2015 (4) TMI 622 - HC - Income Tax

Addition on Mobilization Advance - Difference / discrepancies between receipts as per TDS certificates and the receipts shown as income by the assessee in its return of income - ITAT deleted the addition - Appellate Tribunal and the CIT (A) admitting fresh evidence - Held that - 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 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. Tribunal has committed no error in confirming the order passed by the learned CIT (Appeals) in deleting the additions made on account of the Mobilization Advance account. 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. No substantial questions of law in the present tax appeal would arise - Decided against revenue.

Summary

Issues:
1. Addition of discrepancies in receipts as per TDS certificates and income shown by the assessee.
2. Admission of fresh evidence without following due process under the I.T. Rules.

Analysis:
1. The case involved the appellant, a contractor, who procured contracts from Gujarat Urban Development Company Limited. The appellant filed a return of income for AY 2003-2004, declaring taxable income of Rs. 2,91,111. The appellant accounted for receipts at Rs. 2,26,16,653 and made payments to subcontractors totaling Rs. 4,38,67,648. The Assessing Officer presumed total revenue receipts at Rs. 4,89,16,270, leading to a net taxable income of Rs. 48,64,783. The CIT (Appeals) partly allowed the appeal, deleting the addition made on account of "Mobilization Advance." The revenue appealed to the Tribunal, which confirmed the CIT (Appeals) decision, leading to the current appeal.

2. The appellant contended that the "Mobilization Advance" was to be accounted for as Revenue Receipts in the subsequent year. The Assessing Officer accepted this explanation but computed the net taxable income differently. The CIT (Appeals) and Tribunal both deleted the addition made by the Assessing Officer on account of the "Mobilization Advance." The Tribunal observed that the appellant regularly followed this system, and the revenue had not objected to this treatment. The Tribunal confirmed the CIT (Appeals) decision, stating that the appellant had established receiving the advance through documentary evidence and regular practice.

3. The Tribunal also addressed the issue of admitting fresh evidence without following due process under the I.T. Rules. The Tribunal noted that documentary evidence was furnished before the Assessing Officer and observed that details provided by the appellant were not refuted by the DR. The Tribunal found no error in the decisions of the CIT (Appeals) and confirmed the deletion of the addition on account of the "Mobilization Advance." Ultimately, the Tribunal dismissed the tax appeal, stating no substantial questions of law arose for consideration.