ITO, Ward-13(2), Kolkata, Kolkata V. M/s. Krishnav Construction P Ltd., Kolkata

ITA 1369/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6360 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 08-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: A BOSE
• Section: 143(3); 194C; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA [BEFORE SHRI S. S. GODARA, JM & SHRI M. BALAGANESH, AM] I.T.A. NO. 1369/KOL/2017 ASSESSMENT YEAR: 2013-14 INCOME-TAX OFFICER, WD-13(2), KOLKATA VS. KRISHNAV CONSTRUCTION PVT. LTD. (PAN:AADCK5368D) APPELLANT RESPONDENT DATE OF HEARING 11.06.2018 DATE OF PRONOUNCEMENT 15.06.2018 FOR THE APPELLANT SHRI A. BHATTACHARJEE, ADDL. CIT FOR THE RESPONDENT SHRI A. BOSE, ADVOCATE ORDER PER SHRI M. BALAGANESH, AM THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-5, KOLKATA VIDE APPEAL NO. 84/CIT(A)-5/WD-13(2)/16-17 DATED 31.03.2017. AS SESSMENT WAS FRAMED BY ITO, WD-13(2), KOLKATA U/S. 143(3) OF THE INCOME TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2013-14 VIDE HIS ORDER DATED 30.0 3.2016. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION OF RS 47,36,821/- MADE U/S 69 OF THE ACT FOR UNDERSTATEMENT OF CONTRACTUAL RECEIPTS , IN THE FACTS AND CIRCUMSTANC ES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN CIVIL CONSTRUCTION AND HAD FILED ITS RETURN OF INCOME FOR THE ASST YEAR 2013-14 ON 28.9.2013 DECLARING TOTAL INCOME OF RS 83,780/-. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAD EXECUTED WORKS IN TERMS OF TENDER AGREE MENT VIDE WORK ORDER DATED 25.7.2010 ENTERED INTO WITH M/S MURTI HOUSING & FIN ANCE PVT LTD . THE LD AO OBSERVED FROM THE AUDITED ACCOUNTS OF THE ASSESSEE THAT IT HAD DECLARED INCOME UNDER THE HEAD REVENUE FROM OPERATION AMOUNTING TO RS 1,02, 62,460/- COMPRISING OF THE FOLLOWING:- 2 ITA NO.1369/K/2017 M/S. KRISHNAV CONSTRUCTION PVT. LTD. AY 2013-14 JOB WORK (I) FOR SERVICES RS 17,33,118 (II) FOR SALE OF MATERIALS RS 73,11,984 ------------------ RS 90,45,102 SALE OF EARTH AND SOIL RS 12,17,358 ----------------------- RS 1,02,62,460 ----------------------- 3.1. THE LD AO OBSERVED THAT THE TAX DEDUCTED BY M/ S MURTI HOUSING & FINANCE PVT LTD WAS RS 1,29,399/- U/S 194C OF THE ACT AND AS PER FO RM 26AS, THE TOTAL CONTRACTUAL RECEIPTS OF ASSESSEE WAS RS 64,69,939/-. THE LD AO OBSERVED THAT THE ASSESSEE DISCLOSED ONLY INCOME OF RS 17,33,118/- AS CONTRACTUAL RECEIP T BESIDES RECEIPT ON ACCOUNT OF SALE OF BUILDING MATERIALS FOR RS 73,11,984/-. THE LD A O OBSERVED THAT THE ARGUMENT OF THE ASSESSEE THAT TDS WAS MADE FROM THE SALE OF BUILDIN G MATERIALS TOGETHER WITH THE RECEIPT OF SERVICE CHARGES WAS NOT ACCEPTED AS THERE WAS NO JUSTIFICATION TO DEDUCT TDS ON THE PURCHASE MONEY OF TRADING MATERIALS. ACCORDINGLY, THE DIFFERENCE OF CONTRACTUAL AMOUNT OF RS 47,36,821/- ( 64,69,939 17,33,118) W AS TREATED AS UNDISCLOSED INVESTMENT U/S 69 OF THE ACT AND ADDED TO TOTAL INC OME. 4. THE LD CITA OBSERVED THAT THE LD AO HAD SOLELY R ELIED ON THE TDS CERTIFICATE ISSUED BY MURTI HOUSING & FINANCE PVT LTD SHOWING TDS OF R S 1,29,399/- AND CONTRACTUAL AMOUNT OF RS 64,69,939/-. THE LD AO HAD TREATED TH E CONTRACTUAL AMOUNT AS ONE HAVING NO MATERIAL COMPONENT WHEREAS THE ASSESSEE HAD CLAI MED THAT RS 44,16,544/- WAS MATERIAL COMPONENT IN THE BILL RAISED AGAINST THE S AID CONTRACTEE. ONE MORE BILL HAS BEEN LISTED IN THE TABLE ON PAGE 2 OF THE ASSESSMENT ORD ER. THE LD AO HAD NOT GIVEN ANY FINDING AS TO WHY HE HAD TREATED THE WHOLE CONTRACT UAL AMOUNT AS HAVING NO MATERIAL COMPONENT INSPITE OF THE ASSESSEES SAID CLAIM BEFO RE HIM. THE QUESTION HERE TO BE DECIDED IS WHETHER THE LD AOS FINDING TREATING THE WHOLE CONTRACT AMOUNT AS ONE FOR SERVICE IS CORRECT OR NOT. THE LD CITA OBSERVED TH AT THE IDENTICAL QUESTION AROSE IN THE ASST YEAR 2012-13 IN ASSESSEES OWN CASE AND SINCE THE SAME CONTRACT WAS EXECUTED IN THE CURRENT YEAR FOR THE SAME CONTRACTEE, AND THAT THERE IS NO OTHER CONTRACT HAVING BEEN 3 ITA NO.1369/K/2017 M/S. KRISHNAV CONSTRUCTION PVT. LTD. AY 2013-14 EXECUTED BY THE ASSESSEE, HE FOLLOWED THE VIEW TAKE N BY HIM IN THE ASST YEAR 2012-13 AND GRANTED RELIEF TO THE ASSESSEE. AGGRIEVED, TH E REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE ISSUE UNDER DISPUTE IS SQUARELY COVERED BY THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASST YEAR 2012-13 IN ITA NO. 1942/KOL/2016 DATED 4.5.2018 WHEREIN IT WAS HELD AS UNDER:- AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON T HE FOLLOWING GROUND: 1. WHETHER ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 2,22,68,725/- MADE U/S 69 OF THE I.T. ACT, 1961 FOR UNDERSTATEMENT OF CONTRACTUAL RECEIPT WITHOUT APPRE CIATING THE FACT FINDING OF THE AO. 5. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED T HE MATERIAL AVAILABLE ON RECORD INCLUDING THE PAPER BOOK FILED BY THE ASSESSEE COMPRISING OF PAGES 1 T O 99 WE FIND FROM THE PAGES 57 TO 87 OF THE PAPER BOOK CONTAINING THE ENTIRE AGREEMENT DATED 25.07.20 10 INCLUDING THE WORK ORDER ISSUED BY M/S MURTI HOUSING & FINANCE PVT. LTD. SPECIFYING SCOPE OF SER VICES AND TERMS AND CONDITIONS TO BE COMPLIED THEREON. FROM THE SAID AGREEMENT WE FIND UNDER CLA USE (2) ENCLOSED IN PAGE 58 OF THE PAPER BOOK AS UNDER: 2.0. RATES/PRICE, TAXES AND COST 2.1. THE RATES QUOTED OF RS. 1200/- PER SQ. FT. SH ALL BE FOR THE FINISHED WORK AND SHALL BE INCLUSIVE OF ALL MATERIALS AND LABOUR, EQUIPMENT, S HUTTERING AND CENTRING, SCAFFOLDINGS AND CONSUMABLES ETC. BUT EXCLUSIVE OF CEMENT AND STEEL . ANY VOLUME OF WORK EXCEEDING THE SCHEDULED QUANTITY AS PER THE DRAWINGS ISSUED TO CO NTRACTOR AT THE TIME OF TENDER IS TO BE TREATED AS EXTRA ITEM. THE ABOVE QUOTED RATED ARE INCLUSIV E OF ESI, PF, FREIGHT, EXCISE DUTY & ROYALTY ETC. BUT EXCLUSIVE OF TAXES LIKE SERVICE TAX, VAT E TC WHICH WILL BE PAID EXTRA TO THE CONTRACTOR ,WCT & TDS WILL BE DEDUCTED AS PER THE PROVISIONS O F THE RESPECTIVE ACT AND LAWS OF THE LAND. NO CLAIM ON THIS ACCOUNT OTHER THAN WHAT HAD MENTIO NED IN THIS WORK ORDER WILL BE ENTERTAINED DUE TO ANY REASON WHATSOEVER. QUOTED RATES SHALL AL SO INCLUDE ANY OR ALL WASTAGES ETC. AS APPLICABLE AND THE RATES QUOTED ARE FIRM TILL THE C OMPLETION OF WORK INCLUDING THE EXTENDED PERIOD. NO CLAIM SHALL HOWEVER BE ENTERTAINED IN CA SE OF INCREASE BASIC RATES OF MATERIALS AND LABOUR ETC. IN OTHER WORDS NO ESCALATION OF PRICES /RATES IS ACCEPTABLE DURING THE EXECUTION OR WORK. YOUR QUOTE OF RS. 1200/- PER SQ. FT. AS MENTIONED A BOVE SHALL NOT INCLUDE THE FOLLOWING: ALL HVAC WORKS LOOSE FURNITURE WARDROBES THE CONTRACTOR SHALL AT THEIR OWN EXPENSE, ARRANGE FOR INSURANCE POLICIES SUCH AS WORKMEN COMPENSATION POLICY AND CONTRACTORS ALL RISK POLIC Y EFFECTIVE FROM THE DATE OF COMMENCEMENT OF WORK UNTIL FINAL COMPLETION OF WORK, WHICH WILL BE CERTIFIED BY ARCHITECT/PMC APPOINTED BY US. ALSO RATE QUOTED SHALL INCLUDE THE COSTS OF SUPPLYI NG PHOTOGRAPHS SHOWING THE WORK-IN-PROGRESS FROM VARIOUS ANGLES AS DECIDED BY THE ARCHITECT. TW O SETS OF PHOTOGRAPHS TO BE SUPPLIED BY THE CONTRACTOR I.E. ONE SET TO THE ARCHITECT AND ONE SE T TO US. THE PHOTOGRAPHS SHOULD CONTAIN THE DATE OF PHOTOGRAPH TAKEN PRINTED ON IT. FROM THE ABOVE, IT IS VERY CLEAR THAT THE ASSESSEE IS MANDATED TO SUPPLY MATERIALS AND LABOURS, EQUIPMENT, SCAFFOLDING AND CONSUMABLE EXCLUSIVE CEM ENT AND STEEL. HENCE IT IS FACTUALLY INCORRECT ON T HE PART OF THE LD. DR TO STATE THAT THERE IS NO STIPUL ATION IN THE AGREEMENT DATED 25.07.2010 WARRANTING THE 4 ITA NO.1369/K/2017 M/S. KRISHNAV CONSTRUCTION PVT. LTD. AY 2013-14 ASSESSEE TO SUPPLY ANY MATERIALS FOR WHICH CONSIDER ATION IN THE SUM OF RS. 2,18,16,646/- WAS RECEIVED AND RS. 51,686/- TOWARDS SALE OF TRADING GOODS WERE RECEIVED FROM M/S MURTI HOUSING & FINANCE PVT. LTD.. THE LD. AO HAD NOT GIVEN ANY FINDING TO THE E FFECT THAT THE ENTIRE SUM PAID TO THE ASSESSEE BY M /S MURTI HOUSING & FINANCE PVT. LTD. WERE ONLY IN RES PECT OF CONTRACTUAL PAYMENTS, EXCEPT PLACING RELIANCE ON THE FIGURES REFLECTED IN FORM NO. 26AS SUBJECTING THE ENTIRE PAYMENTS TO DEDUCTION OF TAX AT SOURCE. FACTUALLY WE FIND THAT THE ASSESSEE HAD RE CEIVED 3.37 CRORES TOWARDS CONTRACTUAL RECEIPTS AND RS. 2.18 CRORES TOWARDS SALE OF MATERIALS FROM M/S MURTI HOUSING & FINANCE PVT. LTD. AND BOTH ARE DULY PAID UNDER THE HEAD REVENUE FOR OPERATION. W E ALSO FIND FROM PAGE 51 OF THE PAPER BOOK CONTAINING THE DETAILS OF VARIOUS MATERIALS THAT WE RE SUPPLIED BY THE ASSESSEE TO M/S MURTI HOUSING & FINANCE PVT. LTD. FOR THE SMOOTH EXECUTION OF THE P ROJECT CONTAINING THE DETAILS OF OPENING STOCK, PURCHASES, MATERIALS CONSUMED AND CLOSING STOCK THE REON. THE ASSESSEE HAD ALSO FURNISHED THE ENTIRE DETAILS OF M/S MURTI HOUSING & FINANCE PVT. LTD. TO JUSTIFY ITS CLAIM THAT THERE IS NO UNDERSTATEMENT OF ANY RECEIPT FROM M/S MURTI HOUSING & FINANCE PVT. L TD., THE DETAILS OF WHICH ARE ENCLOSED IN PAGE 43 O F THE PAPER BOOK. FOR THE SAKE OF CONVENIENCE THE SAI D DETAILS ARE REPRODUCED HEREUNDER: IN VIEW OF THESE FACTS WHICH ARE STARRING ON US, WE HAVE NO HESITATION TO UPHOLD THE FINDING OF LD. CI T(A) IN THIS REGARD. ACCORDINGLY, GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND: 2. WHETHER ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 27,43,417/- MADE U/S 6 9 OF THE INCOME TAX ACT, 1961 FOR UNDISCLOSED INVESTMENT IN THE ABSENCE OF EVIDENCE OF PURCHASE I GNORING THE OBSERVATIONS OF THE AO. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ENTIRE DETAILS OF PURCHASES OF VARIOUS MATERIALS TO GETHER WITH THE BILLS WERE DULY SUBMITTED BEFORE TH E LD. AO. WE ALSO FIND THAT THE ASSESSEE HAD FILED A DETA ILED STOCK SUMMERY OF VARIOUS MATERIALS COMPRISING OF OPENING STOCK, PURCHASES, COST OF MATERIALS CONSUMP TION AND CLOSING STOCK THEREON AS UNDER: 5 ITA NO.1369/K/2017 M/S. KRISHNAV CONSTRUCTION PVT. LTD. AY 2013-14 IT WAS ALSO SPECIFICALLY BROUGHT TO THE NOTICE OF T HE LD. AO THAT PURCHASES OF OTHER ITEMS I.E. OTHER THAN (SAND, STONE CHIPS AND BRICKS) TO THE TUNE OF RS. 4 2,09,707/- IS DULY INCLUDED IN THE TOTAL COST OF MA TERIALS CONSUMED IN THE TOTAL SUM OF RS. 2,47,94,550/- THIS FACT IS ALSO EVIDENT FROM THE AFORESAID STOCK SUMMERY. WE FIND THAT ULTIMATELY THE ASSESSEE HAS S HOWN IN THE CLOSING STOCK OF RS. 65,90,629/- BASED ON THE PROPER DETAILS THAT WERE SUBMITTED BEFORE THE L D. AO AND WHICH ARE SUPPORTED BY PROPER EVIDENCES. THE LD. AO MADE ARITHMETICAL CONCLUSION AND ARRIVED AT THE CLOSING STOCK OF MATERIAL FIGURES AT RS. 38,47,212/- ONLY IN RESPECT OF CERTAIN ITEMS AND CO MPARED THE SAME AS TOTAL CLOSING STOCK FIGURE OF RS . 65,90,629/- AND MADE AN ADDITION OF RS. 27,43,417/- AS UNDISCLOSED INVESTMENT. THIS, IN OUR CONSIDERED OPINION, IS ABSOLUTELY NO WARRANTY IN VIEW OF THE C OMPLETE DETAILS OF VARIOUS MATERIALS USED BY THE ASSESSEE IN THE EXECUTION OF THE CONTRACT AS COULD BE EVIDENT FROM THE AFORESAID STOCK SUMMERY. HENCE WE HOLD THAT THERE IS NOT CASE THAT HAS BEEN MADE O UT BY THE REVENUE BEFORE US FOR SUSTAINING THE ADDITION TOWARDS UNDISCLOSED INVESTMENT U/S 69 OF T HE ACT IN THE SUM OF RS. 27,43,417/-. IN THESE FACT S AND CIRCUMSTANCES, WE DO NOT FIND ANY JUSTIFIABLE R EASON TO INTERFERE IN THE ORDER OF LD. CIT(A) AND ACCORDINGLY, GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED. 10. GROUND NO. 3 RAISED BY THE REVENUE IS GENERAL I N NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 5.1. WE FIND THAT THE LD CITA HAD FOLLOWED THE ORDE R PASSED FOR THE ASST YEAR 2012-13 IN ASSESSEES OWN CASE, WHICH WAS UPHELD BY THIS TR IBUNAL IN ITS ORDER DATED 4.5.2018 SUPRA. THE LD DR WAS NOT ABLE TO FURNISH ANY EVIDE NCE CONTRARY TO THE FACTS ON RECORD. 6 ITA NO.1369/K/2017 M/S. KRISHNAV CONSTRUCTION PVT. LTD. AY 2013-14 HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER PAS SED BY THE LD CITA. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 15.06.201 8 SD/- SD/- (S. S. GODARA) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED :15TH JUNE, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ITO, WARD-13(2), KOLKATA 2 RESPONDENT M/S. KRISHNAV CONSTRUCTION PVT. LTD., P -15, INDIAN EXCHANGE PLACE EXTN., 9 TH FLOOR, KOLKATA-700 073. 3 . THE CIT(A)-5, KOLKATA (E-MAILED) 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (E-MAILED) / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .