Appeal details
Counselvise Citation
196220514 RSA 2009
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 5 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-11-2011
Appeal Filed By
Department
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
27-10-2011
Assessment Year
2006-2007
Appeal Filed On
16-06-2009
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI T. K. SHARMA , JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 1962 / AHD/2009 (ASSESSMENT YEAR 2006-07) DCIT, MEHSANA CIRCLE, MEHSANA VS. M/S. NATRAJ CONSTRUCTION CO., ROAYAL HOUSE, RADHANPUR ROAD MEHSANA PAN/GIR NO. : AABFN4852E (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI SAMIR TEKRIWAL, DR RESPONDENT BY: NONE DATE OF HEARING: 27.10.2011 DATE OF PRONOUNCEMENT: 16.11.2011 O R D E R PER SHRI A. K. GARODIA, AM:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), GANDHINAGAR DATED 31.03.2009 FOR THE ASSESS MENT YEAR 2006-07. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: 1) THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING TH E ADDITION OF RS.6,12,846/- MADE ON ACCOUNT OF COMMISSION ON SUB- LET CONTRACT. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3) IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. CI T(A) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE A BOVE EXTENT. 2. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT IT IS NOTICED THAT THE ASSESS EE HAS SHOWN SUB-LET WORK. THE A.O. ASKED VARIOUS DETAILS SUCH AS DOCUM ENTARY EVIDENCE I.T.A.NO.1961 /AHD/2009 2 FROM WHICH IT CAN BE SEEN THAT TO WHOM THE WORK WAS SUB-LET AND THE ASSESSEE WAS ALSO ASKED TO FURNISH VOUCHERS/MEASSUR EMENT BOOK REGARDING THE SUB-LET WORK FROM WHICH THE PAYMENTS CAN BE VERIFIED. THE A.O. HAS ALSO NOTED THAT THE ASSESSEE HAS SHOWN SUB -LET WORK OF RS.6,36,66,480/- AND HAVE SHOWN RECEIPT OF SUB-LET COMMISSION OF RS.9,33,813/-. THE A.O. ASKED THE ASSESSEE TO SHOW THE REASONABILITY OF SUB-LET COMMISSION BECAUSE IT IS STATED BY HIM THAT THE OVERHEADS AND FIXED EXPENSES FOR RECEIVING WORK CONTRACT ARE MORE THAN COMMISSION INCOME SHOWN FROM SUB-LET COMMISSION. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. THAT THE ASSESSEE IS A CONTRACTOR AND CARRY OUT MAINLY ROAD CONSTRUCTION CONTRACTS AND SOME OF SUCH WORK IS ASSIGNED (SUB-LET) BY THE ASSESSEE TO OTHER CONTACTORS AND D ETAILS OF SUCH SUB-LET WORK ASSIGNED BY THE ASSESSEE WITH COPY OF WORK ORD ER OF THE SAID WORK IS ATTACHED WITH THE REPLY. THEREAFTER, THE A.O. HAS NOTED THAT THE ASSESSEE IS SPENDING VARIOUS EXPENDITURES LIKE LIAISONING OF EXECUTIVE OFFICERS TO GET WORK CONTRACT IN TIME AND TO GET PAYMENTS OF TH E WORK IN THE SPECIFIC PERIOD IN WHICH HE HAS COMPLETED THE WORK AND THE A SSESSEE IS ALSO ENGAGING WORKING CAPITAL IN THE BUSINESS TO CARRY O UT THE WORK CONTRACT AND TO MAKE GOODWILL IN THE MARKET OF THE WORK BUSI NESS. HE HAS FURTHER NOTED THAT THE ASSESSEE IS ALSO PAYING INTEREST NEA RLY 12% TO THE CREDITORS. THEREAFTER, THE A.O. HAS FURTHER STATED THAT THE AS SESSEE MIGHT HAVE SUB- LET THE WORK TO HIS KNOWN PERSONS AND NEAR AND DEAR PERSONS ON WHICH HE CAN RELY AND IT IS POSSIBLE THAT THE ASSESSEE MAY H AVE GAINED MORE THAN THE DECLARED COMMISSION IN THE SHAPE OF KIND OR THE MATERIAL USED IN THE WORK DURING THE YEAR FROM THE SUB-LET PERSONS. THE A.O. HAS FURTHER NOTED THAT THE ASSESSEE HAS NOT MAINTAINED THE BOOK REGARDING THE SUB-LET WORK ON WHICH, CONSUMED MATERIAL/WORK DONE MAY BE V ERIFIED BECAUSE IT IS THE BACKBONE OF THE WORK CONTRACT BUSINESS. AFT ER MAKING THESE I.T.A.NO.1961 /AHD/2009 3 OBSERVATIONS, A.O. ESTIMATED THAT THE ASSESSEE MIGH T HAVE EARNED MINIMUM @ 4% COMMISSION ON THE SUB-LET WORK. ON TH E BASIS OF 4% COMMISSION, HE ESTIMATED COMMISSION INCOME OF THE A SSESSEE AT RS.25,46,659/- AND AFTER REDUCING COMMISSION INCOME SHOWN BY THE ASSESSEE OF RS.9,33,813/-, HE MADE ADDITION OF RS.1 6,12,846/-. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE LD. CIT(A) WHO HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSE E AND NOW, THE REVENUE IS IN APPEAL BEFORE US. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE ALTHOUGH NOTICE OF HEARING WAS SENT TO THE ASSESSEE BY REGISTERED POST, WHICH HAS NOT COME BACK UNSERVED AND HENCE, SERVICE OF NOTICE IS PRESUMED A ND, THEREFORE, WE PROCEED TO DECIDE THIS APPEAL OF THE REVENUE EX-PAR TE QUA THE ASSESSEE AFTER HEARING THE LD. D.R. OF THE REVENUE. 4. LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D. R. OF THE REVENUE AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW. WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LD. CIT(A) AS PER PARA 2. 3 OF HIS ORDER, WHICH IS REPRODUCED BELOW: THE MATTER HAS BEEN GIVEN DUE CONSIDERATION AND IN MY VIEW, THE ADDITION MADE IS NOT JUSTIFIED. THE ARRANGEMENT BE TWEEN THE APPELLANT AND ITS SUB CONTRACTOR IS FORMAL CONTRACT UAL ARRANGEMENT, IN WHICH THE COMMISSION IS TO BE PAID TO THE APPELL ANT FOR PASSING ON THE CONTRACT IS DULY RECORDED. ALTHOUGH A.O. HA S RAISED APPREHENSION AND DOUBT ON THE QUANTUM OF COMMISSION RECEIVED, HE HAS NEITHER MADE ANY INQUIRIES NOR ANALYZED ANY CONTRACT TO CONTRADICT THE CONTRACTUAL ARRANGEMENT BETWEEN THE TOW PARTIES. IT HAS NOT BEEN PROVED BY THE A.O. THAT WHAT HAS BEEN STATED BY THE APPELLANT IS NOT CORRECT. WHILE ON ONE HAND IT HAS BEEN ASSERTED BY THE AR THAT NONE OF THE PARTNERS TO WHOM THERE WAS SUBLETTING OF THE CONTRACT WAS COVERED U/S 40A(2)(B), THE A.O. HA S NOT PROVED HIS GENERAL STATEMENT THAT EH ASSESSEE MUST HAVE PASSED ON PROFIT TO ITS DEAR AND NEAR ONES. THEREFORE, THE ADDITION MADE I S WITHOUT ANY BASIS AND WITHOUT ANY FACTS. HENCE, THE SAME IS DE LETED. I.T.A.NO.1961 /AHD/2009 4 6. FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A), IT IS SEEN THAT IT IS STATED BY HIM THAT THE A.O. DID NOT MAKE ANY INQUIR Y AND DID NOT ANALYZE THE CONTRACT BETWEEN THE ASSESSEE AND THE PARTIES T O WHOM THE WORK WAS SUB-LET. BUT IT IS VERY SURPRISING THAT EVEN AFTER MAKING THIS OBSERVATION, LD. CIT(A) HAS ALSO NOT DONE THE EXERCISE WHICH HE IS STATING THAT SHOULD HAVE BEEN DONE BY THE A.O. BUT WAS NOT DONE. NO FI NDING IS GIVEN BY HIM THAT HE HAS EXAMINED THE CONTRACT BETWEEN THE A SSESSEE AND THE PARTIES TO WHOM THE WORK WAS SUB-LET. UNDER THESE FACTS, WE FEEL THAT THIS MATTER SHOULD GO BACK TO HE FILE OF THE A.O. FOR A FRESH DECISION AFTER MAKING DETAILED INQUIRY AND AFTER EXAMINING THE PER SONS TO WHOM THE WORK WAS SUB-LET AND AFTER EXAMINING THE CONTRACT B ETWEEN THE ASSESSEE AND THOSE PARTIES TO WHOM THE WORK WAS SUB-LET. I T SHOULD ALSO BE WORKED OUT AS TO HOW MUCH EXPENDITURE WAS INCURRED BY THE ASSESSEE ON ACCOUNT OF THOSE SUB-LET WORK CONTRACT AND WHETHER COMMISSION INCOME SHOWN BY THE ASSESSEE ON THOSE SUB-LET CONTRACTS IS MORE THAN EXPENSES INCURRED BY THE ASSESSEE OR NOT. AFTER EXAMININ G ALL THESE ASPECTS AND AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, THE A.O. SHOULD PASS NECESSARY ORDER AS PER LAW IN THIS REGARD. 7. IN THE RESULT, APPEAL OF THE REVENUE STANDS ALLO WED FOR STATISTICAL PURPOSES. 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (T. K. SHARMA) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ORDER PRONOUNCED ON 16.11.2011 SP SD./- SD./- (A. K. GARODIA) (D. K. TYAGI) AM JM I.T.A.NO.1961 /AHD/2009 5 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 8/11 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 9/11OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 11/11 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 16/11 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.16/11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16/11/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..
