Income Tax Appellate Tribunal - Kolkata
B.S.Consultancy Services, North 24 ... vs Ito, Ward -51(1) Kol., Kolkata on 6 September, 2017
1
ITA No.345/Kol/2017
B. S. Consultancy Services, AY 2012-13
आयकर अपील
य अधीकरण, यायपीठ - "D" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH: KOLKATA
(सम )Before ी ऐ. ट
. वक , यायीक सद य एवं/and डॉ. अजन
ु$ लाल सैनी, लेखा सद य)
[Before Shri A. T. Varkey, JM & Dr. A. L. Saini, AM]
आयकर अपील सं या / I.T.A No. 345/Kol/2017
नधॉरण वषॅ/Assessment Year: 2012-13
B. S. Consultancy Services Vs. Income-tax Officer, Ward-51(1), Kolkata
(PAN: AAJFB4067H)
(अपीलाथ*/Appellant) (+,यथ*/Respondent)
Date of Hearing 19.06.2017
Date of Pronouncement 06.09.2017
For the Appellant/ अपीलाथ* Shri Miraj D. Shah, Advocate
For the Respondent/ +,यथ* Shri Nicholas Murmu, JCIT
आदे श/ORDER
Per Shri A.T.Varkey, JM
This is an appeal filed by the assessee against the order of Ld. CIT(A)-15, Kolkata dated 06.12.2016 for AY 2012-13.
2. The first ground of appeal is against the action of the Ld. CIT(A) in confirming the addition of Rs.5,17,925/- on account of alleged suppression of service value received.
3. Brief facts of the case are that the assessee firm is engaged in Road Survey Consultancy (Planning & Designing of new road construction). The assessee company filed its return of income declaring a total income of Rs.18,78,030/-. The case was subsequently selected for scrutiny through CASS. The reason for selection of scrutiny assessment was high ratio of refund. The AO noted that as per 26AS, the assessee received for service value at Rs.1,80,00,135/- whereas the assessee in its P&L Account under the head service value has shown at Rs.1,78,05,625/-. The AO noted that the assessee had shown receipt from some parties which are not reflected in Form 26AS and at the same time there were certain 2 ITA No.345/Kol/2017 B. S. Consultancy Services, AY 2012-13 receipts in Form 26AS which were correctly reflected in the accounts of the assessee. After analysing the reconciliation provided by the assessee, the AO found out three discrepancies of Rs.3,30,258/-, Rs.1,60,043/- and Rs.27,624/- respectively and he added the total sum of Rs.5,17,925/- to the income of the assessee. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to confirm the same. Aggrieved, the assessee is before us.
4. We have heard rival submissions and gone through the facts and circumstances of the case. Before us the main plea of the assessee is that the receipt in the return is shown after netting of service tax and, therefore, the difference in receipt shown in Form 26AS vis-à-vis that shown in the return cannot justify the addition made by the AO. According to the Ld. AR, based on the AIR information addition cannot be made. According to the ld. AR, the assessee has no control over Form 26AS which is generated by the department after the payer makes the payment in the name of assessee in Government account; and if Form 26AS is to be believed and the assessee's books of account is to be disbelieved then the assessee should be given an opportunity to confront the payer who made the credit in the assessee's name which formed the basis of generation of Form 26AS, which is not tallying with the books of account of the assessee. Admittedly, the assessee's books of account are audited and the AO could not find any discrepancy in the same. Merely because the 26AS when compared with the service value as reflected in the P&L Account of the assessee cannot be the ground to make the addition. In such cases, we should take note that the assessee has no control over the Form 26AS which is generated by the department when the payer credits the tax deducted at source electronically by entering the PAN details of the assessee, where mistake during entering the PAN details or figures cannot be ruled out. The assessee maintained its books of account in the regular business which is audited and has received its receipts through banking channel. In such a scenario, in order to disbelieve the assessee's P&L Account when there is discrepancy with Form 26AS, then it is the bounden duty of the AO to give opportunity to the assessee to confront the payer and to find out the correct figure, without doing so, the addition made simply believing the Form 26AS will be 3 ITA No.345/Kol/2017 B. S. Consultancy Services, AY 2012-13 an arbitrary exercise of power which cannot be sustained and, therefore, we direct deletion of the same. This ground of appeal of assessee is allowed.
5. Ground no.2 of the appeal of assessee is against the action of the Ld. CIT(A) in confirming the disallowance of 20% of the site expenses claimed by the assessee and thus, adding a sum of rs.4,16,104/-.
6. Brief facts of this issue are that the assessee firm is engaged in the road survey consultancy (Planning and Designing of new road construction) and was engaged in the said consultancy survey work in the hilly areas for the North Eastern region. The work involved survey through mountains and jungles where basic infrastructure of boarding and lodging was not available and were very high risk zones because of the underground activities of extremists operating in these areas. The Engineers and team members were appointed with lucrative allowance of travelling, food and lodging. It has been brought to the notice of the AO that in these areas proper voucher of expenses were not readily available and the cost of lodging and conveyance was very high. The AO on the premise that the assessee failed to produce any bills/voucher was pleased to disallow 20% of the expenses claimed. Thus, made an addition of Rs.4,16,104/- out of the total site expenses of Rs.20,80,522/-. Aggrieved, the assessee filed an appeal before the Ld. CIT(A), who was pleased to confirm the same.
7. We have heard rival submissions and gone through facts and circumstances of the case. We note that the assessee's work is road survey consultancy (Planning and Designing of new road construction) in the north-eastern region of India. The terrain consists of mountains and jungles where lodging, conveyance, food were not readily available and comes with a high cost. The said areas are high risk zone because of insurgency (under- ground activities). The assessee in order to complete the task requires the Engineers and experts who are not ready to work in these difficult conditions, so had to be lured by giving lucrative incentives. The business expediency requires the assessee to disburse the high cost in conveyance, lodging and food for the field employees of the company in this far-flung area which are high risk zones. Before the AO, the assessee produced internal vouchers and bills wherever it could get the bills that was produced; and of course the office vouchers 4 ITA No.345/Kol/2017 B. S. Consultancy Services, AY 2012-13 were produced before the AO. However, the AO has disallowed 20% holding that expenses may not be bona fide and genuine. We do not subscribe to such action of the authorities below on the facts and circumstances of the case as discussed above. The ad-hoc disallowance of 20% is akin to arbitrariness and based on surmises and conjectures without spelling out the defects in the vouchers and books produced before him. The books of account of the assessee are audited and the AO has not found any default with the books of account. If there was any item-wise defect noticed by the AO, then he should have disallowed the said item-wise disallowance but not ad-hoc disallowance which cannot stand under scrutiny of law and, therefore, we are inclined to allow this ground of appeal of the assessee.
8. In the result, appeal of assessee is allowed.
Order is pronounced in the open court on 06.09.2017
Sd/- Sd/-
(Dr. A. L. Saini) (Aby. T. Varkey)
Accountant Member Judicial Member
Dated :6th September, 2017
Jd.(Sr.P.S.)
Copy of the order forwarded to:
1. Appellant - B. S. Consultancy Services, 163, Manikdanga Road, PO Ghola Bazar, 24 Parganas (N) 700 111.
2 Respondent - ITO, Ward-51(1), Kolkata
3. The CIT(A), Kolkata
4. CIT , Kolkata
5. DR, Kolkata Benches, Kolkata /True Copy, By order, Sr. Pvt. Secy.,