THROUGH MOUNTAINS AND JUNGLES WHERE BASIC IN FRASTRUCTURE OF BOARDING AND LODGING WAS NOT AVAILABLE AND WERE VERY HIGH RISK ZONES BEC AUSE OF THE UNDERGROUND ACTIVITIES OF EXTREMISTS OPERATING IN THESE AREAS. THE ENGINEERS AND TEAM MEMBERS WERE APPOINTED WITH LUCRATIVE ALLOWANCE OF TRAVELLING, FOOD AND LODGING . IT HAS BEEN BROUGHT TO THE NOTICE OF THE AO THAT IN THESE AREAS PROPER VOUCHER OF EXPENSES W ERE NOT READILY AVAILABLE AND THE COST OF LODGING AND CONVEYANCE WAS VERY HIGH. THE AO ON TH E PREMISE THAT THE ASSESSEE FAILED TO PRODUCE ANY BILLS/VOUCHER WAS PLEASED TO DISALLOW 2 0% OF THE EXPENSES CLAIMED. THUS, MADE AN ADDITION OF RS.4,16,104/- OUT OF THE TOTAL SITE EXPENSES OF RS.20,80,522/-. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO CONFIRM THE SAME. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEES WORK IS ROAD SUR VEY CONSULTANCY (PLANNING AND DESIGNING OF NEW ROAD CONSTRUCTION) IN THE NORTH-EASTERN REGI ON OF INDIA. THE TERRAIN CONSISTS OF MOUNTAINS AND JUNGLES WHERE LODGING, CONVEYANCE, FO OD WERE NOT READILY AVAILABLE AND COMES WITH A HIGH COST. THE SAID AREAS ARE HIGH RI SK ZONE BECAUSE OF INSURGENCY (UNDER- GROUND ACTIVITIES). THE ASSESSEE IN ORDER TO COMPL ETE THE TASK REQUIRES THE ENGINEERS AND EXPERTS WHO ARE NOT READY TO WORK IN THESE DIFFICUL T CONDITIONS, SO HAD TO BE LURED BY GIVING LUCRATIVE INCENTIVES. THE BUSINESS EXPEDIENCY REQU IRES THE ASSESSEE TO DISBURSE THE HIGH COST IN CONVEYANCE, LODGING AND FOOD FOR THE FIELD EMPLO YEES OF THE COMPANY IN THIS FAR-FLUNG AREA WHICH ARE HIGH RISK ZONES. BEFORE THE AO, THE ASSESSEE PRODUCED INTERNAL VOUCHERS AND BILLS WHEREVER IT COULD GET THE BILLS THAT WAS PROD UCED; AND OF COURSE THE OFFICE VOUCHERS 4 ITA NO.345/KOL/2017 B. S. CONSULTANCY SERVICES, AY 2012-13 WERE PRODUCED BEFORE THE AO. HOWEVER, THE AO HAS D ISALLOWED 20% HOLDING THAT EXPENSES MAY NOT BE BONA FIDE AND GENUINE. WE DO NOT SUBSCR IBE TO SUCH ACTION OF THE AUTHORITIES BELOW ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE. THE AD-HOC DISALLOWANCE OF 20% IS AKIN TO ARBITRARINESS AND BA SED ON SURMISES AND CONJECTURES WITHOUT SPELLING OUT THE DEFECTS IN THE VOUCHERS AND BOOKS PRODUCED BEFORE HIM. THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED AND THE AO HAS NOT FOUND ANY DEFAULT WITH THE BOOKS OF ACCOUNT. IF THERE WAS ANY ITEM-WISE DEFECT NOTICED BY THE AO, THEN HE SHOULD HAVE DISALLOWED THE SAID ITEM-WISE DISALLOWANCE BUT NOT AD-HOC DISALLOWANCE WHICH CANNOT STAND UNDER SCRUTINY OF LAW AND, THEREFORE, WE ARE INCLIN ED TO ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 06.09.2017 SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :6TH SEPTEMBER, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT B. S. CONSULTANCY SERVICES, 163, MANIKD ANGA ROAD, PO GHOLA BAZAR, 24 PARGANAS (N) 700 111. 2 RESPONDENT ITO, WARD-51(1), KOLKATA 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECY.,