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TMI Blog2015 (10) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts were accounted for in the books of account on accrual basis. The appellant company therefore declared the job receipts in the year of billing however the deductor/principal company accounted for part of job receipts in the subsequent year when the goods were removed from the premises of the appellant company. The mercantile system of accounting was consistently followed by the appellant company since last many years and it was clearly disclosed in the audited financial statements by the Auditors in scheduled 16, subpoint (A)(1) of the balance sheet. This disclosure was strictly in conformity with the applicable AS-1 issued by ICAI and GAAP also. Many a times, the job work receipts accounted by the appellant in one year were accounted for in the subsequent year by the principal company. As a result, TDS was also deducted by the principal company in that year and credit for the same appeared in Form No. 26-AS. - Decided against revenue. Addition on concealed sale of scrap on the basis of ER-1 return filed with the Excise Department - CIT(A) deleted the addition - Held that:- It is undisputed fact that the scrap generated out of manufacturing was retained by the vendors an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act. See CIT Vs. State Bank of Bikaner & Jaipur (2014 (5) TMI 222 - RAJASTHAN HIGH COURT) - Decided in favour of assessee - ITA No. 853/JP/2012, CO No. 76/JP/2012 - - - Dated:- 10-9-2015 - R P Tolani, JM And T R Meena, AM For the Petitioner : Smt Pratima Kaushik (CIT) For the Respondent : Shri Abhinav Mehrotra (Adv) ORDER Per T R Meena, A.M. The appeal by revenue and cross objection by assessee arise from the order dated 06/08/2012 passed by the learned CIT (A)-II, Jaipur for A.Y. 2009-10. 2. The ground of revenue's appeal and ground of the assessee's C.O. are as under:- Grounds in Revenue's Appeal. On the facts and in the circumstances of the case and in law the Ld. CIT(Appeals) has erred in:- 1. Restricting the addition to ₹ 24,752/- against the addition of ₹ 27,27,293/- made by the A.O. on account of difference in job work receipts. 2. Deleting the addition of ₹ 1,15,59,814/- made by the A.O. on account of concealed sale of scrap. 3. Deleting the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,137/- and he has not been filed any explanation therefore the said amount is added back in the income of the assessee. In light of above findings/observations, the ld Assessing Officer held that the assessee has concealed the receipt of job work of ₹ 27,27,293/- and the same is added back in the income of the assessee. 4. In first appeal, the ld CIT(A) has partly allowed the appeal on this ground and restricted the addition on account of difference in job work receipts of ₹ 24,752/- instead of ₹ 27,27,293/- made by the Assessing Officer. The appellant company had submitted a reconciliation statement, which has been reproduced as under:- M/s Fag Bearing India Ltd. S.No. Particulars Amount (In Rs.) 1. Receipts as per form No. 26AS 2,31,75,057/- 2. Less: Bills pertaining to previous year (F.Y. 2007-08) (Booked by the principal company during the F.Y. 2008-09, hence, appearing in Form No. 26AS of current year) 46,99,182/- 3. Total 2,84,75,875/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear) 31,137/- 3. Total 3,64,863/- 4. Add: Bills of current year but not accounted for by the deductor, therefore, not appearing in 26AS Nil 5. Total 3,64,863/- 6. Less: Rejections/Debit Notes Nil 7. Total residual job work income of the year as per Form No. 26AS 3,64,863/- 8. Job work income as per Profit Loss Account 3,64,863/- 9. Difference, if any (7-8) Nil 4.1 The ld CIT(A) held that the Assessing Officer without any basis rejected the submissions of the appellant company and at the same time, he ignored the entries in the books of account and copies of debit notes/rejections. In the case of M/s Fag Bearing India Ltd., the Assessing Officer accepted the contention of the appellant company that job work receipts of ₹ 46,99,182/- appearing in Form No. 26AS were accounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement alongwith supporting documentation, which have been duly considered and examined in detail by the ld CIT(A). 6.1 In his order, the ld CIT(A) has held that the difference was worked out by the A.O. by comparing the Form No. 26-AS (Tax Credit Statement) with the job work receipts declared in the books of account. However, many a times, the deductor either did not deduct the tax or accounted for the same in the subsequent year when the goods were lifted from the premises of the appellant company. It was not in dispute that the appellant company was following mercantile system of accounting and job receipts were accounted for in the books of account on accrual basis. The appellant company therefore declared the job receipts in the year of billing however the deductor/principal company accounted for part of job receipts in the subsequent year when the goods were removed from the premises of the appellant company. The mercantile system of accounting was consistently followed by the appellant company since last many years and it was clearly disclosed in the audited financial statements by the Auditors in scheduled 16, subpoint (A)(1) of the balance sheet. This disclosure was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant company merely on surmises. There was no real income, which could be taxed in the hands of the appellant on accrual basis or receipt basis. In view of the above facts, the ld CIT(A) deleted the addition of ₹ 1,15,59,814/- made by the Assessing Officer. 7.2 The ld Sr. DR vehemently supported the order of the Assessing Officer and the ld AR for the assessee reiterated the arguments made before the ld CIT(A) and prayed to uphold the order of the ld CIT(A). 7.3 We have given a careful consideration to the facts and the issue under consideration. It is undisputed fact that the scrap generated out of manufacturing was retained by the vendors and not returned back to the appellant company. The assessee company had paid excise duty on nonreturnable scrap retained by the vendors by taking its notional value or assessable value by the Excise authorities. ER-1 return not only include the goods sold but also goods removed out of factor. Therefore, it is but natural to have difference between sale figures reported by the assessee and figures disclosed in ER-1 return. The ld CIT(A) has thoroughly examined this issue, which has not been controverted by the ld Sr.DR during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not as submitted by the assessee for enhancing the rate on subsequently. The ware house and ocean freight charge as claimed by the assessee is not admissible as these expenses are made outside the country, no evidence regarding liability, justification and no evidence that M/s SKF India Ltd has deducted these expenses from the sale proceeds. Therefore, as per Assessing Officer, the amount to ₹ 1,64,20,870/- was declared less sale on account of export sale as per P L account as compared to the ER-1 return, thus total addition of ₹ 2,72,84,704/- was made by the Assessing Officer. 8.3 Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal by observing that the appellant company had sold multi splendle machinery for 6.5 and 13 lacs, however, it was wrongly entered in sales interstate C-Form interest account @ 2%, which has been rectified by the assessee himself by passing reversal entry. The appellant company, however, received memo from M/s SKF India Limited for short quantity receipt against different bills pertaining to A.Y. 2007-08, 2008-09 and 2009-10 for ₹ 18,21,421/-. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvoices did not pertain to the year under consideration. This was factually incorrect as out of total amount of ₹ 2,07,574/-, the major amount of ₹ 79,910/- related to the year under consideration and quantification and crystallization of the amounts relating to the past years happened in the year under consideration. All these entries were part of RG-1 Register. The J.V. No. 233 had been passed by the appellant company on 31/3/2009 on account of short receipt of goods by M/s SKF India Limited, Bangalore. The A.O. did not accept the entire amount of ₹ 22,24,347/- on the ground that concerned invoices did not pertain to the year under consideration. This was factually incorrect as the total amount of ₹ 22,24,347/- related to the year under consideration and quantification and crystallization of the amount happened in the year under consideration. All these entries were part of RG-1 Register. As regard the addition of ₹ 1,64,20,870/- made on account of export sales, the appellant company had satisfactorily explained that a sum of ₹ 39,18,068/- was reversed vide J.V. No. 153 dated 31/03/2009 on account of refusal of rate difference made vide bill No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) were not submitted before the Assessing Officer. The ld CIT(A) has coterminous power with the Assessing Officer. However, he has accepted the assessee's explanation without any verification from the third party, therefore, in the interest of justice, this issue required to be decided afresh by the Assessing Officer after providing reasonable opportunity of being heard and assessee also directed to cooperate with the Assessing Officer to produce all the evidences required by the Assessing Officer. Accordingly, this issue is set aside to the Assessing Officer. 11. The third ground of the assessee's C.O. is against confirming the addition of ₹ 1,37,927/- for late depositing ESI and PF dues received from the employees. The ld Assessing Officer observed that during the course of assessment, it was observed that the assessee had made late payment of ESI in all its units, the details of which is reproduced at page No. 11 to 13 of the assessment order. As per Section 2(24)(x) read with Section 36(va), the payments of ESI and PF made late by the employer are considered as his income for the relevant year. Therefore, the amount of ₹ 1,37,927/- deposited late of ESI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the decision of Hon'ble ITAT, Jaipur in the case of DCIT Vs. Royal India Jewellery Manufacturing Private Limited in ITA No. 582/JP/2008 dated 13/02/2009. He also placed reliance on the decision of Hon'ble Supreme Court in case of 213 CTR 68 and 220 CTR 635. Therefore, he prayed to delete the impugned addition of ₹ 1,37,927/-. 14. At the outset, the ld DR has vehemently supported the order of the ld CIT(A). 15. We have heard the rival contentions of both the parties and perused the material available on the record. The Hon'ble Jurisdictional High Court in the case of CIT Vs. State Bank of Bikaner Jaipur (2014) 43 taxmann.com 411 (Raj) has held as under:- 20. On perusal of Sec.36(1)(va) and Sec.43(B)(b) and analyzing the judgments rendered, in our view as well, it is clear that the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory liability of payment of dues, as aforesaid; and rightly so as on the one hand claim was being made under Section 36 for allowing the deduction of GPF, CPF, ESI etc. as per the system followed by the assessees in claiming the deduction i.e. a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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