2016 (7) TMI 198 - AT - Income Tax

Rectification of mistake - difference between the gross receipts as per the TDS certificate and turnover as per the Profit & Loss Account - Held that - No information could be furnished as to whether the assessee s application under S.154 was forwarded to the concerned Assessing Officer, and if so, the date of forwarding of the same. Since the application is filed on 26.8.2013, we reasonably presume that it is forwarded within a period of 15 days, and at any rate, before the end of that year. Till date, no action was taken by the Assessing Officer, which implies that the Assessing Officer has not passed any order, and therefore, it is deemed to have been accepted. At any rate, this information was already filed before the Assessing Officer and it was in the knowledge of the CIT(A) in the first round of litigation and also before the Tribunal, which had taken cognisance of the petition filed under S.154, to set aside the matter for reconsideration. Assessing Officer could have verified the status of the petition filed under S.154. This is a normal practice that when an appeal is filed before the CIT(A), a copy of the appeal papers is sent to the Assessing Officer and it is the duty of the Assessing Officer to send his note on the appeal filed by the assessee, so as to assist the first appellate authority in coming to appropriate conclusion. The Assessing Officer has neither acted upon the petition filed under S.154 nor objected to the material filed alongwith the petition filed under S.154 of the Act. In fact, during the course of assessment proceedings, the assessee furnished the details of earlier two years to submit that the gross receipts as per the TDS Certificates cannot be taken as the basis for working out the turnover of a particular year. The Assessing Officer has not commented upon the same. Having regard to the overall circumstances of the case, we are of the view that the learned CIT(A) was justified in taking cognisance of the material and upon verification, he has correctly taken a view that the advances received cannot be taken as part of the current year s turnover. The details available on record are not doubted even at this stage by the Revenue. Under these circumstances, it is not necessary for the CIT(A) to give detailed reasons, when he, upon verification of the details, notices that the figures are reconcilable. Under these circumstances, we uphold the order of the learned CIT(A) - Decided against revenue

Summary

Issues:
Assessment of sub-contract receipts, treatment of advances, procedural irregularities in handling rectification application, admissibility of additional evidence, compliance with Rule 46A of IT Rules, justification of CIT(A)'s decision.

Analysis:
1. Assessment of Sub-contract Receipts:
The appeal concerns the assessment of sub-contract receipts by the assessee company for the year 2008-09. The Assessing Officer noted a variance between the amount offered by the assessee and the amount per TDS certificates, leading to an addition being proposed. The assessee contended that the difference was due to advances received from the department, which were included in the TDS certificates. The Assessing Officer rejected this explanation, citing lack of RA bills as evidence. The ITAT later directed the CIT(A) to re-decide the matter, considering the additional evidence provided by the assessee, leading to the deletion of the addition.

2. Treatment of Advances:
The assessee received mobilization and material advances during the financial year 2006-07, resulting in a difference between the gross receipts per TDS certificates and the turnover per Profit & Loss Account. The CIT(A) accepted the explanation provided by the assessee, considering the details of advances received and running account bills. The CIT(A) concluded that the advances received should not be considered as part of the current year's turnover, leading to the deletion of the addition.

3. Procedural Irregularities in Handling Rectification Application:
The application filed under S.154 was acknowledged by the Addl. Commissioner's office instead of the concerned DCIT, leading to delays in processing. The Revenue contended that the application was not on record of the Assessing Officer, questioning the admissibility of documents filed with the application. The assessee argued that the details were provided to the Assessing Officer, and the CIT(A) correctly considered the evidence in line with the earlier proceedings.

4. Admissibility of Additional Evidence and Compliance with Rule 46A:
The Revenue challenged the admission of additional evidence by the CIT(A) without proper justification, alleging a violation of Rule 46A of the IT Rules. The ITAT noted that the CIT(A) should have followed the prescribed procedure and called for a remand report from the Assessing Officer before admitting the evidence. However, the ITAT upheld the CIT(A)'s decision based on the reconcilable figures and the correctness of the assessee's explanation.

5. Justification of CIT(A)'s Decision:
The ITAT upheld the CIT(A)'s decision to delete the addition, emphasizing that the assessee's explanation was supported by evidence provided during the assessment proceedings. Despite procedural irregularities and delays in processing the rectification application, the ITAT found the CIT(A)'s decision to be justified based on the verifiable details and reconcilable figures. The ITAT dismissed the Revenue's appeal, affirming the CIT(A)'s order.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the addition related to sub-contract receipts, advances, and procedural irregularities, based on the evidence provided by the assessee and the reconcilable nature of the figures. The ITAT emphasized the importance of considering all relevant evidence and following proper procedures in tax assessments.