ITO, Rohtak V. Sh. Bhusan Kumar Prop., Rohtak

ITA 372/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3629 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 27-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C GUPTA
• Assessee Lawyers: US AGGARWAL
• Section: 44AD; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO.372(DEL)/2010 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, SHRI BHUSHAN KUMAR, WARD-2, ROHTAK. VS. PROP. M/S B.K. BUILDCON, H.NO. 410/26, JAWAHAR NAGAR, ROHTAK. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.C. GUPTA, SR. DR RESPONDENT BY: SH RI U.S. AGGARWAL, ADVOCATE ORDER PER K.G. BANSAL : AM THIS APPEAL OF THE REVENUE EMANATES FROM TH E CONSOLIDATED ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), ROHTAK, IN APPEAL NOS. 426 TO434/RTK/08-09 DATED 18.11.2009, PERTA INING TO ASSESSMENT YEAR 2006-07. THE NAME OF THE ASSESSEE APPEARS AT SL. NO. (VIII) OF THE CAUSE TITLE. THE REVENUE HAS TAKEN TWO GROUNDS IN THE APPEAL, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENC E:- (I) IN THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) HAS ERRED IN DELETING ADDITIONS MADE IN THE HANDS O F THE ASSESSEE ON THE PROTECTIVE BASIS, WHILE SUBSTANTIVE ADDITIO NS MADE IN THE HANDS OF M/S PACL INDIA LTD., NEW DELHI IN THE A SSESSMENT YEAR 2006-07 WERE STILL PENDING AT THE FIRST APPELLATE STAGE. (II) IN THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO GIVE CREDIT OF T DS TO THE ASSESSEE ITA NO. 372(DEL)/2010 2 EVEN AFTER HOLDING THAT THE AMOUNTS ON WHICH TAX HAS BEEN DEDUCTED AT SOURCE, HAS ACTUALLY NOT BEEN RECE IVED BY THE ASSESSEE. 2. BEFORE US, THE LD. DR SUBMITS THAT THERE ARE ABOUT 80 SUCH CASES AS THE CASE OF THE ASSESSEE, WHERE THEIR NAMES HAVE BEEN USED BY PACL (I) LTD. FOR SIPHONING OFF OF THE MONEY BY US ING THE DEVICE OF CONTRACT WORK. THE ADDED FEATURE OF THIS CASE IS THAT THE STATEMENT OF THE ASSESSEE HAS BEEN RECORDED. THE SALIENT FEATURES OF ALL THESE CASES HAVE BEEN MENTIONED IN THE ASSESSMENT ORDER. THE SU MMARY, AS MENTIONED IN THE ASSESSMENT ORDER, IS REPRODUCED BELOW:- (I) THE ASSESSEE IN HIS STATEMENT STATED THAT HE VISITED THE OFFICE OF COMPANY DURING THE MONTH OF AUGUST, 2005 AND KNEW ABOUT THE CONTRACT WORK IT IS SEEMS THAT THE COMPANY ALLOTTED CONTRACT WORK DURING THE MONTH OF JULY, 2005 ITSELF. (II) NO. SECURITY/BANK GUARANTEE WAS GIVEN WHE REAS COMPANY ISSUED CHEQUES OF RS. 24,50,000/- AS ADVANCE W ITHOUT VERIFYING THE CAPACITY, BACKGROUND, FINANCIAL STATUS AND ALLIED FACTORS OF THE ASSESSEE. (III) ASSESSEE DID NOT KNOW THE NAMES OF THE P ERSONS WHO ACCOMPANIED HIM FROM MADRAS STATION TO WORK SITE. (IV) NO EVIDENCE WITH REGARD TO PURCHASE OF EQUI PMENT FROM DELHI AND ITS TRANSPORTATION TO MADRAS IN TRAIN WAS P RODUCED. TOTAL NUMBER OF TASLA/KASSI STATED TO BE EMPLOYED WAS TWENTY WHEREAS NUMBER OF LABOURER EMPLOYED WERE 150-200 PER DAY. IT CANNOT BE IMAGINED AS TO HOW THE WORK WAS E XECUTED WITHOUT NECESSARY EQUIPMENTS. ITA NO. 372(DEL)/2010 3 (V) ASSESSEE NEVER SUBMITTED COPIES OF BILLS/VO UCHERS TO THE COMPANY IN LIEU OF EXPENSES INCURRED BY HIM. NE ITHER ANY PROGRESS REPORT IN RESPECT OF THE WORK EXECUTED WAS SUBMITTED BY THE ASSESSEE NOR THE SAME WAS CALLED FOR BY THE COMPANY. (VI) NEITHER THE ASSESSEE VISITED THE COMPANY OFFICE AFTER COMPLETION OF WORK NOR ANY COMPANY REPRESENTATIVE ASKED HIM TO FILE DETAILS OF WORK EXECUTED. (VII) ASSESSEE DID NOT EXECUTE WORK FOR M/S PACL BEFORE AND AFTER THIS WORK. (VIII) THE ENTIRE TRANSACTION INVOLVING DEPOSIT OF CONTRACT RECEIPT IN A BANK AND ITS WITHDRAWAL IN CASH WAS COMPLETED WI THIN A SHORT SPAN OF 8 DAYS WHILE THE CONTRACT ALLEGEDLY F OR THREE MONTHS. (IX) THE ASSESSEE OPENED SAVING BANK ACCOUNT AND WITHDRAWN THE MONEY IN CASH TO AVOID PAYMENT OF BANKING CASH TRANSACTION TAX. (X) NO BANK ACCOUNT WAS OPENED BY THE ASSESSE E NEAR WORK SITE AT CHENNAI AND ENTIRE CASH FOR MAKING PAYMENTS TO LABOUR ETC. WAS ELIGIBLY CARRIED BY THE ASSESSEE FROM RAOHT AK TO CHENNAI, WHICH DEFIES COMMON SENSE AS WELL AS BUSINESS PRUDENT. (XI) THE ASSESSEE FAILED TO GIVE THE COMPLETE AND EXACT ADDRESS OF THE PLACE OR VILLAGE OR CITY WHERE THE SO-CALLED WORK WAS DONE. (XII) THE ASSESSEE HAD NOT CONTACTED PACL COMP ANY ON THE BASIS OF ANY ADVERTISEMENT IN THE NEWSPAPERS/TV ETC. FOR TAKING THE SO- CALLED CONTRACT WORK ALLEGEDLY THROUGH AN UNRE LATED THIRD PERSON. (XIII) THE ASSESSEE WAS NOT EVEN AWARE MEASURE MENT OF THE LANDS IN WHICH THE FILLING WORK WAS DONE. (XIV) PAYMENTS FROM THE PACL HAVE BEEN RECEIVED WITHIN 8 DAYS WITHOUT FURNISHING ANY EVIDENCE FOR COMPLETION OF WORK/VOUCHERS. ITA NO. 372(DEL)/2010 4 (XV) THE ASSESSEE HAS NO BASIC WORKING KNOWLEDG E OF ANY LANGUAGE OF SOUTHERN INDIA. (XVI) EVEN DETAILS OF THE MODE OF TRANSPORT US ED FOR GOING TO THE WORK SITE COULD NOT BE SAID BY THE ASSESSEE IN THE STATEMENTS RECORDED. 2.1 IN THE LIGHT OF THE FACTS MENTIONED IN THE ORD ERS OF THE LOWER AUTHORITIES AND THE AFORESAID STATEMENT, IT IS ARGUED THAT NO EXPENDITURE HAS BEEN INCURRED IN EARNING THE INCOME. IT IS A LSO NOT SPECIFICALLY SUBMITTED THAT THE MONEY WITHDRAWN FROM THE BA NK ACCOUNT HAS BEEN RETURNED TO PACL(I) LTD. THEREFORE, THE WHOL E OF THE AMOUNT RECEIVED BY THE ASSESSEE FROM THE AFORESAID COMPANY IS LIABLE TO BE TAXED U/S 56 OF THE ACT. 2.2 IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF SMT. KAMLESH & OTHERS I N ITA NO. 225(DEL)/2010 ETC. DATED 31.3.2010, A COPY OF WHICH HAS BEEN PLACED BEFORE US. THE OPERATIVE PORTION OF THE ORDER IS CONTAINED IN PARAGRAPHS 4 AND 5, WHICH ARE REPRODUCED BELOW:- 4. WE HAVE HEARD THE LD. DR. NONE WAS P RESENT ON BEHALF OF THE ASSESSEE AND HENCE WITH THE HELP OF THE LD. DR WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW. IF THE ASSESSING OFFICER WAS OF THE VIEW THAT NO WORK HAS BEEN DONE BY ANY OF THE CONTRACTOR, THE AMOUNT RECEIV ED ITSELF ITA NO. 372(DEL)/2010 5 CANNOT BE CONSIDERED TO BE INCOME OF THE ASSESS EE BUT ONLY THE PROFIT FROM SUCH RECEIPT CAN BE BROUGHT TO TAX. THE ASSESSEE HEREIN BEING FOUND TO BE NAME LENDERS COU LD HAVE CHARGED ONLY THE COMMISSION FOR SO LENDING THE N AME. IN THE FORM OF BANK STATEMENT IT IS ALSO EVIDENT THAT THE AMOUNT RECEIVED WAS PURPORTED TO BE REFUNDED BACK TO P ACL INDIA LTD. THEREFORE, INCOME OF THE PRESENT ASSESSEES ARE ONLY TO THE EXTENT OF RECEIVING COMMISSION AND SINCE AL L THESE PERSONS HAVE OFFERED 8% OF THEIR INCOME, NO FU RTHER AMOUNT IS TAXABLE. AT THE SAME TIME, THE LD. CIT(A) HAS FOUND THAT THE INCOME IS NOT ASSESSABLE AS BUSINESS INC OME OR UNDER SECTION 44AD OF THE ACT BUT ONLY AS INCOME FROM OTHER SOURCES WHICH IN ANY CASE COULD NOT HAVE EXCEE DED THE AMOUNT OFFERED FOR TAX. SINCE CORRECT INCOME HAS BEEN OFFERED FOR TAX BY THE ASSESSEES HEREIN, THE ASSESSING OFFICER WAS, THEREFORE, IN ERROR IN TAXING THE ENTIRE SUM RECEIVED AS INCOME. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). 5. AS REGARDS CREDIT FOR TDS, SINCE THE INCOME HAS BEEN ASSESSED IN THE HANDS OF THE ASSESEES AND THE T AX WAS DEDUCTED FROM THEIR INCOME, THE PERSONS ARE EN TITLED TO CREDIT FOR THE TAX DEDUCTED AT SOURCE. THEREFORE, HER E ALSO THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A). 2.3 THE LD. COUNSEL ALSO STATED THAT THE ASSE SSEE HAS CARRIED OUT CONTRACT WORK FOR THE PACL, HOWEVER, HE WAS NOT ABLE TO BRING ANY EVIDENCE ON RECORD TO SUPPORT THE AFORESAID CONT ENTION. 3. WE HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS MADE BEFORE US. WE ARE OF THE VIEW THAT THE SUBMIS SIONS OF THE REVENUE STAND ON SOUNDER FOOTING THAN THOSE OF THE LEARNED COUNSE L. THE ASSESSEE HAS FAILED TO BRING ANY EVIDENCE ON RECORD THAT HE CON DUCTED ANY SUBSTANTIVE ITA NO. 372(DEL)/2010 6 BUSINESS. IN SUCH A CIRCUMSTANCE, HE CAN ONLY B E TAKEN AS A NAME- LENDER, WHOSE INCOME MAY NOT EXCEED 8% OF THE A MOUNT, FOR WHICH ENTRIES WERE PROVIDED. IN THIS VIEW OF THE MAT TER, THE ORDER OF THE TRIBUNAL IN THE CASE OF SMT. KAMLESH & OTHERS IS MADE APPLICABLE TO THIS CASE ALSO SUBJECT TO THE RIGHT OF THE REVENUE TO ARGUE INDEPENDENTLY IN THE CASE OF PACL (I) LTD. THAT THE EXPENDITURE CLAIM ED BY WAY OF JOB WORK WAS BOGUS. SIMILAR DECISION WAS ARRIVED AT BY THE TRIBUNAL IN THE CASE OF SHRI KRISHAN KANT IN ITA NO. 366(DEL)/2010 FOR ASSESSMENT YEAR 2006- 07 DATED 31.05.2010, A COPY OF WHICH HAS ALSO BEEN BROUGHT ON RECORD. SINCE THE UNDERSIGNED WAS SIGNATORY TO THAT ORD ER, THE SAME DECISION IS TAKEN IN THIS CASE. 4. IN THE RESULT, THE APPEAL IS DISMISSED SUBJEC T TO THE AFORESAID REMARKS. 5. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29.06.2010 SOON AFTER THE HEARING WAS CONCLUDED. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 29.06.2010. SP SATIA ITA NO. 372(DEL)/2010 7 COPY OF THE ORDER FORWARDED TO:- SHRI BHUSHAN KUMAR, H.NO. 410/26,JAWAHAR NAGAR, ROH TAK. ITO, WARD-2, ROHTAK. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.