Amresh Kumar V. Principal Commissioner of Income Tax, Ranchi and Income Tax Officer, Ward 3(3), Daltonganj and Income Tax Officer, Technical, Ranchi and HES Infra Private Limited, Andhra Pradesh

WPC/5317/2016

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The case revolves around a scrutiny assessment for the assessment year 2011-12, where Amresh Kumar, the petitioner, contested the addition of income and initiation of penalty proceedings by the Income Tax Department. The dispute centered on alleged payments from three companies, which the petitioner denied receiving, despite confirmations and TDS deductions reported in the 26AS statement. The Commissioner of Income Tax dismissed the petitioner's revision, leading to this writ petition under Article 226 of the Constitution. The High Court's decision emphasized the lack of proper maintenance and audit of the petitioner's books, the absence of rebuttal to the evidence provided, and the procedural correctness of the IT Commissioner's actions.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 796630 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 25-02-2021
• Assessment Year: misc
• Other Referred Cases: Paradigm Geophysical Pty. Ltd. Vs. Commissioner of Income Tax (International Taxation)-3, New Delhi, M/s Kishinchand Chellaram Vs. Commissioner of Income Tax, Bombay City II, Bombay, Sajan Kumar Bhawsinka Vs. Commissioner of Income Tax, Orissa & Anr.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RAHUL LAMBA
• Assessee Lawyers: INDRAJIT SINHA; KUMAR VAIBHAV
• Keywords: 26AS statement; Audit of books; Bogus payment; Income disclosure; Revision; Scrutiny assessment; TDS
• Section: 142(1); 143(2); 271(1)(c); 133(6); 145; 264; 271B; 203AA

Judgement Text

" IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(T) No. 5317 of 2016 ..... Amresh Kumar --- --- Petitioner Versus 1. Principal Commissioner of Income Tax, Ranchi. 2. Income Tax Officer, Ward 3(3), Daltonganj. 3. Income Tax Officer, Technical, Ranchi. 4. HES Infra Private Limited, Andhra Pradesh. -- --- Respondents --- CORAM: The Hon’ble Mr. Justice Aparesh Kumar Singh The Hon’ble Mrs. Justice Anubha Rawat Choudhary Through Video Conferencing --- For the Petitioner : Mr. Indrajit Sinha, Adv. Mr. Kumar Vaibhav, Adv. For the Respondents : Mr. Rahul Lamba, Adv. --- 05/25.02.2021 Heard learned counsel for the parties. 2. The order passed in revision under Section 264 of the Income Tax Act, 1961 dated 11th March 2016 (Annexure-5) by which the review petition was dismissed, is under challenge. The matter relates to scrutiny assessment for the assessment year 2011-12. The petitioner assessee had filed a return for AY 2011-12 disclosing a total income of Rs.1,48,958/-. He disclosed his income from contract work and from other sources. His case was selected for scrutiny under CASS and notices were issued under Section 143(2) of the I.T. Act, 1961 (hereinafter to be referred to as the Act). Thereafter, notices were issued under Section 142(1) of the Act on 7th August 2013. The assesse had disclosed an income of Rs.2,48,958/- from gross receipt at Rs.31,11,976/- as 8% of the gross receipt of M/s Sobha Developers Ltd., Karnataka. The 26AS statement showed the assessee’s gross receipt at Rs.4,07,60,704/-. The 26AS statement revealed that the assessee had received Rs.3,03,760/- from TATA Projects Limited, Andhra Pradesh; Rs. 3,69,82,144/- from HES Infra Pvt. Ltd., Hyderabad and Rs.3,62,824/- from Consolidated Construction Consortium Limited, Chennai. Letters were issued under Section 133(6) of the Act to these three companies. Tata Projects Limited confirmed payment of Rs. 3,03,760/- to the petitioner for FY 2010-11, HES Infra Pvt. Ltd. also confirmed payment to the tune of Rs. 3,69,82,144/- and Consolidated Construction Consortium Limited also 2. confirmed gross payment of Rs. 3,62,824/- to the petitioner in FY 2010-11. Since all these three parties had confirmed payment to the petitioner and the books of account had not been maintained nor audited by the petitioner under Section 145 of the Act, the books of accounts were rejected and 8% of gross receipt of Rs.32,60,856/- was taken as net profit. Since the assessee had already disclosed profit of Rs.2,48,958/-, the balance of Rs.30,11,898/- was added back to his total income and penalty proceedings under Section 271B of the Act was directed to be initiated for failure to get books of accounts audited. He was also asked to furnish evidence in respect of deduction claimed under Chapter VI-A at Rs.1,00,000/-. Regarding deductions under Chapter VI-A on consideration of the evidence of Rs.98,480/- provided by the assessee, the balance of Rs.1520/- was disallowed and added back to his total income. Despite last opportunity granted to the petitioner, no compliance was made and therefore Rs.30,11,904/- was added back to his total income and penalty proceedings under Section 271(1)(c) and 271B of the Act were initiated. 3. Petitioner did not prefer any appeal but chose to move in revision before the Commissioner, IT. Before the Commissioner I.T. the assessee denied having received any amount from the above three parties. He also prayed that details of payment, mode of payment and date of payment may be called for from the above parties. According to the petitioner, no inquiry was conducted by the assessing officer regarding confirmation of payments and a huge demand of Rs.11,19,250/- was raised adding a profit @ 8% on gross receipts of Rs. 3,76,48,728.00. Petitioner contended that simple deduction of TDS would not prove the payment. The assessing officer submitted a report vide letter no.719 dated 30th December 2015 on being called for by the learned Commissioner, IT. Notice was also duly issued to the assessee on 18th January 2016 and he appeared through his authorized representative and filed a written statement along with copies of the relevant documents. Before the Commissioner during course of submissions the learned A.R. categorically submitted that the assessee categorically denied having received any such amount during the relevant accounting year from these three concerns. He reiterated his plea that the assessing officer did not make any inquiries to obtain the details of payments, mode of payments and date of payments from 3. these three companies. Regarding the alleged receipt of Rs. 3,69,82,144/- from M/s HES Infra Pvt. Ltd, Andhra Pradesh it was submitted that the assessee had neither executed any contract with the said company nor received a penny from it during the relevant financial year. The said company had declared bogus payment to the assesse by showing tax deduction against such payment and depositing it in the Government account. It was a fictitious payment sought to be legalized by deducting tax at source. According to the petitioner, he had also written letters to M/s HES Infra Pvt. Ltd. asking for the details of the so-called payments but no response was received. Therefore, such a claim ought to be subjected to thorough verification. 4. The Commissioner, IT in order to check the veracity of the assessee’s claim also issued letter dated 5th February 2016 on M/s HES Infra Pvt. Ltd. requiring it to submit the details and mode of payment of Rs.3,69,82,144/- to the assessee. However, the letter was not responded by the company. Learned CIT, however, took note of the fact that during course of assessment proceedings the A.O. had gathered information from 26AS statement pertaining to the assessee and these three companies namely TATA Projects Limited, Andhra Pradesh; HES Infra Pvt. Ltd., Hyderabad and Consolidated Construction Consortium Limited, Chennai had duly confirmed the payments and also submitted copies of TDS certificate in form-16A. 5. A perusal of the TDS showed that it was duly deposited in the Government account under the respective TAN. The learned CIT therefore arrived at an opinion that there was no apparent reason to disbelieve the payments made to the assessee by these three concerns. Further, the assesse had not rebutted these findings with the help of any contrary evidence in spite of letters dated 21.01.2014 and 11.02.2014 issued upon him. It was also taken note of that the assesse did not challenge the receipts from M/s TATA Projects Limited and Consolidated Construction Consortium Limited, but was only interested in denying the bigger amount allegedly received by him from HES Infra Pvt. Ltd. Learned CIT also observed that no protest was lodged by the assessee at the stage of the assessment proceedings in denying the addition of income of receipts as regards the other two firms. Based on those findings the review petition was dismissed. 6. The petitioner has approached this Court under Article 226 of 4. the Constitution of India being aggrieved. Learned counsel for the petitioner has inter alia made the following submissions :- (i) The revisional authority failed to exercise powers conferred under Section 264 of the Act by making necessary inquiries with the three firms in order to verify the details of payments, mode of payments and date of payments from these companies since the petitioner had completely denied receipt of such payment during the relevant financial year. (ii) Non-preferring of appeal by the assesse should not be treated as adverse against him as the revisional authority has all the jurisdiction and power to consider the plea raised by the petitioner after making due inquiries which he failed to do. In this regard, learned counsel for the petitioner has placed reliance on the judgment of Delhi High Court rendered in the case of Paradigm Geophysical Pty. Ltd. Vs. Commissioner of Income Tax (International Taxation)-3, New Delhi, reported in 2017 SCC Online Del 11814, para-19. (iii) On merits it is contended that deduction of tax at source by M/s HES Infra Pvt. Ltd. without making any payments to the petitioner amounts to bogus transaction being legalized. Petitioner assessee did not have any resource to check or verify such bogus payments. (iv) By placing the order of assessing officer it is submitted that no proper opportunity was granted to the petitioner during course of scrutiny assessment. (v) Reliance has also been placed upon the decision of the Apex Court rendered in the case of M/s Kishinchand Chellaram Vs. Commissioner of Income Tax, Bombay City II, Bombay reported in 1980 (Supp) SCC 660 para-6 in support of the plea that if a document i.e. the confirmation letter of the three concerns was relied upon by the AO and the Commissioner IT, petitioner ought to have been given opportunity to rebut the same. (vi) Learned counsel for the petitioner has submitted that the matter 5. may be remanded to the Commissioner IT to make verification after proper inquiry about the alleged payment said to have been paid by M/s HES Infra Pvt. Ltd., Hyderabad. In this regard, he has relied upon the decision of Apex Court rendered in the case of Sajan Kumar Bhawsinka Vs. Commissioner of Income Tax, Orissa & Anr. reported in (1999) 9 SCC 132. 7. Learned counsel for the petitioner has, however, not been able to explain as to why no books of account were maintained. He however submits that the books of account were not audited as the income disclosed by the assessee in his original return was less than the ceiling under which no audit of books of account is necessarily required. He has also not been able to show that petitioner had any point of time made any complaint regarding fictitious entries of TDS in the 26AS statement either at the time of filing of original return or during scrutiny assessment. 8. Learned counsel for the Revenue Mr. Rahul Lamba has, at the outset, submitted that denial of 26AS statement is unheard of by the assessee. The certificate in Form-16A may be doubted as it is issued by the deductor of TDS who may be a private party but 26AS statements are reflecting the deduction of tax at source as against the assesse maintained by the Income tax Department. Petitioner has at no point of time made any complaint about wrong entries in the 26AS statement though any assessee avails the claims of TDS while filing the IT Return. It is further stated that petitioner’s books of account were not properly maintained and rejected and therefore the assessing officer had treated profit @ 8% on the total gross receipts. Petitioner has cunningly not questioned the addition made upon confirmation of payment from two other concerns out of three, namely M/s Tata Projects Limited, Andhra Pradesh and Consolidated Construction Consortium Limited, Chennai. This again goes to show that the petitioner was not bonafide in disclosing the entire income at the time of original return and also on being added during scrutiny assessment while laying down a challenge before the revisional authority. Petitioner’s books of account were also not audited. It is submitted that the contention of the petitioner that no opportunity was given to the assessee to rebut the documents collected by the AO is also not correct as would reveal from a reading of the order of the assessing authority dated 7th 6. March 2014. The assessee in his wisdom chose to remain silent after issuance of the demand on 7th March 2014 and later on has preferred a revision petition. The revisional authority has taken into account the TDS certificates as also the 26AS statement and the confirmation of payments made by the three concerns while dealing with the contention of the petitioner that the petitioner had not received any such payment from these three concerns. In the absence of books of account and no complaint by the assessee regarding entries in the 26AS statement showing tax deducted at source against receipt of payment against these three concerns, the learned CIT had no reason to differ with the findings of the assessing officer. No contrary evidences were produced before him. Therefore, the scope of interference in the revisional order before this Court in writ jurisdiction being very limited, the writ petition is fit to be dismissed. 9. We have considered the submissions of learned counsel for the parties and taken note of the relevant materials on record. We have gone through the impugned order passed by the learned CIT in revision as well. We have also considered the decisions cited by learned counsel for the petitioner in support of the plea. In the present writ petition, the primary ground of challenge raised by the petitioner is in relation to lack of proper inquiry by the Commissioner, IT in respect of the payments allegedly made by the three concerns namely TATA Projects Limited, Andhra Pradesh; HES Infra Pvt. Ltd., Hyderabad and Consolidated Construction Consortium Limited, Chennai to the petitioner during financial year 2010-11. We find that the petitioner had failed to maintain any books of account. Petitioner’s books of account were neither audited. Petitioner did not make any disclosure of income from the other two concerns namely M/s TATA Projects Limited and Consolidated Construction Consortium Limited either at the time of filing of his original return, though he has accepted the findings of the assessing officer during scrutiny assessment regarding addition of income of receipts from these two concerns. Petitioner has also not made any complaint at any stage regarding any fictitious or wrong entries in the 26AS statement reflecting tax deduction at source against receipt of payments from these three concerns. It further appears that the assessing officer had undertaken inquiries from these three concerns who confirmed the payments made to the petitioner during the 7. financial year 2010-11. Since the petitioner’s books of account were not maintained or audited and the receipts were not only confirmed by the three concerns as above, but 26AS statement and Form-16A submitted by them revealed undisclosed income of Rs.30,11,898/-, after allowing certain deductions under Section VI-A of the Act, the total income of Rs.31,62,383/- was assessed under Section 143 of the Act. Petitioner in his wisdom chose not to prefer any appeal but approached the learned CIT in revision under Section 264 of the I.T. Act. The learned CIT also in order to test the veracity of the assessee’s claim called upon M/s HES Infra Pvt. Ltd. to submit the details and mode of payment reportedly made to the assessee vide letter dated 5th February 2016 which however did not evoke any response. However, learned CIT took note of the fact that these three companies had duly confirmed the payments and also submitted the copies of TDS certificates. The TDS certificates and the 26AS statements all taken together reveal that these three concerns had made payments to the petitioner during FY 2010-11 and moreover assesse did not produce any contrary evidence to that despite notice to him by the assessing officer through letter dated 21st January 2014 and 11th February 2014. It is also surprising that the petitioner chose not to question the receipt of payments from the other two concerns but was interested in denying the amount received from M/s HES Infra Pvt. Ltd. being a bigger amount. The conduct of the petitioner taken as a whole, therefore, does not appear to be clean and bonafide in disclosing proper income in his IT return. Further the contention of the petitioner relying upon the decision of the Apex Court in the case of M/s Kishinchand Chellaram (supra) that the letter of confirmation relied upon by the AO and the revisional authority were not furnished to him, does not appear to be correct as the AO had confronted the assessee with these findings through letters dated 21st January 2014 and 11th February 2014. Moreover, 26AS statements are maintained by the Department under Section 203AA of the Act and are not generated by the concerns from whom the petitioner has received the payments. As such, such arguments also do not cut ice. There is no quarrel about the scope of revisional jurisdiction of the CIT under Section 264 of the Act in support of which reliance has been placed by the petitioner upon the judgment of Delhi High Court in the case of Paradigm Geophysical Pty. Ltd. (supra). 10. On a consideration of the facts and circumstances discussed 8. above, we do not find any of the grounds made out for interference in the order of the learned CIT passed in revision. The instant petition being devoid of merit is dismissed. (Aparesh Kumar Singh, J.) (Anubha Rawat Choudhary, J.) Shamim/ "