M/s. Lokesh Machines Limited, Hyd, Hyderabad V. Addl.CIT, Cir-16(1), Hyderabad

ITA 737/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66150 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 26-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: B R MAHESH
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 737/HYD/2011 ASSESSMENT YEAR 2006-07 M/S. LOKESH MACHINES LTD. HYDERABAD PAN: AAACL4244L VS. ADDL. CIT RANGE-16 HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI B.R. MAHESH RESPONDENT BY: SMT. ALKA RAJVANSHI JAIN DATE OF HEARING: 18.07.2012 DATE OF PRONOUNCEMENT: 10.08.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX-IV, HYDERABAD DATED 28.3.2011 FOR A.Y. 2006-07. 2. THE ASSESSEE RAISED THE GROUND THAT THE CIT ERRED I N TREATING THE TURNOVER ALREADY TAXED IN EARLIER ASSE SSMENT YEAR BASED ON TDS CERTIFICATES ENCLOSED TO RETURN OF INC OME. 3. BRIEF FACTS OF THE ISSUE ARE THAT FOR THE ASSESSMEN T YEAR UNDER CONSIDERATION THE ASSESSEE ENCLOSED 39 TDS CE RTIFICATES SHOWING THE TOTAL TURNOVER OF RS. 35,53,06,887 TOWA RDS CONTRACT RECEIPT U/S. 194C OF THE INCOME-TAX ACT, 1961. HOW EVER, THE ASSESSEE'S PROFIT AND LOSS A/C. REFLECTS AN AMOUNT OF RS. 31,22,08,732. THUS THERE WAS A DIFFERENCE OF RS. 3 .75 CRORES BETWEEN THE ABOVE ACCOUNTS. ACCORDINGLY, THE CIT T OOK UP THE I.T.A. NO. 737/HYD/2011 M/S. LOKESH MACHINES LTD. ===================== 2 ISSUE FOR REVISION U/S. 263 OF THE ACT AND DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT IN THE LIGHT OF OBSE RVATIONS MADE IN THE ORDER PASSED U/S. 263 OF THE ACT. AGAINST T HIS THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED AR SUBMITTED THAT THE ISSUE FOR DETERMI NATION IS A SIMPLE ONE I.E., THE DIFFERENCE BETWEEN THE GR OSS RECEIPTS AS PER 39 TDS CERTIFICATES ENCLOSED TO THE RETURN OF I NCOME AND THE FIGURE OF GROSS RECEIPTS AS SHOWN IN THE P&L ACCOUN T. THE APPARENT UNDER STATEMENT IN THE P&L ACCOUNT IS RS. 4,30,98,155/-. TO EXPLAIN THE DISCREPANCY, THE ASSESSEE SUBMITTED A STATEMENT OF RECONCILIATION AND FURTHER SUBMITTED THAT IT ACCOUN TS FOR TURNOVER IN ITS BOOKS ON THE BASIS OF INVOICES RAISED UPON C OMPLETION OF WORK, SINCE IT IS AN EXCISABLE PRODUCT WHICH HAS TO BE REMOVED FROM THE EXCISE GODOWN AND PLACED WITH THE CLIENTS GODOWNS IN THE FACTORY THAT SINCE THE CLIENT LIFTS THE STOCK D EPENDING ON ITS REQUIREMENT AND SETTLES THE INVOICES BY WAY OF ON A CCOUNT PAYMENTS, TDS IS DEDUCTED BY THE CLIENT BASED ON PA YMENTS MADE. SOME TIMES IT IS ALSO POSSIBLE THAT THE CLIEN T MAKES ADVANCE PAYMENTS ON WHICH TDS IS ALSO DEDUCTED AND THE SAME IS TREATED AS TURNOVER BY THE ASSESSEE. THE STATEME NT OF RECONCILIATION SHOWS THAT THE ASSESSEE'S TURNOVER IN THE INITIAL YEARS IS MORE THAN THE TURNOVER MENTIONED IN THE CO RRESPONDING TDS CERTIFICATES. THE STATEMENT OF RECONCILIATION, AS SUBMITTED BY THE ASSESSEE, COVERS SIX ASSESSMENT YEARS INCLUDING THE ASSESSMEN T YEAR UNDER CONSIDERATION, AND AT THE END OF A.Y. 20 06-07, IT CONTRIVES TO SHOW GROSS RECEIPTS AS PER TDS CERTIFI CATES (AGGREGATE FOR SIX A.YS. STARTING FROM A.Y. 2001-02 AND ENDING WITH THE ASSESSMENT YEAR UNDER CONSIDERATION] AT RS. 104.05 CRORES AND THE AGGREGATE RECEIPTS AS PER P&L ACCOUNT FOR SIX A SSESSMENT I.T.A. NO. 737/HYD/2011 M/S. LOKESH MACHINES LTD. ===================== 3 YEARS HAVE BEEN SHOWN AT 110.62 CRORES THE NET RESULT BEING EXCESS OF R S. 6.56 CRORES SHOWN IN THE P&L ACCOUNT. 5. THE AR RELIED ON THE DECISION OF THE TRIBUNAL IN TH E CASE OF SICAL LOGISTICS LTD. VS. ADDL. CIT, 1 ITR (TRIB. ) 801 (CHENNAI) FOR THE PROPOSITION THAT THE CIT FAILED TO SHOW ANY EVIDENCE WHICH ACCORDING TO HIM SHOULD HAVE BEEN LOOKED INTO BY THE ASSESSING OFFICER. 6. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT TH E ABOVE VERSION OF THE ASSESSEE, ON EXAMINATION, IS F OUND TO BE UNACCEPTABLE FOR THE FOLLOWING REASONS: A) AVOWEDLY, METHOD OF ACCOUNTING FOLLOWED BY THE ASSE SSEE IS MERCANTILE. B) AS PER SECTION 199 OF THE INCOME TAX ACT, 1961, IT IS INCUMBENT UPON THE ASSESSEE TO DISCLOSE RECEIPTS IN THE P&L ACCOUNT COMMENSURATE WITH THE CLAIM OF TDS. THE TOTAL RECEIPTS AS PER THE 39 TDS CERTIFICATES ENCLO SED TO THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS OF THE ORDER OF RS. 35,53,06,887. THE SAID CERTIFICATES ALSO EVIDENCE THE FIGURE OF TDS AT RS. 76,76,659. IN ITS COMPUTATION OF TOTAL INCOME, THE ASSESSEE HA S CLAIMED BENEFIT OF ENTIRE TDS AMOUNT OF RS. 76.76 L AKHS. HENCE, THE ASSESSEE WAS LEGALLY OBLIGATED TO DISCLO SE THE COMMENSURATE GROSS RECEIPTS IN THE P&L ACCOUNT I.E., RS. 35.53 CRORES AS AGAINST RS. 31.22 CRORES ACTUALLY S HOWN BY IT THE DECISION OF THE !TAT, HYDERABAD IN THE CASE OF M/S. BSC-RBM -PATI JOINT VENTURE IN ITA NO. 513/HYD/01 DATED 23.12.2002 HAS CATEGORICALLY HELD THAT AN ASS ESSEE I.T.A. NO. 737/HYD/2011 M/S. LOKESH MACHINES LTD. ===================== 4 MUST SHOW RECEIPTS COMMENSURATE TO THE TDS BENEFIT CLAIMED AND IF RECEIPTS ARE NOT COMMENSURATE WITH THE TDS BENEFIT, THEN THE ASSESSEE WILL NOT BE ENTITLED TO THE BENEFIT OF TDS AS CLAIMED BY IT C) THE ASSESSEE'S VERSION CAN BE ANALYSED FROM THE ANG LE OF SUNDRY DEBTORS. IN THE COURSE OF ASSESSMENT PROCEED ING, THE ASSESSEE HAD SUBMITTED DETAILS OF SUNDRY DEBTORS I. E. MORE THAN RS. 1 LAKH FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IT CAN BE SEEN THERE FROM THAT MAHINDRA & MAHINDRA LIMITED, FIGURES AT SL. NOS. 44 AND 45. AGAINST MAHINDRA & MAHINDRA LTD , THE OPENING BALANCE OF SUNDRY DEBTOR ACCOUNT IS SHOWN AT RS. 6.34 CRORES I.E. OPE NING BALANCE AS ON 01.04.2005. DURING THE PREVIOUS YEAR , RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION, TH E AGGREGATE OF DEBIT IN THIS ACCOUNT IS OF THE ORDER OF RS. 31.31 CRORES AND THE AGGREGATE OF CREDITS IN THIS A CCOUNT IS OF THE ORDER OF RS. 30.78 CRORES. THE TDS CERTIFICA TES PERTAINING TO MAHINDRA &, MAHINDRA LTD. AGGREGATE TO RS. 35.49 CRORES. AS AGAINST THIS, THE ASSESSEE HAS CRE DITED ONLY RS. 30.78 CRORES. THE CLOSING DEBIT BALANCE IS OF T HE ORDER OF RS. 6.87 CRORES AS AGAINST THE OPENING BALANCE O F RS. 6.34 CRORES. IF THE VERSION OF THE ASSESSEE WERE T RUE, THEN THE DIFFERENCE BETWEEN THE AGGREGATE OF CREDITS I.E . RS. 30.78 CRORES AND THE AGGREGATE OF TDS FIGURES I.E. RS. 35.49 CRORES SHOULD HAVE BEEN ADJUSTED AGAINST THE BROUGH T FORWARD OPENING BALANCE OF RS. 6.34 CRORES. BUT NOT HING OF THIS KIND HAS BEEN DONE. SIMILARLY, THERE IS ANOTHE R SUNDRY DEBTOR ACCOUNT OF MAHINDRA & MAHINDRA LTD WHEREIN , THE AGGREGATE OF DEBIT IS RS. 1.17 CRORES AND THE AGGRE GATE OF I.T.A. NO. 737/HYD/2011 M/S. LOKESH MACHINES LTD. ===================== 5 CREDIT IS RS. 97.07 LAKH. IF THIS IS TAKEN INTO AC COUNT, THEN THE AGGREGATE OF CREDITS IN BOTH THE ACCOUNTS PUT T OGETHER WORKS OUT TO RS. 31.95 CRORES. IN OTHER WORDS, THER E WILL BE DEFICIENCY OF RS. 3.74 CRORES COMPARED TO THE TDS CERTIFICATES AGGREGATING TO FIGURE OF RS. 39.49 CRORES PERTAINING TO ONLY MAHINDRA & MAHINDRA LTD. THUS, THE EXPLANATION GIVEN BY THE ASSESSEE GET DEMOLISHED BY ITS OWN EVIDENCE OF SUNDRY DEBTOR ACCOUNT. D) IN THE STATEMENT OF RECONCILIATION SUBMITTED BY THE ASSESSEE, THERE IS PERCEPTIBLE TREND OF JOB WORK RE CEIPTS SHOWN IN THE P&L ACCOUNT BEING MORE THAN SUCH RECEI PTS AS PER TDS CERTIFICATES I.E. ACCORDING TO THE ASSES SEE, EXCEPTING FOR A.Y. 2004-05 WHERE THE TDS FIGURE IS LITTLE MORE BY A MARGIN OF RS. 17.64 LAKHS. GOING BY THIS TREND, THE RECEIPTS SHOWN BY THE ASSESSEE IN THE P&L ACCOU NT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION SHOULD BE M ORE THAN THE TDS FIGURES. BUT SURPRISINGLY, IT IS FOUND TO BE SUBSTANTIALLY LESS BY A MARGIN OF RS. 3.74 CRORES. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. AS SEEN FROM THE CASE RECORD, THE ASSES SING OFFICER NOT AT ALL COMPARED THE TURNOVER DECLARED IN THE TD S CERTIFICATES AND TURNOVER DECLARED IN THE PROFIT AND LOSS A/C. O F THE ASSESSEE. THE ASSESSING OFFICER MUST HAVE COMPARED THESE TWO AND FOUND OUT WHETHER THE TURNOVER DECLARED IN THE TDS CERTIF ICATES IS FULLY ACCOUNTED BY THE ASSESSEE OR NOT. ON THE OTHER HAN D, AS SEEN FROM THE ASSESSMENT ORDER, THERE IS NO DISCUSSION W ITH REGARD TO DETERMINATION OF THE TURNOVER BY THE ASSESSING OFFI CER. IN OTHER WORDS, IT MEANS THAT THE ASSESSING OFFICER HAS NOT LOOKED INTO THE TURNOVER REFLECTED IN THE TDS CERTIFICATES AND HE HAS GONE BY I.T.A. NO. 737/HYD/2011 M/S. LOKESH MACHINES LTD. ===================== 6 THE PROFIT AND LOSS A/C. FILED BY THE ASSESSEE. TH E ASSESSING OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVE STIGATOR. HE IS REQUIRED TO LOOK INTO WHETHER THE TURNOVER REFLE CTED IN THE TDS CERTIFICATES FILED BY THE ASSESSEE HAS BEEN DUL Y REFLECTED IN THE PROFIT AND LOSS A/C. THE ORDER OF THE ASSESSIN G OFFICER IS ERRONEOUS ON THE REASON THAT THERE IS NO PROPER APP LICATION OF MIND BY THE ASSESSING OFFICER, THOUGH HE IS EXPECTE D TO CAUSE ENQUIRY ABOUT THE CORRECT TURNOVER DISCLOSED BY THE ASSESSEE. THE ASSESSMENT ORDER IS PREJUDICIAL TO THE INTEREST OF REVENUE AS THERE IS INVOLVEMENT OF TAX ON THE ISSUE. BEING SO , IN OUR OPINION, THE CIT IS JUSTIFIED IN DIRECTING THE ASSE SSING OFFICER TO EXAMINE THE IMPUGNED ISSUE AND PASS NECESSARY ORDER S DE NOVO. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT ON THI S ISSUE. THE ASSESSING OFFICER WHILE PASSING THE GIVING EFFECT O RDER TO THIS ORDER SHALL EXAMINE WHETHER TURNOVER REFLECTED IN T DS CERTIFICATES HAS BEEN ACCOUNTED IN ANY ASSESSMENT Y EAR AND DECIDE ACCORDINGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2012. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 10 TH AUGUST, 2012 TPRAO COPY FORWARDED TO: 1. M/S. LOKESH MACHINES LTD., C/O. M/S. MAHESH, VIREND ER & SRIRAM, CHARTERED ACCOUNTANTS, 6-3-788/36 & 37A, AMEERPET, HYDERABAD. I.T.A. NO. 737/HYD/2011 M/S. LOKESH MACHINES LTD. ===================== 7 2. THE ADDL. COMMISSIONER OF INCOME - TAX, RANGE - 16, HYDERABAD. 3. THE CIT - IV, HYDERABAD. 4. THE JCIT, RANGE - 16, HYDERABAD. 5. THE DR B BENCH, ITAT, HYDERABAD