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TMI Blog2019 (6) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... o year - difference in contract receipts as per AIR information and declared in the return of income - HELD THAT:- The assessee has filed the detailed working relating to opening work in progress and subsequent bills raised in respect of opening WIP or closing WIP during the appellant proceedings before CIT(A). We noted that despite assessee s details filed before AO, the AO could not pointed out any mistake in the books of accounts or any discrepancy and no books of accounts were ever rejected by the AO while applying the profit rate to the work in progress. The assessee is following the method of accounting consistently and it is followed consistently year after year by ascertaining and accumulating the direct cost such as material cost, labour and other identifiable expenses directly relating to a particular ongoing job as on the last day of the accounting year. We also noted that the work in progress followed at cost + net profit so as to bring the contract revenue for the period lying with the requirement of accounting standard AS 7 as prescribed by ICAI and adopted by assessee as per section 145 of the Act. In such circumstances, we are of the view that the AO and CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gone through the facts and circumstances of the case. Briefly stated facts are that the AO noted that the assessee has not deducted TDS in respect of sale transactions being part of work contract amounting to ₹ 44,91,845/-. According to AO the assessee has not deducted TDS. The AO also noted that although the assessee has debited the TDS of ₹ 1,02,040/- and paid this amount before the due date of return of income but balance amount of TDS of ₹ 46,260/- remained unpaid till the due date of filing of return of income under section 139(1) of the Act. Therefore, the AO disallowed the expenses corresponding to non-paid TDS of ₹ 46,266/- which worked out to ₹ 44,91,845/-. The CIT(A) also confirmed the action of the AO. Aggrieved, assessee in appeal before Tribunal. 4. At the outset, the learned Counsel for the assessee raised the additional ground that the assessee has filed additional evidences in form No. 26A establishing that the payee has filed its return of income and paid the tax due thereon on the said income arising out of the receipts of the contract and filed form No. 26A along with Annexure as provided in Rule 31ACB of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case ad in law the learned A.O. has erred in adding ₹ 3781174 to the income of the appellant on account of alleged undervaluation of closing WIP 31.03.2009 and, the learned CIT(A) has' erred in confirming the said addition. 3(c) Without prejudice to Ground of Appeal No. 3(a) 3(b) and on the facts and in the circumstances of the case ad in law the learned A.O. has erred in calculating the addition at ₹ 3781174/- being addition @ 7% on WIP valued at cost of ₹ 43964726/- which correctly works out to ₹ 3077530/- and the learned CIT(A) has erred in confirming the said addition. 3(d) Without prejudice to Ground of appeal No. 3(a)(b)(c) and on the facts and in the circumstances of the case and in law the learned A.O. has erred in not carrying out corresponding revaluation of opening stock i.e. opening WIP on 01.04.2008 before resorting to revaluation of the closing stock i.e. closing WIP to arrive at the correct income of AY 2009-10. 7. Briefly stated facts are that the AO noted during the course of assessment proceedings that there is a different in contract receipts as per AIR information and that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant had debited the entire indirect expenses relating to the jobs carried out during the year and similarly the entire receipts are admitted either as income credited to the P L A/c. or to the closing WIP, The Assessing Officer has arrived at gross profit of 17.02%. According to the Assessing Officer, entire expenditure for all the contract taken during the year is debited and at the same time all the payments were also received and hence practically there is no WIP, The Assessing Officer was of the view that the Gross profit of 170/o should have been equally distributed between the receipts admitted as income and receipts embedded in closing WIP. By admitting lesser profit the appellant had definitely suppressed the closing WIP. I am not in agreement with the Authorized Representative that because final bill raised was not approved a portion of the receipts were taken to the WIP. Hence the Assessing Officer is justified in adding 15% gross profit to the WIP and to this extent the appellant had tried to suppress the valuation of the closing WIP. The action of the Assessing Officer is upheld. 4.4. It is the contention of the appellant that the closing WIP has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I and adopted by assessee as per section 145 of the Act. In such circumstances, we are of the view that the AO and CIT(A) has wrongly made adhoc addition, which we delete. This issue of assessee s appeal is allowed in term of the above. 9. Coming to ITA No. 4144/Mum/2016 for AY 2009-10, which is in regard to levy of penalty by AO and confirmed by CIT(A) under section 271(1)(c) of the Act in respect of addition made by AO on work in progress on adhoc basis. For this assessee has raised the following ground: - 1. On the facts and in the circumstances of the case in law the learned Assessing Officer has erred in holding and the learned CIT(A) has erred in confirming that the appellant had furnished inaccurate particulars of income thereby concealing the particulars of income with relation to the method of valuation of the work in progress as on 31.03.2009. 2. On the facts and in the circumstances of the case in law the learned Assessing Officer has erred in levying and the learned CIT(A) has erred in confirming penalty of ₹ 1344140/- under section 271(1)(c) on the appellant for furnishing income for AY 2009-10. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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