MBL MP Toll Road Company Ltd, New Delhi V. ITO Ward - 16(3), New Delhi

ITA 1724/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3962 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 01-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAGDISH SINGH
• Assessee Lawyers: HIMANI AGGARWAL
• Keywords: Capital asset; Opportunity of being heard; Principle of natural justice; Capital receipt; TDS
• Section: 6; 143(2); 145(3)

Judgement Text

1 ITA NO. 1724/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I(2 ) + SMC NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEM BER, AND SHRI PRASHANT MAHARISHI, ACCOU NTANT MEMBER ITA NO. 1724/DEL/2019 ( A.Y 2015-16) MBL MP TOLL ROAD COMPANY LTD. SUITE NO. 303, BAANI CORPORATE ONE TOWER, 3 RD FLOOR, PT NO. JASOLA, NEW DELHI PIN: 110025 PAN: AAHCM5400G (APPELLANT) VS ITO WARD-16(3) NEW DELHI (RESPONDENT) APPELLANT BY MS. HIMANI AGGARWAL, CA RESPONDENT BY SH. JAGDISH SINGH, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 18/12/2018 PASSED BY CIT(A)-6, DELHI FOR ASSESSMENT YEAR 2015 -16. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE ORDER PASSED BY LD. CIT (A) IS BAD IN LAW . 2. THAT THE LD. CIT (A), WHILE PASSING THE IMPUGNED O RDER FAILED IN PROVIDING AN ADEQUATE OPPORTUNITY OF BEING HEARD TO THE APPEL LANT. 3. THAT THE LD. CIT (A) DISMISSED THE APPEAL AND PASS ED THE IMPUGNED ORDER ON THE ERRONEOUS PREMISE THAT THE APPELLANT DOES NO T WISH TO PURSUE THE APPEAL. DATE OF HEARING 24.02.2020 DATE OF PRONOUNCEMENT 02.03.2020 2 ITA NO. 1724/DEL/2019 4. THAT THE LD. AO HAS MADE THE ADDITION AMOUNTING TO RS. 20, 78,996/- WITHOUT CONSIDERING THE FACT THAT THIS AMOUNT IS IN THE NATURE OF REIMBURSEMENT OF EXPENSE MADE BY THE APPELLANT ON B EHALF OF M/S. MADHYA PRADESH ROAD DEVELOPMENT CORPORATION. 5. THAT THE LD. AO HAS ERRED IN MAKING THE ADDITION A MOUNTING TO RS. 20, 78,996/- ON THE BASIS OF NON-RECEIPT OF REPLY FROM M/S. MADHYA PRADESH ROAD DEVELOPMENT CORPORATION AGAINST THE NOTICE ISSUED T O IT UNDER SUB SECTION 6 OF SECTION 133 OF THE INCOME TAX ACT, 1961. 6. THAT THE LD. AO HAS ERRED IN REJECTING BOOKS OF TH E APPELLANT U/S 145(3) OF THE ACT. 7. THAT THE LD. AO HAS ERRED IN APPLYING THE PROVISIO NS OF RULE 37BA TO THE FACTS OF THE APPELLANT. 3. THE RETURN OF INCOME DECLARING NIL INCOME WAS FI LED ON 27/09/2015. THE CASE WAS SUBSEQUENTLY SELECTED FOR THE LIMITED SCRU TINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED ON 30/01/2017 AND WAS DUL Y SERVED UPON THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT DURIN G THE YEAR, THE ASSESSEE HAD NOT FILED ANY P & L ACCOUNT. THE ASSESSING OFFI CER FURTHER NOTED THAT THE ASSESSEE SUBMITTED THAT IT HAD NOT PREPARED THE P & L ACCOUNT AS ASSESSEE COMPANY WAS IN THE BUSINESS OF CONSTRUCTION OF ROAD AND THUS BUILDING A STATE HIGHWAY ON DBFOT (DESIGN, BUILD, FINANCE, OPERATE & TRANSFER) PROJECT BASIS. THE ASSESSEE FURTHER SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE CONSTRUCTION WORK WAS UNDER PROGRESS DURING THE REL EVANT PREVIOUS YEAR AND INCOME UNDER DBFOT PROJECT COMES FROM TOLL CHARGES ONCE THE PROJECT IS COMPLETED. FROM THE AIR, THE ASSESSING OFFICER OBS ERVED THAT THE ASSESSEE HAD CERTAIN CONTRACTUAL RECEIPTS AMOUNTING TO RS. 20,78 ,996/- FROM MADHYA PRADESH ROAD DEVELOPMENT CORPORATION LTD AND THE AS SESSEE WAS ASKED TO RECONCILE THE SAME AND ALSO EXPLAIN WHY THE SAID RE CEIPTS WERE NOT DISCLOSED IN THE RETURN OF INCOME. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE AMOUNT OF RS. 20,78,996/- WAS RECEIVED ON WHICH TAX HAD BEEN DEDUCTED AT SOURCE BUT INADVERTENTLY THE PAYER HAD REFLECTED THE TDS UNDER THE PAN OF 3 ITA NO. 1724/DEL/2019 ITS ASSOCIATE COMPANY. THE ASSESSING OFFICER OBSERV ED THAT THE SHIFTING OF UTILITIES WAS AN INDEPENDENT ACTIVITY AND HAD NO FI NANCIAL IMPLICATION ON THE ASSESSEE'S DBFOT PROJECT AND THAT IT HAS TO BE TREA TED INDEPENDENTLY AND CANNOT BE CONSIDERED AS WIP. THE ASSESSING OFFICER ALSO EXAMINED THE COMPUTATION SUBMITTED BY THE ASSESSEE IN WHICH TDS HAD BEEN CLAIMED AT RS. 41,580/-. THE ASSESSING OFFICER REFERRED TO THE PRO VISIONS OF RULE 37BA OF THE INCOME TAX RULES, 1962 AND HELD THAT IT WAS PROVED BEYOND DOUBT THAT THE INCOME OF RS. 20,78,996/- PERTAINED TO THE ASSESSME NT YEAR UNDER CONSIDERATION AND HAD NOT BEEN DECLARED BY THE ASSE SSEE. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAD TO DECLARE THE INC OME UNDER THE HEAD IN WHICH IT FALLS AND CANNOT CHOOSE ITS OWN HEAD. THE ASSESSING OFFICER FURTHER HELD THAT THE INCOME WAS DEFINITELY A BUSINESS INCO ME AND HAD NOTHING TO DO WITH CAPITAL RECEIPT AS NO CAPITAL ASSET WAS CONSTR UCTED BY WAY OF COMPLETING A STANDALONE PROJECT. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD DELIBERATELY CONCEALED THE RECEIPTS AND NOT DECLARE D THE SAME IN THE P & L ACCOUNT. THE AMOUNT OF RS. 20, 78, 996/-WAS TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. ASSESSMENT WAS COMPLETED AT AN INCOME OF RS. 20,79,000/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT SINCE THE NATIONAL COM PANY LAW TRIBUNAL SUSPENDED THE BOARD OF DIRECTORS AND DECLARED MORAT ORIUM AND ALSO APPOINTED INTERIM RESOLUTION PROFESSIONAL TO LOOK INTO THE AF FAIRS OF THE COMPANY WITHIN THE PROCESS OF THE SAID RESOLUTION DATED 18 TH APRIL 2018, THE REPRESENTATION OF THE ASSESSEE COMPANY WAS NOT POSSIBLE BEFORE THE CI T(A). THEREFORE, THE LD. AR SUBMITTED THAT THE MATTER MAY BE REMANDED BACK TO T HE FILE OF THE CIT(A) FOR FRESH ADJUDICATION ON MERIT AFTER GIVING PROPER OPP ORTUNITY OF HEARING TO THE ASSESSEE. 4 ITA NO. 1724/DEL/2019 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. IT CAN BE SEEN THAT DUE TO COR PORATE INSOLVENCY RESOLUTION PROCEEDINGS, THE NATIONAL COMPANY LAW TRIBUNAL SUSP ENDED THE BOARD OF DIRECTORS AND DECLARED MORATORIUM, THE COMPANY WAS SEEKING ADJOURNMENT BEFORE THE CIT(A) AS THE COMPANY COULD NOT PRODUCE REQUISITE DOCUMENTS BEFORE THE CIT(A). THE REASON FOR NON-APPEARANCE BEFORE TH E CIT(A) APPEARS TO BE GENUINE, THEREFORE, IT WILL BE APPROPRIATE TO REMAN D BACK THIS MATTER TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION ON MERIT. NEED LESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLE S OF NATURAL JUSTICE. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATIS TICAL PURPOSE. 8. IN RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND MARCH, 2020. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 02/03/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 1724/DEL/2019 DATE OF DICTATION 24.0 2 .2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25.0 2 .2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 02.03.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 02.03.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 02.03.2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER