ACIT, Meerut V. M/s. Ranjit Singh & Company, Meerut

ITA 3985/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3025 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 15-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO.3985/DEL/2015 ASSESSMENT YEAR : 2011-12 ACIT, CIRCLE- 2, MEERUT. VS. RANJIT SINGH & COMPANY, 188/11, ABU PLAZA, ABU LANE, MEERUT. PAN : AABFR5656G (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI AMIT JAIN, SR.DR ASSESSEE BY : SHRI SANDEEP SAPRA, ADV. SHRI RAVINDRA AGARWAL, CA DATE OF HEARING : 10-01-2018 DATE OF PRONOUNCEMENT : 23-03-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 31.03.2015 OF CIT(A), MEERUT RELATING TO ASSESSMENT YEAR 2011-12. 2. GROUND NO.1 BY THE REVENUE READS AS UNDER :- 1. WHETHER THE LD. CIT(A) ERRED IN LAW AND FACTS I N DELETING THE ADDITION OF RS.1,73,94,300/- THAT HAD BEEN MADE BY THE A.O. AS THE ASSESSEE HAD NOT DECLARED THE SAID GROSS RECEIPTS IN ITS PROFIT AND LOSS ACCOUNT. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FORM ENGAGED IN THE TURNKEY CONSTRUCTION OF HIGH VOLTAGE TRANSMISSION LINES FOR POWER TRANSMISSION CORPORATION OF UTTARAKHAND LTD., U.P. POWER TRANSMISSION 2 ITA NO.3985/DEL/2015 CORPORATION LTD. & POWER GRID CORPORATION OF INDIA LTD. IT FILED ITS RETURN OF INCOME ON 29.09.2011 DECLARING TOTAL INCOME OF RS.2 ,96,88,470/- WHICH WAS LATER REVISED ON 13.09.2012 SHOWING INCOME OF RS.3, 08,21,970/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER NOTED THAT THERE IS A DIFFERENCE IN THE AMOUNT OF RECEIPTS SHOWN BY THE A SSESSEE FROM M/S POWER GRID CORPORATION OF INDIA LTD. (HEREINAFTER REFERRE D AS PGCIL) SINCE THE AMOUNT SHOWN BY THE ASSESSEE IN ITS GROSS RECEIPTS WAS LES SER BY AN AMOUNT OF RS1,73,94,300/-. THE ASSESSING OFFICER, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN THIS DIFFERENCE. IT WAS STATED BEFORE THE ASSESSING OFFICER THAT THE NET PROFIT OF RS.11,35,000/- ON THIS AMOUNT HAS BEEN SH OWN IN THE REVISED COMPUTATION OF INCOME WHILE THE BALANCE AMOUNT OF R S.1,62,59,261/- WAS REDUCED FROM THE CLOSING WORK IN PROGRESS AS ON 31. 03.2011. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND MADE AN ADDITION OF RS.1,73,94,300/-. 4. BEFORE THE LD. CIT(A), THE ASSESSEE FILED VARIOU S DETAILS AND MADE ELABORATE SUBMISSIONS BASED ON WHICH LD. CIT(A) DEL ETED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER :- 3.2 DURING THE COURSE OF APPEAL PROCEEDINGS, THE A R OF THE APPELLANT FILED DETAILED WRITTEN SUBMISSION THE RELEVANT PORTION OF WHICH IS REPRODUCED BELOW: THE ADDITION OF RS.1,73,94,300/- HAS BEEN MADE BY THE LD. A.O. ASSUMING THAT THE GROSS RECEIPT FROM PGCIL TO THAT TUNE HAVE BEEN SUP PRESSED BY THE APPELLANT. THE FACTS ON THIS ISSUE ARE THAT THE APPELLANT DECL ARED GROSS RECEIPTS FROM POWER GRID CORPORATION OF INDIA LIMITED, SATNA (PGCIL, SATNA) AT RS.16,21,93,472/- IN ITS PROFIT & LOSS ACCOUNT (ERECTION WORK) FOR THE YEAR UNDER R EFERENCE. AFTER AUDIT OF THE BOOKS 3 ITA NO.3985/DEL/2015 OF ACCOUNT ON 15.09.2011, THE APPELLANT FILED ITS R ETURN OF INCOME ON 29.09.2011 ON THE BASIS OF THE AUDITED STATEMENTS OF ACCOUNT. AS PER THE AUDITED PROFIT & LOSS ACCOUNT FOR 'ERECTION WORK', THE CLOSING STOCK OF W ORK IN PROGRESS WAS DECLARED AT RS.1,65,00,000/-. THE APPELLANT HAS RECEIVED TDS CE RTIFICATE FOR RS.19,05,514/- FROM PGCIL, VADODARA ALONG WITH LETTER DATED 20.05.2011 SHOWING THEREIN AMOUNT OF RS.1,73,94,261/- AS PAID/CREDITED ON 31.03.2011 AND TDS THEREON OF RS.3,47,886/- WAS DEDUCTED, WHICH WAS PAID TO THE CREDIT OF CENTR AL GOVERNMENT ON 29.04.2011. ON RECEIPT OF THE SAID TDS CERTIFICATE, THE APPELLANT VIDE LETTER DATED 29.09.2011 WROTE TO PGCIL THAT THE TDS OF RS.3,47,886/- ON THE AMOUNT O F RS.1,73,94,261/-, DID NOT BELONG TO THE APPELLANT AND REQUESTED PGCIL, VADODA RA TO ISSUE FRESH TDS CERTIFICATES FOR AN AMOUNT OF RS.15,57,628/- AFTER DELETING THE SAID TDS OF RS.3,47,886/-. VIDE LETTER DATED 17.07.2012, IT WAS CLARIFIED BY PGCIL, VADODARA THAT THE TDS OF RS.2,17,212/- WAS DEDUCTED ON PROVISION BASIS IN MARCH 2011 ON THE AMOUNT OF RS.1,08,60,582/-, PAYMENT OF WHICH WERE A CTUALLY MADE ON 09.06.2011. THEY ALSO INTIMATED VIDE THEIR ABOVE LETTER DATED 1 7.07.2012 THAT THE TDS OF RS.2,17,212/- WAS REPORTED IN QUARTER-4 OF F.Y.2010 -11. BESIDE THAT TDS WAS ALSO DEDUCTED ON A SUM OF RS. 65,33,679/- ON 31.03.2011, PAYMENT OF WHICH WAS ALSO RECEIVED IN THE MONTH OF JUNE 2011. PHOTOCOPIES OF TDS CERTIFICATE, APPELLANT'S LETTERS DATED 29.09.2011 & 13.07.2012 AND PGCIL'S LETTER DA TED 17.07.2012 ARE ENCLOSED AT PAGE NO.31 TO 35 OF THE PAPER BOOK. IN THE MANNER, THE FOLLOWING GROSS RECEIPTS APPEARING IN FORM 26AS AS WELL AS IN THE TDS CERTIF ICATE ISSUED BY PGCIL, VADODARA WERE NOT CONSIDERED BY THE APPELLANT IN ITS PROFIT & LOSS ACCOUNT FOR THE YEAR AS THE PARTICULARS THEREOF WERE NOT AVAILABLE AT THE TIME FINALIZATION OF BOOKS OF ACCOUNT FOR THE YEAR UNDER REFERENCE :- DATE OF CREDIT AMOUNT TDS 31.03.2011 RS.1,08,60,582/- RS.2,17,212/- APPEARING AT SR.NO.17 IN FORM 26AS PLACED AT PAGE NO.89 TO 90 OF THE PAPER BOOK. 31.03.2011 RS.65,33,679/- RS.1,30,674/- APPEARING AT SR.NO.18 IN FORM 26AS PLACED AT PAGE NO.86 TO 90 OF THE PAPER BOOK. TOTAL RS.1,73,94,261/- RS.3,47,886/- AS THE APPELLANT WAS NOT INTIMATED ABOUT PASSING/AP PROVAL OF ABOVE WORK AND ALLOWING CREDIT THEREOF DURING THE YEAR, THE APPELL ANT DID NOT ACCOUNT FOR THE ABOVE AMOUNT AS CONTRACT RECEIPT BUT HAS VALUED THIS WORK AS 'WORK IN PROGRESS' AND HAS CREDITED THE SAME TO THE CREDIT OF PROFIT & LOSS ACCOUNT AT RS.1,65,00,000/-. ON THE BASIS OF LETTER DATED 17.07.2012 OF PGCIL, VADODARA , AT THE TIME OF PREPARATION OF THE BALANCE SHEET FOR A. Y. 2012-13, THE APPELLANT REDUCED THE AMOUNT OF OPENING VALANCE OF STOCK OF WORK IN PROGRESS OF RS.1,65,00,000/- AS ON 01.04.2011 BY AN AMOUNT OF RS.1,62,59,261/- TOWARDS COST OF TH E WORK APPROVED/CREDITED AT RS.1,73,94,261/- ON 31.03.2011 AND ACCOUNTED FOR TH E BALANCE AMOUNT OF RS.2,40,739/- (I.E. 1,65,00,000.00 - RS.1,62,59,261 .00) ONLY, AS OPENING STOCK OF WORK IN PROGRESS IN THE PROFIT & LOSS ACCOUNT FOR A. Y. 2012-13. COPY OF AUDITED BALANCE SHEET FOR A.Y.2012-13 IS ENCLOSE D HEREWITH AT PAGES NO.36 TO 53 OF THE PAPER BOOK IN SUPPORT OF THE SAME. THE APPELLAN T ALSO REVISED ITS RETURN OF INCOME FOR ASSESSMENT YEAR UNDER REFERENCE BY OFFERING A S UM OF RS.11,35,000/- AS INCOME 4 ITA NO.3985/DEL/2015 FROM THE AFORESAID AMOUNT OF RS.1,73,94,261/- I.E. RS.1,73,94,261/- (BEING THE AMOUNT CREDITED ON 31.03.2011 BY PGCIL TO THE APPEL LANT) - RS.1,62,59,261/-(BEING THE COST OF THE SAID WORK OF RS.1,73,94,261/- AS AD JUSTED FROM THE AMOUNT OF WORK IN PROGRESS) = RS.11,35,000/-. ON THESE FACTS, IT IS PRAYED THAT THE TOTAL AMOUNT OF RS.1,73,94,261/- STOOD ACCOUNTED FOR BY THE APPELLANT BY WAY OF REDUCTION OF CLOSING STOCK OF WORK IN PROGRESS BY RS.1,62,59,261/- AND BY OFFERING INCOME FROM THE SA ID TRANSACTION TO THE EXTENT OF RS.11,35,000/- BY FILING REVISED RETURN OF INCOME O N 13.09.2012. COPY OF REVISED RETURN IS PLACED AT PAGE NO. 54 TO 57 IN THE PAPER BOOK. COPY OF RE-CASTED PROFIT & LOSS ACCOUNT NARRATING THE ABOVE TRANSACTION AND EF FECT THEREOF ON PROFIT & LOSS ACCOUNT IS ENCLOSED HEREWITH AT PAGES NO.58 OF THE PAPER BOOK. IT IS WORTH SUBMISSION HERE THAT THE BALANCE SHEET OF A.Y.2012-13 WAS AUDITED AND SIGNED BY THE AUDITOR ON 05.09.2012 AND THE REVISED RETURN WAS FILED BY THE APPELLANT ON 13.09.2012 I.E. MUCH BEFORE THE COMMENCEMENT OF ASSESSMENT PROCEEDINGS IN THE YEAR UNDER REFERENCE. THE LD. A.O. DID NOT TAKE NOTE OF THE ABOVE FACTS T HAT THE BALANCE OF WORK IN PROGRESS HAS BEEN REDUCED BY THE APPELLANT IN SUCCEEDING YEA R AND MADE ADDITION OF RS.1,73,94,300/- TREATING THE SAME AS SUPPRESSED GR OSS RECEIPTS. THE LD. A.O. HAS COMMITTED A FURTHER ERROR AS HE PROCEEDED WITH THE FIGURES OF REVISED INCOME DECLARED AT RS.3,08,21,970/- FOR COMPUTING THE TOTAL INCOME OF THE APPELLANT AND MADE ADDITION OF RS.1,73,94,300/-. THE REVISED INCO ME INCLUDED A SUM OF RS.11, 35, 000/- ALREADY DECLARED BY THE APPELLANT AS ITS INCO ME OUT OF THE SUM OF RS.1,73,94,300/-. AS A RESULT OF WHICH DOUBLE ADDIT ION TO THE EXTENT OF RS.11,35,000/- HAS BEEN RESULTED DURING THE YEAR UNDER REFERENCE A ND IN EFFECT THE TOTAL INCOME OF THE APPELLANT STOOD ENHANCED BY A SUM OF RS.1,73,94,300 /- + RS.11,35,000/- I.E. RS.1,85,29,300/- FOR A.Y.2011-12 AND THE INCOME FOR A.Y.2012-13 STOOD ENHANCED BY A SUM OF RS.1,62,59,261/-, THE AMOUNT BY WHICH OPEN ING BALANCE OF WORK IN PROGRESS IS REDUCED/ADJUSTED BY THE APPELLANT ITSELF. IN THE MANNER, THE AMOUNT OF RS.1,73,94,300/- IS ADDED TWICE ONCE BY THE APPELLA NT ITSELF AND AGAIN BY THE LD. A. O. AS ABOVE. UNDER THE CIRCUMSTANCES, IT IS PRAYED THAT THE ADDI TION OF RS.1,73,94,300/- DESERVES TO BE DELETED BEING A DOUBLE ADDITION TO INCOME OF THE APPELLANT AS NO CONTRACT RECEIPT IS SUPPRESSED BY THE APPELLANT ON THIS ISSUE. ' 3.3 I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS ABOVE. FRO M THE FACTS OF THE CASE, IT IS CLEAR THAT THE AMOUNT UNDER DISPUTE WAS CREDITED BY M/S PGCIL ON THE LAST DAY OF MARCH 2011 AND PGCIL ALSO DEDUCTED TAX THEREON. FOR THIS REASON, THE AMOUNT UNDER DISPUTE AND THE TAX THEREON GOT REFLEC TED IN THE 26AS STATEMENT OF THE APPELLANT FOR THE F.Y. 2010-11 RELEVANT TO A.Y. 201 1-12. IT IS ALSO SEEN FROM RECORD THAT WHEN THE APPELLANT RECEIVED TDS CERTIFICATE AG AINST THE AMOUNT IN DISPUTE IT WROTE TO THE PAYER COMPANY THAT THE AMOUNT OF RS. 1 ,73,94,261/- DOES NOT BELONG TO THEM. HOWEVER, TILL THE TIME OF FILING RETURN FOR A .Y.2011-12, NO CLARIFICATION WAS PROVIDED BY THE PAYER COMPANY. IT IS ALSO SEEN FROM RECORD THAT THE PAYER COMPANY REVERTED TO THE APPELLANT IN THE MONTH OF JULY 2012 WHEREBY THEY INFORMED THAT THEY HAVE DEDUCTED TDS OF RS. 2,17,212/- ON THE PAYMENT OF RS. 1,08,58,962/- ON PROVISION BASIS IN MARCH 2011. NO CLARIFICATION WAS GIVEN BY M/S PGCIL FOR THE BALANCE AMOUNT. IN THIS SITUATION, THE APPELLANT FILED A RE VISED COMPUTATION OF INCOME AFTER FILING A REVISED RETURN. IN THE REVISED COMPUTATION , THE APPELLANT INCLUDED RS. 5 ITA NO.3985/DEL/2015 11,35,000/- AS NET PROFIT ON THE RECEIPT OF RS. 1,73,94,261/-. THE APPELLANT ALSO REDUCED THE BALANCE AMOUNT OF RS. 1,62,59,261/- FROM THE CL OSING WORK IN PROGRESS AS ON 31.03.20.11. CONSEQUENTLY, THE OPENING WORK IN PRO GRESS AS ON 01.04.2011 WAS ALSO REDUCED BY THE SAME AMOUNT. 3.4 THE AO, IT SEEMS DID NOT APPRECIATE THE TOTALITY O F FACTS. HE UNERSTOOD THAT SINCE AN AMOUNT OF RS. 1,73,94,261/- WAS NOT INCLUD ED IN THE GROSS RECEIPT FOR THE A.Y. 2011-12, THE ENTIRE AMOUNT OF RS. 1,73,94,261/- WAS SUPPRESSED. IT SEEMS THAT THE AO WAS UNDER IN AN IMPRESSION THAT WHILE THE RECEIPT W AS SUPPRESSED, THE CORRESPONDING EXPENDITURE WAS ALREADY BOOKED IN THE PROFIT AND LO SS ACCOUNT AND THEREFORE THE ENTIRE AMOUNT REPRESENTS UNDISCLOSED INCOME. HOWEVE R, FROM THE FACTS OF THE CASE, IT IS SEEN THAT AN AMOUNT OF RS. 1,62,59,261/- WAS REDUCED FROM THE OPENING WORK IN PROGRESS OF THE IMMEDIATELY SUCCEEDING YEAR AND THE REFORE THE DEBIT SIDE OF P&L ACCOUNT WAS REDUCED BY THE MATCHING AMOUNT. IN THIS SITUATION, IT IS CLEAR THAT THE APPELLANT HAS FOLLOWED PROPER ACCOUNTING PRINCIPLES BY WHICH THE AMOUNT IN DISPUTE HAS BEEN CORRECTLY ACCOUNTED FOR. THE ACTION OF THE AO HAS RESULTED INTO DOUBLE ADDITION OF THE SAME AMOUNT ONCE BY THE APPELLANT I TSELF AND SECOND TIME BY THE AO. 3.5 CONSIDERING THE TOTALITY OF FACTS, I HAVE COME TO A CONCLUSION THAT THE AO HAS TAKEN A WRONG VIEW OF THE FACTS. THE GROUND OF APPE AL NO.2(A) IS ALLOWED AND ADDITION OF RS. 1,73,94,300/- IS DELETED. 5. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AFTER CONSIDERING THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). WE FIND THE LD. CIT(A) HA S GIVEN A CATEGORICAL FINDING AFTER GOING THROUGH THE CLARIFICATION OBTAINED FROM THE PAYER COMPANY. WE FIND THE ASSESSEE FILED REVISED COMPUTATION OF INCOME AL ONG WITH THE REVISED RETURN WHEREIN THE RECEIPT OF RS.1,73,94,261/- WAS ENHANCE D AND CORRESPONDING WORK IN PROGRESS AMOUNTING TO RS.1,62,59,261/- WAS REDUC ED AND THE CORRESPONDING PROFIT WAS DECLARED. THE LD. DR COULD NOT CONTROVE RT THE FACTUAL FINDINGS GIVEN BY THE LD. CIT(A) ON THIS ISSUE. 6 ITA NO.3985/DEL/2015 7. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY UPHOLD THE SAME. THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 8. GROUND NO.2 BY THE REVENUE READS AS UNDER :- WHETHER THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF RS.95,31,126/- THAT HAD BEEN MADE BY THE A.O. SINCE THE ASSESSEE HAD NOT DECLARED THE SAID CONTRACT RECEIPT RECEIVED BY IT FROM M/S P GCIL IN A JOINT VENTURE THAT THE ASSESSEE HAD UNDERTAKEN WITH M/S B.S. TRANSCOMM LTD ., HYDERABAD. 9. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESS EE TO EXPLAIN THE TRANSACTION OF RS.95,31,126/-. THE ASSESSING OFFICER HAS NOTED THAT THE AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE FROM M/S PGCIL BUT HAS NOT BEEN SHOWN AS PART OF ITS RECEIPTS. IT WAS STATED BEFORE THE ASSESSING OFFIC ER THAT THIS RECEIPT WAS WRONGLY CREDITED IN ITS ACCOUNT BECAUSE IT BELONGS TO ANOTHER COMPANY NAMED M/S B.S. TRANSACTION LTD. (HEREINAFTER REFERRED AS BSTL) WHICH IS A JOINT VENTURE PARTNERS. HOWEVER, THE ASSESSING OFFICER W AS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE MAINLY BECAUSE TH E AMOUNT IN QUESTION WAS NOT IMMEDIATELY REVERSED BY THE ASSESSEE TO M/S BST L. THE ASSESSING OFFICER ACCORDINGLY MADE ADDITION OF RS.95,31,126/-. 10. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE , LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION BY OBSERVI NG AS UNDER :- 7 ITA NO.3985/DEL/2015 4.3 I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS ABO VE. THIS IS BORNE OUT FROM THE RECORDS THAT APPELLANT AND M/S BSTL WORKED IN JOINT VENTURE FOR CARRYING OUT WORK OF M/S PGCIL. AS PER THE CLAIM OF THE APPELLANT IT RE CEIVED PAYMENT OF RS.95,31,126/- ON ACCOUNT OF JOINT VENTURE PARTNER M/S BSTL. COPY OF BILL SENT BY M/S BSTL HAS BEEN REPRODUCED BY THE AO IN THE BODY OF ASSESSMENT ORDER. FROM THE SAID BILL, IT IS APPARENT THAT THE CONSIGNEE WAS PGCIL AND A SUM OF RS.4,423/- WAS DEDUCTED FROM TOTAL BILL OF RS.95,35,548/- AND PAYMENT OF RS.95,3 1,125/- WAS MADE. M/S BSTL HAS CLAIMED THE SAID AMOUNT FROM THE APPELLANT VIDE THE IR BILL AS REPRODUCED IN THE ASSESSMENT ORDER. IT IS FURTHER SEEN FROM RECORD T HAT AS PER THE AGREEMENT FOR THE JOINT VENTURE BETWEEN THE APPELLANT AND M/S BSTL EI THER PARTY CAN RECEIVE THE DISBURSEMENT OF PAYMENT. IT IS AN UNDISPUTED FACT THAT THE PAYMENT OF RS.95,31,126/- WAS PASSED ON TO M/S BSTL BY THE APPELLANT. THE PR OOF OF PAYMENT THROUGH BANKING TRANSACTION AND A CERTIFICATE FROM M/S BSTL THAT TH E SAID AMOUNT HAD BEEN RECEIVED WERE PRODUCED BEFORE THE AO. IN THIS SITUATION, TH E OBSERVATION OF THE AO THAT THE APPELLANT HAS PASSED ON THE SAID AMOUNT TO M/S BSTL AFTER A PERIOD OF SEVERAL MONTHS IS NOT MATERIAL TO THE FACTS OF THE CASE. 4.4 CONSIDERING THE TOTALITY OF FACTS, I HAVE COME TO A CONCLUSION THAT THIS AMOUNT CANNOT BE CONSIDERED AS INCOME OF APPELLANT BECAUSE IT HAS BEEN PASSED ON TO ITS JOINT VENTURE PARTNER TO WHOM IT ORIGINALLY RELATED. ON THE BASIS OF ABOVE FACTS, THE GROUND OF APPEAL NO.2(B) IS ALLOWED AND ADDITION OF RS.95, 31,126/- IS DELETED. 11. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), TH E REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 12. AFTER HEARING BOTH THE SIDES, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE LD. CIT(A) DELETING THE ADDITION. WE FIND THE LD. CIT(A) AFTER VERIFICATION OF RECORDS HAS GIVEN A CATEGORICAL FINDING THAT AFTER DEDUCTING A SUM OF RS.4,423/- FROM THE TOLL BILL OF RS.95,35,548/- AN AMOUNT OF R S.95,31,125/- WAS PAID BY M/S PGCIL WHICH WAS CLAIMED BY BSTL FROM THE ASSESS EE AS PER THEIR BILLS. SINCE AS PER AGREEMENT FOR THE JOINT VENTURE BETWEE N THE ASSESSEE AND M/S BSTL EITHER PARTY CAN RECEIVE THE DISBURSEMENT OF P AYMENT AND SINCE THE PAYMENT OF RS.95,31,126/- WAS PASSED ON TO M/S BSTL BY THE ASSESSEE, THROUGH PROPER BANKING CHANNEL AND THE SAID PARTY HAS CONFI RMED TO HAVE RECEIVED THE 8 ITA NO.3985/DEL/2015 PAYMENT WHICH WAS FILED BEFORE THE ASSESSING OFFICE R, THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETIN G THE ADDITION SO MADE. LD. DR COULD NOT CONTROVERT THE ABOVE FACTUAL FINDING G IVEN BY THE LD. CIT(A). WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE LD. CIT(A). THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 13. GROUND NO.3 BY THE REVENUE READS AS UNDER :- WHETHER THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF RS.94,39,635/- WHICH HAD BEEN MADE BY THE A.O. ON A CCOUNT OF SUPPRESSION OF CONTRACT RECEIPTS RECEIVED BY THE ASSESSEE FROM M/S PGCIL, SATNA. 14. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESS EE TO SUBMIT AN EXPLANATION REGARDING THE CONTRACT RECEIPT AMOUNTING TO RS.3,02 ,53,401/-. THE ASSESSING OFFICER OBSERVED THAT THIS AMOUNT WAS NOT SHOWN IN THE GROSS RECEIPTS. ON BEING QUESTIONED BY THE ASSESSING OFFICER IT WAS SU BMITTED THAT THIS AMOUNT REPRESENTS ADVANCE FROM M/S PGCIL, SATNA. IT WAS F URTHER OBSERVED BY THE ASSESSING OFFICER THAT AN AMOUNT OF RS.2,08,13,767/ - ONLY WAS REFLECTED IN THE BALANCE SHEET AS ADVANCE FROM PGCIL, SATNA. THE AS SESSING OFFICER, THEREFORE, CAME TO THE CONCLUSION THAT THE DIFFERENCE AMOUNT O F RS.94,39,635/- I.E. (3,02,53,401 2,08,13,767/-) HAS NOT BEEN SHOWN IN THE GROSS RECEIPT OF THE ASSESSEE. HE ACCORDINGLY MADE AN ADDITION OF RS.94 ,39,635/- TO THE TOTAL INCOME OF THE ASSESSEE. 9 ITA NO.3985/DEL/2015 15. BASED ON THE ARGUMENT ADVANCED BY THE ASSESSEE, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO DELETE THE SAME BY OBSERVI NG AS UNDER :- 5.3 I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS ABO VE. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT NO SPECIFIC SHOW CAUSE WAS GIVE N TO THE APPELLANT BEFORE MAKING THIS ADDITION. FROM THE SUBMISSION OF THE APPELLAN T, IT IS CLEAR THAT SUM OF RS.94,39,634/- WAS ADJUSTED AGAINST THE RUNNING BIL LS/PAYMENTS DURING THE YEAR OUT OF THE TOTAL ADVANCE OF RS.3,02,56,401/-. THE APPELLA NT RAISED TOTAL BILLS OF RS.16,21,93,472/- IN FAVOUR OF PGCIL, SATNA WHILE T HE TOTAL PAYMENT EXCLUDING THE AMOUNT OF THE ADVANCE AS ABOVE WAS RECEIVED TO THE TUNE OF RS.15,27,47,347/-. THE ASSESSEE HAS CREDITED THE AMOUNT OF RS16,21,93,472/ - FROM THAT PARTY TO THE P&L ACCOUNT OF THE YEAR UNDER REFERENCE. I HAVE VERIFI ED THE SAME FROM THE P&L ACCOUNT AND THE PAYMENT OF RS.15,27,47,387/- IS VERIFIABLE FROM 26AS ON RECORD. THE APPELLANT HAS ACCOUNTED FOR CONTRACT RECEIPTS BEFOR E ADJUSTMENT OF ADVANCE OF RS.94,39,634/-, BEING A PART OF TOTAL AMOUNT OF ADV ANCE OF RS.3,02,53,401/- AND THEREFORE NO SUPPRESSION OF RECEIPTS IS MADE BY THE APPELLANT. THUS IN THIS MANNER, THE AMOUNT OF RS.94,39,634/- HAS BEEN ACCOUNTED FOR BY THE APPELLANT IN ITS CONTRACT RECEIPTS. IN THIS SITUATION THE FINDING OF THE AO BECOMES FACTUALLY INCORRECT. CONSIDERING THE TOTALITY OF FACTS, I HAVE COME TO A CONCLUSION THAT THIS ADDITION HAS BEEN WRONGLY MADE BY THE AO. THE GROUND OF APPEAL NO.2(C) IS THEREFORE ALLOWED AND ADDITION OF RS.94,39,634/- IS DELETED. 16. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), TH E REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 17. AFTER HEARING BOTH THE SIDES, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE LD. CIT(A). WE FIND FROM THE ORDER OF THE LD. CIT(A) THAT NO SPECIFIC SHOW- CAUSE NOTICE WAS GIVEN BY THE ASSESSING OFFICER TO THE ASSESSEE BEFORE MAKING THIS ADDITION. FURTHER, AN AMOUNT OF RS.94,39,634/ - WAS ADJUSTED AGAINST RUNNING BILLS/PAYMENTS OUT OF THE ADVANCES GIVEN, A FACTUAL FINDING GIVEN BY THE LD. CIT(A) AND NOT CONTROVERTED BY THE REVENUE. TH E LD. CIT(A) HAS ALSO GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAS A CCOUNTED FOR THE CONTRACT RECEIPTS BEFORE ADJUSTING OF ADVANCE OF RS.94,39,63 4/- BEING A PART OF TOTAL 10 ITA NO.3985/DEL/2015 AMOUNT OF ADVANCE OF RS.3,02,53,401/- AND THERE IS NO SUPPRESSION OF RECEIPTS BY THE ASSESSEE. THE ABOVE FACTUAL FINDINGS COULD NOT BE CONTROVERTED BY THE LD. DR. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN TH E ORDER OF THE LD. CIT(A) ON THIS ISSUE AND THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 18. GROUND NO.4 BY THE REVENUE READS AS UNDER :- 4. WHETHER THE LD. CIT(A) HAS ERRED IN LAW AND FAC TS IN DELETING THE ADDITION OF RS.3,32,45,363/- IGNORING THE FACT THAT THIS ADDITI ON HAD BEEN MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF 20% OF UNVOUCHED EXPENSE S, THE PAYMENT OF MOST OF WHICH HAD BEEN MADE BY THE ASSESSEE IN CASH. 19. AFTER HEARING BOTH THE SIDES, WE FIND THE ASSES SING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASS ESSEE HAD NOT MAINTAINED PROPER BILLS AND VOUCHERS IN RELATION TO MANY HEADS OF EXPENSES. THE ASSESSING OFFICER ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY 30% OF EXPENDITURE UNDER CERTAIN HEADS NOT BE DISALLOWED. THE ASSESSEE STAT ED BEFORE THE ASSESSING OFFICER THAT VOUCHERS HAD BEEN KEPT BY THE ASSESSEE AND THEY ARE PRODUCED BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSI NG OFFICER TOOK EXCEPTION TO THE FACT THAT MUSTER ROLLS WERE NEVER MAINTAINED BY THE ASSESSEE. HE ACCORDINGLY DISALLOWED 20% OF EXPENSES OUT OF AS MA NY AS 21 DIFFERENT HEADS OF EXPENSES. IN THIS WAY, AN ADDITION OF RS.3,36,70,3 30/- WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. 11 ITA NO.3985/DEL/2015 20. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE AND AFTER HEARING THE ASSESSING OFFICER DURING THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER :- 6.3 I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS ABO VE. THE ACCOUNTS OF THE ASSESSEE ARE AUDITED. VARIOUS EXPENSES WHICH HAVE BEEN DISAL LOWED ARE DEBITED IN-THE BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNTS WERE PRODUCED BEFOR E THE AO. DURING THE CONCERNED YEAR, THE APPELLANT HAD SHOWN A GROSS RECEIPT OF RS .45.I9 CRORES AND A RETURNED INCOME OF RS.3,08,21,970/-. ALL THESE DISALLOWANCES ARE MADE ON ADHOC BASIS BY RESORTING TO ESTIMATION. NO REASON HAS BEEN GIVEN AS TO WHY 20% OF DISALLOWANCE IS PROPER AND FAIR. IT IS TO BE NOTED HERE THAT AS PER ASSESSMENT ORDER SHOW CAUSE FOR DISALLOWING 30% OF CERTAIN EXPENSES WAS ISSUED BY T HE AO. HOWEVER, WITHOUT ANY BASIS, HE HAS DISALLOWED 20% OF THE EXPENSES. THE A .O. HAS NOT CONDUCTED ANY ENQUIRY ON HIS OWN NOR HAS HE BROUGHT ANY POSITIVE MATERIAL ON RECORD IN SUPPORT OF HIS CONCLUSION. HE HAS JUST MADE AN ADHOC DISALLOW ANCE. 6.4 ONE OF THE MAIN REASONS GIVEN BY THE AO FOR MAK ING SUCH DISALLOWANCES IS THE FACT THAT NO MUSTER ROLLS WERE MAINTAINED BY THE AP PELLANT. IT IS SEEN FROM RECORD THAT ON THIS GROUND THE NET PROFIT RATE ON THE TURNOVER FROM ERECTION WORK HAS BEEN RAISED BY AOS IN NUMBER OF ASSESSMENT YEARS DURING PAST. I T IS FURTHER SEEN THAT THAT THE APPELLATE AUTHORITIES HAVE MAINTAINED IN NUMBER OF ASSESSMENT YEARS THAT 7.5% OF NET PROFIT SHOULD BE FAIR; IN THE ASSESSMENT YEAR 2004- 05, 05-06, 06-07 & 2007-08, THE CIT(A) HAS TAKEN THIS VIEW WHICH HAS BEEN FURTHER C ONFIRMED BY THE ITAT. FOR THE ASSESSMENT YEAR UNDER APPEAL, THE APPELLANT HAD SHO WN NET PROFIT RATE OF 7.38% RELATED TO GROSS RECEIPTS FROM ERECTION WORKS. FOL LOWING THE DECISION OF THE ITAT, NET PROFIT RATE ON RECEIPT FROM ERECTION WORK IS TAKEN TO BE 7.5%. IN THIS SITUATION, THE NET PROFIT ON RECEIPTS FROM ERECTION WORK SHOULD BE RS. 2,65,43,381/- AS AGAINST RS. 2,61,18,414/- DECLARED BY THE APPELLANT. IN THIS WA Y, AN ADDITION OF RS. 4,24,967/- IS CONFIRMED AND THE BALANCE AMOUNT OF RS. 3,32,45,363 /-(3,36,70,330 4,24,967) IS DELETED. GROUND OF APPEAL NO.3 IS THEREFORE PARTLY ALLOWED. 7.1 DURING THE COURSE OF APPEAL PROCEEDINGS, OPPORT UNITY OF HEARING WAS GIVEN TO THE AO ALSO. A JOINT HEARING OF THE AO AND THE AR W AS HELD OR 25.03.2015. THE AO ALSO FILED A LETTER DATED 25.03.2015 BEFORE THE UND ERSIGNED WHEREIN HE REQUESTED TO ENHANCE THE DISALLOWANCE MADE BY HIM. A COPY OF THE AO'S LETTER WAS ALSO FORWARDED TO THE AR OF THE APPELLANT FOR HIS COMMENTS. THE RE LEVANT PORTION OF THE AO'S LETTER IS GIVEN BELOW: DURING THE ASSESSMENT PROCEEDING IN A.Y. 2012-13, I T IS NOTICED THAT THE ASSESSEE HAS NOT MAINTAINED DOCUMENTARY EVIDENCE RE GARDING THE CASH EXPENDITURE OF THE SAME HEADS. IN SUPPORT OF THIS, THE ASSESSEE PR ODUCED SELF MADE VOUCHERS WHICH WERE NOT PRODUCED/MAINTAINED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDING FOR A.Y. 2011-12. IT IS NOTICED ON VERIFICATION OF THES E SELF MADE VOUCHERS THAT NOT A SINGLE VOUCHER WAS PROPERLY VOUCHED (NO VOUCHER NO., NO NA ME OF RECIPIENT, SIGNATURE OF RECIPIENT AND NO ADDRESS). EVEN ALL THE CASH PAYMEN T VOUCHERS WERE HAVING CASH PAYMENT OF MORE THAN 1 LAKH, WHICH IS A CLEAR CUT V IOLATION OF THE PROVISION OF SECTION 40A(3) OF THE I.T.ACT, 1961. 12 ITA NO.3985/DEL/2015 IN VIEW OF THE ABOVE FACTS AND FINDINGS, THE DISALL OWANCES SHOULD BE MORE THAN THE DISALLOWED BY THE UNDERSIGNED. IT IS ALSO NOTICED T HAT CONSIDERING THE NATURE OF BUSINESS THE CASH PAYMENTS WERE MADE IN THESE HEADS WERE ON HIGHER AND UNREASONABLE. IT IS REQUESTED TO ENHANCE THE DISALL OWANCE IN FAVOUR OF REVENUE. IT IS ALSO TO BE MENTIONED HERE THAT THE HON'BLE ITAT HAS ALLOWED THE ASSESSEE'S APPEAL IN THE SOME OF PRECEDING YEARS, BUT THE FACTS WERE TOT ALLY DIFFERENT AND THE ISSUE RAISED BY THE UNDERSIGNED WAS NEVER RAISED BEFORE. IF WE CONSIDER THE DECISION OF THE HON'BLE ITAT, THEN THERE IS NO NEED FOR MAINTAINING BOOKS O F ACCOUNT OR MAKING SCRUTINY FOR EVERY YEAR WHICH CANNOT BE THE INTENTION OF THE HON 'BLE ITAT AND THE ONUS FOR MAINTAIN PROPER BOOKS OF ACCOUNT, BILLS AND VOUCHER S ALWAYS LIES ON THE ASSESSEE. 7.2 I HAVE CONSIDERED THE SUBMISSION MADE BY THE AO AND THE REJOINDER FILED BY THE AR. THE AO HAS REFERRED TO THE ASSESSMENT PROCE EDINGS FOR THE A.Y. 2012-13. THE EVIDENCE GATHERED DURING THE COURSE OF ASSESSMENT P ROCEEDINGS FOR A.Y. 2012-13 CANNOT BE RELEVANT FOR A.Y. 2011-12. FURTHER, THE AO HAS NOT GIVEN A SINGLE INSTANCE OF VIOLATION OF SECTION 40A(3). HE HAS JUST MADE A SWEEPING REMARK THAT ALL THE CASH PAYMENT VOUCHERS WERE HAVING CASH PAYMENT OF MORE T HAN RS.1 LAC. THE PROVISION OF SECTION 40A(3) ARE NOT AUTOMATICALLY APPLICABLE WHE NEVER THERE IS A CASH PAYMENT. IN ORDER TO MAKE THE PROVISION OF SECTION 40A(3) AP PLICABLE, THE AO HAS TO ESTABLISH THAT PAYMENT OF MORE THAN RS.20,000/- HAS BEEN MADE TO A SINGLE PERSON IN A SINGLE DAY. EVEN THEN, THE SECTION 40A(3) WILL NOT BE APP LICABLE IF SUCH PAYMENTS ARE COVERED UNDER EXCEPTIONS PROVIDED IN THE SECTION AN D IN RULE 6DD. IN VIEW OF THE ABOVE FACTS, NO ADVERSE CONCLUSION IS DRAWN FROM TH E LETTER OF THE AO. 21. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), TH E REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 22. AFTER HEARING BOTH THE SIDES, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE LD. CIT(A). WE FIND THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER AND NOT A SINGLE INSTANCE OF VIOLATION OF PROVISIONS OF SECTION 40A(3) HAS BEEN POINTED OUT BY THE ASSESSIN G OFFICER. WE FIND VARIOUS DISALLOWANCES HAVE BEEN MADE ON AD-HOC BASIC AND NO REASON HAS BEEN GIVEN AS TO WHY 20% DISALLOWANCE OF EXPENSES HAS BEEN MADE. NO ENQUIRY HAS BEEN CONDUCTED BY THE ASSESSING OFFICER TO COME TO SUCH CONCLUSION. IN OUR OPINION, MERELY BECAUSE THE ASSESSEE HAS NOT MAINTAINED THE MUSTER ROLE THE SAME CANNOT 13 ITA NO.3985/DEL/2015 BE A GROUND TO MAKE AD-HOC DISALLOWANCE IN ABSENCE OF ANY POSITIVE FINDING BY THE ASSESSING OFFICER WHEN THE BOOKS OF ACCOUNT ARE PRODUCED AND NO OTHER MISTAKES HAVE BEEN POINTED OUT. FURTHER, THE PROFI T DECLARED BY THE ASSESSEE IN THE INSTANT YEAR IS IN COMMENSURATE WITH THE RATE O F PROFIT IN THE PRECEDING ASSESSMENT YEARS. THEREFORE, IN VIEW OF THE ABOVE DISCUSSION AND IN VIEW OF THE ELABORATE ORDER PASSED BY THE LD. CIT(A) ON THIS IS SUE, WE DO NOT FIND ANY INFIRMITY IN THE SAME. ACCORDINGLY, THE SAME IS UP HELD AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 23. THE NEXT TWO GROUNDS I.E. GROUND NO.5 AND 6 BEI NG GENERAL IN NATURE ARE DISMISSED. 24. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD MARCH, 2018. SD/- SD/- (BEENA A. PILLAI) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23-03-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI