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TMI Blog2015 (5) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd. in the TDS certificates issued on the ground that statutory auditor as well as tax auditor did not mention that the appellant has been following percentage completion method stipulated in the Accounting Standard (AS) - 7 and by giving complete go by to the admitted fact that bill of Rs. 1,08,92,867/- has been accounted for and assessed in next assessment year. 3. That in the facts and circumstances of the case and in law Ld. CIT (A) in perversity of facts upheld addition of Rs. 16,61,161/-under section 69 of Act on account of purchases made from M/s. Amit Steel. 4. That in the facts and circumstances of the case and in law Ld. CIT (A) erred in upholding disallowance of service tax of Rs. 15,64,994/- under section 43 B of act. 5. That in the facts and circumstances of the case and in law Ld. CIT (A) erred in upholding disallowance under section 40 (a) (ia) of Act to the extent of Rs. 69,320/-." 3. Ground No.1 is general in nature so is not adjudicated. 4. Ground No.2 relates to the addition of Rs. 1,09,92,260/- on account of difference in contract receipts shown by the appellant and accounted for by the customer M/s Uniproducts India Ltd. 5. Brief facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thod based on percentage completion. Therefore, the revenue was recognized less in this year but it has been recognized in the next assessment year i.e. A. Y. 2009-10. It was pointed out to us by the ld AR that this exercise of recognizing the said amount next year was done much before this question was raised in the year under appeal and so it was not an afterthought. Assessment order of the assessee reveals that the said income was already offered to tax in A.Y. 2009-10 and this has been so offered in the return filed in October, 2009 whereas impugned assessment has been made on 31.12.2010, this according to the ld AR is stated to show the bona-fide conduct of the assessee. According to Shri Ashwani Taneja the Hon'ble Delhi High Court in the following cases have held that if tax rates in both the years are same, it should not be of much concern as to whether income gets taxed in one year or in the other year. CIT vs. Vishnu Industrial Gases (P) Ltd. in ITR no. 229/1988 dated 06.05.2008 CIT Vs. Dinesh Kumar Goel (331 ITR 10 (Del) CIT Vs. Excel Industries Ltd. (2013) 38 taxmann. Com 100 (SC)/ 358 ITR 295 (SC) 8. On the other hand, the ld DR relied on the order of the ld CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Dharam Steel showed discrepancies. The purchase as shown by the assessee from the concern are Rs. 38,59,019/- whereas as per the party it has made sales of Rs. 21,91,993/- only. Further, AO noted that there was a difference in the credit balance also. These facts were confronted to the counsel of the assessee vide order sheet entry dated 21.12.2010 and he was asked to explain as to why adverse inference be not drawn from these facts. As the appellant failed to produce its books of accounts during the course of assessment proceedings and notices issued by the AO to verify such purchases remained uncomplied and as also there was difference in amount of M/s Dharam Steel Traders, the account as per ledger of M/s.Dharam Steel Traders could not be reconciled by the assessee company and therefore, difference of Rs. 16,67,026/- was added to the income of the assessee company as unexplained expenditure. 13. Aggrieved assessee preferred an appeal before the ld CIT(A) 14. During the course of appellate proceedings the appellant filed confirmation of account of these parties. The matter was remanded to the AO for comments. Therein it was stated by the AO in his remand report "To verify t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claims of the appellant cannot be verified. As the appellant has not been able to substantiate its claim with documentary evidenced the same is dismissed. The addition ofRs. 16,61,161/- is upheld." 16. Aggrieved by the said order of the Ld. CIT(A), the assessee is before us. 17. The Ld. AR submitted that the case of the assessee is that the purchase was made from M/s Amit Steel but was wrongly shown in the account of M/s Dharam Steel because both the concerns were owned by the same person. But fact of the matter is that purchase was made from M/s Amit Steel. Ld. AR took our attention towards Paper Book Page 25-26 which are the submissions before the Ld. CIT(A) submitting that bill of Amit Steel was wrongly entered in the account of M/s Dharam Steel and the error was so apparent which was sought to be noted by the Ld. CIT(A). According to the Ld. AR the assessee wrongly accounted for Bill No. 2 dated 3.12.2007 of M/s Amit Steels of Rs. 16,61,161/- in the account of M/s Dharam Steel. In may not be out of place to mention that on 3.12.2007 M/s Dharam Steel was issuing invoice no. 1367 which was received by the assessee whereas invoice / challan no of Amit Steel is 2, which clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sen and on perusal of the Remand Report of the AO in which the Inspector's Report wherein the Inspector has clearly mentioned that the M/s Amit Steel and Dharam Steel belongs to one and the same person and the mistake made by the assessee accountant need not come in their way to saddle them with the liability. The explanation of the assessee has been corroborated by evidence on record, therefore, there is no justification for impugned disallowance. We find force in the contention of the assessee's counsel regarding this factual aspect and the ld. DR could not point out anything contrary to the said fact so we are inclined to allow this ground and direct the AO to delete the addition in dispute made on this account. 21. Ground no. 4 relates to the disallowance of the service tax payable amounting to Rs. 15,64,994/- under section 43B of the Act. 22. The AO has stated in his assessment order that from the perusal of the balance sheet as on 31.3.2008 the assessee has shown Rs. 15,64,994/- as service tax payable and Rs. 3,04,284/- as sales tax payable. When it was asked by the AO to explain, the assessee replied that the service tax was paid on 16.6.2009 and 22.6.2009 and has also sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 28. We have heard both the parties and have gone through the records and submissions made by both the parties. We find from the records that the Service Tax payable has not been claimed as deduction in the P&L account. We further find that assessee is following the mercantile system of accounting. Similar case was decided by the Hon'ble Jurisdictional High Court in the case CIT vs. Noble & Hewitt (I) P. Ltd. (2008) 305 ITR 324 (Delhi) (Supra) has held "in our opinion, since the assessee did not debit the amount to the P&L account as an expenditure nor did the assessee claimed any deduction in respect of the amount and considering that the assessee is following the mercantile system of accounting the question of disallowance of deduction not claimed could not arise." The aforesaid case is similar to that case in hand and therefore ratio laid down in that case is squarely applicable to the case in hand, therefore, we allow the claim of the assessee. 29. Ground no. 5 it relates to the disallowance of Rs. 69,320/- under section 40(a)(ia) of the Act. 30. The AO noticed that assessee has booked shuttering expenses of Rs. 18,03,690/-. On a query by the AO, he filed the party wise det ..... X X X X Extracts X X X X X X X X Extracts X X X X
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