DEPUTY COMMISSIONER OF INCOME TAX, KOLKATA V. BHAWANI CONSTRUCTION PVT LTD, KOLKATA

ITA 1715/KOL/2024

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax (DCIT), Kolkata against Bhawani Construction Pvt. Ltd. concerning the assessment year 2015-16. The primary issues in dispute were the additions made by the Assessing Officer (AO) regarding estimated profits and disallowed liabilities, which the CIT(A) later deleted. The revenue's appeal to the ITAT contested the CIT(A)'s decision, arguing that the CIT(A) erred in law and fact by allowing the deletions without sufficient evidence from the assessee. The ITAT, after reviewing the arguments and evidence, upheld the CIT(A)'s decision, dismissing the revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 315767 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MIRAJ D. SHAH
• Assessee Lawyers: AMULDEEP KAUR
• Section: 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA BEFORE SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER ITA No. 1715/KOL/2024 Assessment Year: 2015-16 DCIT, Kolkata Vs. Bhawani Construction Pvt. Ltd. 269, G. T. Road, Liluah, West Bengal-711204. (PAN: AABCB1996N) (Appellant) (Respondent) Present for: Appellant by : Shri Miraj D. Shah, AR Respondent by : Shri Amuldeep Kaur, Addl. CIT, Sr. DR Date of Hearing : 01.05.2025 Date of Pronouncement : 13.05.2025 O R D E R Per Sanjay Awasthi, Accountant Member : The present appeal emanates from order passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) on 30.11.2023 by Ld. CIT(A), Kolkata-21. 2. In this case, there is a delay of 190 days in filing of the said appeal by the revenue. The department has filed the following petition, requesting condonation of delay. 2 ITA No. 1715/Kol/2024 Bhawani Construction Pvt. Ltd., AY: 2015-16 3 ITA No. 1715/Kol/2024 Bhawani Construction Pvt. Ltd., AY: 2015-16 3. Considering the reasons for delay, as laid out in the aforementioned petition, the delay is hereby condoned and the present appeal is admitted for adjudication. 4. In this case the action of ld. Assessing Officer resulted in two impugned additions: (i) Rs.1,52,26,995/- by estimating profit @ 20% of turnover arrived after rejecting the books; and (ii) Disallowance of a liability to the tune of Rs.1,51,05,324/-. 5. Aggrieved with this action of Ld. Assessing Officer, the assessee approached the Ld. CIT(A), where it was averred that adequate opportunity was not provided by the Assessing Officer in allowing the assessee to present the full set of facts regarding the impugned additions. It was stated that assessing profit from business @ 20% was on the very higher side, that too when the reasons for rejecting the books were not sound. Secondly, it was stated that the liability added on account of one M/s. Mataji Vinimay Pvt. Ltd. was not a current year’s liability but being brought forward from FY 2009-10. It was stated that there was no transaction with this entity during the year under consideration. In light of these averments the Ld. CIT(A) forwarded the documents before him for the Ld. Assessing Officer to comment upon. The Ld. Assessing Officer filed a remand report, which was utilized by the Ld. CIT(A) to arrive at conclusion in favour of the assessee as under: (i) “Regarding the estimation of profit the AO, I find neither during the assessment proceedings, nor during the Remand Proceedings, has pointed out any such defects in the accounts of the appellant. The audited financial statements of the preceding A.Y's were there before the AO during the course of Remand and the AO had an opportunity to point out inconsistencies of the Books of Account for the relevant year vis-a-vis the books of account of the appellant for .the preceding years, but no such inconsistencies have been pointed out by the AO. In view of the above judgements, I find that the rejection of books of account and the estimated addition of Gross Profit @ 20% made by the Ld. A.O is not justified in so far as Assessing Officer was required to demonstrate the defects in the 4 ITA No. 1715/Kol/2024 Bhawani Construction Pvt. Ltd., AY: 2015-16 books of account of the appellant. The addition of Rs. 1,52,26,995/- thereby stands deleted.” (ii) “Regarding the alleged unverified liability I have carefully gone through the submission and relevant records filed by the appellant. It appears to me from the Assessment order of the Ld. Assessing Officer that addition has been on non- compliances of notices issued u/s. 133(6) of the Act. I have also gone through the submission, ledgers copies and bank statement highlighting the payment made to the parties. Moreover, from the perusal of remand report given by the Ld. ACIT, Circle -1 Hazaribagh vide his letter dated 25.04.2019 it is clear that no adverse inferences were made regarding the transactions and such outstanding liabilities exist in the books of appellant and the liability is not ceased. From the above remand report it is clear that director of the company namely Mataji Vinimay Company Private Limited accepted the fact that outstanding balance is still existing and is carried forward in their books. Accordingly, in view of the pronouncement of the Hon'ble Apex Court and considering the fact that such outstanding balance is still exist in the books of both the parties, such addition u/s 41 (1) of Rs.1,51,05,324/- is deleted. The grounds raised are therefore allowed.” 6. Aggrieved with this action of ld. CIT(A), the revenue is in appeal before the ITAT, through the following grounds: “1. Whether the Ld. CIT(A) has erred in facts and in law by allowing the appeal of the assessee by deleting the addition of Rs.1,52,26,995/- made by the AO despite the assessee failing to produce any books of account during the assessment proceedings that could show the true state of business of the assessee? 2. Whether the Ld. CIT(A) has erred in facts and in law by allowing the appeal of the assessee by deleting the addition of Rs.1,51,05,324/- made by the Assessing Officer despite the assessee failing to establish the genuineness of the transactions and the identity and creditworthiness of the creditors? 3. The department craves the right to add, alter, amend or withdraw any ground of appeal before or at the time of hearing.” 7. Before us the Ld. DR vehemently argued that the assessee had not presented the full facts before the Ld. Assessing Officer and hence there was merit in the Assessing Officer’s actions. He, thereafter, relied upon the order of Ld. Assessing Officer. 8. Per contra, the ld. AR relied on the order of Ld. CIT(A) and read out from various portions of the same. He pointed out that the Ld. CIT(A) arrived at his decision only after extensively going through the remand 5 ITA No. 1715/Kol/2024 Bhawani Construction Pvt. Ltd., AY: 2015-16 report filed by the Assessing Officer. He pointed out that the discussion was available on pages 9-18 of the impugned order. 9. We have carefully considered the rival arguments and also gone through the records before us. We find that the Ld. CIT(A) has arrived at his conclusion in a meticulous and judicious manner. We have already extracted relevant portions from the impugned order, which form the basis for his decision. We cannot find fault with the same and we uphold the same. 10. In the result, the appeal of the revenue is dismissed. Order pronounced on 13th May, 2025. Sd/- Sd/- (Pradip Kumar Choubey) (Sanjay Awasthi) Judicial Member Accountant Member Dated: 13th May, 2025 JD, Sr. P.S. Copy to: 1. The Appellant: DCIT, Kolkata 2. The Respondent. Bhawani Construction Pvt. Ltd. 3. CIT(A), NFAC, Delhi 4. Pr. CIT 5. DR, ITAT, Kolkata Bench, Kolkata 6. Guard file. True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "