TMI Blog2006 (1) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... P L a/c. However, the amount of work-in-progress was not reflected on the credit side of the trading account. When the assessee was asked to explain the same, he submitted that since no opening stock of work-in-progress was shown in the subsequent year, the amount would be merely an adjustment entry because in the subsequent year, the same amount has been shown as receipt. Therefore, it would not affect the quantum of income. The AO did not accept the explanation on the ground that the assessee had not maintained any closing stock register and, therefore, if was not possible to ascertain the work-in-progress. Accordingly, he made an addition of Rs. 1,35,000 and Rs. 2,70,000 in respect of other amount received on 16th May, 1998. 3. Being aggrieved, the assessee carried the matter in appeal before the CIT(A). The submissions made before the AO were reiterated. It was submitted before the CIT(A) that the only payment received by the assessee in April, 1998 was for Rs. 1,35,000. This showed that the work was completed in the month of April, 1998 and addition in this respect was not called for. Similar arguments were advanced in respect of receipt of Rs. 2,70,000 on 16th May, 1998. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rogress completed upto 31st March, 1998 was not at all shown on the credit side of the trading/P L a/c. Since the assessee was following mercantile system of accounting, the expenses incurred on completion of contract and corresponding receipts in respect of the same are required to be accounted for in the year when such work was completed. In the case of a civil contractor, the value of work-in-progress of ongoing contract is required to be shown on the credit side of the P L ale. As rightly observed by the learned CIT(A) there is definitely time gap between the completion of the contract, submission of the bill to the contractee Department, time taken for sanctioning the amount after inspection by the concerned authority. It is impossible to believe that bill is submitted on the same date on completion of the contract and the payment is also received on the same date, more so when the assessee has not produced any evidence either before the authorities below or even the Tribunal to indicate date on which the bill was submitted for which payment of Rs. 1,35,000 had been received on 24th April, 1998. Considering the fact that there was a time gap of only 3 weeks from the end of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow and drew our attention to para 6 on p. 7 of the impugned order, where the learned CIT(A) has given reasons for upholding the addition. 11. We have heard both the parties and carefully considered the rival submissions with reference to facts, evidence and material on record. There is no dispute about the fact that the assessee had not shown receipt of material of Rs. 34,104 in the books of account. It is also a fact that the assessee does not earn any income out of the material supplied by the contractee Department, as the quantum of receipt is not dependent on this fact. While the receipt would appear on the credit side, the utilization thereof would appear on the debit side. The learned CIT(A) has upheld the addition on the ground that assessee must have underutilized the material supplied by the Department. But there is no evidence in support of such finding of the CIT(A). If there is no utilization or underutilization, it is for the contractee Department to take suitable action for the same and not for the AO. Taking these facts in view and in the absence of any material on record, we are of the considered opinion that the learned CIT(A) was not justified in sustaining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate and interest shown in the return of income. If the assessee was accounting for interest on accrual basis, there was no difficulty in reconciling the figure about the interest shown in the respective returns and interest shown in the TDS certificate. Thus, apparently no relief is called for. However, in order to be fair with the assessee, we set aside the order of the CIT(A) and restore the issue to the file of the AO with a direction to allow a relief only if the assessee is able to reconcile the difference between the income shown in the returns on accrual basis and interest shown in TDS certificate and also if the contention of the assessee is found to be correct. We order accordingly. This ground of appeal is treated as allowed for statistical purposes. 17. The last issue raised in this appeal relates to sustaining of an addition of Rs. 4,688 being interest on refund received from the IT Department. The facts of the case are that the AO observed that the assessee was issued refund of interest on Rs. 4,688 on the last date of the accounting year, i.e., 31st March, 1998 and therefore the same should have been included in the income of the assessee. Accordingly, the AO made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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