Sh. Dharam Singh, Mohali V. ITO, Mohali

ITA 585/CHANDI/2011

• Counselvise Citation: 58521514 RSA 2011
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 27-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: TEJ MOHAN SINGH
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 585/CHD/2011 ASSESSMENT YEAR: 2006-07 SHRI DHARAM SINGH, VS. THE ITO, WARD 6(2), PROP: M/S DASMESH FABRICATORS, MOHALI MOHALI PAN NO. ALWPS9236L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SMT JAISHREE SHARMA DATE OF HEARING : 25.08.2011 DATE OF PRONOUNCEMENT : 30.08.3011 ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CHANDIGARH DATED 12.1.2011 RELATING TO ASSESSMENT Y EAR 2006-07 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. A CT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN SUSTAINING THE ADDITION OF RS. 2,06,396/- ON ACCOUNT OF ALLEGED DIFFERENCE IN THE WORK DONE WHIC H IS ILLEGAL, ARBITRARY & UNJUSTIFIED. 2 2. THAT WITHOUT PREJUDICE TO THE ABOVE AND STRICTLY IN THE ALTERNATIVE, IT IS ONLY THE PROFIT ELEMENT WHICH CA N BE ADDED FOR THE PURPOSE OF COMPUTATION OF INCOME AND AS SUCH THE ADDITION SUSTAINED IS ARBITRARY & UNJUSTIF IED. 3. THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 3,83,878/- ON ACCOUNT OF ALLEGED DIFFERENCE IN SUNDRY DEBTORS WHICH IS ILLEGAL, ARBI TRARY & UNJUSTIFIED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS DECLARING RECEIPT FROM JOB WORK DONE ON BEHALF OF M/S RANBAXY LTD, PA ONTA SAHIB. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DECL ARED GROSS RECEIPTS OF RS. 59,87,780/-. HOWEVER, AS PER THE TDS CERTIFICA TE ISSUED BY M/S RANBAXY LTD, THE TOTAL CONTRACT PAYMENTS FOR THE FI NANCIAL YEAR WORKED OUT TO RS. 67,74,469/- I.E. THERE WAS A DIFFERENCE OF RS. 7,86,889/-. THE ASSESSING OFFICER CALLED FOR INFORMATION U/S 133(6) OF THE INCOME TAX ACT FROM M/S RANBAXY LTD AND AS PER THE SAID INFORMATI ON, THE SAID COMPANY HAD RELEASED PAYMENT OF RS. 61,94,176/- UPTO 31.3.2 006 AS AGAINST TOTAL INVOICES PROCESSED AND CREDITED OF RS. 67,74,669/-. THE BALANCE AMOUNT OF RS. 3,80,493/- WAS REALIZED AFTER 31.3.2006. TH E ASSESSING OFFICER VIDE PARA 4 OF THE ASSESSMENT ORDER NOTED THAT THE TOTAL JOB WORK PAYMENTS AMOUNTED TO RS. 61,94,176/- AGAINST WHICH THE ASSES SEE HAD SHOWN JOB WORK AT RS. 59,87,780/-. THE ASSESSEE HAD SHOWN LE SS RECEIPTS BY RS. 2,06,396/-. FURTHER, AS PER THE DETAILS RECEIVE D FORM M/S RANBAXY LAB PVT LTD, THE BALANCE PAYMENT DUE AS ON 31.3.2006 WA S RS. 5,80,493/-. THE ASSESSEE IN HIS SUNDRY DEBTORS HAD SHOWN A SUM OF RS. 1,96,615/- AS RECEIVABLE FROM M/S RANBAXY LABORATORIES PVT LTD. AS PER THE ASSESSING OFFICER THE ASSESSEE HAD SHOWN SUNDRY DEBTS LESS TO THE EXTENT OF RS. 3,83,878/-. THE EXPLANATION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER 3 WAS THAT THE SUM OF RS. 5,80,493/- SHOWN BY M/S REL IANCE LABORATORIES LTD INCLUDED SUM OF RS. 3,83,877/- AS SERVICE TAX D EDUCED BY THE COMPANY FROM THE BILLS TO BE DEPOSITED ON BEHALF OF THE ASS ESSEE. THE ASSESSING OFFICER NOTED THAT AS PER THE INFORMATION RECEIVED FROM M/S RELIANCE LABORATORIES LTD, THE PAYMENT WAS MADE NET OF SERVI CE TAX AND HENCE THE SUM OF RS. 2,06,396/- AND RS. 3,83,878/- WERE ADDED AS INCOME OF THE ASSESSEE. THE CIT(A) CONFIRMED THE ORDER OF THE A SSESSING OFFICER. 4. THE LD. AR FOR THE ASSESSEE BEFORE US POINTED OU T THAT THE DIFFERENCE WAS ON ACCOUNT OF THE SERVICE TAX. HOWE VER, WHEN CONFRONTED TO FURNISH THE DETAILS, THE ASSESSEE WAS UNABLE TO FURNISH THE SAME. THE LD. AR FAIRLY ADMITTED THAT ALL THE RECEIPTS RELAT ED TO THE SAME PARTY AND THE ASSESSEE HAVING RECEIVED A SUM OF RS. 59,87,780 /- HAD DECLARED THE SAME AS ITS RECEIPTS FOR THE FINANCIAL YEAR. ADMIT TEDLY, THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. AN ALTE RNATIVE PLEA WAS RAISED BY THE ASSESSEE THAT ONCE ADDITION ON ACCOUN T OF GROSS RECEIPTS LESS SHOWN TO THE EXTENT OF RS. 2,06,396/- IS MADE IN TH E HANDS OF THE ASSESSEE, CORRESPONDING ADDITION ON ACCOUNT OF SUNDRY DEBTORS LESS SHOWN IS NOT WARRANTED. THE LD. DR FOR THE REVENUE PLACED RELIA NCE ON THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTI NG UNDER WHICH RECEIPTS ACCRUING TO THE ASSESSEE ARE TO BE ACCOUNT ED FOR AS ITS INCOME FOR THE FINANCIAL YEAR IRRESPECTIVE OF THE FACT WHETHER THE SAME HAVE BEEN RECEIVED BY THE ASSESSEE DURING THE FINANCIAL YEAR ITSELF OR NOT. SIMILARLY, THE EXPENDITURE WHICH ARE INCURRED / BOO KED BY THE ASSESSEE WHERE PAYMENTS FOR THE SAME HAS BEEN MADE OR NOT AR E TO BE BOOKED AS AN 4 EXPENDITURE RELATING TO THE FINANCIAL YEAR TO WHICH THE SAME RELATES. THE ASSESSEE BEFORE US IS FOLLOWING MERCANTILE SYSTEM O F ACCOUNTING, THE ASSESSEE IS CARRYING ON THE JOB WORK ON BEHALF OF M /S RANBAXY LABORATORIES LTD. DURING THE YEAR UNDER CONSIDERAT ION, THE SAID COMPANY HAD RELEASED PAYMENT OF RS. 61,94,176/- AGAINST WHI CH THE ASSESSEE CLAIMS TO HAVE RECEIVED RS. 59,87,780/-. THE ASSESSEE HAD NOT ACCOUNTED FOR SUM OF RS. 2,06,396/- AS PART OF ITS JOB WORK RECEIPTS. WE ARE IN AGREEMENT WITH THE ORDERS OF THE AUTHORITIES BELOW THAT IN VI EW OF THE ASSESSEE FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THE SAID RECEIPTS OF RS. 2,06,396/- ARE TO BE INCLUDED AS INCOME OF THE ASSE SSEE FOR THE YEAR UNDER CONSIDERATION. 6. FURTHER, THE SECOND ASPECT OF THE ISSUE IS THAT IN THE LIST OF SUNDRY DEBTORS SHOWN BY THE ASSESSEE AS ON 31.3.2006, A SU M OF RS. 1,96,615/- WAS DUE TO BE RECEIVED FORM M/S RANBAXY LABORATORIE S LTD WHEREAS AS PER THE INFORMATION COLLECTED FROM THE SAID PARTY, THE BALANCE DUE TO THE ASSESSEE WAS RS. 5,80,493/- THE ASSESSEE THUS HAD SHOWN THE SUNDRY DEBTORS LESS TO THE EXTENT OF RS. 3,83,878/-. WE F IND MERIT IN THE CLAIM OF THE ASSESSEE THAT THE DIFFERENCE IN THE RECEIPTS NO T SHOWN BY THE ASSESSEE TO THE EXTENT OF RS. 2,06,396/- WAS RECEIVABLE FORM M/S RANBAXY LABORATORIES (P) LTD AND THE SAME HAS NOT BEEN REFL ECTED BY THE ASSESSEE IN ITS BALANCE SHEET. WE ARE OF THE VIEW THAT ASSE SSEE IS ENTITLED TO THE CREDIT OF THE SAID SUM OF RS. 2,06,396/-, ADDITION OF WHICH HAS BEEN UPHELD BY US IN THE PARAS HEREINABOVE. THUS, THE B ALANCE ADDITION ON ACCOUNT OF SUNDRY DEBTORS WILL STAND REDUCED TO RS. 77,482/- (RS. 3,83,878 RS. 2,06,396/-) THE SAID ADDITION OF RS .77,482/- IS THUS CONFIRMED. THE GROUND NOS. 1 TO 3 RAISED BY THE A SSESSEE ARE THUS PARTLY ALLOWED. 5 ITA NO. 585/CHD/2011 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2011. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH AUGUST, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH