Assistant Commissioner of Income Tax, Circle-3, Guwahati V. Shri Druba Jyoti Hazarika, Guwahati

ITA 309/GTY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7591 (ITAT-GUWAHATI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 15-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UTTAM KUMAR BARTHAKUR
• Assessee Lawyers: D LOYI
• Keywords: Business income; Corroborative evidences; TDS
• Section: 44AD; 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI ECOURT, AT KOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.309/GAU/2018 ( / ASSESSMENT YEAR:2011-12) ACIT, CIRCLE-3, GUWAHATI VS. SHRI DHRUBA JYOTI HAZARIKA HOUSE NO. 191, AMRIT PATH, NEAR GANESHGURI, GUWAHATI-781006 ./ ./PAN/GIR NO.: ABCPH 5924 R (ASSESSEE) .. (REVENUE) C.O. NO. 01/GAU/2019 (ARISING OUT OF ITA NO.309/GAU/2018 ( / ASSESSMENT YEAR: 2011-12) SHRI DHRUBA JYOTI HAZARIKA HOUSE NO. 191, AMRIT PATH, NEAR GANESHGURI, GUWAHATI-781006 VS. ACIT, CIRCLE-3, GUWAHATI ./ ./PAN/GIR NO.: ABCPH 5924 R (ASSESSEE) .. (REVENUE) ASSESSEE BY : SHRI UTTAM KUMAR BARTHAKUR, ADVOCAT E RESPONDENT BY : SHRI D. LOYI, ADDL. CIT / DATE OF HEARING : 13/05/2019 /DATE OF PRONOUNCEMENT : 24/07/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE AND TH E CROSS OBJECTION FILED BY THE ASSESSEE , PERTAINING TO ASSESSMENT YEAR 2011-1 2, ARE DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEAL)-2 , GUWAHATI, WHICH IN TURN SHRI DHRUBA JYOTI HAZARIKA ITA NO.309/GAU/2018& C.O. NO. 01/GAU/2019 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 2 22 2 ARISE OUT OF AN ASSESSMENT ORDER PASSED BY THE ASS ESSING OFFICER U/S 263 R.W. S. 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT) DATED 09/03/2016. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN FACTS AS WELL AS IN LAW IN DELETING THE ADDITION / DISALLOWANCE OF RS. 96,69,785/- AS UNDISCLOSED BUSINESS RECEIPT. II) THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OR ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF AP PEAL. 3. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE CO URSE OF ASSESSMENT PROCEEDING UNDER SECTION 143(3)/263 OF THE INCOME TAX ACT, 196 1,THE AO NOTICED THAT THE ASSESSEE HAS SHOWN GROSS RECEIPT FROM BUSINESS OF C IVIL WORKS AT RS. 6,69,064/- ONLY, WHEREAS AS PER 26AS THE TOTAL CONTRACT RECEIP T WAS OF RS. 5,09,63,009/-. THE LD. CIT U/S 263 HAS DIRECTED AO TO MAKE PROPER ENQU IRES AND REFRAME THE ASSESSMENT ON THIS ISSUE.DURING THE SCRUTINY PROCEE DINGS, THE ASSESSEE EXPLAINED THAT IN EARLIER YEARS THE ASSESSEE WAS CARRYING ON CONTRACT BUSINESS UNDER THE NAME OF ' NORTH EASTERN ENGINEERING CONSTRUCTION COMPANY (NEECCO). HOWEVER, IN THE FY 2009-L0, ALL THE ASSETS AND LIABILITIES OF T HE SAID BUSINESS INCLUDING THE CONTRACTS AWARDED NEECO WAS TAKEN OVER AS GOING CON CERN BY A NEWLY INCORPORATED COMPANY STYLED NORTH EASTERN ENGINEERI NG CONSTRUCTION COMPANY PVT. LTD. (NEECCO PVT. LTD.). DURING THE YEAR UNDER CONSIDERATION THE CONTRACTS WHICH WERE AWARDED TO NEECCO IN EARLIER YEARS WERE EXECUTED BY NEECCO PVT. LTD. BUT THE CONTRACTEE CONTINUED TO DEDUCT AND DEP OSIT ITDS AGAINST THE SAID CONTRACT IN THE PAN OF THE ASSESSEE. IN THE ABOVE C IRCUMSTANCES, THE COMPANY I.E. NEECCO PVT. LTD., ALLOWED ITDS AMOUNT OF RS. 6,69,0 64/- TO THE ASSESSEE. THEREFORE, THE ASSESSEE HAS SHOWN THE ENTIRE AMOUNT I.E 100% OF RS. 6,69,064/- AS HIS INCOME. THE REMAINING AMOUNT OF CONTRACT RECEIP T OF RS. 5,02.93,915/- ( RS. 5,09,63,009/- MINUS RS. 6,69,064/-) WAS SHOWN AS IN COME BY THE SAID NEECCO PVT. LTD WHO ACTUALLY EXECUTED THE SAID CONTRACT WO RKS. IT IS OBSERVED FROM THE AUDITED FINANCIAL STATEMENTS OF THE NEECCO PVT, LTD . THAT THE SAID COMPANY HAS SHOWN TOTAL CONTRACT RECEIPT OF RS. 37,64,11,220/-. THE ASSESSEE WAS REQUESTED TO FURNISH THE PARTY WISE BREAK-LIP OF THE CONTRACT RE CEIPT OF RS. 37,64,11,220/- SHRI DHRUBA JYOTI HAZARIKA ITA NO.309/GAU/2018& C.O. NO. 01/GAU/2019 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 3 33 3 SHOWING CONTRACT RECEIPT IN RESPECT OF WHICH ITDS W AS CLAIMED BY THE ASSESSEE AND THE CONTRACT RECEIPT IN RESPECT OF WHICH THE IT DS WAS CLAIMED BY THE SAID NEECCO PVT. LTD. THE BREAK-UP FURNISHED BY THE ASSE SSEE IS AS UNDER :- IN VIEW OF THE ABOVE, THE SUBMISSION OF THE ASSESSE E ON THIS ISSUE TO THE EXTENT OF RS. 4,06,24,160/- WAS NOT ACCEPTED BY AO. HOWEVER, THE ASSESSEE COULD NOT GIVE ANY EXPLANATION IN RESPECT OF THE BALANCE AMOUNT OF RS. 96,69,785/- (RS. 5,09,63,009/- MINUS RS. 6,69,064/- MINUS RS. 4,06,2 4,160/-). THEREFORE, THE BALANCE AMOUNT OF RS. 96,69,785/- IS TREATED AS UND ISCLOSED CONTRACT RECEIPT OF THE ASSESSEE AND THEREFORE AO MADE ADDITION. 4. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE AD DITION.AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US AND ASSESSEE IS IN CROSS-OBJ ECTION BEFORE US. 5. THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERA TED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OU R EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER OF THE LD. CIT(A). SHRI DHRUBA JYOTI HAZARIKA ITA NO.309/GAU/2018& C.O. NO. 01/GAU/2019 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 4 44 4 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE OF EXPENSES INCURRED IN REGARD TO RECEIPT OF RS. 96,69,785/-. IN THE ABSENCE OF SAME THE ASSESSING OFFICER HAS AD DED BACK THE ENTIRE AMOUNT OF RS. 96,69,785/-. ON APPEAL, THE LD. CIT(A) NOTED TH AT THE ASSESSEE HAS FAILED TO RECONCILE THE DIFFERENCE THEREFORE HE MADE THE ADDI TION @ 10% OF THE RECEIPT. WE NOTE THAT SINCE THE ASSESSEE COULD NOT PRODUCE ANY SUPPORTING EVIDENCE TOWARDS EXPENSES AND COULD NOT RECONCILE THE CONTRACT RECEI PT DURING THE APPELLATE PROCEEDINGS,THEREFORE THE LD. CIT(A) ESTIMATED THE PROFIT FROM THE AFORESAID CONTRACT RECEIPT @ 10%. WE NOTE THAT WHEN THE ASSES SEE HAS FAILED TO RECONCILE THE DIFFERENCE IN FORM 26AS, THEN THIS IS ONLY THE ALTE RNATIVE AVAILABLE BEFORE THE LD. CIT(A) WHICH IS REASONABLE AND COMPARABLE WITH OTHE R CASES.WE NOTE THAT THE AFORESAID AMOUNT OF RS. 96,69,785/- IS A PART OF T HE GROSS RECEIPT OF RS. 5,09,63,009/- MENTIONED IN 26AS AND EVIDENTLY SUBJE CTED TO TDS. IN ABSENCE OF ANY RECONCILIATION, THERE IS NO ALTERNATIVE BUT CON SIDER IT AS RECEIPT IN THE HANDS OF THE ASSESSEE. BUT, BEING A PART OF CONTRACT RECEIP T, WHICH HAS BEEN SUBJECTED TO TDS, ONE MUST INCUR EXPENSES TO EARN IT. ACCORDING LY, NET PROFIT FROM SUCH BUSINESS MUST BE ESTIMATED. HOWEVER, PRESUMPTIVE RA TE OF 8 %, AS PRESCRIBED IN SECTION 44AD CANNOT BE APPLIED FOR A.Y. 2011-12, AS THE SAID PROVISION IS APPLICABLE FOR GROSS RECEIPTS UP TO RS. 60 LAKHS FO R THE SAID YEAR. THEREAFTER, LD. CIT(A) CONSIDERED THAT IT WOULD BE JUSTIFIABLE IN E STIMATING THE PROFIT FROM SUCH RECEIPT AT 10% (TEN PER CENT) I.E. AT RS. 9,66,978/ -.THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND HENCE WE APPROVE THE ORDER OF THE LD. CIT(A). 7. NOW WE SHALL TAKE CROSS OBJECTION FILED BY THE A SSESSEE IN C.O. NO. 01/GAU/2019. 8. GROUND NO. 1 RAISED BY THE ASSESSEE IN CROSS OBJ ECTION IS SUPPORTIVE TO THE ORDER OF THE LD. CIT(A). SINCE WE HAVE ALREADY CONFIRMED THE ORDER PASSED BY THE LD. CIT(A) THEREFORE CROSS-OBJECTION NO. 1 RAISED BY TH E ASSESSEE BECOMES INFRACTUOUS AND DOES NOT REQUIRE ADJUDICATION. SHRI DHRUBA JYOTI HAZARIKA ITA NO.309/GAU/2018& C.O. NO. 01/GAU/2019 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 5 55 5 9. GROUND NO. 2 RAISED BY THE ASSESSEE IN CROSS-OBJ ECTION HAS NOT BEEN PRESSED BY THE LD. COUNSEL THEREFORE WE DISMISS THE SAME AS NO T PRESSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E CROSS-OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 24.07.2019 SD/- ( A.T. VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 24/07/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-3, KOLKATA 2. SHRI DHRUBA JYOTI HAZARIKA 3. C.I.T(A)- 4. C.I.T.- GUWAHATI 5. CIT(DR), GAUHATI BENCH, GUWAHATI. 6. GUARD FILE. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY / DDO / H . O. O ITAT, GAUHA TI BENCH