TMI Blog2012 (12) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, cannot be disallowed - I.T.A.No. 445/CTK/2012 - - - Dated:- 21-12-2012 - Shri K.K.Gupta, Accountant Member And Shri K.S.S.Prasad Rao, Judicial Member For the Appellant : S.Debasis Nayak/K.K.Bal, ARs For the Respondent : N.K.Neb, DR ORDER Shri K.K.Gupta, Accountant Member . This appeal by the assessee raised the following grounds. 1. For that the orders of the forums below are arbitrary, illegal and unjust in facts and circumstances of the case and liable to be quashed. 2. For that the Ld. Assessing authority arbitrarily Proceeded for assessment without supplying the reasons recorded u/s 148(2) of the Income tax Act prior to issuance of notice u/s 148(1) Income tax Act, hence the reassessment proceeding is void and liable to be quashed. 3. For that the initiated the proceeding u/s 147 without verifying the third party evidence is liable to be quashed. 4. For that Ld. A.O has proceeded to reassess without granting sufficient opportunity for filing of objection, which is a clear case of violation of principles of natural justice, therefore the assessment is liable to be quashed. 5. For that the Assessing officer has i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income of the assessee. On appeal, the learned CIT(A) confirmed the same. 5. The learned Counsel of the assessee submitted that the assessee s business is such that he is forced to maintain his accounts on actual receipt basis. Here the expenditure is booked after income is received. Therefore while preparing the profit and loss account he booked only the expenses against the income received during that financial year. During the financial year 2007-08 relevant to the assessment year 2008-09 his actual contract receipts was ₹ 1,59,00,468, and he has shown the same in his profit and loss account and booked expenses incurred to earn such income accordingly. It is a fact that the assessee has booked all the expenses against the income received during that year. He has not booked the expenses against the entire contract receipts shown in the 26AS statement. The entire contract receipts shown in the 26AS statement has not been received during that financial year. Out of the total contract receipt of ₹2,18,92,896 shown in the 26AS statement only ₹1,59,00,486 has been received during the financial year 2007-08, a sum of ₹ 34,42,935 has been received during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit and loss account for the financial year 2007- 08 for unexplained reason. The learned Counsel of the assessee submitted that it is the fact that the assessee has booked all the expenses against the income received during that year. He has not booked the expenses against the entire contract receipts shown in the 26AS statement. The entire contract receipts shown in the 26AS statement has not been received during that financial year. Out of the total contract receipt of ₹2,18,92,896 shown in the 26AS statement only ₹1,59,00,486 has been received during the financial year 2007-08, a sum of ₹34,42,935 has been received during the financial year 2008-09 and some of the amount shown is still not received. Learned CIT(A) s finding that the assessee has claimed undisclosed expenditure is not correct. In course of assessment the assessee claimed expenses to be incurred against income to the received. Therefore question of undisclosed source of income or claim of undisclosed expenditure does not arise. Both the Assessing Officer as well as the learned CIT (Appeals) have passed the orders in a confused manner without appreciating the bonafide of the assessee. Had it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee s income account which has not been able to substantiate. 7. We have heard the rival submissions on this issue. We find as regards the fact of bringing to tax a sum of ₹59,91,720 relying on the statement 26AS as uploaded by the tax deductors, we do find merit in the contention of the learned Counsel of the assessee that the accounting of the income was on the basis of receipt of income in the bank accounts of the assessee which have been fully disclosed to the Department as per the requisition of the Assessing Officer. The assessee is a retired Air-force Officer and was conversant with employing personnel for security services rendered by him to reputed public sector undertakings which names are also disclosed by the 26AS statement. In other words, not following mercantile system of accounting was a misnomer insofar as the assessee has recorded the expenses incurred against the receipts the major expenditure being salary and employees PF etc., against the income received only. Therefore, it was nobody s case that the tax deduction was to be explained according to the income generated by the assessee not disclosed to the Department on whatever method of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the tax deductors not billed to the tax deductors cannot form part of the income of the assessee being a statutory liability could at best be disallowed u/s.43B has not been established by the Assessing Officer which issue leans in favour of the assessee at the time of verification of reconciliation by the Assessing Officer. In view of the above, we set aside the order of the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer for consideration afresh in the light of what has been stated above needless to say, after affording reasonable opportunity to the assessee of being heard. 8. As regards Ground No.7, on verification of the details of EPF ESI along with deposit challans filed by the assessee, the Assessing Officer found that the assessee had collected an amount of ₹6,65,890 towards EPF and ₹90,300 towards ESI but the same have not been deposited in the respective funds within the due date specified in the said Act. Therefore, he treated the these two amounts totaling ₹7,56,190 as income u/s.2(24)(x) and added to the total income of the assessee. 9. Before the learned CIT(A) the assessee contended that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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