The Assistant Commissioner Of Income Tax, Circle1(1), Visakhapatnam V. M/s. Visakhapatnam Dock Lobour Board (now Meraged With Visakhapatnam Port Trust), Visakhapatnam

ITA 624/VIZ/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5809 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 07-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSEEL KUMAR AGARWAL
• Section: 147; 148; 143(3); 143(1)

Judgement Text

आयकर अपीऱीयअधिकरण, विशाखापटणम पीठ, विशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री ऱलऱत क ु मार, न्याययक सदस्य एिं श्री एस बाऱाक ृ ष्णन, ऱेखा सदस्य के समक्ष BEFORE SHRI LALIET KUMAR, HON‟BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON‟BLE ACCOUNTANT MEMBER आयकर अऩीऱ सं./ I.T.A. No.624/Viz/2019 (ननधाारण वषा / Assessment Year : 2007-08) Assistant Commissioner of Income Tax, Circle-1(1), Visakhapatnam. Vs. M/s. Visakhapatnam Dock Labour Board (now merged with Visakhapatnam Port Trust), Visakhapatnam. PAN: AAAAV 1409 R (अऩीऱाथी/ Appellant) (प्रत्यथी/ Respondent) अऩीऱाथी की ओर से/ Appellant by : Sri Suseel Kumar Agarwal प्रत्याथी की ओर से / Respondent by : Sri SPG Mudaliar, Sr. AR स ु नवाई की तारीख / Date of Hearing : 28/03/2022 घोषणा की तारीख/Date of Pronouncement : 29/03/2022 O R D E R PER S. BALAKRISHNAN, Accountant Member : This appeal filed by the Revenue against the order of the Ld. CIT(A)-1, Visakhapatnam in ITA No. 165/2013-14/ACIT-C1(1), Vsp/2016-17, dated 16/08/2019 passed U/s. 143(3) r.w.s 147 and U/s. 250(6) of the Act for the AY 2007-08. 2 2. Brief facts of the case are that the assessee filed its return of income for the AY 2007-08 on 31/10/2007 admitting a loss of Rs. 1,99,23,230/-. The return was processed U/s 143(1) and thereafter the case was reopened U/s. 147 of the Act by issuing notice U/s. 148 on 29/03/2012 after recording the reasons for reopening U/s. 147 of the Act. The Ld. AO observed that the assessee was following cash system of accounting and made provision towards „Wage Board Arrears‟ payable at Rs. 146.32 lakhs and „Special Levy‟ payable at Rs. 70.23 lakhs similarly. The assessee was also claimed provision under the head „sundry debtors‟ at Rs.73.54 lakhs. The assessment was completed U/s. 143(3) by the Ld. AO after disallowing a sum of Rs.1,42,69,000/-. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)-1, Visakhapatnam. The Ld. CIT (A) after considering the submissions made by the assessee‟s representative held that the proceedings U/s. 147 was valid. Ld. CIT (A) also noted that since the appellant has filed the return of income based on the receipts and payments account maintained by the assessee on cash system of accounting. The Ld. CIT(A) concluded that since the appellant has filed its income based on 3 receipts and payments, the necessity of considering income and expenditure statement on accrual basis is not required and deleted the addition made by the Ld. AO. Aggrieved by the order of the Ld. CIT (A), the Revenue is in appeal before the Tribunal by raising the following grounds of appeal: “1. The order of the Ld. CIT(A)-1, Visakhapatnam is erroneous both on facts and in law. 2. The Ld. CIT (A) failed to appreciate that the assessee computed the total income from income and expenditure account, but not from receipt and payment account, which case the provision for future expenses is not allowable expenses because income and expenditure account is prepared on due basis. 3. The Ld. CIT (A) ought not to have accepted the assessee’s submission that total income is computed based on receipt and payment account without actually verifying the assessee’s computation of total income and income & expenditure account, because the total income in this case was computed from Income & Expenditure account only but not from receipts and payment account. 4. The appellant craves leave to add or delete or amend or substitute any ground of appeal before and / or at the time of hearing of appeal. Beside the merit in facts and law, it is also submitted that there is an audit objection in this case. For these and other grounds that may be urged at the time of appeal hearing. It is prayed that addition made by the AO disallowances of wage board arrears and special levy payable be restored.” 3. The Ld. DR argued that based on the consolidated income and expenditure account, the accruals are being considered by 4 the assessee in the income & expenditure statement. The DR then pleaded that the order of the Assessing Officer be upheld. 4. Per contra, the Ld. AR argued that the consolidated income and expenditure account is prepared for administrative purposes which has not been considered for filing the return of income. The Ld. AR also demonstrated that as per the consolidated income & expenditure account as on 31/3/2007 the “Excess of Expenditure over income” is stated at Rs. 6,04,06,681.40 whereas the assessee has claimed “Excess of Expenditure over income” only at Rs. 1,99,23,230/- in the Return of Income (ROI), which is based on the actual receipts and payments account. The Ld. AR also stated that he has submitted the reconciliation of Excess of Expenditure over income between the accrual basis of accounting and the cash basis of accounting. The Ld. AR also in his written submissions stated that since the tax impact involved in the appeal is less than Rs. 50 lakhs, the appeal filed by the Revenue is not maintainable vide CBDT Circular No. 3/2018, dated 20/08/2018. The Ld. AR also stated that as per the grounds of appeal raised by the Revenue, it is stated in Ground No.4 that there is an audit objection whereas it was not raised before the Ld. CIT (A). 5 5. We have heard both the sides and perused the material available on record and also the orders of the Authorities below. We find from Annexure-1 submitted by the Ld. AR the assessee has filed ROI in ITR-7 for the AY 2007-08 vide Acknowledgement No.0101000224, dated 31/10/2007 disclosing a loss of Rs. 1,99,23,230/-. It may be noted that difference between cash and accrual basis of accounting will be on account of current assets and current liabilities. We find from the reconciliation statement that adjustments w.r.t current assets and current liabilities were made while arriving at the loss claimed as per the return of income. Based on the above findings, we find force in the arguments of the Ld. AR that the assessee has not claimed the expenses which were accounted on accrual basis while filing the ROI for the AY 2007-08. In view of the above findings, since the loss claimed by the assessee is based on the receipts and payments account followed on the cash accounting system basis, we find no infirmity in the order of Ld.CIT(A) and hence no interference is required. Therefore the ground No 2 & 3 raised by the Revenue are dismissed. Ground No 4 was not pressed and hence dismissed. 6 Ground No 1 is general in nature and need no adjudication. 6. In the result, appeal filed by the Revenue is dismissed. Pronounced in the open Court on the 29 th March, 2022. Sd/- Sd/- (ऱलऱत क ु मार) (एस बाऱाक ृ ष्णन) (LALIET KUMAR) (S.BALAKRISHNAN) न्याययकसदस्य/JUDICIAL MEMBER ऱेखा सदस्य/ACCOUNTANT MEMBER Dated : 29.03.2022 OKK - SPS आदेश की प्रतिलिपि अग्रेपिि/Copy of the order forwarded to:- 1. ननधााररती/ The Assessee– M/s. Visakhapatnam Dock Labour Board (Now merged with Visakhapatnam Port Trust), Port Area, Visakhapatnam, Andhra Pradesh – 530001. 2. राजस्व/The Revenue – Asst. Commissioner of Income Tax O/o. ACIT, Circle-1(1), 4 th Floor, Direct Taxes Building, MVP Colony, Visakhapatnam. 3. The Principal Commissioner of Income Tax-1, Visakhapatnam. 4. आयकर आय ु क्त (अऩीऱ)/ The Commissioner of Income Tax (Appeals)-1, Visakhapatnam. 5. ववभागीय प्रनतननधध, आयकर अऩीऱीय अधधकरण, ववशाखाऩटणम/ DR, ITAT, Visakhapatnam 6. गार्ा फ़ाईऱ / Guard file आदेशान ु सार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam