TMI Blog2022 (4) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... invoices shown by the assessee and the corresponding entries in the company s ledger. We find that all those evidences were placed before the Assessing Officer and before the ld. CIT(A). Before, Ld. CIT(A) the assessee has shown total 151 invoices, which were raised by the assessee company and the said company has paid ₹ 7,85,15,834/-. The assessee has shown the same at ₹ 7,84,40,700/- and the difference is not much. CIT(A) restricted the addition to the extent of profit on such differences. The profit on such differences can be made @ 10% which will be ₹ 7,513/- and accordingly, the addition was restricted to that extent. In response to notice U/s 133(6) of the Act alongwith reply of M/s Aarti Industries, We find the in Form 26AS were furnished, the Assessing officer ignored all those details. He also ignored reconciliation and written submission filed by the assessee. The direction of Addl.CIT under section of the Act were also overlooked and given two folds justification in support of his calculation of turnover of assessee. First relates to service tax return and other is that in earlier year i.e. A.Y. 2014-15, the addition on account of less turnover shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Form 26AS does not contain details of payment on which tax has not been deducted/not deposited into Govt. A/c. and the A.O. could not ignore the figures of turnover reported in Service Tax Return filed by the assessee and accepted by the Service Tax Authorities. 3. On the facts and circumstances of the circumstances of the case and in law, the Ld. CIT(A) erred in deleting addition of ₹ 1,68,42,822/- out of total addition of ₹ 1,68,49,975/ without appreciating that the A.O. after considering the assesee's submission and reply of M/s. Aarti Industries Ltd. in response to notice u/s. 133(6) of the Act had recorded his finding on the reconciliation statement filed by the assessee during the course of assessment proceedings in the body of assessment order. The assessee had given contradictory submissions during the course of assessment proceedings. 4. The appellant craves to add to, amend or alter the above ground as may be deemed necessary. 2. Brief facts of the present case are that the assessee is individual and engaged in the business of industrial construction and undertook civil construction works for M/s Aarti Industries Ltd. for the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led on or before 21st October and 25th April for each of half of the year respectively and that the many invoices were certified by M/s Aarti Industries after filing service tax return. Uncertified invoices were reported in service tax return and only 90 days time is provided in revising service tax return. The Assessing officer in order to verify the genuineness of transactions, issued notice under section 133(6) of the Income tax Act, 1961 (in short, the Act) to M/s Aarti Industries on 11/07/2017. Notice was replied by M/s Aarti Industries wherein they stated that as per their policy, they accept only those bills which are certified by their engineers and hence no question of billing for uncertified amount arise. The Assessing officer noted that the first bill was issued by the assessee on 21/04/2014 which was certified by M/s Aarti Industries on 08/05/2014 and the last bill invoice for half yearly filing of service tax return was raised by assessee on 17/09/2014 of ₹ 6,38,055/- and the date of certification is unclear. Further, bill raised for the first half of the year i.e. April to September on 26/08/2014 was certified by M/s Aarti Industries on 13/09/2014 which is befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first half was not the actual one, which is proved by the invoices issued during the first six months of the year. The difference of turnover was derived by grossing up the turnover mentioned in service tax return of first half by 50% and considered fully as works contract service liable to partial reverse charge. The submission of the assessee were brushed aside by the Assessing officer and preferred calculating the turnover on the basis of service tax paid and ignoring by Form - 26AS which is an authentic document to substantiate the actual turnover of the assessee. The assessee sought direction under section 144A of the Act from the Additional CIT, who vide his direction dated 04/12/2017, clearly directed that instead of applying statistical ratios emphasis should be given on invoices shown by the assessee and the corresponding entries in the company s ledger. All those evidences were placed before the Assessing Officer and before him (ld. CIT(A)]. The Assessing officer in spite of clear direction, completed the assessment by applying statistical grossed upon ratio and made huge addition in the hands of assessee. The assessee has shown total 151 invoices were raised by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e difference of 1.68 crore. Before, assessing officer could not explained the basis of difference and thus the assessing officer made addition of such difference. The Ld. CIT(A) accepted the submissions of the assessee and granted relief to the assessee. The ld. Sr. DR has supported the order of Assessing Officer and would submits that the order passed by the assessing officer may be restored by reversing the order of Ld. CIT(A). 6. On the other hand, the ld AR of the assessee has submitted that the ld. CIT(A) granted relief to the assessee by proper appreciation of facts of the case. The Ld. AR for the assessee submits that the reason for difference was that the assessee raised invoices against the contractee company Aarti Industries and after verification by their engineer, the cost of certain items were reduced to the extent of ₹ 1.15 crore and certain invoices of ₹ 53.14 lacs were withdrawn by the assessee but the assessee paid service tax thereon including on the invoices which was reduced to the extent of ₹ 1.15 crore. It was further submitted that the difference in service tax turnover and income tax turnover is due to frequent correction in invoices by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 21/04/2014 which was certified by M/s Aarti Industries on 08/05/2014 and the last bill invoice for half yearly filing of service tax return was raised by assessee on 17/09/2014 of ₹ 6,38,055/- and the date of certification is unclear. Further, bill raised for the first half of the year i.e. April to September on 26/08/2014 was certified by M/s Aarti Industries on 13/09/2014 which is before the last date of filing of service tax return. 8. We find that the ld. CIT(A) while restricting the addition has reasonably restricted the addition to the extent of profit element if any in the difference of receipt/turnover reported in service tax return as well as income tax return. The ld. CIT(A) held that, the assessee stated during the assessment, the assessee sought direction U/s 144A of the Act and the direction was given by the Range head/Addl.CIT, Range-1, Bharuch on 04/12/2017. In the direction, the range head clearly stated that instead of applying statistical ratios emphasis should be given on invoices issued by the assessee and the corresponding entries in company s ledger. The Assessing officer inspite of clear direction, completed the assessment by applying statistical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Act were also overlooked and given two folds justification in support of his calculation of turnover of assessee. First relates to service tax return and other is that in earlier year i.e. A.Y. 2014-15, the addition of ₹ 2,57,974/- on account of less turnover shown in income tax return as compared to service tax return were made and no objection was raised by the assessee on such proposed addition and no appeal was filed by the assessee. The said justification of the assessee was also not accepted by the ld. CIT(A). The ld. CIT(A) held that merely the assessee accepted the addition in earlier year to save the cost of litigation that does not give liberty to the Assessing Officer to make huge addition without pointing out specific defects in the books of assessee or reply received from contractee party. All the payments were received from M/s Aarti Industries Ltd. either by way of account payee cheques or RTGS only. There is no occasion for earing any out of book receipts from M/s Aarti Industries. And deleted the substantial part of the addition. We find that the order of Ld. CIT(A) is also based on factual analysis of Fo-26AS as well. Therefore, we do not find any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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