TMI Blog2014 (8) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... nst Revenue. Suppression of sales – Amount credited in next year - Taxability on the basis of TDS u/s 198 – Held that:- Accounting Standard-9 (AS-9) envisages that the revenue from sale/service should be recognized as per the prescribed manner - the advance received by the assessee cannot be treated income and he had correctly shown the balance amount of ₹ 1.14 Crores for the AY-2010-11 - deduction of tax for the payment is one of the deciding facts for recognize the revenue of a particular year - But TDS in itself does not mean that the whole amount mentioned in it should be taxed in a particular year deduction of tax and completion of assessment are two different things while finalizing the tax liability of the assessee and AO is required to take all the facts and circumstances of the case not only the TDS certificate – the order of the FAA with regard to the TDS does not suffer from legal infirmity – relying upon Income-tax Officer, Ward-4(3), Ahmedabad Versus Hans Road Carriers (P.) Ltd [2010 (8) TMI 756 - ITAT AHMEDABAD] - the FAA had directed the AO to include ₹ 3.21 Lakhs, being TDS on the advance of ₹ 1.41 Crores, to be included as a part of the turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law and in facts in alleging that respondent's purchases are nongenuine without bringing on record any independent and reliable evidences. d. The Ld. AO has erred in law and in facts in alleging that respondent has received back cash from the suppliers purely on the basis of surmises and conjectures; without adducing any evidence on record in support of the same. e. The Ld. AO has also erred in alleging the respondent's purchases are non- genuine purchases and disallowing the same as expenditure, which infact is as held by the Ld. CIT(A). 2. ADDITION OF ₹ 1, 53, 22, 875/- ON ACCOUNT OF SUPPRESSION OF SALES: - a. The Ld. AO has erred in law and in facts while adding as suppression of sales, an amount of Rs. 1, 53, 22, 8751- received as advance (on which TDS was deducted). The Ld. AD has failed to appreciate that the amount received was in the nature of mobilization advance, as per terms of the contract for smooth running of work and was not a part of the Contract value. The advance received was a pure liability in nature (as evident form balance sheet) and recoverable proportionately against future running bills and accordingly, was correctly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . . . . we tried to communicate them but there is no response at all from parties. Further our person visited at parties' places as per address on our record, but parties are not available on respective places. Please find enclosed herewith letters from our banker stating the payment details to respective parties in subsequent year . . . The sample bills submitted contained TIN numbers of the vendors. The same were verified in the Maharashtra sales tax department official website www. mahavat. gov. in. The website had specifically put up the name of NBE with TIN number as 'Hawala Dealer' who issued bill without delivery of goods. As regards DKE, the website search did not yield any results for the TIN numbers shown in the bills. The AO concluded that the TIN number shown in DKE bill itself was bogus. After considering the submissions of the assessee, the AO held that same was not acceptable , that merely payment to parties through banking channel did not prove the genuineness of purchase or genuineness of expenses made by the assessee. He made an addition of ₹ 13. 69 lakhs (Rs. 5. 05 lakhs +Rs. 8. 65 lakhs)to the total income of the assessee. 2. 2. Aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. 2. 4. We have heard the rival submissions and perused the material before us. We find that AO had made the addition as one of the supplier was declared a hawala dealer by the VAT Department. We agree that it was a good starting point for making further investigation and take it to logical end. But, he left the job at initial point itself. Suspicion of highest degree cannot take place of evidence. He could have called for the details of the bank accounts of the suppliers to find out as whether there was any immediate cash withdrawal from their account. We find that no such exercise was done. Transportation of good to the site is one of the deciding factor to be considered for resolving the issue. The FAA has given a finding of fact that part of the goods received by the assessee was forming part of closing stock. As far as the case of Western Extrusion Industries. (supra)is concerned, we find that in that matter cash was immediately withdrawn by the supplier and there was no evidence of movement of goods. But, in the case before us, there is nothing, in the order of the AO, about the cash traial. Secondly, proof of movement of goods is not in doubt. Thererfore, consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received, that as per Section 198 of the Act all sums deducted would be income of an assessee for the purpose of computing his income. Finally, he added ₹ 1. 53Crores, received form JISL to the total income of the assessee. 3. 1. Aggrieved by the order of the AO assessee filed an appeal before the FAA. After considering the contentions of the assessee and the assessment order, he held that assessee had received work order on 27. 12. 2008, that he had started the work only thereafter, that he had already raised bills aggregating to ₹ 88. 30 lakhs during the 3 months ended on 31. 03. 2009, that out the said amount ₹ 17. 6 lakhs, being 20% of the billed amount was adjusted out of the total advance of ₹ 1. 59 crores, that accordingly, he had shown the balance advance of ₹ 1. 41 crores as liability in the balance-sheet as on 31. 03. 2009, that from the statement reconciliation of billing and advances submitted by him showed that balance advance of Rs. . 1, 41, 70, 000/- was offered as part of sales on the following assessment year on completion of the contract, that there was no work-inprogress on 31. 03. 2009, that the unadjusted advance of Rs. . 1. 41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was adjusted out of the total advance received by him, that balance advance of ₹ 1. 41 Crores (1. 59 Crores 17. 66 Lakhs) was shown as liability in the balance sheet for the year under appeal, that in the reconciliation of billing and advance statement, the assessee had offered advance of Rs. . 1. 41 Crores as a part of sale for the AY-2010- 11, that the contract was completed in the succeeding year. Accounting Standard-9 (AS-9) envisages that the revenue from sale/service should be recognized as to the performance set out in paragraph no. 11 or 12 are satisfied. In our opinion, the advance received by the assessee during the year cannot be treated income and hence he had correctly shown the balance amount of ₹ 1. 14 Crores for the AY-2010-11. It is a fact that deduction of tax for the payment is one of the deciding facts for recognize the revenue of a particular year. But TDS in itself does not mean that the whole amount mentioned in it should be taxed in a particular year deduction of tax and completion of assessment are two different things while finalizing the tax liability of the assessee and AO is required to take all the facts and circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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