DCIT, CIRCLE 4(2), NEW DELHI V. CONSULTING ENGINEERING SERVICES (INDIA) PRIVATE LIMITED, NEW DELHI

ITA 4091/DEL/2024

AI Insights

The case involves the Deputy Commissioner of Income Tax (DCIT) appealing against the Consulting Engineering Services (India) Pvt. Ltd. concerning various assessment orders for the Assessment Year 2009-10. The primary contention revolves around the legality and jurisdiction of the assessment orders passed under sections 143(3), 254, and 144B of the Income-tax Act, 1961. The appellant argued that the initial assessment order dated 29 June 2012 was illegal, without jurisdiction, and barred by time limitation. Subsequent orders were also challenged on similar grounds. The Tribunal noted procedural lapses and the non-production of crucial documents like the order under section 127 of the Act, leading to the restoration of the matter back to the CIT(A) for a comprehensive re-evaluation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470206 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR BHARATI
• Assessee Lawyers: ANANYA KAPOOR
• Keywords: Set aside; Opportunity of being heard; Business expenditure; Principle of natural justice; TDS; Assessment record; FORM 26AS
• Section: 143(3); 143(2); 250; 201; 13; 142(2A)

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No. 4091/Del/2024 (Assessment Year: 2009-10) DCIT, Circle-4(2), New Delhi Vs. Consulting Engineering Services (India) Pvt. Ltd, 2nd Floor, Plot No. 184, Platinum Tower, Udyog Vihar, Phase-1, Gurgaon (Appellant) (Respondent) PAN: AAACC5110G Assessee by : Ms. Ananya Kapoor, Adv Shri Tarun Chanana, Adv Shri Shivam Yadav, Adv Revenue by: Shri Sanjay Kumar Bharati, CIT DR Date of Hearing 16/01/2025 Date of pronouncement 21/03/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.4091/Del/2024 for AY 2009-10, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] in Appeal No. ITBA/NFAC/S/250/2024- 25/1066487637(1) dated 08.07.2024 against the order of assessment passed u/s 143(3) r.w.s. 254 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 29.06.2012 by the Assessing Officer, DCIT, NFAC, Delhi (hereinafter referred to as „ld. AO‟). ITA No. 4091/Del/2024 Consulting Engineering Services (India) Pvt. Ltd Page | 2 2. The revenue has raised the following grounds of appeal before us:- “1.1 That the assessment order passed under section 143(3) of the Act dated 29 June 2012 is illegal, bad in law, without jurisdiction and barred by time limitation, and as such the same is liable to be quashed along with the fresh assessment order passed under section 143(3) r.w.s. 254 r.w.s. 144B of the Act dated 30 September 2021 and order passed under section 250 of the Act dated 08 July 2024 passed by the Ld. CIT(A). The illegality of the first assessment order (i.e. order dated 29 June 2012) goes to the root of the matter and as such the said order along with the subsequent assessment order is liable to be quashed. 1.2 That in the absence of order under section 127 of the Act, the notices issued, and orders passed by the Additional Commissioner of Income Tax, Range -3 are illegal and without jurisdiction as Additional Commissioner of Income Tax, Range -3 was not competent and never had the jurisdiction to issue notices and pass the orders in the case of the Appellant. As such the reference under section 142(2A) of the Act and the assessment order dated 29 June 2012 and all subsequent orders including the fresh assessment order dated 30 September 2021 and CIT(A) order dated 08 July 2024 are illegal, bad in law and without jurisdiction and the same are liable to be quashed. 1.3 That the order dated 27 December 2011 passed under section 142(2A) of the Act referring the case of the Appellant for special audit is illegal, bad in law, without jurisdiction, null and void and the assessment order dated 29 June 2012 passed under section 143(3) of the Act is barred by time limitation and is liable to be quashed. Hence the subsequent assessment order dated 30 September 2021 and CIT(A) order dated 08 July 2024 is also liable to be quashed. Without prejudice to the above, the Appellant submits as under: 1.4 That the Ld. CIT(A) has not given reasonable and meaningful opportunity of hearing to Appellant. The order is passed without giving any opportunity to the Appellant. 1.5 That the Ld. CIT(A) has failed to adjudicate on the issue of non- availability of order under section 127 of the Act with the Revenue and has also failed to pass a speaking order to this effect. 1.6 That the last notice was issued on 14 July 2023 which was duly replied and thereafter no notice is received. Therefore, the order passed by the Ld. CIT(A) is against the principles of natural justice and as such is liable to be set aside. 1.7 That the Ld. CIT(A) has completely ignored the submission dated 07 August 2023 filed by the Appellant that the appeal against the order dated 29 May 2019 passed by the Hon'ble Income Tax Appellate Tribunal was pending before the Hon'ble Delhi High Court and proceeded to pass the order under ITA No. 4091/Del/2024 Consulting Engineering Services (India) Pvt. Ltd Page | 3 section 250 of the Act without giving reasonable opportunity of being heard to the Appellant which is against the principles of natural justice. 1.8 That due to the above, the Ld. CIT(A) has failed to give effect to the order dated 16 May 2024 passed by the Hon'ble Delhi High Court in the matter of the Appellant. 1.9 That the Ld. CIT(A) has failed to understand the meaning of de-novo assessment while passing the order GROUND 2 2.1 That the Ld. CIT(A) has erred in law and on facts and circumstances of the case by not deleting the addition of Rs. 24,73,568/- by treating the loan for acquisition of assets which has to be capitalized. as same interest on term 2.2 That the Ld. CIT(A) has confirmed the addition of Rs. 24,73,568/- without appreciating that the Appellant has offered the sum of INR 20,69,092/- being interest recoverable from Cee-Ess Development Consultants (P) Ltd. for tax in AY 2010-11 and such confirmation of addition has resulted in double taxation of the said sum. Therefore, it is not justified on the part of Ld. CIT(A) to confirm the aforesaid addition. GROUND 3 3.1 That the Ld. CIT(A) has erred in law and on the facts of the case in confirming the addition on account of prior period expense. In doing so, the Ld. CIT(A) has failed to take cognizance of the details furnished before him. 3.2 That the Ld. CIT(A) has erred in law and on the facts of the case in not deleting but remanding back to the Ld. AO the disallowance to the extent of Rs. 65,46,993/- on account of interest under section 7Q of Employees Provident Fund and & Miscellaneous Provisions Act, 1952 and of Rs. 10,40,312/- on account of payment of service tax. 3.3 That the Ld. CIT(A) has erred in law and on the facts of the case in erroneously disallowing the expense to the extent of Rs. 18,10,251/- despite no additions were made in this regard by the Ld. AO and has failed to pass a speaking order to this effect. 3.4 The Ld. CIT(A) has not considered the evidences filed before him during the course of appellate proceedings and has failed to pass a speaking order. 3.5 Without prejudice to the Appellant's claim that these expenses pertain to AY 2009-10, the Ld. CIT(A) has erred in law in not directing the Ld. AO to allow these expenses in the preceding assessment years. ITA No. 4091/Del/2024 Consulting Engineering Services (India) Pvt. Ltd Page | 4 GROUND 4 41 That on the facts of the case and as well as in law, the Ld. CIT(A) is not justified in confirming the disallowance of Rs. 2,86,86,731/- by treating it as disallowable under section 40A(2) of the Act. 4.2 That the Ld. CIT(A) has failed to appreciate that the confirmation of addition of Rs. 2,86,86,731/- has resulted in double taxation. Therefore, it is not justified on the part of the Ld. CIT(A) to confirm the aforesaid addition. GROUND 5 5.1 That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in confirming the addition of Rs. 37,79,53,913 made on account of purported short valuation of closing job in progress by not considering the method of accounting for valuation of stock being consistently followed by the Appellant. In doing so, the Ld. CIT(A) has ignored the documentary evidence filed before him. 5.2 That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in confirming the addition of a sum of Rs. 5,52,82,724/- out of total addition of Rs. 37,79,53,913 without appreciating that such expenses are non-job related expense which should not be added to the value of closing job in progress. 5.3 That without prejudice to Ground 5.1 and 5.2, the Ld. CIT(A) has erred in law and on facts of the case in not directing the Ld. AO to increase the value of opening job in progress for Assessment Year 2010-11 by Rs. 37,79,53,913/-. GROUND 6 6.1 That the Ld. CIT(A) has erred in law and facts and circumstances of the case in confirming the addition of Rs. 1,25,54,650/- made by the Ld. AO by treating it income purported to have accrued but not credited to profit and loss account. In doing so, the Ld. CIT(A) has ignored the documentary evidences filed before him. 6.2 That the Ld. CIT(A) has failed to appreciate that the confirmation of addition of Rs. 1,25,54,650/- shall result in double taxation as related jobs are still continuing and its income shall be offered to tax in the subsequent years. Therefore, it is not justified on the part of Ld. CIT(A) to confirm the aforesaid addition. 6.3 That without prejudice to Ground No. 6.1 and 6.2, the Ld. CIT(A) has erred in law and on facts of the case in not directing the Ld. AO to increase the value of opening job in progress for AY 2009-10 by Rs. 1,25,54,650/-. ITA No. 4091/Del/2024 Consulting Engineering Services (India) Pvt. Ltd Page | 5 GROUND 7 7.1 That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in confirming the addition of Rs. 11,23,57,173 made by the Ld. AO on account of losses incurred on pre 2003 as well as post 2003 projects completed during the current financial year as per regularly followed accounting method. In doing so, the Ld. CIT(A) has ignored the documentary evidences filed before him. 7.2 That the Ld. CIT(A) is not justified in confirming the addition without appreciating the fact that contracts were completed at a value lower than the estimated revenue and thereby losses have been booked upon completion of such contracts. GROUND 8 8.1 That the Ld. CIT(A) has erred in law and facts and circumstances of the case in not adjudicating the issue regarding the addition of Rs. 86,89,569/- and remanding the same to the Ld. AO on account of disallowance of losses in respect of on-going jobs and adding the same to the closing value of Job- in-Progress of the Appellant. In doing so, the Ld. CIT(A) has ignored the documentary evidence filed before him. 8.2 That the Ld. CIT(A) has completely ignored the fact that the Ld. AO was not justified in making the addition while inaccurately computing the quantum of the loss. 8.3 That without prejudice to Ground No. 8.1 and 8.2, the Ld. CIT(A) has erred in law and on facts of the case in not directing the Ld. AO to increase the value of opening job in progress for Assessment Year 2009-10 by Rs. 86,89,569/-. 8.4 That the Ld. CIT(A) has erred in not considering the evidences filed before him during the course of appellate proceedings. GROUND 9 9.1 That on the facts of the case and as well as in law, the Ld. CIT(A) is not justified in confirming the disallowance of Rs. 5,33,54,856/- being expenses incurred by the Appellant in respect of jobs closed in earlier years which were claimed by the Appellant to be revenue in nature. In doing so, the Ld. CIT(A) has ignored documentary evidence filed before him. 9.2 That on the facts of the case as well as in law and circumstances of the case, the Ld. CIT(A) is not justified in confirming the addition without appreciating that such expenditure are business expenditure wholly and exclusively incurred in the current year for the business of the Appellant and income against such expenditure was offered to tax in the earlier years. ITA No. 4091/Del/2024 Consulting Engineering Services (India) Pvt. Ltd Page | 6 GROUND 10 10.1 That the Ld. CIT(A) has erred in law and on the facts of the case in confirming the addition of Rs. 1,46,92,513/- made by the Ld. AO on account of income alleged to be neither appearing in jobs-in progress nor professional fees statement of the Appellant. 10.2 The Ld. CIT(A) has failed to consider the evidences filed before him during the course of appellate proceedings. GROUND 11 11.1 That the Ld. CIT(A) has erred in law and facts of the case in confirming the addition of Rs. 10,97,99,516/- made by the Ld. AO by alleging that income appearing in form 26AS is in excess of amounts appearing in BIS. 11.2 The Ld. CIT(A) has failed to consider the evidences filed before him during the course of appellate proceedings. GROUND 12 12.1 That the Ld. CIT(A) has erred in law and on the facts of the case in confirming the addition of Rs. 8,95,36,675/- made by the Ld. AO in respect of invoices not appearing in BIS. The Ld. CIT(A) while confirming such addition has also failed to direct the Ld. AO to allow the credit of corresponding TDS amounting to Rs. 97,60,938/-. 12.2 That the Ld. CIT(A) is not justified in confirming the addition of Rs. 8,95,36,675/- while the basis of determining the quantum of addition is incorrect. The Ld. CIT(A) is also not justified in confirming addition without considering the documentary evidences provided before him by the Appellant. GROUND 13 13.1 That the Ld. CIT(A) has erred in law and the facts of the case in not adjudicating the issue of incorrect assessed income for Rs. 3,13,400 and remanding the same back to the Ld. AO for examination. 13.2 That the Ld. CIT(A) has erred in not considering the evidences filed before him during the course of appellate proceedings. GROUND 14 14.1 That the Ld. CIT(A) has erred in law and the facts of the case in not adjudicating the issue of non-grant of foreign tax credit of Rs. 45,91,188/- under section 91 of the Act and remanding the same back to the Ld. AO for examination. ITA No. 4091/Del/2024 Consulting Engineering Services (India) Pvt. Ltd Page | 7 14.2 That the Ld. CIT(A) has erred in not considering the evidences filed before him during the course of appellate proceedings. GROUND 15 15.1 That the Ld. CIT(A) has erred in law and the facts of the case in not adjudicating the issue of non-grant of credit for tax deduction at source of Rs. 2,60,01,233/- and remanding the same back to the Ld. AO for examination. 15.2 That the Ld. CIT(A) has erred in not considering the evidences filed before him during the course of appellate proceedings. GROUND 16 16.1 That the Ld. CIT(A) has erred in law in not adjudicating the issue of levy of interest under section 220(2) of the Act for Rs. 47,75,63,720/- and remanding the same to the Ld. AO to decide as per the law without appreciating the fact that in case of de-novo assessment, the period for levy of interest under section 220(2) of the Act starts from the expiry of period of 30 days from the date on which notice under section 156 of the Act pursuant to de-novo assessment order is issued. 16.2 That the Ld. CIT(A) has not considered the evidences/judicial precedents/submissions filed before him during the course of appellate proceedings. GROUND 17 17.1 That without prejudice to each of the above grounds, the additions made are overlapping and amount to double disallowance in this year as well as in subsequent years and the benefit of the same has not been given. Each ground is without prejudice to each other.” 3. We have heard the rival submissions and perused the materials available on record. At the outset , the Learned AR before us narrated the entire facts and events that triggered the present appellate proceedings. The same is reproduced below in a tabular form:- Date Sequence of events 27.08.2010  Notice under section 143(2) of the Act was issued by the Deputy Commissioner of Income Tax, Circle 3(1) („DCIT').  Thereafter, notice under section 143(2) of the Act was issued by the Additional Commissioner of Income Tax, Range 3 („Addl. CIT‟). ITA No. 4091/Del/2024 Consulting Engineering Services (India) Pvt. Ltd Page | 8 21.11.2011  A notice under section 142(2A) of the Act dated 21 November 201 1 was issued by the Addl. CIT to show cause why Special Audit should not be conducted in the case of the Respondent for AY 2009- 10 27.12.2011  The Assistant Commissioner of Income Tax, Circle 3(1) passed the order dated 27 December 2011 under section 142(2A) of the Act 29.06.2012  The Addl. CIT passed the order under section 143(3) of the Act 31.12.2013  The Respondent filed an appeal before the Commissioner of Income Tax (Appeals) which was partly allowed. Aggrieved by the order of the Commissioner of Income Tax (Appeals), the Respondent filed an appeal before the Hon'ble Income Tax Appellate Tribunal. 08.01.2016  During the pendency of the appeal, an additional ground was raised before the Hon‟ble Tribunal as under: \"That the assessment order passed dated 29/06/2012 for A. Y. 2009-10 by the Additional Commissioner of Income Tax (Addl. CIT) \" is illegal, had in law, without jurisdiction as the AddL CIT had no jurisdiction to pass the said assessment order. \" 10.06.2016 • Hon'ble Tribunal vide its interim order directed the Revenue to. inter alia, produce the order under section 127 of the Act along with the assessment record, which was never produced. 29.05.2019 • Hon'ble Tribunal passed a remand order and directed the Respondent/Assessing Officer to frame the assessment de- novo and also left the ground of jurisdiction to be adjudicated by the Respondent/Assessing officer. • The Respondent and Revenue filed an appeal before the Hon'ble Delhi High Court. Hence, there were cross-appeals pending adjudication before the Hon'ble High Court. 30.09.2021 & 28.10.2021 • In the meantime, and during the pendency of the appeals in the Hon'ble High Court, de-novo assessment order was passed by the Assessing Officer. Aggrieved by the de-novo order, the Respondent filed an appeal before the Commissioner of Income Tax (Appeals), which had been pending adjudication. 20.07.2023  A video-conferencing hearing was held with Commissioner of Income Tax (Appeals), wherein it was informed that Respondent and Revenue have filed an appeal before the Hon‟ble High Court against the order dated 29.05.2019 passed by the Hon‟ble Tribunal which is currently pending adjudication.  Commissioner of Income Tax (Appeals) requested that a submission stating the above fact be filed before his office along with the relevant supporting documents and that the matter will be kept in abeyance till the final order of the Hon‟ble High Court. The said submission was ITA No. 4091/Del/2024 Consulting Engineering Services (India) Pvt. Ltd Page | 9 filed on 07.08.2023 (Annexure - A). This fact is also recorded on para 3 at page 2 in the order of the Hon'ble Tribunal dated 30.10.2024 in ITA No. 3515/Del/2024 (copy enclosed - Annexure B).  It is important to note and highlight that no further notice was received from the Commissioner of Income Tax (Appeals) post 20.07.2023 and the Commissioner of Income Tax (Appeals) has thereafter, without affording any opportunity to the Respondent, proceeded to pass the impugned order, which is subject matter of the present appeal before Your Honours. 16.02.2024 and 16.05.2024  Hon‟ble High Court vide its order dated 16.02.2024 read with order dated 16.05.2024 had directed the Commissioner of Income Tax (Appeals) to adjudicate on the issue of non-production of order under section 127 of the Act being an open issue. 10.07.2024  The Respondent received the order dated 08 July 2024 under section 250 of the Act from the Commissioner of Income Tax (Appeals) 01.08.2024  Aggrieved by the order of Commissioner of Income Tax (Appeals), the Respondent filed an appeal before Your Honours (ITA No. 3515/Del/2024) 06.09.2024  The Respondent also filed a request for early hearing before Your Honours as Commissioner of Income Tax (Appeals) had failed to adjudicate the principle ground of jurisdiction i.e.. existence of valid order under section 127 ot the Income-tax Act. 1961 („Act'), which was specifically directed to be examined by the Hon'ble Delhi High Court as well as this Hon'ble Bench of the Income Tax Appellate Tribunal in the first round of the appeal preferred by the Respondent for the subject AY. 13.09.2024 • The request for early hearing was heard and allowed by Your Honours and the matter was fixed for hearing. 30.10.2024 • Your Honours have restored the entire matter back to the file of Commissioner of Income Tax (Appeals). The relevant extract of the order is as under: “5. In the peculiar facts of the case where the first appellate order in question has been passed after a considerable gap after the last issue of notice and where the proceedings M ere pending before the Hon 'hie Delhi High Court, it will be only fair to give proper chance to the assessee to represent its case in right earnest. Guided by the principles of objectivity, fairness and justice, we consider it just and expedient to restore the entire matter back to the file of CIT(A). The CIT(A) shall pass a speaking order on the points raised by the assessee after giving proper opportunity to the assessee. ” ITA No. 4091/Del/2024 Consulting Engineering Services (India) Pvt. Ltd Page | 10 04.11.2024 The Respondent received the intimation that Revenue has filed an appeal before the Hon'ble Tribunal. 4. When this was confronted to the Learned DR, he fairly admitted that the matter be restored to the file of Learned CITA. Considering the rival submissions, we deem it fit and appropriate to restore this appeal to the file of Learned CITA to decide the entire appeal in the light of order of Hon‟ble Delhi High Court dated 16.2.2024 and 16.5.2024 and order passed by this Tribunal in ITA No. 3515/Del/2024 dated 30.10.2024. Accordingly, the grounds raised by the revenue are allowed for statistical purposes. 5. In the result, the appeal of the revenue is allowed for statistical purposes. Order pronounced in the open court on 21/03/2025. -Sd/- -Sd/- (YOGESH KUMAR U.S.) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 21/03/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "