M/s Veolia Water (India) Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 4027/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97926 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 09-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNITA KEJRIWAL
• Keywords: Principle of natural justice; Additional evidence; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH H NEW DELHI BEFORE : SHRI C.M. GARG , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 4027/DEL./2013 ASSTT. YEAR : 2009 - 10 VEOLIA WATER (INDIA) PVT. LTD., VS. A.C.I.T., CIRCLE 17(1), B - 1, MARBLE ARCH, NEW DELHI. 9, PRITHVIRAJ ROAD, NEW DELHI [PAN: AABCV7389R] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SALIL KAPOOR & SHRI SHUBHAM RASTOGI , ADVOCATE RESPONDENT BY : SMT. SU NITA KEJRIWAL, CIT/DR DATE OF HEARING : 09.10.2015 DATE OF PRONOUNCEMENT : 23 .11.2015 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 30.03.2013 OF THE LD. CIT(A) - 19, NEW DELHI FOR THE ASSESSMENT YEAR 2009 - 10 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE IMPUGNED ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [HEREAFTER REFERRED TO AS CIT(A) IS BAD IN LAW AND ON FACTS. 2. ON THE FACTS AND IN CIR CUMSTANCES OF THE CASE THE IMPUGNED ORDER OF THE LEARNED CIT(A) IS PERVERSE IN AS MUCH AS HE HAS PROCEEDED ON THE ITA NO. 4027/DEL./2013 2 ERRONEOUS FOOTING THAT ADDITIONAL EVIDENCE HAS BEEN FILED BY THE APPELLANT AND FURTHER HE HAS DECLINED ADMISSION OF THE SO CALLED ADDITIONAL E VIDENCE BYCITING RULE 46A OF THE INCOME TAX RULES, 1962 WITHOUT APPRECIATING THAT THE ENTIRE FACTS AND EVIDENCE REGARDING THE DEMO ZONE PROJECT AND THE KANHAN PROJECT HAD BEEN FILED BEFORE THE LD. ASST. COMMISSIONER OF INCOME - TAX CIRCLE 17(1), NEW DELHI (H EREAFTER REFERRED TO AS AO ] 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRONEOUSLY SUSTAINED THE ACTION OF THE AO IN MAKING AN ADDITION OF RS.3,85,036/ - IN THE NAGPUR DEMO ZONE PROJECT AND RS.3,30,55,975/ - IN THE KANHAN PROJ ECT ON THE ALLEGED GROUND OF SHORT RECOGNITION OF REVENUE GROSSLY IGNORING THE FACT THAT REVENUE RECOGNITION HAS BEEN CONSISTENTLY AND REGULARLY MADE IN THE ACCOUNTS IN ACCORDANCE WITH THE NOTIFIED ACCOUNTING STANDARD - 7 OF ICAI FOLLOWING PERCENTAGE PROJEC T COMPLETION METHOD AND THE CORRECTNESS AND COMPLETENESS OF ACCOUNTS HAS NOT BEEN DISPUTED BY THE AO NOR HAS THE AO INVOKED SECTION 145(3) OF THE INCOME TAX ACT, 1961. 4. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, IT IS PRAYED THAT THE AO BE DIRECTED TO ALLOW REDUCTION OF INCOME TO THE TUNE OF RS.1,98,13,410/ - CONSIDERED IN THE PROFIT AND LOSS ACCOUNT AS OF THE NATURE OF INCOME UNDER THE HEAD FUTURE LOSS ON CONTRACT IN RESPECT OF PROJECT PENCH - 1 ON ITS COMPLETION WHICH WAS REFLECTED IN THE PROFIT & L OSS ACCOUNT IN THE PRECEDING ASSESSMENT YEAR 2008 - 09 AS PROVISION FOR FUTURE LOSS BY THE APPELLANT AS PER CLAUSE 35 OF THE ACCOUNTING STANDARD - 7 OF ICAI AND DISALLOWED BY THE AO AS WELL AS LEARNED CIT(A) ON THE GROUND THAT THE LOSS IS CONTINGENT IN NATURE . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE NATURE OF BUSINESS ACTIVITIES OF ASSESSEE ARE OF EXECUTING CIVIL CONSTRUCTION CONTRACTS, O &M, CONSULTANCY AND OUTSOURCING SERVICES IN PROCESS WATER AND WASTE WATER MANAGEMENT FOR MUNICIPALITIES AND INDUSTRI AL COMPANIES. THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.09.2009 DECLARING LOSS OF RS.2,17,68,900/ - . THE ASSESSEE IS SAID TO HAVE RECOGNIZED REVENUE AT RS. 59,56,74,487/ - ON THE BUDGETED ESTIMATED ITA NO. 4027/DEL./2013 3 COST OF KANHAN PROJECT OF RS.59,37,45,358/ - THEREBY COMP UTING A BUDGETED PROFIT OF RS.19,29,129/ - WHICH WORKS OUT TO 0.32%. SIMILARLY ON PROJECT DEMO ZONE, THE ASSESSEE HAS SHOWN TOTAL BUDGETED COST OF RS.21,04,89,514/ - AGAINST THE LIKELY REVENUE FROM THE SAID PROJECT AT RS.21,51,06,226/ - , COMPUTING BUDGETED PR OFIT OF RS.46,16,712/ - WHICH WORKS OUT TO 2.15%. THE AO NOTICED THAT VIDE ANNEXURE VII OF THE TAX AUDIT REPORT U/S. 44AB, THE TAX AUDITOR HAS REPORTED THAT THE ASSESSEE HAS GROSS PROFIT MARGIN OF 27.61%. THE ASSESSING OFFICER, THEREFORE, AFTER CONSIDERING THE REPLY OF ASSESSEE THEREFORE, COMPUTED SHORT RECOGNITION OF REVENUE BY THE ASSESSEE AT RS.3,30,55,975/ - IN RESPECT OF KANHAN PROJECT AND RS.3,85,85,056/ - ON PROJECT DEMO ZONE AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE . THE FIRST APPEAL FILE D BY ASSESSEE AGAINST THIS ORDER WAS DISMISSED VIDE THE IMPUGNED ORDER, HENCE, THIS APPEAL BY THE ASSESSEE . 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET CONTENDED THAT NO ADDITIONAL EVIDENCE WAS SUBMITTED BEFORE THE LD. CIT(A) AND THE EVIDENCES , WHATSOEVER, SUBMITTED BEFORE THE LD.CIT(A) ALREADY STOOD FILED BEFORE THE AO, AS SOUGHT BY HIM. B UT THE LD. CIT(A) WITHOUT APPRECIATING THE ENTIRE FACTS DISMISSED THE APPEAL OF ASSESSEE OBSERVING THAT THE ASSESSEE FAILED TO EXPLAIN WHY THE ABOVE DETAILS WERE NOT FILED DURING THE ASSESSMENT PROCEEDINGS. IT ITA NO. 4027/DEL./2013 4 WAS SUBMITTED THAT SOME OF THE EVIDENCES SUBMITTED BEFORE THE LD. CIT(A) WERE ALREADY SUBMITTED BEFORE THE AO IN 154 PROCEEDINGS AND SOME OF THEM WERE SUBMITTED ALONG WITH REPLY OF ASSESSEE. THEREFORE, T HERE WAS NO JUSTIFICATION TO FILE ANY APPLICATION U/R. 46A AND THUS THE ORDER PASSED WITHOUT CONSIDERING THE DETAILS OF THE PROJECTS SUBMITTED BEFORE THE AUTHORITIES BELOW, IS NOT SUSTAINABLE AND AGAINST THE NATURAL JUSTICE. ON THE OTHER HAND, THE ASSESSM ENT ORDER SHOWS THAT DETAILS MENTIONED IN VARIOUS REPLIES WERE NOT ACCOMPANIED THEREWITH AND THEREFORE, THE ADDITIONAL EVIDENCES HAVE RIGHTLY REJECTED FOR ADMISSION BY THE LD. CIT(A). 4. ON PERUSAL OF THE IMPUGNED ORDER IN THE LIGHT OF ABOVE SUBMISSIONS OF BOTH THE PARTIES, WE FIND THAT THE LD. CIT(A) HAS ALSO NOT POINTED OUT AS TO WHICH OF THE DETAILS/EVIDENCES FURNISHED BY ASSESSEE WERE IN THE NATURE OF ADDITIONAL EVIDENCES TO BE ADMITTED ON RECORD UNDER RULE 46A. PER CONTRA, THE ASSESSEE HAS CLAIMED T O HAVE NOT SUBMITTED ANY ADDITIONAL EVIDENCE. IN SUCH SITUATION, WE ARE OF THE OPINION, THAT WITHOUT DELVING INTO THIS CONTROVERSY , THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO GET CONSIDERATION ON THE DETAILS/EVIDENCES OF BOTH THE PROJECTS. THE MATTER, THEREFORE, DESERVES TO BE RESTORED TO THE FILE OF AO FOR PASSING THE ASSESSMENT ORDER AFTER CONSIDERING THE DETAILS/EVIDENCES SUBMITTED BY THE ASSESSEE PERTAINING TO BUDGETED COST ITA NO. 4027/DEL./2013 5 OF BOTH THE PROJECTS AND REVENUE RECOGNITION THEREFROM. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND REMIT THE CASE BACK TO THE FILE OF ASSESSING OFFICER ON THIS LIMITED ISSUE, WHO AFTER CONSIDERING ALL THE DETAILS OF THE PROJECTS AND SUPPORTING EVIDENCE, SHALL PASS THE ASSESSMENT ORDER AFRESH AFTER GIVING REASONABLE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE SHALL BE AT LIBERTY TO FURNISH ALL THE DETAILS/EVIDENCES WHICH HE DEEMS FIT TO SUBMIT IN SUPPORT OF ITS CASE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOU NCED IN THE OPEN COURT ON 23.11.2015 . SD/ - SD/ - ( C.M. GARG ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23.11.2015 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI