Maheswar Sahoo, v. ITO, Paradeep

ITA 358/CTK/2011 | 2005-2006
Pronouncement Date: 23-09-2011

Appeal Details

RSA Number 35822114 RSA 2011
Assessee PAN AXCPS6536N
Bench Cuttack
Appeal Number ITA 358/CTK/2011
Duration Of Justice 2 month(s) 1 day(s)
Appellant Maheswar Sahoo,
Respondent ITO, Paradeep
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 23-09-2011
Assessment Year 2005-2006
Appeal Filed On 22-07-2011
Judgment Text
IN THE INC O ME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE : SHRI K.K.GUPTA AM AND SHRI K.S.S.PRASAD RAO JM ITA NO. 358/CTK/2011 (ASSESSMENT YEAR 2005 - 06) SRI MAHESWAR SAHOO AT/P.O. KALASPUR VIA: BHUINPUR DIST. KENDRAPARA 754 239 PAN: A XCPS 6536 N VERSUS INCOME - TAX OFFICER WARD 2 PARADEEP. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.K.JENA AR FOR THE RESPONDENT SHRI S.C.MOHANTY DR DATE OF HEARING : 16.09.2011 DATE OF PRONOUNCEMENT : 23.09.2011 ORDER S HRI K.K.GUPTA AM : THIS APPEAL BY THE ASSESSEE IS ON THE SOLITARY ISSU E WITH RESPECT TO THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) UPHOLDING THE ADDITION SO CONSIDERED BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTIONS 147/143(3) OF THE INCO ME - TAX ACT 1961. 2. THE BRIEF FACTS ARE THAT THE ASSESSEE A CONTRACTOR EXECUTED A CONTRACT UNDER EXECUTIVE ENGINEER AUL EMBANKMENT DIVISION AUL DIST - KENDRAPARA (PRINCIPAL) AND DISCLOSED INCOME FROM SAID C ONTRACT DURING THE YEAR UNDER CONSIDERATION. T HE ASSESSEE GOT ITS ACCOUNT AUDITED VOLUNTARILY BY A CHARTERED A CCOUNTANT EVEN THOUGH ITS TURNOVER WAS BELOW THE LIMIT ON WHICH COMPULSORY AUDIT IS REQUIRED U/S 44AB OF THE ACT. THE RETURN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS PROCESSED U/S 143(1) ON 27.01 .2006 WHEREIN THE RETURN SO FILED WAS ACCEPTED BY THE ASSESSING OFFICER . THE REAFTER THE AS SESSMENT WAS REOPENED UNDER SECTION 147 ON MERE CONFUSION THAT AS THE ASSESSEE HA D CLAIMED RECOVERY BY THE PRINCIPAL AMOUNTING TO 1 71 400 AND DEDUCTED THE SAME FROM THE GROSS BILL BUT THE TDS CERTIFICATE DID NOT BE AR ANY DETAILS FOR WHICH THERE WAS AN UNDER - ASSESSMENT IN THE CASE. BUT THE BILL STATEMENT SHOWED THAT THE SAID DEDUCTION WAS MADE BY THE PRINCIPAL TOWARDS ROYALTY TO T HE GOVERNMENT FOR ITA NO.358/CTK/2011 2 PROCUREMENT OF SANDS METALS ETC . USED IN THE CONTRACT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 147 OF THE ACT AND THE ENTIRE AMOUNT OF ROYALTY AND RECOVERY HAS BEEN ADDED AS BOGUS EXPENDITUR E. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHO CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY DISMISSING THE ASSESSEES APPEAL IN LIMINE AS IT WAS BELATEDLY FILED BY 43 DAYS. 3. THE LEARNED AR OF THE ASSESSEE FIRSTLY CONTENDED BEFORE US THAT THE DELAY IN FILIN G BELATED APPEAL BEFORE THE LEARNED CIT(A) WAS DULY EXPLAINED AND CONSIDERING THE SAME THE LEARNED CIT(A) SHOULD HAVE CONDONED THE DELAY AND DISPOSED OF THE APPEAL ON MERITS. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE IMPUGNED ORDER OF THE LEARNED C IT(A). 4. HAVING HEARD BOTH THE PARTIES AND PERUSING THE IMPUGNED ORDER OF THE LEARNED CIT(A) IT IS SEEN THAT THE ASSESSEE EXPLAINED THE BELATED FILING OF THE APPEAL WAS DUE TO SUDDEN ILLNESS OF THE ASSESSEE AND WAS UNDER TREATMENT AND MEDICAL SUPERVISION FROM 20.1.2010 TO 12.03.2010 DULY SUPPORTED BY MEDICAL CERTIFICATE. THE LEARNED CIT(A) HELD THE ABOVE EXPLANATION AS NOT SUFFICIENT CAUSE FOR SUCH A LONG DELAY OF FORTY THREE DAYS IN FILING THE APPEAL. BUT ON THE FACE OF MEDICAL CERTIFICATE WHICH WAS NOT DISPUTED BY THE LEARNED CIT(A) THE EXPLANATION OFFERED BY THE ASSESSEE SEEMS TO US TO BE SUFFICIENT TO CONDONE THE DELAY. IN SUCH VIEW OF THE MATTER WE AGREE WITH THE SUBMISSION OF THE LEARNED AR OF THE ASSESSEE THAT THE LEARNED CIT(A) SHOULD HAVE CONDON ED THE DELAY AND DISPOSED OF THE APPEAL ON MERITS. 5. ON MERITS OF THE CASE THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUND FOR INITIATING REASSESSMENT PROCEEDINGS IN ITSELF WAS BAD IN LAW INSOFAR AS THE CONFIRMATION NOT HAVING BEEN RECEIVE D FROM THE EXECUTIVE ENGINEER AUL EMBANKMENT DIVISION KENDRAPARA WAS SELF - SUFFICIENT FOR THE ASSESSING OFFICER TO HOLD THAT THE AMOUNT OF RECOVERY OF 1 71 400 WHICH ITA NO.358/CTK/2011 3 ALONE HAS BEEN ADDED IN THE HANDS OF THE ASSESSEE AS INCOME WAS NOT A TRANSACTION WHICH THE ASSESSING OFFICER HELD AS THE ASSESSEES MOTIVE FOR GETTING THE REFUND BY INFLATING THE DEBIT SIDE OF THE PROFIT & LOSS ACCOUNT. FOR THIS PURPOSE H E SUBMITTED THAT THE ASSESSEE HAD RENDERED THE GROSS RECEIPTS AMOUNTING TO 28 95 933 WHICH CERTIFICATE INCLUDED THE RECOVERY OF 1 71 400 WAS ON ACCOUNT OF ROYALTY WHICH THE ASSESSEE OUGHT TO HAVE PAID HAVING EXTRACTED SAND FROM THE RIVER BED AS PER THE POLICY OF THE GOVERNMENT. IN OTHER WORDS THIS EXPENDITURE RE COVERED BY THE EXECUTIVE ENGINEER WAS NEVER INCURRED BY THE ASSESSEE WHEN THE GROSS RECEIPTS AS PAID FOR BY THE EXECUTIVE ENGINEER HAD THE ACTUAL EXPENSES INCLUDED THEREIN. THE CHARTERED ACCOUNTA NT OF THE ASSESSEE THEREFORE RIGHTLY DEBITED THE P & L ACCOUNT BY THE SUM OF 1 71 400 WHICH IS THE COST OF SAND RECOVERED BY THE DEPARTMENT AS THE COST OF THE CONTRACT AGAINST WHICH TAX AT SOURCE HA D BEEN DEDUCTED BY THE DEPARTMENT . IT WAS NEVER THE CASE OF THE ASSESSEE RENDERING THE SAME AS INCOME WHEN THE ASSESSING OFFICER CHOSE TO OBTAIN INFORMATION FROM EXECUTIVE ENGINEER AUL KENDRAPADA WHO HAD NOT GIVEN STATEMENT AGAINST THE ASSESSEE TO THIS EFFECT. AN OBVIOUS EXPENDITURE WHICH HAS BEEN GIVEN A VALUE BY THE GOVERNMENT CANNOT BE HELD AGAINST THE ASSESSEE AS A FRAUDULENT CLAI M . THE ASSESSEE HAD RIGHTLY DECLARED THE INCOME ON THE BASIS OF THE GROSS RECEIPTS AS A CONTRACTOR FOR THE GOVERNMENT WHO CHOSE TO GIVE A VALUE TO THE SAND REMOVED FOR THE UTILIZATION THEREOF IN THE VERY GOVERNMENT CONTRACT THEREFORE NULLIFIES THE CLAIM AS EXPENDITURE. THE ASSESSEE HAS SHOWN MORE PROFIT FROM THE SAME CONTRACT THEREFORE CANNOT BE HELD LIABLE TO BE TAXED AGAIN ON THE MATERIAL SUPPLIED BY THE DEPARTMENT FOR WHICH THE BILL HAD BEEN RAISED AND RECOVERED. 6. THE LEARNED DR SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ITA NO.358/CTK/2011 4 AVAILABLE ON RECORD. ON OUR CAREFUL CONSIDERATION OF THE FACTS WE ARE INCLINED TO HOLD THAT THE CLAIM OF ROYALTY RECOVERED BY THE GOVERNMENT AS A STATUTORY SUPPLY OF MATERIAL FOR THE SAID CONTRACT AS HAS BEEN INSCRIBED BY THE EXECUTIVE ENGINEER ITSELF COULD NEVER BE FURTHER PUT FORTH BEFORE THE ASSESSEE WHO HAD INCORPORATED THE RECOVERY IN ITS BOOKS OF ACCOUNT OVER AND ABOVE WHAT THE BILLS HAD BEEN RAISED FOR THE SETTL EMENT OF THE CONTRACT. WE FIND THAT THE RECOVERY MADE BY THE EXECUTIVE ENGINEER ON ACCOUNT OF ROYALTY FOR REMOVAL OF SAND AS PER THE PRACTICE OF THE GOVERNMENT DEPARTMENT TO DEDUCT THE SAME THEREFORE COULD NOT BE HELD AGAINST THE ASSESSEE UNDER THE PROVISI ONS OF SECTION 148 WHEN THE ASSESSEE HAD SHOWN HIGHER PROFITS ON THE EXECUTION OF THE SAME. THE DEBIT TO THE P & L ACCOUNT MADE AFTER HAVING RECEIVED THE PAYMENT AGAINST THE BILLS RAISED IT WAS THE DEPARTMENT WHO CHOSE TO RECOVER THE SAME AT 1 71 400 FROM THE ASSESSEE AS THE COST OF SAND TO WHICH THE ASSESSEE HAD NO FURTHER DISPUTE. THIS EXPENDITURE THEREFORE COULD NOT BE DISALLOW ED TO BE TAXED AS INCOME IN THE HANDS OF THE ASSESSEE. AS NOTICED EARLIER SINCE THE LEARNED CIT(A) HAS NOT CONSIDERED THE ISSUE ON MERITS BY NOT ADMITTING THE APPEAL ON THE GROUND OF BELATED FILING OF APPEAL BY 43 DAYS WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF 1 71 400. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 23 RD SEPTEMBER 2011 H.K.PADHEE SENIOR PRIVATE SECRETARY. ITA NO.358/CTK/2011 5 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SRI MAHESWAR SAHOO AT/P.O. KALASPUR VIA: BHUINPUR DIST. KENDRAPARA 754 239. 2. THE RESPONDENT: INCOME - TAX OFFICER WARD 2 PARADEEP. 3. THE CIT 4. THE CIT(A) 5. THE DR CUTTA CK 6. GUARD FILE (IN DUPLICATE) TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY.