Income Tax Appellate Tribunal - Kolkata
Dcit, Cir-3, Bankura, Bankura vs M/S Rabin Singh Heavy Earth Movers ... on 6 February, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA 'C' BENCH, KOLKATA Before : Shri J.Sudhakar Reddy, Accountant Member and Shri S.S. Viswanethra Ravi, Judicial Member I.T.A. No. 789/Kol/2015 A.Y : 2010-11 DCIT, Central Circle-3, Bankura "Bilash Bhawan", Chandmaridanga P.O. & Dist. Bankura, Pin-722101 Appellant
-Vs-
M/s Rabin Singh Heavy Earth Movers Co. Pvt. Ltd.
At. Deshuria, Durlovpur, Dist. Bankura, Pin-722102 PAN: AABCR 6351 H Respondent C.O. No. 32/Kol/2015 (Arising out of I.T.A. No. 789/Kol/2015) A.Y : 2010-11 M/s Rabin Singh Heavy Earth Movers Co. Pvt. Ltd.
At. Deshuria, Durlovpur, Dist. Bankura, Pin-722102 PAN: AABCR 6351 H Cross Objector
-Vs-
DCIT, Central Circle-3, Bankura "Bilash Bhawan", Chandmaridanga P.O. & Dist. Bankura, Pin-722101 Respondent ITA No. 789/Kol/2015 & C.O. No. 32/Kol/2015 M/s Rabin Singh Heavy Earth Movers Co. Pvt. Ltd. 1 Appearances by:
For the Appellant: Shri Saurav Kumar, Addl. CIT For the Respondent: None Date of hearing : 07/01/2019 Date of pronouncement : 06/02/2019 Shri. S.S.VISWANETHRA RAVI, JM:
1. Both the appeal and cross objection by the Revenue and assessee respectively against the common order dated 26.03.2015 passed by the CIT(A)-Durgapur for assessment year 2010-11.
2. First we shall take up the appeal filed by the revenue in I.T.A. No. 789/Kol/2015. The appellant revenue filed this appeal on 03.06.2015 and Registry issued many notices to the assessee intimating the fixation of date of hearing by RPAD which are as follows:
Sl. No. Date of notice Date of hearing Remarks
i. 14.08.2017 25.09.2017 DR requested adjournment
ii. 25.09.2017 20.11.2017 No proceedings
iii. 20.11.2017 09.01.2018 None appeared on behalf of the assessee
iv. 09.01.2018 27.02.2018 None appeared on behalf of the assessee
v. 27.02.2018 25.04.2018 None appeared on behalf of the assessee
vi. 25.04.2018 19.06.2018 No proceedings
vii. 19.06.2018 25.09.2018 No proceedings.
viii. 25.09.2018 22.11.2018 No proceedings.
ix. 22.11.2018 07.01.2019 None appeared on behalf of the assessee.
3. The respondent assessee called absent. On perusal of the record it is noted that the registry issued notices dated 05.12.2018 intimating ITA No. 789/Kol/2015 & C.O. No. 32/Kol/2015 M/s Rabin Singh Heavy Earth Movers Co. Pvt. Ltd. 2 the date of hearing to the respondent assessee by RPAD on 07.01.2019 i.e. today but we find no representation on behalf of the assessee nor any application flied seeking adjournment. The ld. DR submits this Tribunal issued notices through DR on 22.11.2018 and notice was served on the assessee through Department. Therefore, considering the record and submission of the ld. DR, we set ex parte and proceed to hear the ld. DR for appellant revenue and pass consolidated order.
4. Heard the ld. DR and perused the material available on record.
The assessee is a company and is engaged in the business of civil contracts. According to the Assessing Officer the assessee filed non- corroborating evidence in support of its claim of opening balance as on 01.04.2009 amounting to Rs. 66,13,857/-. The Assessing Officer held there is a short fall in respect of SNC Power Corporation Pvt. Ltd. to an expenditure of Rs. 41,09,398/-. Further he held that the assessee deliberately did not produce party ledger accounts in the name of BHEL and thereby the Assessing Officer added an amount of Rs. 41,09,398/- + Rs. 10,43,637/- on account of understatement of contract receipt to the total income of the assessee.
5. The assessee challenged the action of the Assessing Officer in adding the said amounts to the total income of the assessee before the CIT(A). The CIT(A) while dealing with the issue in respect of SNC Power Corporation Pvt. Ltd. examined the audited balance sheet produced by the assessee and held that the breakup of the schedule L which is gross sales figures as on 31.03.2010 has clearly shown the ITA No. 789/Kol/2015 & C.O. No. 32/Kol/2015 M/s Rabin Singh Heavy Earth Movers Co. Pvt. Ltd. 3 figure of contract receipts from SNC Power Corporation Pvt. Ltd. of Rs. 2,27,80,457/-. The CIT(A) further held that SNC Power Corporation Pvt. Ltd. did not deny the said receipt which was paid by making various adjustments such as TDS, security deposit, retention and other recovery etc.
6. In respect of understatement of two receipts of M/s BHEL, the CIT(A) held that the Assessing Officer did not follow accounting policy and BHEL has paid Rs. 14,78,953/- which is reflected in the profit & loss account of the assessee as on 31.03.2010 and also in the TDS certificate in form 26AS. Further he held the ledger of M/s BHEL in the books of the assessee also reflects the said accounts and held that addition made on account of understatement of two receipts in respect of BHEL is not justified and deleted both the additions. The relevant portion of which is reproduced herein below:
"6.1. In the case of M/s SNC Power Corporation Pvt. Ltd.., the Assessing Officer in Table-B has given figures of bills payable as on 01.04.2009 at Rs. 70,54,999/- and the bills raised in the financial year 2009-10 at Rs. 1,98,34,856/-. These two figures together comes to Rs. 2,68,89,855/-. Similarly the Assessing Officer has given figure of bills paid during the financial year 2009-10 at Rs .1,51,72,100/- and the closing balance as on 31.03.2010 at Rs. 1,17,17,755/-. These two figures together comes to Rs. 2,68,89,855/-. As per the Assessing Officer the contract receipt which should have been shown in the P & L Account by the appellant and ought to have been of Rs. 2,68,89;855/- and since the appellant has shown contract receipt of Rs. 2,27,80,457/- in its P&L Account, as per the A.O. the difference comes to Rs. 41,09,398/- (Rs. 2,68,89,855/- Rs. 2,27,80,457/-), which the A.O. considered as the understatement of the contract receipt.
However, the A.O. has also given another set of figures in this Table -8 based on the figures in the books of account of the appellant which is as under. The bills payable as on 01.04.2009 is of Rs. 66,13,857/- and the bills raised in the financial year 2009-10 is of Rs. 1,83,95,350/- and together this figure comes to Rs. 2,50,09,207/-. The A.O. has also given the figure of bills paid in the financial year 2009-10 at Rs. 1,51,50,000/- and the closing balance as on 31.03.2010 of Rs. 98,59,207/- which together comes to Rs. 2,50,09,207/. This figure of Rs. 2,50,09,207/- as per the A.O. should have been the contract receipt and ought to have been shown by the appellant in its P&L Account and since the appellant has shown contract receipt of Rs. 2,27,80,457/- , the A.O. arrived at the difference of Rs. 22,28,750/-. Thus in the case of M/s. SNC Power Corporation (P) Ltd. in Table -8 of the Assessment Order, the A.O. has arrived at two sets of figures of understatement of contract receipts such as Rs. 41,09,398/-ITA No. 789/Kol/2015 & C.O. No. 32/Kol/2015
M/s Rabin Singh Heavy Earth Movers Co. Pvt. Ltd. 4 as per the reply of M/s. SNC Power Corporation (P) Ltd. and Rs. 22,28,750/- as per the books of account of the appellant. However, the A.O. has preferred to adopt the figure of Rs. 41,09,398/- for addition thereby discarding the figure of Rs. 22,28,750/:; thereby without assigning any reasons for such pick choose of figures by him.
However, in my considered opinion, the method adopted by the A.O. for deriving the understatement of contract receipt is nothing but the jugglery of figures which has no support of accounting principles. Besides, the finding given by the A.O. is highly cryptic and it is purely based on pure permutation and combination and it has no base in the accounting principles followed in the provisions and procedures of execution of LT. Act. The appellant is having audited Balance Sheet and the opening balance of the bills payable are already accounted for in the immediate earlier assessment year i.e. 2009-10 and this figure being opening balance cannot be considered for such calculation as has been done by the A.O. The A.O. has mentioned that the appellant is following mercantile system of accounts and yet without understanding the mercantile system of accounts, the A.O. has proceeded to include the opening balance of bills payable in this case. Besides, the A.O. has also included the bills paid during the year along with the closing balance of the bills payable in order to arrive at the figure of Rs. 2,68,89,855/- which is again grossly faulty method of accounting by the A.O. The Appellant in his audited balance sheet in the break- up of Schedule' Lt which is gross sales figure as on 31.03.2010 has clearly shown the figure of contract receipts from M/s. SNC Power Corporation (P) Ltd. of Rs. 2,27,80,457/-. This 'figure has not been denied by M/s. SNC Power Corporation (P) Ltd. and after making various adjustments such as TDS, Security Deposit, retention, other recovery etc., out of this gross bill amounting to Rs. 2,27,80,457/-, the appellant was paid Rs. 1,83,95,350/-. This figure of Rs. 2,27,80,457/- is the gross bill raised by M/s. SNC Power Corporation (P) Ltd. and this amount is reflected in the TDS statement in Form 26AS. As per the Ledger of M/s. SNC Power Corporation (P) Ltd, the closing balance as on 31.03.2009 in the books of the appellant is Rs. 66,13,857/- and the closing balance in the ledger as on 31.03.2010 is Rs. 98,59,207/- and this closing balance has also become the opening balance as on 01.04.2010 in the case of M/s. SNC Power Corporation (P) Ltd. Thus, this closing balance of Rs. 98,59,207/- comes out of the gross bills raised during the year amounting to Rs. 2,27,80,457/- and since the appellant has already credited in its P&L A/C with the figure of gross bills of Rs. 2,27,80,457/- , the closing balance in this case cannot be added to the bills paid during the year to derive the contract receipt which the A.O has done otherwise. Similar is the case with the opening balance of Rs. 66,13,857/- which is as on 01.04.2009 and since this is the brought forward closing balance as on 31.03.2009, the same also cannot be added with the bills raised during the financial year 2009-10, as this amount has already been incorporated in the gross bills of M/s. SNC Power Corporation (P) Ltd. for the financial year 2008-09. Besides, this amount is also shown in the Balance Sheet as on 31.3.2009 under the head of 'Sundry Debtors'. Similarly the amount of Rs. 98,59,207/- is also shown in the list of Sundry Debtors in the Balance sheet as on 31.03.2010. Thus considering all the above aspects, it will be seen and appreciated that derivation by the A.O. of the understatement of contract receipt is definitely by a contrived method and because of the poor understanding of the A.O. of the mercantile system of accounts and cash system of accounts, the figures given in the Table - B reveals the unique hybrid method followed by the A.O. thereby mixing both the methods of accounting principle which is definitely not sustainable in the eyes of the law. In my considered opinion, there is absolute non-application of mind by the A.O. in deriving such figures. Thus considering all these aspects of the case, I am of the firm opinion that addition of Rs. 41,09,398/- in this case is not sustainable and accordingly the same is hereby deleted.
6.2 The A.O. has also derived the understatement of contract receipt in the case of M/s. BHEL amounting to Rs. 10,43,637/-. In this case, in the Table- B , as stated that the bills payable in the case of M/s. BHEL as on as of Rs. 25,2 ,590/- and the bills paid during the financial year is of Rs. 13,41,913/- and the closing balance as on 31.03.2010 is of Rs. 11,80,677/-. Thus as ITA No. 789/Kol/2015 & C.O. No. 32/Kol/2015 M/s Rabin Singh Heavy Earth Movers Co. Pvt. Ltd. 5 per the A.O. the contract receipt ought to be shown by the appellant in the P&L A/c should have been Rs. 25,22,590/- and since the appellant has shown Rs. 14,78,953/- in the P&L Account, the difference of Rs. 10,43,637/- (Rs. 25,22,590/- - Rs. 14,78,953/-) is stated as understatement of contract receipt. As has already been stated in Para 6.1 of this order, the method of calculation of the A.O in the case of BHEL in deriving this figure of Rs. 10,43,637/- is again full of loopholes and the A.O. has again followed his own unique hybrid system of accounting to arrive at this figure in a contrived manner. In this regard, M/s. BHEL vide their letter dated 19.03.2013 have clearly stated that as a contractee, they have not recognized the liability of the bill amounting to Rs. 11,80,867/- and they have not passed any accounting entry on this amount in their books of account in the financial year 2009-10. This amount was settled by M/s. BHEL in the Assessment year 2011-12. During the assessment year 2010-11, M/s. BHEL has paid Rs. 14,78,953/- which is reflected in the P &L A/C of the appellant as on 31.03.2010 and also in the TDS Certificate in Form 26AS. The ledger of M/s. BHEL in the books of appellant also reflects this figure. The amount of Rs. 11,80,677/- is considered in the Assessment year2011- 12 and in that year Rs. 12,97,447/- has been paid to the appellant by M/s. BHEL which includes an amount of Rs. 11,80,627/-. The figure of Rs. 12,97,447/- is reflected in the details of the sales' of the appellant in the assessment year 2011-12 and is also reflected in the TDS Certificate in Form 26AS. Thus considering all these aspects of this transaction of the appellant with M/s BHEL, I am of the opinion that the addition of Rs. 10,43,637/- is not justified and not warranted in the facts and circumstances of the case. Accordingly, the addition of Rs. 10,43,637/- is hereby deleted."
7. As discussed above we are unable to endorse the finding of CIT(A) in the absence of any assistance from the assessee or its counsel. It is needless to mention it is the responsibility and onus is on the respondent assessee to file all the documents in support of its claim before this Tribunal. Since there is no documents evidencing support of assessee's claim and view of CIT(A), we set aside the order of CIT(A) and restore the order of Assessing Officer. Thus grounds raised by the revenue are allowed.
8. The cross objection filed by the assessee in C.O. NO. 32/Kol/2015, we find the assessee particularly contended at ground no. 6 of cross objection that above said cross objection was filed in support of order of CIT(A). In view of our discussion in revenue's appeal in I.T.A. No. 789/Kol/2015 in above mentioned paragraphs and grounds raised by the assessee in cross objection becomes academic ITA No. 789/Kol/2015 & C.O. No. 32/Kol/2015 M/s Rabin Singh Heavy Earth Movers Co. Pvt. Ltd. 6 which requires no adjudication from us. Thus grounds raised by the assessee are dismissed.
9. In the result, the appeal of the revenue is allowed and the cross objection of the assessee is dismissed.
Order pronounced in the open Court on 06-02-2019.
Sd/- Sd/-
J. Sudhakar Reddy S.S. Viswanethra Ravi
Accountant Member Judicial Member
Date: 06-02-2019
SB,Sr. PS
Copies to :
(1) Appellant/Department: DCIT, Circle-3, Bankura (2) Respondent/Assessee: M/s Rabin Singh Heavy Earth Movers Co. Pvt. Ltd. (3)Commissioner of Income-tax (Appeals) (4) Commissioner of Income Tax, Kolkata (5) The Departmental Representative (6) Guard File By order Assistant Registrar ITAT, Kolkata ITA No. 789/Kol/2015 & C.O. No. 32/Kol/2015 M/s Rabin Singh Heavy Earth Movers Co. Pvt. Ltd. 7