2012 (10) TMI 678

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....by the Assessing Officer on account of mobilization advance. 3. Assessee company in this case is engaged in the business of manufacturing, designing and fabrication of aluminum and architectural products. In this case it was noted that the assessee has shown Rs. 3,87,74,848/- as mobilization advance under the head 'current liabilities'. The assessee was asked to provide details of the said advance. In response, the assessee stated that whenever it obtains a new project, it receives 20% mobilization advance from the customer for procuring the material. After the execution of the work, it raises the bill for the work done which is certified by the client. Out of the certified amount, the client deducts portion of mobilization advance apart....

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....ccrued income which was unacceptable to the Assessing Officer. It was further noted that the assessee had not submitted copies of agreement with the parties. Accordingly, the Assessing Officer added Rs. 38774848/- to the assessee's income. 4. Before the Ld. Commissioner of Income Tax (A) assessee made the following submissions:- "It was submitted that the assessee was a private limited company engaged in the business of manufacturing of aluminum panels and other related products. The manufacturing was carried out as per the architectural designs and specification supplied by the customers which varies from customer to customer. The assessee company mostly insists and receives about 10% to 30% mobilization advance from the customers to....

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....ion and also the income in subsequent years under the mercantile system of accounting." 4.1 Considering the above, Ld. Commissioner of Income Tax (A) observed that there was no doubt that the assessee has followed a system of accounting which has been accepted in the earlier years by the Department. Assessee had also shown work-in-progress during the year and observed that this was a consistent method of accounting being followed by the assessee and accepted by the Revenue. In such a scenario, Ld. Commissioner of Income Tax (A) held that the assessee's system of accounting cannot be questioned. He referred to the case laws including that of Hon'ble Apex Court in the case of Radhasoami Satsang vs. C.I.T. [1992] 193 ITR 321 (SC). Consideri....