The DCIT, Circle-2(1)(2), Ahmedabad V. JSIW Infrastructure Pvt.Ltd., Ahmedabad

ITA 1214/AHD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5364 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-04-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 10-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Accommodation entries
• Section: 143(3); 143(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (VIRTUAL COURT) BEFORE: SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEM BER THE DEPUTY CIT, CIRCLE-2(1)(2), AHMEDABAD (APPELLANT) VS JSIW INFRASTRUCTURE PVT. LTD. 4, ASTTA MITRA ESTATE, B/H, JUPITER MILL, DUDHESHWAR ROAD, AHMEDABAD PAN: AABCJ8501F (RESPONDENT) REVENUE BY: SHRI VIDHYUT TRIVEDI, SR. D.R. ASSESSEE BY: SHRI S.N. DIVETIA, A.R . DATE OF HEARING : 26-08-2020 DATE OF PRONOUNCEMENT : 25-09-202 0 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2011-12, ARISES FRO M ORDER OF THE CIT(A)-2, AHMEDABAD DATED 12-02-2018, IN PROCEEDIN GS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN S HORT THE ACT. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- ITA NO. 1214/AHD/2018 ASSESSMENT YEAR 2011-12 I.T.A NO. 1214/AHD/2018 A.Y. 2011-12 PAGE NO DEPUTY CIT VS. JSIW INFRASTRUCTURE PVT. LTD. 2 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 3,60,00,000/- BEING NET INCOME @ 8% OF RS. 44,99,99,999/-. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) H AS ERRED IN LAW AND ON FACTS BY NOT HOLDING THAT (SINCE THE CONTRACTEE HAD ITSELF ADMIT TED THAT THE ASSESSEE COMPANY I.E. CONTRACTOR HAD GIVEN BOGUS BILLS AS ACCOMMODATION ENTRIES) THE ASSESSEE COMPANY HAD RECEIVED A COMMISSION @ 8% (WHICH IS THE PREVALENT RATE) FOR P ROVIDING THE ACCOMMODATION ENTRIES AMOUNTING TO RS. 44,99,99,999/- TO M/S. NAFTOGAZ IN DIA PVT. LTD. 3. THE FACT IN BRIEF IS THAT THE RETURN OF INCOME D ECLARING INCOME OF RS. 16,57,57,400/- WAS FILED ON 30 TH SEP, 2011. THE RETURN WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT. SUBSEQUENTLY, THE A SSESSMENT WAS REOPENED BY ISSUING OF NOTICE U/S. 148 OF THE ACT ON 30 TH MARCH, 2016 ON THE BASIS OF INFORMATION RECEIVED FROM DDIT(INVESTIGATION) THAT ASSESSEE WAS SUB- CONTRACTOR OF M/S. NAFTOGAZ INDIA PVT. LTD. WHO HAD BOOKED FALSE ENTRIES IN ITS BOOKS OF ACCOUNT TO THE AMOUNT OF RS. 44,99,99, 998/- . DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAS STATED THA T SEARCH ACTION WAS CARRIED IN THE CASE OF M/S. NAFTOGAZ INDIA PVT. LTD . AND IT WAS GATHERED FROM THE INFORMATION THAT ASSESSEE COMPANY HAD DONE THE SUB-CONTRACT FOR M/S. NAFTOGAZ INDIA LTD. FOR AMOUNT OF RS. 49,99,99,999/ -. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS NOT RECORDED THE S UB-CONTRACT WORK PERFORMED TO THE AMOUNT OF RS.49,99,999/- IN ITS B OOKS OF ACCOUNT. THEREFORE, THE ASSESSING OFFICER HAS REJECTED THE B OOKS OF ACCOUNT OF THE ASSESSEE AND INCREASE THE INCOME OF THE ASSESSEE BY 8% ON TOTAL AMOUNT OF RS. 44,99,99,999/- SHOWN AS SUB-CONTRACT CARRIED OUT BY THE ASSESSEE FOR NAFTOGAZ INDIA PVT. LTD. IN THIS WAY, THE ASSESSIN G OFFICER HAS MADE ADDITION OF RS. 3,60,00,000/- TO THE TOTAL INCOME O F THE ASSESSEE. I.T.A NO. 1214/AHD/2018 A.Y. 2011-12 PAGE NO DEPUTY CIT VS. JSIW INFRASTRUCTURE PVT. LTD. 3 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE L D. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT PART OF THE DECISION OF THE LD. CIT(A) IS AS UNDER:- 2.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, ASSESSMENT ORDER AND SUBMISSION OF THE APPELLA NT. THE AO HAS MADE THE ADDITION OF RS.3,60,00,000/- BE ING PROFIT @ 8% OF RS.44,99,99,999/- ON THE GROUND THAT APPELLANT HAS NOT RECORDED THE CONTRACT OF RS.44,99 ,99,999/- FROM M/S. NEFTO GO?, INDIAPVT. LTD. IN TH E BOOKS OF ACCOUNT. THE APPELLANT HAS SUBMITTED THAT IT HAS RECEIVED CONTRACT OF RS.25,10,71,424/- FROM M/S, MEFTOGAZ INDIA PVT. LTD. AND RS.20,44,00,000/- FROM M/S. AMR CONSTRUCTION AND SAME ARE DULY RECORDED I N THE BOOKS OF ACCOUNT. THE APPELLANT HAS FURTHER SUB MITTED THAT CONTRACT OF RS.20,44,00,000/- FROM M/S. AMR CONSTRUCTION LIMITED WAS OUT OF CONTRACT OF RS.44,8 4,69,9027- SUB CONTRACTED BY M/S. NEFTOGAZ INDIA PV T. LTD. THEREFORE, AO'S FINDING THAT CONTRACT RECEIVED FROM M/S. NEFTOGAZ INDIA PVT. LTD. WAS NOT RECORDE D IN THE BOOKS OF ACCOUNT IS NOT CORRECT. 2.4. THE AO IN HIS REASON FOR RECORDING AT PARA 3 H AS NOTED THAT DURING THE COURSE OF SEARCH PROCEEDIN GS AND THE STATEMENT RECORDED IT WAS NOTICED THAT M/S. NEF TOGAZ INDIA PVT. LTD. HAD GIVEN SUB CONTRACT WORTH RS,44,84,69,902/- TO M/S. AMR CONSTRUCTION LIMITED AND M/S. AMR CONSTRUCTION LIMITED CORRESPONDINGLY HAS GIVEN A SUB CONTRACT TO APPELLANT COMPANY FOR A N AMOUNT OF RS.22,40,81,633/- FOR THE FOLLOWING SIT ES:- I) SITE EXCAVATION WORK BETWEEN KM: 329. 000 TO KM 387.100 (58,100 KM) OF REACH - V OF THE SIX LANING OF PANIPAT - JALANDHAR II) SITE EXCAVATION WORK BETWEEN KM : 237.1 61 TO KM. 267.000 (30.439 KM) OF REACH - V OF THE S IX LANING OF PANIPAT- JALANDHAR SECTION OF NH - 1 PRO JECT, III) SITE EXCAVATION WORK BETWEEN KM : 237. 161 TO KM. 267.000 TOTAL 61.400 KM OF REACH - V OF THE SIX LANING OF PANIPAT - JALANDHAR SECTION OF NH - 1 PROJECT. (IV) CONSTRUCTION OF ROAD WORK FOR KONDHWAR PH-1, P ART - IT, PUNE. (V) CONSTRUCTION OF ROAD WORK FOR MIRA ROAD PH-1, P ART - II, MIRA ROAD, THANE. THE APPELLANT COMPANY HAS FURTHER SUB CONTRACTED TH E ABOVE PROJECT TO M/S. PATEL ENGINEERING LIMITED F OR RS.12,34,00,000/- FOR CONTRACTS OF ABOVE PROJECTS M ENTIONED AT PONT MO. I, II & III AND TO M/S. COASTA L PROJECTS LIMITED FOR RS.7,67,00,000/- FOR PROJECTS MENTIONED AT POINT NO. IV& V. THE AO HAS FURTHER RECORDED THAT M/S. NEFTOGAZ INDI A PVT. LTD. HAS GIVEN SUB CONTRACT WORTH RS.24,59,69,387/- TO THE APPELLANT COMPANY FOR THE FOLLOWING PROJECTS:- I) CONSTRUCTION OF PUMP HOUSE IN HNSS (HANDRI NEEVA SUJALA SRAVANTHI) PHASE - II, MADKASIRA (13) IN THE STALE OF AO FOR RS. L 1.42 CRORES. II) GLIS (GERMANISCHERLLYOCL INDUSTRIAL SERVIC ES INDIA PVT. LID.) PHASE - ILL, PACKAGE - I. EARTH WORK, EXCAVATION ETC. (RS.3.81 CRORES). III) DISMANTLING OF CONCRETE AND CLE ARING DEBRIS FROM MUMBAI INTERNATIONAL AIRPO RT (MIAL) PROJECT SITE RS.8.30 CRORES) 12 IV) BANGALORE WATER SUPPLY AND SEWERAGE BOAR D : FABRICATION AND LAYING OF CLEAR WATER TANK MAIN FROM GUBALA TO HBR ON EAST BANGALORE (RS. L .5 5 CRORES). THE ASSESSEE, M/S. JSIW INFRASTRUCTURE PVT. LTD. ON RECEIPT OF THE CONTRACT CORRESPONDINGLY SUB CONTRACTED THE ABOVE P ROJECTS TO THE FOLLOWING PARTIES:- A. M/S. PSK INFRASTRUCTURES AND PROJECTS LTD. FOR RS.19,33,67,345/- B. COASTAL PROJECTS LIMITED BOTH HYDERABAD FOR R S.5,25,51,020/- THE AO DESPITE OF THE ABOVE FACTS HAS NOTED THAT AP PELLANT HAS NOT RECORDED THE CONTRACT OF RS.44,99,9 9,999/- IN THE BOOKS OF ACCOUNT AND ADDED 8% OF THE ABOVE R ECEIPT AS INCOME. 2.5. APPELLANT ON THE OTHER HAND HAS SUBMITTED COPY OF P & L ACCOUNT SHOWING THE CONTRACT FROM M/S. NEFTOGAZ INDIA PVT. LTD. AND M/S. AMR CONSTRUCTION. THE CONTRACT HAS BEEN SUB CONTRACTED ON BACK TO BA CK BASIS AND ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. TH E APPELLANT HAS SUBMITTED DETAIL OF WORK AND ACCOUN TED FOR IN THE BOOKS OF ACCOUNT AS UNDER:- XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXX 2.8 THE APPELLANT HAS SHOWN RECEIPT OF RS.45,51,53, 057/- AND DEBITED EXPENDITURE OF RS.44,59,31,228/- SHOWING PROFIT OF RS.92,21,829/- FROM ID CONTRACT. THE APPELLANT COMPANY HAS SHOWN CONTRACT RECEIPT OF S.L80.9 CRORE AND PROFIT OF RS.19.39 CRORES IN THE P & L ACCOUNT. THE ALLEGED CONTRACT RECEIPT AND PAY MENTS ARE DULY REFLECTED IN THE BOOKS OF ACCOUNT, THEREFO RE, REJECTION OF BOOKS OF ACCOUNT AND ESTIMATION OF PROFIT FROM M/S. NEFTOGAZ INDIA PVT. LTD. @ 8% WAS UNCALLE D FOR AND UNJUSTIFIED. 2.9. IN VIEW OF THE ABOVE FACTS OF THE CASE, AD DITION MADE BY THE AO IS DELETED AND THE RELATED GROUNDS OF APPEAL ARE ALLOWED. I.T.A NO. 1214/AHD/2018 A.Y. 2011-12 PAGE NO DEPUTY CIT VS. JSIW INFRASTRUCTURE PVT. LTD. 4 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE A CT WAS FINALIZED IN THE CASE OF THE ASSESSEE ON 29 TH SEP, 2016. THE ASSESSING OFFICER POINTED OUT THAT ASSESSEE HAD NOT RECORDED IN ITS BOOKS OF ACCO UNTS SUB-CONTRACT WORK CARRIED OUT TO THE AMOUNT OF RS. 44,99,99,999/- FOR M/S. NAFTOGAZ INDIA PVT. THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACC OUNT OF THE ASSESSEE AND INCREASED ITS INCOME BY 8% OF TOTAL SUB-CONTRACT AM OUNT OF RS.44,99,99,998/- EXECUTED FOR THE CONTRACTOR M/S. NAFTOGAZ INDIA LTD. ON PERUSAL OF MATERIAL ON RECORD, IT IS OBSERVED THAT FINDINGS OF THE ASSESSING OFFICER ARE NOT SUPPORTED WITH ANY RELEVANT MATERIA L/EVIDENCES TO SUBSTANTIATE THAT THE SAID TRANSACTIONS WERE NOT RE CORDED IN THE BOOKS OF ACCOUNTS. IN THIS REGARD ON THE OTHER HAND DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. CIT(A) HAS CATEGORICALLY EXPLA INED IN HIS FINDING THAT ASSESSEE HAS RECORDED ALL THE TRANSACTIONS IN ITS B OOKS OF ACCOUNT AND SHOWN THE COMPLETE CONTRACT RECEIPT AND CONTRACT EXPENDIT URE DULY REFLECTED IN THE BOOKS OF ACCOUNT WHICH DEMONSTRATE THAT THE ASSESSI NG OFFICER HAS FAILED TO SUBSTANTIATE THE REASON FOR REJECTING THE BOOKS O F ACCOUNTS AND ESTIMATING THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNTS AND FAILED TO POINT OUT HOW THE CONTRACT RECEIPT AND CONTRACT EXPENDITURE WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER HAS NOT CONTROVERTED ANY PART OF PROFIT AND LOSS ACCOUNT OR OTHER RECORD OF THE ASSESSEE IN SUPPORT OF HIS CONTENTION THAT ASSESSEE HAS NOT SHOWN THE AMOUNT OF SUB-CONTRACT R ECEIPT IN ITS BOOKS OF ACCOUNT. HOWEVER, LD. CIT(A) HAS SPECIFICALLY ELAB ORATED AT PARA 2.5 OF HIS ORDER DEMONSTRATING THAT IN THE PROFIT AND LOSS AC COUNT THE ASSESSEE HAS CLEARLY SHOWN THE RECEIPT AND EXPENDITURE OF SUB-CO NTRACT CARRIED OUT FOR I.T.A NO. 1214/AHD/2018 A.Y. 2011-12 PAGE NO DEPUTY CIT VS. JSIW INFRASTRUCTURE PVT. LTD. 5 M/S. NAFTOGAZ INDIA PVT. LTD. THE ASSUMPTION/OBSER VATION OF THE ASSESSING OFFICER HAS CATEGORICALLY BEEN DISPROVED BY THE LD. CIT(A) IN HIS FINDING AT PARA 2.5 BY REPRODUCTION OF THE EXTRACT OF BOOK OF ACCOUNTS SHOWING THAT SUB-CONTRACT TRANSACTIONS WERE RECORDED IN THE BOOK S OF ACCOUNTS. IN THE LIGHT OF THE ABOVE FACTS AND FINDINGS OF LD. CIT(A) , WE DO NOT FIND ANY ERROR IN THE DECISION OF LD. CIT(A), THEREFORE, THE APPEA L OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25-09-2020 SD/- SD/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 25/09/2020 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,