DCIT, CHENNAI V. M/s. R.R. Constructions & Infrastructure India Pvt.Ltd., CHENNAI

ITA 2679/CHNY/2016

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7809 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 14-09-2016
• Court: TRIBUNAL
• Keywords: Business expenditure; Opportunity of being heard; Set aside
• Section: 148; 143(3); 80IA

Judgement Text

आयकर अपील य अ धकरण, “सी” यायपीठ, चे नई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ी ए. मोहन अलंकामणी, लेखा सद य एवं ी धु वु आर.एल रे डी, या यक सद य के सम Before Shri A. Mohan Alankamony, Accountant Member & Shri Duvvuru RL Reddy, Judicial Member I.T.A.Nos.2679, 2680 and 2681/Mds/2016 As ses s me nt Years: 2009-10, 2010-11 and 2012-13 The Deputy Commissioner of Income Tax, Corporate Circle 5(2), Chennai 34. Vs. M/s. R.R. Construction & Infrastructure India Pvt. Ltd., No. 1, Dorai Arasan Street, Saligramam, Chennai 600 093. [PAN: AADCR6735R] (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से / Appellant by : Shri A.V. Sreekanth, JCIT यथ क ओर से/Respondent by : None सुनवाई क तार ख/ Da te o f h e a r i n g : 27.04.2017 घोषणा क तार ख /Da te o f Pr o n o u n ce me n t : 28.04.2017 आदेश /O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: These three appeals filed by the Revenue pertaining to same assessee are directed against separate orders of the ld. Commissioner of Income Tax (Appeals) 3, Chennai dated 29.06.2016 relevant to the assessment years 2009-10, 2010-11 and 2012-13. 2. All the appeals of the Revenue are found to have been filed late by two days. The Assessing Officer has filed an affidavit for condonation of I.T.A. Nos.2679-2681/M/16 2 delay by stating that he was deputed for the search duty and therefore, he could not file the appeals within time. The ld. DR, citing the reasons as stated by the Assessing Officer, requested for condoning the delay and to admit the appeals for hearing. Since the Revenue was prevented by sufficient cause in not filing the appeals in time, we condone the delay of two days in filing the appeals and admit the appeal for hearing. 3. During the course of last hearing of the appeals, at the request of the ld. AR vide his letter dated 28.02.2017, the hearing the appeals are adjourned to 27.04.2017 and having noted the next date of hearing, the ld. AR has endorsed in the order sheet. When, the appeals are taken up for hearing on 27.04.2017, none appeared on behalf of the assessee and hence, we proceeded to decided the appeals after hearing the ld. DR. 4. The first common ground raised in the appeals of the Revenue for the assessment years 2009-10 and 2010-11 is that the ld. CIT(A) has erred in deleting the addition made on account of contract charges paid by the assessee to M/s. Shakti Projects. 4.1 Brief facts of the case are that the assessee is engaged in the business of civil construction and contractors, engineers & builders. The assessee filed its return admitting total income and the assessment under section 143(3) of the Income Tax Act, 1961 [“Act” in short] was completed on I.T.A. Nos.2679-2681/M/16 3 08.12.2011. Thereafter, the assessment as reopened by service of notice under section 148 of the Act dated 31.03.2014. After considering various details filed by the assessee, the assessment under section 143(3) r.w.s. 147 of the Act was completed on 31.03.2015 by assessing total income of the assessee at ₹.5,49,30,870/- after making various disallowances. 4.2 The assessee carried the matter in appeal before the ld. CIT(A). With regard to the issue of disallowance made on account of contract charges paid by the assessee to M/s. Shakti Projects, by following the earlier orders of the ld. CIT(A) for the assessment year 2011-12, the ld. CIT(A) deleted the addition made by the Assessing Officer and allowed the ground raised by the assessee. 4.3 On being aggrieved, the Revenue is in appeal before the Tribunal and challenged the deletion of addition. The ld. DR has submitted that against the order of the ld. CIT(A) for the assessment year 2011-12, the Department has preferred an appeal before the Tribunal and the Tribunal vide its order in I.T.A. No. 1010/Mds/2016 dated 30.09.2016, and the issue is decided in favour of the Revenue, which should be followed for the assessment years under consideration. 4.4 We have heard the ld. DR and perused the orders of authorities below. We find that the Assessing Officer had reopened the assessment on I.T.A. Nos.2679-2681/M/16 4 the basis of assessment order passed for the assessment year 2011-12, against which, the assessee filed an appeal before the ld. CIT(A). The ld. CIT(A), by following the appellate order for the assessment year 2011-12, deleted the addition made by the Assessing Officer. Against the order of the ld. CIT(A), the Department has preferred further appeal before the Tribunal for the assessment year 2011-12. Vide order in I.T.A. No. 1010/Mds/2016 dated 30.09.2016 for the assessment year 2011-12, the Tribunal has observed as under: “7. We have perused the orders of the authorities below. We also heard ld. Departmental Representative carefully. The reason why ld. Commissioner of Income Tax (Appeals) deleted the disallowance made by the ld. Assessing Officer considering the payments effected by the assessee to M/s. Sakthi Projects to be bogus, is reproduced hereunder:- “On the other hand, AR of the appellant has vehemently argued that statements recorded by the AO have categorically shown that M/s. Shakti Projects was doing of sub contract work and money withdrawn from the bank account of M/s. Shakti Projects is meant for M/s. Shakti Projects only. It is further stated by the AR of the appellant, AO has made an attempt to disprove the claim on mere surmises ignoring the replies given by the employees in the sworn statements. I find force in the arguments of the AR of the appellant. Further, I have found nothing adve.rse. in the above statement given by Mr. V.Subhash. The money withdrawn from the above mentioned bank account has been given to M/s. Shakti Projects. Moreover, AO has not carried out any enquiry to show M/s. Shakti Projects is bogus entity or it has not done sub contract work. I found that AO has not done any enquiry in this direction. Further, I have found that AO has not made any enquiry in the appellant's bank account. He has not questioned the payments made by the appellant to its sub contractor M/s. Shakti Projects. His entire enquiry has been on operation of bank account belongs to M/s. Shakti Projects. His objections are not against making of payment by the appellant to the M/s. Shakti Projects but the way the bank account belongs to M/s: Shakti Projects was operated. It is admitted by the AO that M/s. Shakti Projects has been doing sub contract work for A.Y. 2009-10, 10-11 and 2011- 12 and total value of the sub contract has been shown at Rs. 6,19,06,317. In para 2.1 and 2.2 of the assessment order, AO has stated that appellant company has made payment to Mls, Shakti Projects to the tune of Rs. 6,19,06,317 and closing I.T.A. Nos.2679-2681/M/16 5 balance was shown at Nil as on 31.03.2011. The above facts are very clear that appellant has got the work done by the sub-contractor M/s. Shakti Projects and payment was made to M/s. Shakti Projects. Therefore, I hold that Aa's findings in para 2.6 of the assessment order are found to be on surmises because mere operation of bank account of Shakti Projects by the employees of the appellant cannot be the basis for disallowances without proving sub contract work was not carried out by M/s. Shakti Projects. Therefore, I hold that AO has not brought out any cogent and worthwhile material to substantiate for disallowance of Rs. 15,10,507. On the other hand I found that appellant has incurred above mentioned expenditure for the purpose of sub contract work given to M/s. Shakti Project, which is nothing but ordinary business expenditure. In view of the above discussion, I direct the AO to delete the addition made on account of sub contract work done by the M/s. Shakti Projects amounting to Rs.15,10,507/-.’’ The ld. Assessing Officer had given a clear finding that M/s. Shakti projects had in its account opening form for its account maintained with Syndicate Bank mentioned the name of Shri. C G Rajesh Babu, with business address as RR Constructions, No.101, Meera Mansion, Athati Inn, Ameerpet, Hyderabad. Ld. Assessing Officer had also examined Shri. Subash an employee of the assessee in relation to withdrawals made by M/s. Sakthi Projects from their bank account and answers to the pertinent queries given by Shri. Subash is reproduced hereunder:- Qn.8. I am showing the bank statement of Shakti Projects in Syndicate Bank, Ameerpet, Hyderabad for the F.Y. 2010-11. It is seen that you have made following cash withdrawals: Date Cheque No. Withdrawal (₹) 3.4.2010 411881 4.00 lacs 6..4.2010 411882 9.00 lacs 8.4.2010 411883 9.00 lacs 13.4.2010 411885 9.00 lacs 15.4.2010 411889 9.00 lacs 16.4.2010 411890 9.00 lacs 174.2010 411892 9.00 lacs 19.4.2010 411894 9.00 lacs 20.4.2010 411895 7.00 lacs 27.4.2010 411896 8.00 lacs 14.5.2010 413401 9.00 lacs 14.6.2010 413402 1.00 lacs 16.6.2010 413404 9.50 lacs 18.6.2010 413409 9.50 lacs 19.6.2010 413411 9.50 lacs 22.6.2010 413413 9.50 lacs 25.6.2010 413414 9.50 lacs 20.7.2010 413415 9.00 lacs I.T.A. Nos.2679-2681/M/16 6 21.7.2010 413417 9.00 lacs 23.7.2010 413419 9.00 lacs 20.8.2010 413423 8.00 lacs 26.8.2010 413426 2.05 lacs 7.2.2011 413427 9.00 lacs Please verify the same with the bank statement and confirm. Please also confirm he mode of withdrawal. Ans. I have verified with the bank statement and hereby confirm that I have made the above withdrawal. All are by self-cheques. Qn.9 Why did you withdraw cash? Ans: We give payments to Shakti projects through RTGC or account payee cheques. Representatives from Shakti Projects will come I will accompany them to Bank and withdraw cash for them. For self-cheques, the Bank required some identity proof and hence, I accompanied them. Qn.10 To whom did you give the money withdrawn from the account of Shakti projects as detailed in Qn.6 above? Ans. Sometimes I will hand over the money to Mr. Kiran Kumarm office Assistant of RR Constructions. Rest of all times I will hand over the money to the representative of Shakti Projects." 8. The bank statements of M/s. Sakthi projects, withdrawals from which were made by assessee’s employees is reproduced hereunder:- Sl.No Date Transaction details Debits Credits 1 01.04.2010 B/F 20,25,601.5 0 2 03.04.2010 Lokesh 8,00,000 3 03.04.2010 Subhash 4,00,000 4 03.04.2010 Kiran Kumar 8,00,000 5 06.04.2010 Subhash 9,00,000 6 06.04.2010 RR Constructions Infrastructures I-16193 9,00,000 7 08.04.2010 RR Constructions Infrastructures I-05916 18,00,000 8 08.04.2010 Subhash 9,00,000 9 08.04.2010 Kiran Kumar 9,00,000 10 09.04.2010 RR Constructions Infrastructures I-01473 18,00,000 11 10.04.2010 Self 9,00,000 I.T.A. Nos.2679-2681/M/16 7 13 13.04.2010 RR Constructions Infrastructures I-08193 18,00,000 14 13.04.2010 Subhash 9,00,000 15 15.04.2010 RR Constructions Infrastructures 9,00,000 16 15.04.2010 Lokesh 9,00,000 18 16.04.2010 RR Constructions Infrastructures I-00425 27,00,000 19 16.04.2010 Subhash 9,00,000 20 16.04.2010 Lokesh 9,00,000 21 .04.2010 Subhash 9,00,000 22 19.04.2010 RR Constructions Infrastructures I-00247 25,00,000 23 19.04.2010 Subhash 9,00,000 24 19.04.2010 Lokesh 9,00,000 25 20.04.2010 Subhash 7,00,000 26 27.04.2010 RR Constructions Infrastructures I- 08811 16,00,000 27 27.04.2010 Lokesh 8,00,000 28 27.04.2010 Subhash 2,00,000 29 27.04.2010 Subhash 2,00,000 30 27.04.2010 Subhash 8,00,000 31 13.05.2010 RR Constructions Infrastructures I-0811 9,00,000 32 13.05.2010 Self 9,00,000 33 14.05.2010 RR Constructions Infrastructures I-09032 18,00,000 34 14.05.2010 Subhash 9,00,000 35 14.05.2010 Subhashcasa cheq withdrawal 9,00,000 36 14.06.2010 Subhash 1,00,000 37 14.06.2010 RR Constructions Infrastructures I 00288 1,00,000 38 15.06.2010 RR Constructions Infrastructures I 07434 19,00,000 39 15.06.2010 Cash Cheq Withdrawal 9,50,000 40 16.06.2010 Subhash 9,50,000 41 17.06.2010 RR Constructions Infrastructures I 5201 35,00,000 42 18.06.2010 Subhash 9,50,000 43 18.06.2010 Lokesh 9,50,000 44 19.06.2010 Subhash 9,50,000 45 19.06.2010 Kiran Kumar 9,50,000 46 22.06.2010 RR Constructions Infrastructures I 8738 9,50,000 47 22.06.2010 Subhash 9,50,000 48 25.06.2010 Subhash 9,50,000 49 25.06.2010 RR Constructions Infrastructures I 5448 9,50,000 50 20.07.2010 RR Constructions Infrastructures I 00195 18,00,000 51 20.07.2010 Subhash 9,00,000 52 20.07.2010 Kiran Kumar 9,00,000 53 21.07.2010 RR Constructions Infrastructures 06218 18,00,000 54 2.07.2010 Kiran Kumar 9,00,000 55 21.07.2010 Kiran Kumar 9,00,000 56 23.07.2010 RR Constructions Infrastructures I - 4003500 32,00,000 57 23.07.2010 Subhash 9,00,000 58 23.07.2010 Kiran Kumar 9,00,000 59 24.07.2010 Cash Cheq Withdrawal 7,00,000 60 24.07.2010 Cash Cheq Withdrawal 7,00,000 I.T.A. Nos.2679-2681/M/16 8 61 20.08.2010 RR Constructions Infrastructures IPVT 5451 19,50,000 62 20.08.2010 Lokesh 8,00,000 63 20.08.2010 Subhash 8,00,000 64 20.08.2010 Kiran Kumar 3,50,000 65 26.08.2010 RR Constructions Infrastructures I 3248 2,05,000 66 26.08.2010 Subhash 2,05,000 67 07.02.2011 RR Constructions Infrastructures I 78614 9,00,000 68 07.02.2011 Subhash 9,00,000 69 30.03.2011 RR Constructions Infrastructures I pvt 9011139 5,39,884 70 30.06.2011 Karimullah 5,39,800 3,67,94,800 3,65,20,485 9. It is manifest from the above bank account, that there were immediate cash withdrawals on the dates on which money was transferred by the assessee to the account of the Sakthi Projects. The withdrawals were on the very same day. Claim of the assessee is that M/s. Sakthi Projects had done sub contract works to the tune of ₹5 Crores. If so, it is impossible to believe that they had to use assessee’s employees for withdrawing their money from their bank account. It is also difficult to believe that the said company did not issue a single cheque to any other party except the cash withdrawals made through employees of the assessee. Assessee did not produce any record before ld. Assessing Officer to show that any regular work done by the Sakthi projects for it. In our opinion, on the face of the above facts there rested a heavier onus on the assessee to establish that work was indeed done by M/s. Sakthi Projects, so as to justify the payments to them. This was never discharged by the assessee. In these facts and circumstances, we are of the opinion that the ld. Assessing Officer took a right view in disbelieving the payments made to the Sakthi projects. The reason given by the ld. Commissioner of Income Tax (Appeals) to reverse the disallowance made by the ld. Assessing Officer that ld. Assessing Officer had not done enquiry to prove the bogus nature of Sakthi projects is in our opinion incorrect. When the records showed that assessee had withdrawn the money paid into the account of M/s. Sakthi Project, as mentioned by us, there was a heavier onus on the assessee to show through sufficient evidence that Sakthi Projects had done any work for it, which it failed to do. We therefore, have no hesitation to set aside the order of the ld. Commissioner of Income Tax (Appeals) and reinstate the disallowance made by the ld. Assessing Officer. Ground No.2 of the Revenue stands allowed.” 4.5 After carefully considering the facts and circumstances and respectfully following the above decision of the Coordinate Benches of the Tribunal in assessee’s own case for the assessment year 2011-12, we set I.T.A. Nos.2679-2681/M/16 9 aside the order of the ld. CIT(A) and sustain the addition made by the Assessing Officer for the assessment years under consideration. Thus, the ground raised by the Revenue for both the assessment years is allowed. 5. The next effective common ground raised in the appeals of the Revenue for the assessment years 2009-10, 2010-11 and 2012-13 is that the ld. CIT(A) has erred in holding that the assessee is eligible for deduction under section 80IA of the Act. Similar issue was considered by the Tribunal in assessee’s own case for the assessment year 2011-12 by observing as under: 11. We find that the ld. Assessing Officer had disallowed claim u/s.80IA of the Act for a reason that deduction under the said section was not available to the assessee, since it was doing only work contract awarded by another person. As per ld. Departmental Representative, the ld. Assessing Officer had given a clear finding that contract entered by the assessee was only renovation of existing infrastructure facility and assessee would not qualify as developer. As against this, the ld. Commissioner of Income Tax (Appeals) following the decision of the Co-ordinate Bench in assessee’s own case for the assessment year 2007-2008 in ITA No.2061/Mds/2010 allowed the claim. We are of the opinion that the decision relied on by the ld. Commissioner of Income Tax (Appeals) was for a year much prior to the impugned assessment year and there was no assimilation of facts by the ld. Commissioner of Income Tax (Appeals) to show that situation as it was relevant assessment year 2007-2008 remained the same for the impugned assessment year also. We are therefore of the opinion that this issues needs a fresh look by the ld. Assessing Officer. We therefore, set aside the order of ld. Commissioner of Income Tax (Appeals) and remit the issue regarding claim u/s.80IA of the Act back to the file of ld. Assessing Officer for consideration afresh in accordance with law. Ground Nos.3 & 4 are allowed for statistical purpose. I.T.A. Nos.2679-2681/M/16 10 5.1 Respectfully following the above decision of the Coordinate Benches of the Tribunal in assessee’s own case for the assessment year 2011-12, we set aside the order of the ld. CIT(A) and remit the matter back to the file of the Assessing Officer for fresh consideration in accordance with after allowing opportunity of being heard to the assessee. Thus, the ground raised by the Revenue is allowed for statistical purposes. 4. In the result, the appeals filed by the Revenue are allowed for statistical purposes. Order pronounced on the 28 th April, 2017 at Chennai. Sd/- Sd/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER Chennai, Dated, the 28.04.2017 Vm/- आदेश क त ल प अ े षत/Copy to: 1. अपीलाथ /Appellant, 2. यथ / Respondent, 3. आयकर आयु त (अपील)/CIT(A), 4. आयकर आयु त/CIT, 5. वभागीय त न ध/DR & 6. गाड फाईल/GF.