Basu & Hajra Builders v. ACIT, Cir-50(1), Kolkata
[Citation -2019-LL-0830-14]

Citation 2019-LL-0830-14
Appellant Name Basu & Hajra Builders
Respondent Name ACIT, Cir-50(1), Kolkata
Court ITAT-Kolkata
Relevant Act Income-tax
Date of Order 30/08/2019
Assessment Year 2014-15
Judgment View Judgment
Keyword Tags reconciliation of turnover • service tax liability • method of accounting • nature of payment • cash basis • sale of flat • mismatch of turnover • prior period expenses
Bot Summary: The assessee s sole substantive grievance raised in the instant appeal challenges the correctness of both the lower authorities action adding difference figure of Rs.6,63,738/- in respect of turnover as per service tax return. There is no difference in turn over because the Service Tax paid instead of showing expenditure in P/L A/c has been reduced from income side. In assessment order A.O. has rejected the claim considering the same to be prior period expenditure. Prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of the financial statements of one or more prior periods. Voluntary compliance Encouragement Scheme was introduced by CBEC for FY -2013-14 to make a correct disclosure of Service Tax Liability for earlier period. However even assuming that recording of such Service Tax Liability was an omission in the earlier years, still since it is in the nature of statutory dues such expenditure is allowable on cash basis u/s 43B. Since the amount was paid during the FY 2013-14 even though it is related to earlier periods, the same is deductible u/s 43B. The A.O. has failed to note the nature of payment and has made a general and sweeping statement that prior period expense are not allowable. Only objection raised that the expense relate to prior period has got no foundation and is liable for jettisoning.


IN INCOME TAX APPELLATE TRIBUNAL C-SMC BENCH : KOLKATA [Before Hon'ble Shri S.S. Godara, JM ] I.T.A. No. 466/Kol/2019 Assessment Year : 2014-15 M/s. Basu & Hajra Builders V/s. ACIT, Cir-50(1), Kolkata PAN: AAHFB5060E (Appellant) (Respondent) For Appellant : Shri K.M. Roy, FCA, ld.AR For Respondent : Shri Sankar Halder, JCIT, ld. Sr.DR Date of Hearing : 14.08.2019 Date of Pronouncement : 30.08.2019 ORDER Shri S.S. Godara, JM: 1. This Assessee s appeal for assessment year 2014-15 arises against CIT(A), 15, Kolkata s order dated 11-01-2019 passed in case no. 220/CIT(A)-15/16-17/Cir- 50(1)/KOL involving proceedings u/s 143(3) of Income-tax Act, 1961 ( in short Act ). Heard both parties. Case file perused. 2. assessee s sole substantive grievance raised in instant appeal challenges correctness of both lower authorities action adding difference figure of Rs.6,63,738/- in respect of turnover as per service tax return. CIT(A) s detailed discussion affirming Assessing Officer s action reads as under:- 3.2 Ground of Appeal No. 2 contention of appellant is that in terms of V.C.E.S sum of Rs.6,63,738/- was paid. However while presenting financial statements said sum was reduced from turnover of sale of flat. difference 2 I.T.A. No. 466/Kol/2019 A.Y 2014-15 M/s. Basu & Hajra Builders arrived is artificial and A.O. has not analyzed facts properly. Kind attention is drawn to reconciliation of turnover enclosed herewith. More particularly, method of accounting followed for disclosure of turnover in financial statements may be kindly adverted to. There is no difference in turn over because Service Tax paid instead of showing expenditure in P/L A/c has been reduced from income side. Assessing Officer has superficially added same without delving into merits of case. In assessment order A.O. has rejected claim considering same to be prior period expenditure. In this connection it is pertinent to mention about definition of prior period expenditure as AS-5. "Prior period items are income or expenses which arise in current period as result of errors or omissions in preparation of financial statements of one or more prior periods. " Voluntary compliance Encouragement Scheme was introduced by CBEC for FY -2013-14 to make correct disclosure of Service Tax Liability for earlier period. However even assuming that recording of such Service Tax Liability was omission in earlier years, still since it is in nature of statutory dues such expenditure is allowable on cash basis u/s 43B. Since amount was paid during FY 2013-14 even though it is related to earlier periods, same is deductible u/s 43B. A.O. has failed to note nature of payment and has made general and sweeping statement that prior period expense are not allowable. He has not disputed nature of accounting or quantum of payment. Only objection raised that expense relate to prior period has got no foundation and is liable for jettisoning. contention of appellant has been considered. It is observed that appellant has not been able to reconcile difference in respect of Turn over as per Service Tax Return vis-a-vis income tax return. It is observed that total sales of appellant is Rs. 8,39,05,3171 whereas assessee has disclosed same at Rs. 8,45,69,055/ in Service Tax Return for F.Y.2013-14. Accordingly difference of Rs. 6,63,738/- being [Rs.8,45,69,055/. minus Rs. 8,39,05,3 I 7/-] added back to total income of assessee by A.O is confirmed and ground of appeal is dismissed. 3. It therefore emerges from perusal of CIT(A) s findings under challenge that instance of re-conciliation issue between assesee s turnover as per sales tax return 2 3 I.T.A. No. 466/Kol/2019 A.Y 2014-15 M/s. Basu & Hajra Builders and income-tax return. I therefore deem it appropriate to restore instant issue back to file of Assessing Officer for finalizing assessee s re-conciliation afresh as per law within three effective opportunities of hearing. Necessary computation to follow. 4. This Assessee s appeal is allowed for statistical purpose. Order pronounced in Court on 30-08-2019 Sd/- [ S.S.Godara ] Judicial Member Dated : 30 -08-2019 **PRADIP, Sr. PS Copy of order forwarded to: 1. Appellant/Assessee: M/s. Basu & Hajra Builders, K.C Paul Apartment (Near: Rajarhat P.S, Rajarhat,700135, W.B. 2. Respondent/Assessee: ACIT, Cir-50(1), Uttarapan Building, Manicktala Civic Centre, Kolkata-700 054., W.B. 3..C.I.T(A).- 4. C.I.T.- Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata. True copy By Order Assistant Registrar H.O.O/D.D.O Kolkata 3 Basu & Hajra Builders v. ACIT, Cir-50(1), Kolkata
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