Commissioner Of Income Tax-Ii vs Narayansingh Gulabsinghji & M/S G H ... on 20 March, 2015

[Cites 0, Cited by 2]

Gujarat High Court

Commissioner Of Income Tax-Ii vs Narayansingh Gulabsinghji & M/S G H ... on 20 March, 2015

1. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribuna, "A" Bench, Ahmedabad (hereinafter referred to as "the learned Tribunal") dated 29.2.2008 in ITA No.2053/Ahd/2006 for AY 2003-2004, the revenue has preferred the present tax appeal with the proposed following substantial questions of law.

"[A] Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs.48,64,783/- made on account of discrepancies found between receipts as per TDS certificates and the receipts shown as income by the assessee in its return of income?

[B] Whether the Appellate Tribunal and the CIT (A) have not substantially erred in admitting fresh evidence, without following due process under the I.T. Rules?"

2. That the assessee, who was carrying on business of contractor had procured four different contracts to be Page 1 of 7 O/TAXAP/775/2009 ORDER executed at four sites, namely, Surendranagar, Bhachau, Kachchh - Bhuj and Anjar from Gujarat Urban Development Company Limited. The assessee filed return of income for AY 2003-2004 declaring taxable income of Rs.2,91,111/- on 12.11.2003. That the assessee while computing his taxable income had accounted for the receipts (on account of revenue receipt) at Rs.2,26,16,653/-. At the same time, the assessee also engaged sub-contractor for executing the work procured by it and made total payments to those two sub contractors at Rs.4,38,67,648/- and out of total payment of Rs.4,38,67,648/- made by the assessee to the sub-contractors, the assessee considered payment of Rs.1,70,23,292/- made to the sub contractors M/s Tarshil Associates and another payment of Rs.51,18,412/- made to another sub contractor M/s Narayansingh Gulabsinghji as business expenditure for the AY 2003-2004. Thus, the assessee considered the contract receipt at Rs.2,26,16,653/- against which, claimed the expenditure on account of payments made to aforesaid two sub contractors at Rs.2,21,41,704/-. In addition to the above, the assessee also claimed another expenditure of Rs.1,83,838/- in the profit and loss account.

3. It appears that the Gujarat Urban Development Company Limited issued TDS certificate to the assessee for AY 2003-2004, as per which the total payments made to the assessee were shown at Rs.4,89,16,270/- and the TDS at Rs.10,27,241/-. It appears that the assessee had not accounted for receipts amounting to Rs.2,62,99,670/- while computing its income for AY 2003-2004, because according to the assessee, the said amount was received as "Mobilization Advances" against four contracts and was to be accounted for Page 2 of 7 O/TAXAP/775/2009 ORDER as Revenue Receipts at the time of completion of work in the next year.

4. Since the assessee had accounted for the revenue receipt at Rs.2,26,16,653/- only, but had claimed TDS amounting to Rs.10,27,241/- on the basis of TDS certificate, the Assessing Officer presumed the assessee's total revenue receipt at Rs.4,89,16,270/- and expenditure on account of payments made to sub contractors at Rs.4,38,67,648/-. That the assessee was called upon to explain why the receipts should not be taken at Rs.4,89,16,270/- against Rs.2,26,16,653/- shown by the assessee. The assessee explained before the Assessing Officer that out of total receipts of Rs.4,89,16,270/-, receipt to the extent of Rs.2,62,99,617/- were on account of "Mobilization Advances"

and similarly, out of total payment of Rs.4,38,67,648/- made to the sub contractors the expenditure accounted for in this year was only to the extent of Rs.2,21,41,704/- paid to M/s Tarshil Associates and M/s Narayansingh Gulabsinghji. That the Assessing Officer accepted the version that the credit for TDS on "Mobilization Advance" of Rs.2,62,99,617/- will be admissible in the year in which this advance will be adjusted against the assessee's bills and will be treated as Revenue Receipts. However, the Assessing Officer did not accept the assessee's explanation and consider the total payment of Rs.4,89,16,270/- as Revenue Receipts and after allowing credit for total payments made to sub contractors at Rs.4,38,67,648/- and on account of expenses debited in the Profit and Loss Account at Rs.1,83,838/- computed the net taxable income at Rs.48,64,783/-. Being aggrieved by and dissatisfied with the aforesaid, the assessee preferred appeal Page 3 of 7 O/TAXAP/775/2009 ORDER before the learned CIT (Appeals), who partly allowed the appeal, however, deleted the addition made by the Assessing Officer on account of "Mobilization Advance" in the year under consideration and consequently, set aside the the addition made by the Assessing Officer.

5. Feeling aggrieved by and dissatisfied with the order passed by the learned CIT (Appeals) in deleting the addition made by the Assessing Officer on account of "Mobilization Advance"in the year under consideration, the revenue preferred appeal before the learned Tribunal and by impugned judgment and order, the learned Tribunal has dismissed the appeal preferred by the revenue confirming the order passed by the learned CIT (Appeals) deleting the additions made by the Assessing Officer on account of "Mobilization Advance" in the year under consideration.

6. Feeling aggrieved by and dissatisfied with the impugned judgment and order passed by the learned Tribunal, the revenue has preferred the present tax appeal with the aforesaid proposed questions of law.

7. We have heard Mrs. Bhatt, learned advocate appearing for the appellant at length. We have also considered and gone through the orders passed by the Assessing Officer, learned CIT (Appeals) as well as learned Tribunal.

8. At the outset, it is required to be noted and it has come on record that the assessee was following the system regularly showing the mobilization account and the amount of advance were always stated in the subsequent AY against bills Page 4 of 7 O/TAXAP/775/2009 ORDER in that year and the revenue had not raised any objection for that treatment. Considering the aforesaid facts and circumstances, when the learned CIT (Appeals) as well as the learned Tribunal have deleted the additions made by the Assessing Officer on account of "Mobilization Advance" in the year under consideration, it cannot be said that the learned CIT (Appeals) as well as the learned Tribunal have committed any error. In para 8.4 and 9, the revenue observed and held as under:

"8.4 Coming to the Assessing Officer's reliance on the fact that sub contractors had shown the total payments made to them as Revenue Receipts we are again of the opinion that in view of the documentary evidence, placed on record, that the assessee had received amount of Rs.2,62,99,617/- as advance against four contracts, simply because the sub contractors showed the payments to them as their Revenue Receipts was of non consequences; meaning thereby that treatment of receipts by sub contractors in their hands was normal reliance for treating the receipts in assessee's hands.

9. We, in view of above, facts and circumstances of the case and the fact, are of the view that the assessee has established the factum of having received advance of Rs.2,62,99,617/- by way of documentary evidence as well as the facts that it was following the same system regularly (Revenue has not disputed the claim), also the fact that the amount of advances was adjusted in the subsequent Assessment Year against bills in that year and the Revenue having not raised any objection for that treatment, we do not see any infirmity in the order of the CIT (Appeals) and therefore, the order of the CIT (Appeals) on this point is confirmed."

9. Considering the aforesaid facts and circumstances, it cannot be said that the learned Tribunal has committed any Page 5 of 7 O/TAXAP/775/2009 ORDER error in confirming the order passed by the learned CIT (Appeals) in deleting the additions made on account of the "Mobilization Advance" account.

10. In so far as the contention on behalf of the revenue that the appellate Tribunal and the learned CIT (Appeals) have erred in admitting fresh evidence without following due procedure under the Income Tax Rules is concerned, it is required to be noted that as such, no elaborate submissions have been made on the aforesaid by learned advocate appearing on behalf of the revenue. Even otherwise, from the impugned judgment and order, it appears that the learned CIT (Appeals) as well as learned Tribunal have observed and considered that the documentary evidences were furnished before the Assessing Officer. It is also required to be noted in para 8 that the learned Tribunal has specifically observed that the details of advance received from four contractors as given by the assessee in the chart which was claimed to have been submitted before the Assessing Officer as well as the learned CIT (Appeals) have not been refuted by the DR.

11. Considering the aforesaid over all facts and circumstances of the case, it cannot be said that the learned Tribunal has committed any error, which calls for interference of this Court. No substantial questions of law in the present tax appeal would arise. Under the circumstances, present tax appeal deserves to be dismissed and is accordingly dismissed.




                                                             (M.R.SHAH, J.)




                                  Page 6 of 7
           O/TAXAP/775/2009                 ORDER



                                           (S.H.VORA, J.)
shekhar




                             Page 7 of 7

Unlock Advanced Research with PRISMAI

Gujarat High Court