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TMI Blog2024 (12) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... declared by the DG GSTI, Delhi Zone Unit, it was observed that there was under declaration of gross receipts to the extent of Rs. 36,62,41,517/-. The AO observed that DG GSTI, Delhi has conducted searches in the case of assessee and Aero Promoters Pvt. Ltd. on 23.05.2015 and detected the evasion of service tax. 3. The assessee is engaged in the business of construction and residential complexes at Delhi and development of plot at Indore. The AO observed that the payments were received mostly on cash for providing such services from the prospective buyers from the years 2011-12 to 2015-16. He further observed that assessee received Rs. 531.34 crores for Delhi project and Rs. 28.89 crores for Indore project. He further observed that these receipts were not found in the books of account. Further he observed that it was found that considerations were received in cash in most of the cases and not recorded in the statutory books of account. The AO tabled gross receipts reported in ITR and detected by DG GST as under :- ASSESSMENT YEAR Gross reported in ITR Receipts detected by DGGST Under report of receipts 2013-14 74,70,94,404 126,03,53,280 51,32,58,876 2014-15 77,23,55,386 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under consideration was submitted before the AO. However ld. CIT (A), after considering the assessee's submissions and findings in the assessment order, sustained the additions made by the AO. 6. Aggrieved, assessee is in appeal before us raising following grounds of appeal :- "A) That the facts of the circumstances of the case the learned AO & the CIT (A) erred in: 1. The CIT (A) and Learned assessing officer erred on the facts and in law in not accepting the reconciliation furnished by the appellant, during the course of without assigning any reason. 2. The CIT (A) erred in not recognising that Learned Assessing Officer erred on the facts and in law in making the trading addition of Rs. 2.90.08.526/- (i.e. 10% of (Rs.36,62,41,517 7,61,56,255/-) on estimation basis without pin pointing any transactions not recorded in the books of account and rejecting the books of account maintained in the normal course of the business and had been audited both by the Statutory as well as Tax Auditors. 3. The CIT (A) erred in not recognising that Learned Assessing Officer erred on the facts and in law in making an adhoc addition on his whims, fancies, assumptions, presumptions without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over worked out as per Service Tax Laws vis-a-vis the same appearing in the audited financial statements consequent to that the assessment is reopened by issue of notice u/s 148 of the Act. 7.1 Ld. AR for the assessee further submitted that the Assessee filed its return of income in response to notice u/s 148 on 30.04.2021 vide acknowledgment no.346695231300421 and the only reason for reopening the case was information received by the assessing officer, from the office of The Director General, GSTI, Delhi i.e. variation of Rs. 36,62,41,517/- in gross receipts/turnover reported by the assessee in its audited annual accounts with that of the gross receipts/Turnover computed by the office of The Director General, GSTI, Delhi. It is submitted that the turnover appearing in the books of accounts & audited set of annual accounts is computed by following the generally accepted accounting principles & accounting standards whereas the turnover computed by the office of The Director General, GSTI, Delhi, is by following point of taxation rules as per Service Tax laws. He submitted that the system of calculating the turnover under both the laws is materially different and cannot be matched w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 953/- In this regard it is submitted that as per service tax, Notification No.30/2012 dated 20th June 2012, the service tax is also payable on certain specified expenses under reverse charge mechanism (ReM) therefore they also become part of the turnover. Whereas, for accounting purposes, the expenses debited in the books of accounts of the assessee are expenses only and they can never become a part of turnover as per GAAP. Detail of expenses of Rs. 12,344,953/- where service tax was paid under reverse charge mechanism (RCM), as per the said notification is enclosed with copy of the service tax returns which were submitted during the course of the assessment proceedings and before Ld. CIT(A) also. In this regard, he referred Page no.89-117 of the paper book. b. Advance received against sale of property/plot/flats in excess of the revenue recognized as per POCM : Rs. 28,70,66,225/-. He submitted that in case of builders/ developers, under the generally accepted accounting principles (GAAP), the turnover is to be recognized by following the percentage of completion method (PC OM) as per the Guidance Note issued by the Institute of Chartered Accountants of India with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of such payment. He submitted that as the assessee is a real estate developer, it sold the properties on the basis of agreement to sell/sale deed and no invoice is raised, thus as per the above rule, turnover under the Service Tax Act, in the case of the assessee company, is recognized as and when any advance is received. It was submitted that during the year under consideration, the assessee company received fresh advances against sale of property/plots/flats in excess of the revenue recognized as per POCM of Rs. 28,70,66,225/-. The office of the Director General, GSTI, Delhi, on the basis of Point of Taxation Rule-3, has included the amount of said advances in the turnover of the assessee appearing in the profit & loss account and thus preponed the tax liability under Service Tax. Whereas the assessee company has recognized the turnover as per Accounting Standard -7 following POCM method of recognizing revenue irrespective of date of receipt of advances. He submitted that detail containing the name, address, PAN and amount of fresh advances received, during the year, against the booking of the property/plots/flats from the parties was placed before the learned assessing offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - are the expenses debited on which service tax is paid under reverse charge mechanism as per the Notification NO.30/2012 dated 20th June 2012 and these expenses debited in the profit and loss account cannot be treated as the business income. 7.6 It is submitted that the AO and ld. CIT (A), in their orders, have not disregarded the reconciliation submitted by the Assessee and they did not find any fault in it neither had they asked for any additional documents. He submitted that they have not even rejected the books of account of the assessee but have made/upheld the estimated addition of Rs. 2,90,08,526, which is contrary to law laid by Hon'ble High Court of Delhi in the case of National Industrial Corporation Limited 258 ITR 578). 7.7 In view of his aforesaid submissions, ld. AR for the assessee submitted that the addition may be deleted and the appeal be allowed. 8. On the other hand, ld. DR for the Revenue submitted that no doubt, assessee has submitted reconciliation of turnover before the lower authorities. However, assessee has not submitted any supporting documents in support of reconciliation carried on by it. The Bench asked the ld. DR at the Bar to substantiate th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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