Makami Infrastructure Pvt. Ltd., Durgapur V. ITO, WD-1(4), DURGAPUR, Durgapur

ITA 557/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1505 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 30-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Additional evidence
• Section: 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B, KOLKATA [BEFORE SHRI P.M. JAGTAP, AM AND SHRI ABY. T. VARKEY, JM] I.T.A. NO. 557/KOL/2016 ASSESSMENT YEAR: 2010-11 M/S. MAKARNI INFRASTRUCTURE PVT. LTD................................APPELLANT B-3, COLLIN PATH, BIDHANNAGAR, DURGAPUR 713 212 [PAN : AAGCM 1128 G] I.T.O. WD. 1(4)..................................RESPONDENT AAYAKAR BHAWAN, CITY CENTRE, DURGAPUR 713 216 APPEARANCES BY: SHRI V.N. PUROHIT, FCA APPEARING ON BEHALF OF THE ASSESSEE. SHRI S. DASGUPTA ADDL. CIT (DR) APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JANUARY 31, 2018 DATE OF PRONOUNCING THE ORDER : FEBRUARY 14, 2018 ORDER PER P.M. JAGTAP, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), DURGAPUR DATED 05.02.2016. 2. GROUND NO. 1 RAISED BY THE ASSESSEE IN THIS APPEAL CHALLENGING THE VALIDITY OF THE ASSESSMENT MADE BY THE A.O. UNDER SECTION 147/143(3) IS NOT PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE THE TRIBUNAL. THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 3. THE ISSUE INVOLVED IN GROUND NO 2 OF THE ASSESSEES APPEAL RELATES TO THE ADDITION OF RS. 17,72,639/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF UNDERSTATEMENT OF GROSS RECEIPTS. 2 I.T.A. NO. 557/KOL/2016 ASSESSMENT YEAR: 2010-11 MAKARNI INFRASTRUCTURE PVT. LTD. 4. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF EXECUTION OF CONTRACT JOBS. SINCE NO RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT, A NOTICE U/S 148 WAS ISSUED BY THE A.O. ON 26.12.2013 AFTER RECORDING THE REASONS. IN RESPONSE TO THE SAID NOTICE, THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE COMPANY ON 11.01.2014 DECLARING A TOTAL INCOME OF RS. 6,91,170/-. IN THE P & L ACCOUNT FILED ALONG WITH THE SAID RETURN, GROSS RECEIPTS AT RS. 1,03,31,816/- WERE SHOWN BY THE ASSESSEE. IN ORDER TO VERIFY THE SAID GROSS RECEIPTS, NOTICES WERE ISSUED BY THE A.O. U/S 133(6) TO THE CONCERNED PARTIES. THE INFORMATION RECEIVED IN RESPONSE TO THE SAID NOTICES REVEALED THAT THERE WAS A DIFFERENCE IN THE CLOSING STOCK BALANCE AS SHOWN BY THE ASSESSEE IN THE ACCOUNT OF THE CONCERNED DEBTORS. THE ASSESSEE COULD NOT RECONCILE THE SAID DIFFERENCES IN SPITE OF SUFFICIENT OPPORTUNITY AFFORDED BY THE A.O. IN THIS REGARD. A FURTHER VERIFICATION MADE BY THE A.O. ALSO REVEALED THAT ONE BILL RAISED BY THE ASSESSEE ON M/S. KALYANPUR CEMENT LTD. ON 07.03.2010 FOR RS. 17,72,639/- WAS NOT ACCOUNTED FOR BY THE ASSESSEE COMPANY IN ITS BOOKS OF ACCOUNTS. IT WAS ALSO NOTICED BY THE A.O. THAT THE SAID BILL WAS DULY RECORDED BY M/S. KALYANPUR CEMENT LTD. IN ITS BOOKS OF ACCOUNTS AND EVEN A DEDUCTION OF RS. 3,43,056/- WAS MADE ON ACCOUNT OF FUEL CHARGES. HE FURTHER NOTED THAT THE CORRESPONDING DEDUCTION FOR THE SAID FUEL EXPENSES WAS DULY CLAIMED BY THE ASSESSEE COMPANY IN ITS BOOKS OF ACCOUNTS. SINCE THE ASSESSEE COULD NOT OFFER ANY SATISFACTORY EXPLANATION IN THIS REGARD, THE A.O. MADE AN ADDITION OF RS. 17,72,639/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF 3 I.T.A. NO. 557/KOL/2016 ASSESSMENT YEAR: 2010-11 MAKARNI INFRASTRUCTURE PVT. LTD. UNDERSTATEMENT OF GROSS RECEIPTS IN THE ASSESSMENT COMPLETED U/S 147/143(3) VIDE AN ORDER DATED 19.08.2014. 5. AGAINST THE ORDER PASSED BY THE A.O. U/S 147/143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) CHALLENGING INTER ALIA THE ADDITION OF RS. 17,72,639/- MADE BY THE A.O. ON ACCOUNT OF ALLEGED UNDERSTATEMENT OF GROSS RECEIPTS AND SINCE THE SUBMISSION MADE BY THE ASSESSEE IN SUPPORT OF ITS CASE ON THIS ISSUE WAS NOT FOUND ACCEPTABLE BY HIM, THE LD. CIT(A) PROCEEDED TO CONFIRM THE SAID ADDITION MADE BY THE A.O. FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER: GROUND NO 2 RELATES TO THE ADDITION OF RS. 17,72,639/- OF RECEIPT WHICH WAS NOT SHOWN BY THE APPELLANT AND THE SAME WAS DUE FROM M/S. K.C.L. AS WORKED OUT BY THE A.O. IN THE ASSESSMENT ORDER AT PAGE 6 PARA NO 4, 5 & 6. THE APPELLANT STATES THAT THIS WAS DISPUTED BILL THEREFORE NOT OFFERED FOR INCOME. PERUSAL OF SUBMISSION SHOWS THAT TDS HAS BEEN DEDUCTED ON THIS PAYMENT IN THE SAME YEAR WHICH SHOWS THAT M/S. K.C.L. HAS ACKNOWLEDGED ITS ACCRUAL IN HIS BOOK. THE APPELLANT IS ALSO ACKNOWLEDGING ITS INCOME BY WAY OF ACCRUAL. THEREFORE FIND NO REASON AS WHY THIS AMOUNT WAS NOT SHOWN BY THE APPELLANT AS RECEIPT. THE INCOME SHOULD HAVE BEEN SHOWN FOLLOWING EVEN THE ACCOUNTING PRINCIPAL TOO. CONSIDERING THE FACTS OF THE CASE NARRATED ABOVE, THE GROUND OF THE APPELLANT IS HEREBY DISMISSED. THE ADDITION MADE BY A.O. IS HEREBY CONFIRMED. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE BILL FOR RS. 17,72,639/- RAISED ON M/S. KALYANPUR CEMENT LTD. WAS NOT ACCOUNTED FOR BY THE ASSESSEE COMPANY IN ITS BOOKS OF ACCOUNTS AS THE SAME WAS A PROVISIONAL BILL SUBJECT TO THE APPROVAL OF THE CONCERNED PARTY. HE, HOWEVER, HAS NOT BEEN ABLE TO EXPLAIN WHAT EXACTLY IS MEANT BY A PROVISIONAL BILL. IF AT ALL THE SAID BILL WAS SUBJECT TO THE APPROVAL OF THE 4 I.T.A. NO. 557/KOL/2016 ASSESSMENT YEAR: 2010-11 MAKARNI INFRASTRUCTURE PVT. LTD. PARTY, THE FACT THAT THE SAME WAS DULY ACCOUNTED FOR BY THE SAID PARTY IN ITS BOOKS OF ACCOUNTS CLEARLY INDICATED ITS APPROVAL AND THERE WAS NO JUSTIFICATION FOR THE ASSESSEE NOT TO ACCOUNT FOR THE SAME IN ITS BOOKS OF ACCOUNTS. MOREOVER, THE ASSESSEE COMPANY FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING SHOULD HAVE ACCOUNTED FOR THE SAID BILL IN THE YEAR UNDER CONSIDERATION ITSELF AS THE CONTRACT WORK FOR WHICH THE SAID BILL WAS RAISED BY THE ASSESSEE HAD ALREADY BEEN COMPLETED IN THE YEAR UNDER CONSIDERATION AND EVEN THE EXPENDITURE FOR THE SAID WORK WAS DULY ACCOUNTED FOR BY THE ASSESSEE AS POINTED OUT BY THE A.O. 7. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED A LETTER DATED 02.01.2016 ISSUED BY KALYANPUR CEMENT LTD. STATING THAT THE BILL IN QUESTION WAS IN DISPUTE AND THE AMOUNT FOR THE SAME, THEREFORE, WAS NOT PAID TO THE ASSESSEE COMPANY. HE HAS ALSO FILED A YEAR-WISE SUMMARY OF THE ACCOUNT OF M/S. KALYANPUR CEMENT LTD. SHOWING THAT THE AMOUNT OF THE SAID BILL WAS FINALLY ADJUSTED IN THE F.Y. 2015-16 AND CONTENDED THAT THIS ISSUE MAY BE SENT BACK TO THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH IN THE LIGHT OF THIS ADDITIONAL EVIDENCE. THE LEARNED DR HOWEVER HAS RAISED A STRONG OBJECTION TO THE ADMISSION OF THE SAID ADDITIONAL EVIDENCE. AS RIGHTLY POINTED OUT BY HIM, THERE IS NO APPLICATION FILED BY THE ASSESSEE SEEKING ADMISSION OF THE SAID ADDITIONAL EVIDENCE. THERE ARE ALSO NO REASONS GIVEN BY THE ASSESSEE AS TO WHY THE SAID EVIDENCE COULD NOT BE FILED BEFORE THE AUTHORITIES BELOW. MOREOVER THE LETTER OF KALYANPUR CEMENT LTD. DATED 02.01.2016 WAS AVAILABLE WITH THE ASSESSEE COMPANY BEFORE PASSING OF THE IMPUGNED ORDER OF THE LD. CIT(A) ON 05.02.2016 AND NO REASON WHATSOEVER IS GIVEN ON BEHALF OF THE ASSESSEE FOR ITS FAILURE TO 5 I.T.A. NO. 557/KOL/2016 ASSESSMENT YEAR: 2010-11 MAKARNI INFRASTRUCTURE PVT. LTD. FILE THE SAME BEFORE THE LD. CIT(A). IN ANY CASE, EVEN IF THERE WAS SOME DISPUTE ABOUT THE BILL IN QUESTION RAISED BY THE ASSESSEE COMPANY, THE CORRESPONDING WORK HAVING BEEN COMPLETED BY THE ASSESSEE COMPANY IN THE YEAR UNDER CONSIDERATION AND THE EXPENDITURE FOR THE SAME ALSO HAVING BEEN CLAIMED BY IT, THE ASSESSEE COMPANY OUGHT TO HAVE ACCOUNTED FOR THE SAME IN ITS BOOKS OF ACCOUNTS AS PER THE MERCANTILE SYSTEM OF ACCOUNTING. WE, THEREFORE, FIND NO MERIT IN THE CASE OF THE ASSESSEE ON THIS ISSUE AND REJECTING THE CONTENTION RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) CONFIRMING THE ADDITION OF RS. 17,72,639/- MADE BY THE A.O. ON ACCOUNT OF UNDERSTATEMENT OF GROSS RECEIPTS. GROUND NO 2 OF THE ASSESSEES APPEAL IS ACCORDINGLY DISMISSED. 8. THE ISSUE RAISED IN GROUND NO 3 RELATES TO THE ADDITION OF RS. 3,63,752/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) BY WAY OF THE ALLEGED EXCESS CLAIM OF DEPRECIATION. 9. WHILE VERIFYING THE CLAIM OF THE ASSESSEE FOR DEPRECIATION, A.O. FOUND THAT THE ASSESSEE COMPANY HAS CLAIMED DEPRECIATION AT FULL RATE ON CERTAIN ITEMS OF PLANT & MACHINERY WHICH WERE PURCHASED IN THE SECOND HALF OF THE YEAR UNDER CONSIDERATION. ACCORDING TO HIM, THE ASSESSEE COMPANY THEREFORE WAS ENTITLED FOR DEPRECIATION ONLY AT HALF OF THE NORMAL RATE AND ACCORDINGLY THE CLAIM OF THE ASSESSEE FOR DEPRECIATION WAS DISALLOWED BY HIM TO THE EXTENT OF RS. 3,63,752/-. ON APPEAL, THE LD. CIT(A) CONFIRMED THE SAID DISALLOWANCE MADE BY THE A.O. 6 I.T.A. NO. 557/KOL/2016 ASSESSMENT YEAR: 2010-11 MAKARNI INFRASTRUCTURE PVT. LTD. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, DEPRECIATION AT HALF OF THE NORMAL RATE ONLY WAS CLAIMED BY THE ASSESSEE ON ACCOUNT OF THE PLANT & MACHINERY PURCHASED IN THE SECOND HALF OF THE YEAR UNDER CONSIDERATION AND THE DISALLOWANCE ON ACCOUNT OF DEPRECIATION WAS MADE BY THE AUTHORITIES BELOW UNDER A WRONG IMPRESSION THAT DEPRECIATION AT FULL RATE WAS CLAIMED BY THE ASSESSEE COMPANY. HE HAS CONTENDED THAT THIS ASPECT IS OPEN FOR VERIFICATION AND THE A.O. MAY BE DIRECTED TO DECIDE THIS ISSUE AFTER VERIFICATION OF THE CLAIM OF THE ASSESSEE. SINCE THE LEARNED DR HAS NOT RAISED ANY OBJECTION IN THIS REGARD, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH AFTER VERIFYING THE CLAIM OF THE ASSESSEE THAT DEPRECIATION ONLY AT HALF OF THE NORMAL RATE WAS CLAIMED ON THE RELEVANT PLANT & MACHINERY PURCHASED IN SECOND HALF OF THE YEAR UNDER CONSIDERATION. GROUND NO 3 OF THE ASSESSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2018. SD/- SD/- (ABY.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14/02/2018 BISWAJIT, SR. PS 7 I.T.A. NO. 557/KOL/2016 ASSESSMENT YEAR: 2010-11 MAKARNI INFRASTRUCTURE PVT. LTD. COPY OF ORDER FORWARDED TO: 1. M/S. MAKARNI INFRASTRUCTURE PVT. LTD., B-3, COLLIN PATH, BIDHANNAGAR, DURDGAPUR 713 212. 2. ITO, WD. 1(4), AAYAKAR BHAWAN, CITY CENTRE, DURGAPUR 713 216. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA