आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद Ûयायपीठ 'बी बी' बी अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL " B " BENCH, AHMEDABAD सव[ौी मुकुल कुमार ौावत, Ûयाियक सदःय एवं ौी अिनल चतुवद ȶ ȣ, लेखा सदःय के सम¢ । BEFORE SHRI MUKUL Kr.SHRAWAT, JUDICIAL MEMBER And SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No.3428/Ahd/2009 ( िनधा[रण वष[ / Assessment Year : 2006-07) The DICT बनाम/ M/s.Florence Construction Cir.9 Vs. Sant Kutir Ahmedabad Nr.N.T.House Opp.Ashram Road Post Office Ahmedabad ःथायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AABFF 2749 Q (अपीलाथȸ /Appellant) .. (ू×यथȸ / Respondent) अपीलाथȸ ओर से / Appellant by : Shri Samir Tekriwl, Sr.D.R. ू×यथȸ कȧ ओर से/Respondent by : -None- सुनवाई कȧ तारȣख / Date of Hearing : 29/02/2012 घोषणा कȧ तारȣख /Date of Pronouncement : 2/3/12 आदे श / O R D E R PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER : This is an appeal at the behest of the Revenue which has emanated from the order of the CIT(A)-XV Ahmedabad dated 06/11/2009 and the substantive ground argued before us is ground No.1; reproduced below:- 1) The ld.Commissioner of Income-tax(A)-XV, Ahmedabad has erred in law and on facts in deleting the addition made on account of advance receipt of Rs.2242650/-. ITA No.3248/Ahd/2009 DCIT vs. M/s.Florence Construction Asst.Year - 2006-07 -2- 2. Facts
in brief as emerged from the corresponding assessment order passed u/s.143(3) of the I.T.Act dated 31/12/2008 were that a return of loss of Rs.43,58,620/- was filed. The assessee-firm was stated to be engaged in the building construction business. It has also been noted by the AO that there were differences among the partners and they were involved in a civil as well as criminal litigation. It has also been noted by the AO that during the year under consideration, the assessee was in receipt of an amount of Rs.2,91,00,000/- from M/s.Sharma Car Pvt.Ltd. as per TDS certificate. Against the said amount, the assessee has claimed a liability of Rs.8,04,474/- towards service tax. As per AO, the net amount of receipt ought to be Rs.2,97,42,650/-. Whereas in the profit & loss account the assessee had shown a receipt of Rs.2,75,00,000/-. The difference between the two, i.e. Rs.22,42,650/- ( Rs.2,97,42,650 - Rs.2,75,00,000 ) was held as an income not offered for taxation. The same was accordingly taxed. The matter was carried before the first appellate authority.
3. Before ld.CIT(A), it was pleaded as under:
"a) Simply because the return of income for AY 2007-08 was not filed by the appellant cannot make the receipts of Rs.22,42,650 as chargeable to tax in AY 2006-07. It was stated that the firm was carrying the business of developing a commercial complex called Florence in which it is customary to receive money in advance and the execution of work will take place later. Bills for the work done are therefore subsequently raised generally at the end of the year when the Engineer/Supervisor would give the report of work done. It is only then the receipt becomes chargeable to tax.
b) That the appellant firm had accounted for all the payments received from two parties i.e. Sharma Cars Pvt.Ltd. & Real Strips ITA No.3248/Ahd/2009 DCIT vs. M/s.Florence Construction Asst.Year - 2006-07 -3- Pvt.Ltd.) and that the alleged discrepancy arises only because of the bills for Rs.2.39 crore (net of Service Tax) raised against aforesaid two parties though total payments received during the year are Rs.2.91 crore as per TDS certificates.
c) That the appellant had accounted for in its P&L account as income only the receipts as per bills raised against the Sharma Cars Pvt.Ltd. in accordance with the method of accounting followed by the firm and terms and conditions of the contract with Sharma Gars Pvt.Ltd.
d) That there was dispute amongst the partners in Civil Court and the books of accounts were not available with the appellant's partner. Therefore no return for AY 2007-08 could be filed by the firm. As the return had not been filed for valid reasons in AY 2007-08 the AO could not have drawn adverse inference so as to tax any particular receipts earlier to the date of accrual.
e) That there was n accrual of any income with regard to Rs.22,42,650 because the amounts were received from Sharma Cars Pvt.Ltd. towards the first and second floors allotted to it. That advance receipt cannot be considered as income at the time when it is received because it would be considered as income only upon bill raised by the appellant."
3.1. After going through the submissions, ld.CIT(A) has held that since the assessee had followed mercantile system of accounting, therefore an advance could not be taxed and that the appellant will not get the credit of TDS in the next year on declaration of income, relevant para-7 is as under;-
"7. After going through rival submissions it is seen that the Advance cannot be included in the income as the assessee is following mercantile system of accounting. In this case therefore the addition made by the AO considering Advance income is directed to be ITA No.3248/Ahd/2009 DCIT vs. M/s.Florence Construction Asst.Year - 2006-07 -4- deleted. However same time appellant will not get credit of TDS on this amount as Income is going to be offered in the next year."
4. Now the Revenue is before us. On the date of hearing, no one has appeared from the side of the respondent-assessee. We have noticed that as per the directions, Revenue has served a notice on the respondent. In this regard, a report has been furnished by DCIT, Cir-9, Ahmedabad dated 21/02/2012 that the notice was duly served on one of the partners of the assessee. Since no one has appeared from the side of the assessee, therefore, we have proceeded ex-part qua the assessee, after hearing ld.DR. Mr. Samir Tekriwal, ld.DR has argued that no return for A.Y. 2007-08 was filed by the assessee. Since no return in the subsequent year has been filed by the assessee, therefore it was wrong on the part of ld.CIT(A) to grant relief with the direction not to give the credit of TDS on the income going to be offered in the next year.
5. We find force in the submission of ld.DR. It appears that ld.CIT(A) while giving relief has overlooked one of the fact that no return for AY 2007-08 was filed by the assessee. It is also not clear whether thereafter anytime the assessee has filed the income-tax return. Rather the correct procedure ought to be to ask for the basis of showing receipt of Rs.2,75,00,000/- as against the receipt of Rs.2,97,42,650/-. Ld.CIT(A) should have enquired about the reconciliation of the said difference. At present the difficulty is that the respondent-assessee has chosen not to appear. Therefore, we are also not in a position to give a correct finding on facts. In the interest of justice, we deem it proper to restore this issue ITA No.3248/Ahd/2009 DCIT vs. M/s.Florence Construction Asst.Year - 2006-07 -5- back to the file of ld.CIT(A) to be decided de novo as per law. Revenue's ground is allowed but for statistical purposes.
6. In the result, appeal of the Revenue is treated as allowed for statistical purposes only.
Sd/- Sd/- ( ANIL CHATURVEDI ) ( MUKUL Kr. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 2/ 3 /2012 टȣ.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदे श कȧ ूितिलǒप अमेǒषत/Copy षत of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. ू×यथȸ / The Respondent. 3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ(अपील) / The CIT(A)-XV, Ahmedabad
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाईल / Guard file.
आदे शानुसार/ BY ORDER, स×याǒपत ूित //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) उप/ आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation.......................29.2.12
2. Date on which the typed draft is placed before the Dictating Member 29.2.12.................. Other Member.....................
3. Date on which the approved draft comes to the Sr.P.S./P.S.................
4. Date on which the fair order is placed before the Dictating Member for pronouncement......
5. Date on which the fair order comes back to the Sr.P.S./P.S............2.3.12
6. Date on which the file goes to the Bench Clerk........................ 2.3.12
7. Date on which the file goes to the Head Clerk..................................
8. The date on which the file goes to the Assistant Registrar for signature on the order..........................
9. Date of Despatch of the Order..................