TOSCANO INFRASTRUCTURE P.LTD, THANE V. DCIT 10-(3), MUMBAI

ITA 6578/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0832 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK LD
• Assessee Lawyers: DR K SHIVRAM; RAHUL HAKANI LD ARS
• Keywords: Bogus purchase; Additional evidence; Question of law; Reassessment proceedings
• Section: 43B; 143(3); 133A; 147

Judgement Text

ITA NOS.6577-6578 & 6849- 6850/M/2014 TOSCANO INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEARS : 2009-10 & 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NOS. 6577 & 6578/MUM/2014 ( / ASSESSMENT YEARS: 2009-10 & 2010-11) TOSCANO INFRASTRUCTURE PRIVATE LIMITED GROUND FLOOR, ASHAR I.T. PARK ROAD NO. 16Z WAGLE INDUSTRIAL ESTATE NEAR AGRICULTURAL BUS STOP THANE(W) 400 604 / VS. DEPUTY COMMISSIONER OF INCOME TAX 10(3) ROOM NO. 451 AAYKAR BHAWAN M.K.ROAD MUMBAI -400 020 !' ./ ./PAN/GIR NO. AACCT-7263-P ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) & ./I.T.A. NOS. 6849 & 6850/MUM/2014 ( / ASSESSMENT YEARS: 2009-10 & 2010-11) DEPUTY COMMISSIONER OF INCOME TAX 10(3) ROOM NO. 451 AAYKAR BHAWAN M.K.ROAD MUMBAI -400 020 / VS. TOSCANO INFRASTRUCTURE PRIVATE LIMITED GROUND FLOOR, ASHAR I.T. PARK ROAD NO. 16Z WAGLE INDUSTRIAL ESTATE NEAR AGRICULTURAL BUS STOP THANE(W) 400 604 !' ./ ./PAN/GIR NO. AACCT-7263-P ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) ITA NOS.6577-6578 & 6849- 6850/M/2014 TOSCANO INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEARS : 2009-10 & 2010-11 2 '$ / APPELLANT BY : DR. K.SHIVRAM & SHRI RAHUL HAKANI, LD. ARS %&'$ / RESPONDENT BY : DR. A.K.NAYAK, LD. DR / DATE OF HEARING : 24/04/2017 / DATE OF PRONOUNCEMENT : 02 /05/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEALS BY ASSESSEE AS WELL AS BY REV ENUE FOR ASSESSMENT YEARS [AY] 2009-10 & 2010-11 ASSAILS COM MON ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-22 [CIT(A)], M UMBAI DATED 18/08/2014. SINCE THE ISSUES SPRINGS OUT OF COMMON SETS OF FACTS, WE DISPOSE-OFF ALL THE APPEALS BY WAY OF THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE AND BREVITY. FIRST WE TAKE UP ASSESSEE S APPEAL ITA NO. 6577/MUM/2014 & REVENUES APPEAL ITA NO. 6850/M/14 FOR AY 2009-10 QUA CONFIRMATION OF ADDITION TO THE EXTENT OF 20% ON AL LEGED BOGUS PURCHASES. 2. BRIEFLY STATED, THE ASSESSEE, BEING RESIDENT COR PORATE ASSESSEE, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 VIDE ASSESSING OFFICER [AO] ORDER DAT ED 18/11/2013 WHEREIN THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.10,09,83,380/- UNDER NORMAL PROVISIONS AFTER ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.6,72,98,528/- AS AGAINST INCOME OF RS.3,36,84,85 0/- DETERMINED IN THE ORIGINAL ASSESSMENT U/S 143(3)(III) DATED 25/12/201 1. THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 30/09/2009 DECLARING TOTAL INCOME OF RS.3,30,14,320/-. THE ASSESSEE WAS ENGAGED AS CIVIL AND LABOUR CONTRACTORS DURING THE IMPUGNED AY . THE REASSESSMENT PROCEEDINGS WERE INITIATED CONSEQU ENT TO A ITA NOS.6577-6578 & 6849- 6850/M/2014 TOSCANO INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEARS : 2009-10 & 2010-11 3 SURVEY ACTION UPON THE ASSESSEE ON 23/11/2012 WHERE THE ASSESSEE WAS FOUND TO HAVE INDULGED IN PROCURING CERTAIN BOGUS PURCHASE BILLS WITHOUT TAKING ACTUAL DELIVERY OF MATERIAL. THE ASSESSEE WA S FOUND TO HAVE MADE PURCHASES FROM FOLLOWING PARTIES WHO WERE LISTED AS HAWALA DEALERS AS PER INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT: - NO. NAME OF THE DEALER TIN NO. AMOUNT (RS.) 1. CENTURIAN SALES CORPORATION 27530623900V 43,69,207/ - 2. ATLAS ENTERPRISES 27710363744V 46,528/- 3. COSMOS ENTERPRISES 27490290339V 56,871/ - 4. U.V.DISTRIBUTORS PVT. LTD. 27450611043V 5,3 8,670/- 5. OM CORPORATION 27310540795V 20,856/- 6. SAICAN MERCANTILE PVT. LTD. 27290614817V 2,93,69,074/ - 7. SUBHLABH METAL AND ALLOYS PVT LTD. 27940590646V 3,28,97,322/- TOTAL 6,72,98,528/ - DURING SURVEY OPERATIONS, A STATEMENT U/S 133A WAS RECORDED FROM THE MD OF THE ASSESSEE COMPANY WHICH WAS RETRACTED LATER ON. THE ASSESSEE DENIED HAVING INDULGED IN ANY SUCH BOGUS PURCHASES AND CONTESTED THE ADDITION MADE WITH RESPECT TO BOGUS PURCHASES. HOWEVER, UPON PERUSAL OF SURVEY REPORT AND CONTENTIONS RAISED BY THE ASSESSEE, AO N OTED THAT THE ASSESSEE FAILED TO ESTABLISH THE ACTUAL DELIVERY OF GOODS AS NO DELIVERY CHALLANS, STOCK REGISTER, TRANSPORTATION BILLS ETC. WERE AVAILABLE / PRODUCED EITHER AT THE TIME OF SURVEY OPERATIONS AS WELL AS DURING SCRUTINY ASSESS MENT PROCEEDINGS AND HENCE THE ASSESSEE FAILED TO DISCHARGE THE ONUS OF PROVING THE PURCHASES MADE BY HIM. FURTHER, THE ASSESSEE COULD NOT FURNIS H ANY EVIDENCE TO CONTROVERT THE DECLARATION AND DISCLOSURE MADE DURI NG THE COURSE OF SURVEY PROCEEDINGS WHICH LED THE AO TO MAKE IMPUGNED ADDIT IONS. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME BEFOR E LD. CIT(A) WITH PARTIAL SUCCESS VIDE ORDER DATED 18/08/2014 WHERE I T RAISED SIMILAR PLEAS AND CONTENDED THAT THE ASSESSEE BEING CIVIL CONTRACTORS , COULD NOT HAVE CARRIED OUT ITS BUSINESS WITHOUT ACTUAL DELIVERY OF GOODS A ND THEREFORE, THE PURCHASES ITA NOS.6577-6578 & 6849- 6850/M/2014 TOSCANO INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEARS : 2009-10 & 2010-11 4 WERE GENUINE PARTICULARLY WHEN THE ASSESSEE WAS MAI NLY WORKING ON GOVERNMENT PROJECTS. THE ASSESSEE PRODUCED PAPER-BOOK CONTAINING DETAILS OF PROJECTS UNDERTAKEN BY THE ASSESSEE DURING THE Y EAR ALONG WITH DETAILS OF PURCHASE AND CONSUMPTION OF STEEL IN THOSE PROJECTS . THE ASSESSE COULD ALSO PRODUCE COPIES OF DELIVERY CHALLANS / DETAILS OF DE LIVERY / LORRY NUMBER ETC. WITH RESPECT TO FEW PARTIES ONLY WHICH LED LD. CIT (A) TO CONCLUDE THAT THE ASSESSEE FAILED TO ESTABLISH THE ACTUAL DELIVERY OF GOODS CONCLUSIVELY. THEREAFTER, CONSIDERING VARIOUS JUDICIAL PRONOUNCEM ENTS ON THE SUBJECT, THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO 20% OF AL LEGED BOGUS PURCHASES WHICH CAME TO RS.1,34,59,705/-. STILL AGGRIEVED, T HE ASSESSEE IS IN APPEAL BEFORE US. THE REVENUE IS IN APPEAL AGAINST RELIEF PROVIDED BY THE LD. CIT(A). 4. THE LD. COUNSEL FOR ASSESSEE, DR. K.SHIVRAM, WHILE DRAWING OUR ATTENTION TO VOLUMINOUS DOCUMENTS PLACED IN THE PAPER- BOOK, CONTENDED THAT THE ASSESSEE WORKED AS CONTRACTOR / SUB-CONTRACTOR MAINLY FOR GOVERNMENT PROJECTS WHERE THE WORK OF THE ASSESSEE WAS SCRUTIN IZED AT VARIOUS LEVELS AND FURTHER SUCH A HUGE MAGNITUDE OF WORK COULD NOT HAV E BEEN ACCOMPLISHED BY THE ASSESSEE WITHOUT CONSUMPTION OF RAW MATERIAL. T HE ASSESSEE PURCHASED MAINLY STEEL FROM THE ALLEGED BOGUS SUPPLIERS, WHIC H WAS A KEY RAW MATERIAL TO UNDERTAKE SUCH PROJECTS. MOREOVER, THE ASSESSEE WAS IN POSSESSION OF ALL PURCHASE INVOICES ETC. AND THE PAYMENTS TO ALLEGED BOGUS SUPPLIERS WERE THROUGH BANKING CHANNELS AND HENCE, THE PURCHASES C OULD NOT BE DOUBTED. PER CONTRA, THE LD. DR CONTENDED THAT ADEQUATE RELIEF HAS ALREA DY BEEN PROVIDED BY LD. CIT(A) TO THE ASSESSEE AND THEREFOR E, NO FURTHER RELIEF COULD BE GRANTED TO THE ASSESSEE ON THE FACTS OF THE CASE . THE ASSESSEE PRODUCED ADDITIONAL EVIDENCES BEFORE LD. CIT(A) WHICH WERE N EVER SUBJECTED TO AOS SCRUTINY. FURTHER, THE ONUS TO SUBSTANTIATE THE PUR CHASE SQUARELY LIED ON THE ASSESSEE AND THE ASSESSEE HAS FAILED TO DISCHARGE T HE PRIMARY ONUS OF ITA NOS.6577-6578 & 6849- 6850/M/2014 TOSCANO INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEARS : 2009-10 & 2010-11 5 PROVING THE PURCHASES CONCLUSIVELY AS NO EVIDENCES COULD BE PROVIDED BY HIM TO SUBSTANTIATE ACTUAL DELIVERY OF GOODS DESPITE MA KING VOLUMINOUS PURCHASES FROM THE BOGUS SUPPLIERS. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. A PERUSAL OF VARIOUS DOCUMENTS PLACED IN THE PAPER-BOOK REVEALS THAT ALTHOUGH THE ASSESSEE WAS IN POSSESSION OF PUR CHASE INVOICES BUT THESE INVOICES WERE INCOMPLETE WITH RESPECT TO DETAILS OF TRANSPORTATION ETC. THE ASSESSEE HAD PURCHASED BULKY ITEM LIKE STEEL FROM T HESE SUPPLIERS, THE DELIVERY OF WHICH REQUIRED ELABORATE TRANSPORTATION AND THE ASSESSEE WAS EXPECTED TO PROVE THE ACTUAL DELIVERY OF MATERIAL W ITH TRANSPORTATION DETAILS, TRANSPORT/GR RECEIPTS, STOCK INWARD REGISTER ETC. O N THE OTHER HAND, NO CONCRETE EFFORTS HAS BEEN MADE BY REVENUE TO ESTABL ISH THE PURCHASES AS NON-GENUINE BEYOND DOUBT BY OBTAINING CONFIRMATORY LETTERS ETC. FROM THE ALLEGED BOGUS SUPPLIERS. PRIMA FACIE, IT APPEARS THAT THE ADDITION HAS BEEN MADE SOLELY ON THE BASIS OF INFORMATION RECEIVED FR OM THE SALES TAX DEPARTMENT AND STATEMENT MADE U/S 133A BY THE MD OF ASSESSEE COMPANY DURING SURVEY OPERATIONS. THEREFORE, WE FIND LAPSES ON BOTH THE SIDES. THE TRIBUNAL, INVARIABLY, IN ALL SUCH CASES, HAVE TAKEN A STAND THAT EVEN IF PRESUMING THAT ALL PURCHASES WERE BOGUS, ENTIRE ADD ITION THEREOF WAS NOT WARRANTED FOR PARTICULARLY WHEN THE SALES WERE NOT IN DISPUTE AND THE ACCOUNTS OF THE ASSESSEE WERE AUDITED AND THE ASSES SEE PROVIDED QUANTITATIVE DETAILS TO A REASONABLE EXTENT AND THE ADDITION, IF ANY, WHICH HAS TO BE MADE IN ALL SUCH CASES IS TO ACCOUNT FOR PROF IT ELEMENT EMBEDDED IN SUCH PURCHASE TRANSACTIONS. THEREFORE, AFTER DUE DI SCUSSION WITH BOTH THE REPRESENTATIVE, WE ESTIMATE THE ADDITION @12.5% OF BOGUS PURCHASES OF RS.6,72,98,528/- WHICH COMES TO RS.84,12,316/-. HEN CE, ADDITION TO THAT ITA NOS.6577-6578 & 6849- 6850/M/2014 TOSCANO INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEARS : 2009-10 & 2010-11 6 EXTENT IS CONFIRMED. CONSEQUENTLY, THE ASSESSEES A PPEAL STANDS PARTLY ALLOWED WHEREAS THE REVENUES APPEAL STANDS DISMISS ED. 6. NOW, WE TAKE UP ASSESSEES APPEAL ITA NO.6578/M/ 2014 AND REVENUES APPEAL ITA NO.6849/M/14 FOR AY 2010-2011. 7. THE REVENUES APPEAL AND GROUND NOS. 1 TO 4 OF A SSESSEES APPEAL RELATED TO ADDITION WITH RESPECT TO BOGUS PURCHASES . THE ASSESSEE, IN SIMILAR MANNER, SUFFERED SIMILAR ADDITION OF BOGUS PURCHASE S FOR RS.2,01,71,071/- IN AN ASSESSMENT U/S 143(3) VIDE AO ORDER DATED 12/03/ 2013 WHICH WAS CONTESTED BEFORE LD. CIT(A) WHERE THE ASSESSEE GOT PARTIAL RELIEF AS THE ADDITION WAS RESTRICTED TO 20%. THE REVENUE HAS ASS AILED THE RELIEF PROVIDED BY THE LD. CIT(A) WHEREAS THE ASSESSEE HAS ASSAILED THE ADDITION CONFIRMED BY THE LD. CIT(A). 8. AS WE HAVE ALREADY DECIDED THE ISSUE IN AY 2009- 10 AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY RESTRICTING THE ADDIT ION TO 12.5%, THERE BEING NO MAJOR CHANGE IN FACTS OR CIRCUMSTANCES EXCEPT FO R FIGURES ETC., TAKING THE SAME STAND, WE RESTRICT THE IMPUGNED ADDITIONS TO 1 2.5% OF RS.2,01,71,071/- WHICH COMES TO RS.25,21,384/-. HENCE, THE REVENUES APPEAL STANDS DISMISSED WHEREAS GROUND NOS. 1 TO 4 OF ASSESSEES APPEAL STANDS PARTLY ALLOWED. 9. THE ASSESSEE, IN GROUND NO. 5 TO 6 HAS FURTHER CONTESTED ANOTHER ADDITION ON ACCOUNT OF SERVICE TAX LIABILITY U/S 43 B FOR RS.51,74,066/-. FACTS QUA THIS ADDITION ARE THAT DURING ASSESSMENT PROCEEDING S, IT WAS NOTED THAT THE ASSESSEE REFLECTED OUTSTANDING SERVICE TAX LIAB ILITY AGGREGATING TO RS.51,74,066/- IN HIS BALANCE SHEET UNDER THE HEAD LIABILITIES BUT SINCE THE SAME REMAINED UNPAID BY THE ASSESSEE, THE SAME ATTR ACTED DISALLOWANCE U/S 43B. THE ASSESSEE CONTENDED THAT SINCE THE AMOUNT W AS NOT COLLECTED FROM THE CUSTOMERS, THE LIABILITY TO PAY THE SAME DID NO T ARISE IN TERMS OF RULE 6 OF ITA NOS.6577-6578 & 6849- 6850/M/2014 TOSCANO INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEARS : 2009-10 & 2010-11 7 THE SERVICE TAX RULES. FURTHER, THE ASSESSE NEVER DEBITED /ROUTED THE SAME THOUGH PROFIT & LOSS ACCOUNT AND THEREFORE NEVER CL AIMED DEDUCTION THEREOF AND HENCE, NO SUCH DISALLOWANCE COULD BE MADE. HOWE VER, UPON PERUSAL OF SUB CONTRACT AGREEMENT ENTERED INTO BY THE ASSESSEE WITH ITS CUSTOMERS, IT WAS NOTICED THAT THE PAYMENT OF SERVICE TAX WAS THE LIABILITY OF THE ASSESSEE AND AS THE SAME WAS NOT DEPOSITED BEFORE THE DUE DA TE OF FILING THE RETURN OF INCOME, THE ADDITION THEREOF WAS MADE IN THE ASSESS MENT INVOKING THE PROVISIONS OF SECTION 43B. THE SAME WAS CONTESTED B EFORE LD. CIT(A) WHERE THE ASSESSEE RELIED UPON CERTAIN JUDICIAL PRONOUNCE MENTS AND CONTENDED THAT THE LIABILITY TO PAY SERVICE TAX AROSE ONLY UPON RE CEIPT OF PAYMENT FROM THE CLIENTS. AFTER APPRECIATING THE VARIOUS CONTENTIONS AND CASE LAWS, THE LD. CIT(A) PARTLY ALLOWED THE CLAIM OF THE ASSESSEE BY DIRECTING THE AO TO VERIFY THE AMOUNT OF SERVICE TAX COLLECTED BY THE ASSESSEE AND DISALLOW THAT PORTION WHICH WAS COLLECTED BUT NOT PAID. AGGRIEVED, THE AS SESSEE IS IN APPEAL BEFORE US. 10. THE LD. AR HAS RAISED SIMILAR CONTENTIONS BEFOR E US AND CONTENDED THAT THE ASSESSEE MAINTAINED SEPARATE ACCOUNT OF SERVICE TAX WHEREIN THE SERVICE TAX COLLECTED WAS CREDITED THEREBY SHOWING PAYABLE AND THE SERVICE TAX PAID ON MATERIAL ETC. FOR SET OFF IS DEBITED IN THE SAME LEDGER ACCOUNT AND THE NET DIFFERENCE OF TWO IS SHOWN AS PAYABLE IN TH E BALANCE SHEET. FURTHER, THE SERVICE TAX PAYABLE WAS NEVER DEBITED / ROUTED THROUGH PROFIT & LOSS ACCOUNT AND THE ASSESSEE NEVER CLAIMED DEDUCTION TH EREOF AND HENCE, SECTION 43B HAD NO APPLICATION. IT WAS FURTHER CONT ENDED THAT AS PER SERVICE TAX RULES, THE LIABILITY TO PAY SERVICE TAX AROSE O NLY UPON RECEIPT OF RESPECTIVE PAYMENTS FROM THE CLIENTS AND HENCE THE PROVISIONS OF SECTION 43B WERE NOT APPLICABLE TO THE SAME. RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN CIT VS. NOBLE & HEWITT (I) PVT. LTD. [2008 305 ITR 324 ] ITA NOS.6577-6578 & 6849- 6850/M/2014 TOSCANO INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEARS : 2009-10 & 2010-11 8 WHICH WAS FOLLOWED BY MUMBAI TRIBUNAL IN PHARMA SEARCH VS. ACIT [53 SOT 1]. 11. PER CONTRA , LD. DR CONTENDED THAT THE ASSESSEE COULD FOLLOW E ITHER INCLUSIVE METHOD OR EXCLUSIVE METHOD OF ACCOUNTING AND THE ASSESSEE FOLLOWED EXCLUSIVE METHOD UNDER WHICH THE SERVICE T AX LIABILITY WAS NOT ROUTED THROUGH PROFIT & LOSS ACCOUNT AND DIRECTLY REFLECTE D IN THE BALANCE SHEET. NEVERTHELESS, THE ASSESSEE GOT THE DEDUCTION THEREO F INDIRECTLY BY NOT CREDITING THE AMOUNT OF SERVICE TAX TO THE PROFIT & LOSS ACCOUNT. OUR ATTENTION HAS BEEN DRAWN TO THE PROVISIONS OF SECTI ON 145A TO CONTEND THAT THE RECEIPTS OF ASSESSEE WERE TO INCLUDE THE SERVIC E TAX PORTION AND THE DEDUCTION THEREOF COULD BE PROVIDED ONLY IN TERMS O F SECTION 43B UPON ACTUAL PAYMENT OF THE SAME. OUR ATTENTION WAS FURTHER DRAW N TO EXPLANATION-2 TO SECTION 43B TO CONTEND THAT AS PER THIS EXPLANATION , ANY SUM PAYABLE MEANS A SUM FOR WHICH THE ASSESSEE INCURRED LIABILITY IN THE PREVIOUS YEAR EVEN THOUGH SUCH SUM MIGHT NOT HAVE BEEN PAYABLE WITHIN THAT YEAR UNDER THE RELEVANT LAW. THEREFORE, THE ASSESSEE INCURRED THE LIABILITY DURING IMPUGNED AY WHICH, IN FACT, MAY NOT BE PAYABLE UNDER THE REL EVANT SERVICE TAX RULES AND THEREFORE, SECTION 43B WAS RIGHTLY INVOKED. RELIANC E WAS PLACED ON THE JUDGMENT OF APEX COURT IN CHOWRINGHEE SALES BUREAU P. LTD. [1977 110 ITR 385] 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. FIRST OF ALL, WE FIND THAT SECTION 145A HAS NO APPLICATION TO THE ISSUE UNDER DISPUTE AS THIS SECTION DEALS ONLY WITH VALUATION OF PURCHASE AND SALE OF GOODS AND NO APPLICATION IN SERVICE CONTRAC TS. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE FOLLOWED EXCLUSIVE METHOD OF ACCO UNTING AND CREDITED THE PROFIT & LOSS ACCOUNT ONLY WITH NET AMOUNT OF SERVI CES RENDERED EXCLUDING SERVICE TAX. FURTHER, AS PER THE SERVICE TAX RULES, AS THEY STOOD AT RELEVANT ITA NOS.6577-6578 & 6849- 6850/M/2014 TOSCANO INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEARS : 2009-10 & 2010-11 9 TIME, THE ASSESSEE WAS LIABLE TO PAY SERVICE TAX ON LY UPON ACTUAL REALIZATION OF SERVICES RENDERED AGAINST THAT LIABILITY AND NOT ON ACCRUAL BASIS. THEREFORE, WE FIND ALTHOUGH THE SERVICE TAX LIABILITY MAY HAVE BEEN SHOWN AS OUTSTANDING AT YEAR END, YET THE SAME MAY NOT HAVE BECOME ACTUA LLY PAYABLE AS PER SERVICE TAX RULES. AT THIS JUNCTURE, THE VIEW TAKEN BY MUMBAI TRIBUNAL IN PHARMA SEARCH VS. ACIT [SUPRA] BECOMES RELEVANT WHERE THE TRIBUNAL AFTER CONSIDERING THE JUDGMENT OF HONBLE DELHI HIGH COUR T IN CIT VS. NOBLE & HEWITT (I)(P) LTD. [2008 305 ITR 324] & CHENNAI TRIBUNAL IN ACIT VS. REAL IMAGE MEDIA TECHNOLOGIES P. LTD. [2008 114 ITD 573] COUPLED WITH APEX COURT JUDGMENT IN CHOWRINGHEE SALES BUREAU P. LTD. [1977 110 ITR 385] HELD THAT THE RIGOR OF SECTION 43B COULD NOT BE APPLIED IN CASE NO SERVICE TAX WAS PAYABLE BY THE ASSESSEE AS PER RELEVANT SERVICE TAX RULES. FURTHER, HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN CIT VS. OVIRA LOGISTICS PRIVATE LIMITED [ITA NO. 1023 OF 2013 17/04/2015] DEALING WITH THE SAME ISSUE HAS MADE SIMILAR OBSERVATIONS:- 9] HAVING PERUSED THE AFORESAID DECISIONS, WE ARE CLEARLY OF THE VIEW THAT SECTION 43B DOES NOT CONTEMPLATE LIABILITY TO PAY S ERVICE TAX BEFORE ACTUAL RECEIPT OF THE FUNDS IN THE ACCOUNT OF THE ASSESSEE. IN OUR VI EW, LIABILITY TO PAY SERVICE TAX INTO THE TREASURY WILL ARISE ONLY UPON THE ASSESSEE RECEIVING THE FUNDS AND NOT OTHERWISE. ACCORDINGLY, WHEN SERVICES ARE RENDERED, THE LIABILITY TO PAY SERVICE TAX IN RESPECT OF THE CONS IDERATION PAYABLE WILL ARISE ONLY UPON THE RECEIPT OF SUCH CONSIDERATION AND NOT OT HERWISE. 10]IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE A RE OF THE VIEW THAT NO SUBSTANTIAL QUESTION OF LAW ARISES. ACCORDINGLY, THE APPEAL HAS NO MERITS AND THE SAME IS DISMISSED. THERE WILL BE NO ORDER AS TO COSTS. RESPECTFULLY FOLLOWING THE JURISDICTIONAL HIGH COUR T, WE ALSO HELD THAT RIGOR OF SECTION 43B DO NOT APPLY IN CASE THE LIABILITY TO P AY SERVICE TAX DID NOT ARISE AS PER THE RELEVANT SERVICE TAX RULES NOTWITHSTANDI NG THE FACT THAT THE SAME WAS SHOWN AS OUTSTANDING IN THE BOOKS OF ACCOUNTS A ND REMAINED UNPAID. THEREFORE, IN PRINCIPLE, WE AGREE WITH THE CONTENTI ONS OF THE LD. AR AND THEREFORE, DEEM IT FIT TO RESTORE THE MATTER BACK T O THE FILE OF LD. AO FOR LIMITED ITA NOS.6577-6578 & 6849- 6850/M/2014 TOSCANO INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEARS : 2009-10 & 2010-11 10 PURPOSE OF VERIFICATION OF THE FACT THAT THE SERVIC E TAX LIABILITY SHOWN AS OUTSTANDING AT YEAR END AND REMAINING UNPAID WAS AC TUALLY NOT PAYABLE AS PER SERVICE TAX RULES. IF SO, THE IMPUGNED ADDITION S SHALL STAND DELETED. THE ASSESSEE IS ALSO DIRECTED TO SUPPLY NECESSARY DOCUM ENTS / INFORMATION TO SUBSTANTIATE THIS FACT FAILING WHICH THE LD. AO SHA LL BE AT LIBERTY TO DISPOSE-OFF THE MATTER ON THE BASIS OF MATERIAL AVAILABLE ON RE CORD. THE GROUNDS OF ASSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PU RPOSES. 13. IN NUTSHELL, BOTH THE APPEALS FILED BY REVENUE STANDS DISMISSED WHEREAS BOTH THE APPEALS FILED BY ASSESSEE STANDS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND MAY, 2017. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 02.05.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. %. , . , / DR, ITAT, MUMBAI 6. /0 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI S