ACIT Corporate Circle 3(2), CHENNAI V. Viswakarma Real Estates & Constructions P. Ltd., CHENNAI

ITA 2034/CHNY/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8356 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 25-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G.D. JAYANTHI ANGAYARKANNI
• Keywords: TDS; Set aside; Bogus
• Section: 133(6); 143(2)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.2034/CHNY/2018 / ASSESSMENT YEAR: 2015-16 THE ASST. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(2), CHENNAI-600 034. VS. M/S. VISWAKARMA REAL ESTATES & CONSTRUCTIONS PVT. LTD., NO. 65, ALWARPET STREET, ALWARPET, CHENNAI-600 018. [PAN: AABCV 5770 E] ( APPELLANT ) (R ESPONDENT ) DEPARTMENT BY : MS.G.D. JAYANTHI ANGAYARKANNI, JCIT ASSESSEE BY : NONE / DATE OF HEARING : 29.11.2018 /DATE OF PRONOUNCEMENT : 31.12.2018 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-11, CHENNAI DATED 02.04.2018 RELEVANT TO THE ASSESSMENT YEAR 2015-16. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS THAT THE LD.CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDITION MADE UNDER SUBCONTRACTING EXPENSES OF .5,38,72,144/-. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2015-16 ON 30.10.2015 ADMITTING A TOTAL INCOME OF I.T.A. NO. 2034/CHNY/18 2 .1,39,89,350/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND THE NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT] DATED 04.08.2016 WAS DULY SERVED ON THE ASSESSEE ON 11.08.2016. AFTER VERIFICATION OF DETAILS FURNISHED BY THE ASSESSEE, BY CONSIDERING THE REPORT OF THE ITI, THE ASSESSING OFFICER HELD THE SUBCONTRACTING EXPENSES OF .5,38,72,144/- AS BOGUS EXPENSES AND BROUGHT TO TAX. 3. ON APPEAL, BY CONSIDERING THE IT RETURN FILED BY M/S. MAYAN INFRASTRUCTURE PVT. LTD. ALONG WITH PROFIT & LOSS ACCOUNT AND BALANCE SHEET, ETC., THE LD. CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE, RPAD ON RECORD. HENCE, WE PROCEED TO DECIDE THE APPEAL AFTER HEARING THE LD. DR. 5. WE HAVE HEARD THE LD. DR, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IS IN THE BUSINESS OF PROPERTY DEVELOPMENT. IN ORDER TO VERIFY THE MISMATCH IN PAYMENT (RELATED PARTY) UNDER SECTION 40A(2)(B) OF THE ACT, THE ASSESSING OFFICER CALLED FOR THE DETAILS OF SUBCONTRACTING EXPENSES PAID TO ONE M/S. MAYAN INFRASTRUCTURE PVT. LTD., THE ASSESSEE COMPANY HAS CLAIMED TO HAVE PAID .5,38,72,144/- AS SUBCONTRACTING EXPENSES TO M/S MAYAN INFRASTRUCTURE PVT. LTD AND TDS WAS ALSO DEDUCTED ON THE SAME. RETURNS & FINANCIALS FOR I.T.A. NO. 2034/CHNY/18 3 THE ASSESSMENT YEAR 2015-16 WERE CALLED FOR IN RESPECT OF M/S. MAYAN INFRASTRUCTURE PVT. LTD., AND THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE COMPANY FURNISHED THE SAME. ON SCRUTINY OF THE FINANCIALS OF M/S. MAYAN INFRASTRUCTURE PVT. LTD. THE ASSESSING OFFICER FOUND THAT THE TOTAL TURNOVER OF MAYAN INFRASTRUCTURE WAS ONLY .5,30,41,346/- WHICH IS APPROXIMATELY ONLY THE EXPENSES OF M/S. VISHWAKARMA REAL ESTATES AND CONSTRUCTIONS (INDIA) PVT. LTD. FURTHER, IN ORDER TO ASCERTAIN THE TRUE NATURE OF THE TRANSACTION BETWEEN M/S. VISHWAKARMA REAL ESTATES AND CONSTRUCTIONS (INDIA) PVT. LTD., AND M/S. MAYAN INFRASTRUCTURE PVT. LTD., THE INSPECTOR OF INCOME TAX WAS SENT TO SERVE NOTICE UNDER SECTION 133(6) OF THE ACT DATED 22.11.2017 AT THE ADDRESS OF M/S. MAYAN INFRASTRUCTURE PVT. LTD., AS FURNISHED BY THE AUTHORISED REPRESENTATIVE. HOWEVER, THE NOTICE COULD NOT BE SERVED, SINCE, NO COMPANY BY THE NAME OF M/S. MAYAN INFRASTRUCTURE PVT. LTD., WAS FOUND AT THE ADDRESS PROVIDED BY THE AUTHORISED REPRESENTATIVE. ON ENQUIRY, THE AUTHORISED REPRESENTATIVE SUBMITTED THAT, THE COMPANY HAD SHIFTED FROM THE EARLIER GIVEN ADDRESS AND FURNISHED THE NEW ADDRESS I.E. NO.9, SESHADRI ROAD, ALWARPET, CHENNAI-600 018. ONE ACCOUNTANT BY NAME SHRI K.S. SWAMINATHAN, APPEARED AND RECEIVED THE NOTICE UNDER SECTION 133(6) OF THE ACT, CLAIMING HIMSELF AS THE STAFF OF M/S. MAYAN INFRASTRUCTURE PVT. LTD. HOWEVER, SINCE NO REPLY TO THE NOTICE HAS BEEN RECEIVED, THE INSPECTOR OF INCOME TAX WAS SENT ONCE AGAIN TO THE NEW ADDRESS OF M/S. MAYAN I.T.A. NO. 2034/CHNY/18 4 INFRASTRUCTURE PVT. LTD. CONSEQUENT TO THE VISIT TO THE ADDRESS PROVIDED BY THE AUTHORISED REPRESENTATIVE IN RESPECT OF MAYAN INFRASTRUCTURE, THE REPORT FURNISHED BY THE ITI READS AS UNDER: 'ON 11.12.2017, AS DIRECTED, I MADE A VISIT TO THE ADDRESS I.E NO.9, SESHADRI ROAD, ALWARPET, CHENNAI - 600 018. THE SIGN BOARD OF M/S MAYAN INFRASTRUCTURE PVT. LTD., WAS NOT FOUND AT THE SAID ADDRESS. INSTEAD THE SIGN BOARD OF M/S. VISHWAKARMA REAL ESTATES AND CONSTRUCTIONS (INDIA) PVT. LTD. WAS FOUND AT THE SAID ADDRESS. I ENQUIRED THE SECURITY GUARD OF THAT CAMPUS, WHETHER ANY COMPANY IN THE NAME OF M/S. MAYAN INFRASTRUCTURE PVT. LTD IS FUNCTIONING IN THE SAID PREMISES. THE SECURITY REPLIED THAT, NO SUCH COMPANY IN THE NAME OF M/S. MAYAN INFRASTRUCTURE WAS FUNCTIONING THERE. PHOTOGRAPHS WERE TAKEN AS A PROOF FOR NON-EXISTENCE OF THE COMPANY M/S. MAYAN INFRASTRUCTURE PVT. LTD. FROM THE ABOVE FACTS, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE EXPENDITURE IN THE NATURE OF SUBCONTRACTING EXPENSES PAID TO THE RELATED PARTY M/S. MAYAN INFRASTRUCTURE PVT. LTD. IS BOGUS AND M/S. MAYAN INFRASTRUCTURE PVT. LTD. IS ONLY A SHELL COMPANY EXISTING ONLY IN PAPER. ACCORDINGLY, THE SUBCONTRACTING EXPENSE CLAIMED BY THE ASSESSEE WAS DISALLOWED AS BOGUS EXPENSES. 6. BEFORE THE LD. CIT(A) ASSESSEE HAS HAS SUBMITTED A COPY OF THE IT RETURN FILED BY M/S. MAYAN INFRASTRUCTURE PVT. LTD. ALONG WITH P&L ACCOUNT AND B/S WITH ALL THE SCHEDULES THEREIN. BY CONSIDERING THE INCOME TAX RETURN AND ASSESSMENT OF THE LATTER COMPANY, THE LD. CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. WE FIND FROM THE APPELLATE ORDER THAT THE LD. CIT(A) HAS NOT MADE ANY EFFORT TO GET THE AUTHENTICITY OF EXISTENCE OF THE LATTER COMPANY M/S. MAYAN INFRASTRUCTURE PVT. LTD. OR THE ASSESSEE HAS I.T.A. NO. 2034/CHNY/18 5 FURNISHED ANY DETAILS ABOUT THE EXISTENCE OF THE LATTER COMPANY. IN THIS CASE, SINCE THE TURNOVER OF M/S. MAYAN INFRASTRUCTURE PVT. LTD. WAS MORE OR LESS WITH THE EXPENSES OF THE ASSESSEE, THE ASSESSING OFFICER MADE ALL THE EFFORTS TO LOCATE THE LATTER COMPANY FOR SERVING NOTICE UNDER SECTION 133(6) OF THE ACT THROUGH THE INSPECTOR OF INCOME TAX. THE REPORT OF THE INSPECTOR OF IT IS VERY CLEAR ABOUT NON-EXISTENCE OF M/S. MAYAN INFRASTRUCTURE PVT. LTD. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY HELD THAT THE EXPENSES PAID TO THE RELATED PARTY M/S. MAYAN INFRASTRUCTURE PVT. LTD. IS BOGUS AND M/S. MAYAN INFRASTRUCTURE PVT. LTD. IS ONLY A SHELL COMPANY, WHICH EXISTS ONLY IN PAPER. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND CONFIRM THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE GROUND RAISED BY THE REVENUE IS ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED. ORDER PRONOUNCED ON THE 31 ST DECEMBER, 2018 IN CHENNAI. SD/- SD/- (A.MOHAN ALANKAMONY) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 31.12.2018 VM/- I.T.A. NO. 2034/CHNY/18 6 /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.