Indian Infradevelopers P. Ltd., Ahmedabad V. The ITO, Ward-2(1)(3), Ahmedabad

ITA 1542/AHD/2018

AI Insights

The case involves Indian Infradevelopers P. Ltd., which appealed against the order of the CIT(A)-2, Ahmedabad, confirming an addition of Rs.7,69,179 to their income for the Assessment Year 2008-09. The addition was based on alleged contractual receipts from M/s. KNR Construction Limited, as reflected in Form No.26AS. The assessee contended that these receipts were for sub-contract expenses and should not have been added to their income. The Income Tax Officer had initially added this amount after verifying details from Form No.26AS and a response from M/s. KNR Construction Limited. However, the tribunal found that the reclassification of the payment from 'sub-contract expenses' to 'labour charges' by M/s. KNR Construction Limited was not justifiable and did not comply with the usual accounting practices, leading to the allowance of the assessee's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129263 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-08-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 11-06-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL K. PATEL
• Keywords: TDS
• Section: 148

Judgement Text

ITA No.1542/Ahd/2018 Assessment Year: 2008-09 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.1542/Ahd/2018 Assessment Year: 2008-09 Indian Infradevelopers P. Ltd., 11, Basant Bahar Bungalows, Opp. Sterling City Club, Bopal, Ahmedabad – 380 058. [PAN – AAACI 7002 H] Vs. The Income Tax Officer, Ward – 2(1)(3), Ahmedabad. (Appellant) (Respondent) Assessee by Shri Mehul K. Patel, Advocate Revenue by Shri Yogesh Mishra, Sr. DR Da te o f He a r in g 29.08.2023 Da te o f P ro n o u n ce m e n t 13.10.2023 O R D E R This appeal is filed by the Assessee against order dated 22.02.2018 passed by the CIT(A)-2, Ahmedabad for the Assessment Year 2008-09. 2. The Assessee has raised the following grounds of appeal :- “1. That the Ld. CIT(A) has grievously erred in law, and on facts, in confirming the addition of Rs.7,69,179/- made on account of alleged contractual receipts only on the basis of Form No.26AS. 2. That on facts, evidence on record, and as per law, the entire addition ought to have been deleted as in fact the appellant has not received any such contractual receipts.” 3. The information was available on ITD that the assessee Company has not filed return of income for the Assessment Year (A.Y.) 2008-09. After recording reasons for reopening, notice under Section 148 of the Income Tax Act, 1961 was issued on 31.03.2015, which was served upon the assessee company. The assessee company filed its return of income on 12.10.2015 in response to notice under Section 148 of the Act issued on 31.03.2015 and has shown loss of (-) Rs.8,524/-. The return filed by the assessee company was held as nonest return of income. The Assessing Officer observed that on verification of the 26AS details, the assessee company received contractual receipts of Rs.15,38,358/- from M/s. KNR Construction Limited and in response to notice under Section ITA No.1542/Ahd/2018 Assessment Year: 2008-09 Page 2 of 3 133(6) of the Act, M/s. KNR Construction Limited submitted its reply thereby confirmed that the said party made the payment against the contract to the tune of Rs.7,69,179/- as against Rs.15,38,358/--. In 26AS statement of the assessee company the payment of Rs.7,69,179/- each were shown to have credited on 31.10.2007, whereas M/s. KNR Construction Limited has confirmed to have only one payment i.e. Rs.7,69,179/- on 31.10.2007. The assessee company has not offered the said receipt of Rs.7,69,179/- in its Profit & Loss Account. After taking cognisance of the assessee’s reply, the Assessing Officer held that the assessee company failed to prove that the payments received from M/s. KNR Construction Limited to the tune of Rs.7,69,179/- was not its contractual receipt. The Assessing Officer, therefore, made addition of Rs.7,69,179/- on the basis of contractual receipt confirmed by M/s. KNR Construction Limited and also reflected in 26AS statement. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. A.R. submitted that the assessee company submitted its account thereby stating that whenever M/s. KNR Construction Limited were crediting assessee’s account for work done, they wrote “sub-contract expenses” always. But while closing the account with the assessee they have changed the title and termed it as “labour charges account” and, therefore, did not do TDS. The Ld. AR pointed out that from the statement submitted by M/s. KNR Construction Limited dated 30.04.2005 and 11.02.2006 the said company have credited final sub- contract expenses and in narration mentioned “final payment certificate – accounted”, meaning the work was over. After final bill of 11.02.2006, on 10.04.2007 M/s. KNR Construction Limited made payment of Rs.8,65,000/- and on 20.10.2007 they made a payment of Rs.15,08,000/- thereby stating cheque details and mentioning that towards full and final payment as on 29.10.2007. The book entry in a different manner cannot make the assessee responsible and the addition should have been deleted by the CIT(A) as per the contentions of the Ld. AR. 6. The Ld. DR relied upon the Assessment Order and the order of the CIT(A) ITA No.1542/Ahd/2018 Assessment Year: 2008-09 Page 3 of 3 7. Heard both the parties and perused all the relevant material available on record. From the perusal of the documents it is clearly seen that sub-contract expenses were mentioned on the earlier occasions in the account of M/s. KNR Construction Limited and only while closing the account with the assessee company they have changed the nomenclature and stated that they have debited labour charges account and did not do TDS. In fact, the payment of Rs.8,65,000/- and payment of Rs.15,08,000/- was settled vide cheque dated 30.10.2007 and conveniently M/s. KNR Construction Limited has shown in their book debit balance of Rs.7,60,464/- as labour charges which is justifiable for claiming addition in assessee’s case. Thus, addition made by the Assessing Officer on the basis of Form No.26AS and the statement made by M/s. KNR Construction Limited is not justifiable. Hence, appeal of the assessee is allowed. 8. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on this 13 th October, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 13 th October, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad