ITO, Rohtak V. Sh. Govind Kumar, Rohtak

ITA 4708/DEL/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7093 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 28-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMARDR
• Keywords: Business income; Additional evidence
• Section: 44AD; 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'C' BEFORE SHRI R.P. TOLANI,JM & SHRI A N PAHUJA,AM ITA NO.4708/DEL/2011 ASSESSMENT YEAR:-2006-07 INCOME TAX OFFICER, WARD 2, ROHTAK V/S SHRI GOVIND KUMAR S/O SHRI KAILASH CHAND, H.NO. 184/19, WARD NO.30, CHINYOT COLONY, ROHTAK (PAN: AAPVPK 8724 R) [APPELLANT] [RESPONDENT] ASSESSEE BY :- NONE REVENUE BY:- SHRI B.R.R. KUMAR,DR DATE OF HEARING 29-12-2011 DATE OF PRONOUNCEMENT 29-12-2011 O R D E R A N PAHUJA: THIS APPEAL FILED ON 28.10.2011 BY THE REVENUE AGAINST AN ORDER DATED 29-08-2011` OF THE LD. CIT ( APPEALS)- ROHTAK FOR THE ASSESSMENT YEAR 2006-07, RAISES THE FOLLOWI NG GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT (A) HAS ERRED IN LAW AND IN FACTS BY DELETING T HE ADDITIONS MADE BY ASSESSING OFFICER IN THE HANDS OF THE ASSES SEE ON THE PROTECTIVE BASIS, WHILE THE SUBSTANTIVE ADDITIONS M ADE IN THE HANDS OF M/S PACL INDIA LTD. NEW DELHI FOR ASSESSME NT YEAR 2006-08 IS STILL PENDING AT THE APPELLATE STAGE. 2. THE APPELLANT CRAVES LEAVE TO ADD, DELETE OR AME ND ANY GROUND OR GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE TH AT RETURN DECLARING INCOME OF ` `2,36,160/- FILED ON 24 TH JULY, 2006 BY THE ASSESSEE, HAVING RECEIPTS FROM PACL INDIA LTD., WAS PROCESSED U/S 143(1) OF T HE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). DURING THE PROCESSING OF RETURN, THE ASSESSING OFFICER [AO IN SHORT] NOTICED CERTAIN DIS CREPANCIES IN THE REFUND CLAIM ON THE BASIS OF TDS CERTIFICATE ISSUED BY THE PACL INDIA LTD. . THE SAID ITA NO.4708 /DEL/2011 2 2 CERTIFICATE REFLECTED GROSS RECEIPTS OF ` ` 29,52,000/-. HOWEVER, ON ENQUIRIES IT TRANSPIRED THAT NO CONTRACT ACTIVITY WAS UNDERTAKEN BY THE ASSESSEE. ACCORDINGLY, AFTER RECORDING REASONS, IN WRITING, THE AO ISSUED NOTICE U/S 148 OF THE ACT. THE ASSESSEE DID NOT APPEAR NOR FILED ANY REPLY. SUBSE QUENTLY, IN RESPONSE TO NOTICE DATED 22.11.2010 U/S 142 (1) OF THE ACT, , THE ASS ESSEE SUBMITTED THAT RETURN ALREADY FILED ON 24.07.2006 MAY BE TREATED AS RETUR N IN RESPONSE TO NOTICES U/S 148 OF THE ACT. NO OTHER DOCUMENT OR INFORMATION W AS FILED DESPITE SUFFICIENT OPPORTUNITY ALLOWED. THEREFORE, THE AO PROCEEDED T O COMPLETE THE ASSESSMENT ON THE BASIS OF MATERIAL ON RECORD. THE AO FURTHER POINTED OUT THAT 128 PERSONS IN ROHTAK CLAIMED TO HAVE UNDERTAKEN CONTRACT WORK FOR PACL AMOUNTING TO ` ` 36,47,41,500/- ,WITHOUT ANY ACTUAL CONTRACT WORK O UT OF THESE, 64 PERSONS FILED THEIR RESPECTIVE RETURNS. ON ENQUIRIES IN OTHER SI MILAR CASES, IT WAS NOTICED THAT THE ASSESSEES DID NOT HAVE SUFFICIENT EXPERIENCE TO UNDERTAKE CONTRACT ACTIVITY . SINCE DESPITE SUFFICIENT OPPORTUNITY THE ASSESSEE D ID NOT ESTABLISH THE GENUINENESS OF THEIR CLAIM NOR RESPONDED TO NOTICE S U/S 142(1) OF THE ACT, THE AO OBSERVED AS UNDER:- I) NO DOCUMENTARY EVIDENCE IN SUPPORT OF CLAIM OF DOING CONTRACT WORK OF THE PACL INDIA LTD., B 1/5, PASCHI M VIHAR, NEW DELHI HAS BEEN PRODUCED. II) NO VOUCHER OF ANY EXPENSE WAS PRODUCED. III) THE ASSESSEE EVEN FAILED TO GIVE THE COMPLETE AND EXACT ADDRESS OF THE PLACE WHERE THE SO-CALLED WORK WAS D ONE. IV) THE ASSESSEE HAS NOT PRODUCED ANY LABOURER REGI STER OR SALARY REGISTER, ETC. V) THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE REGA RDING EXPENSES. VI) ASSESSEE HAS NOT OPENED ANY BANK ACCOUNT AT OR NEAR THE WORKSITE ALLEGED TO BE SITUATED NEAR CHENNAI, WHICH IS BEYOND COMMON SENSE AND BUSINESS PRUDENCE. VII) ASSESSEE HAS FAILED TO BRING ON RECORD EVEN A SINGLE DOCUMENTARY EVIDENCE IN THE FORM OF PAYMENT THROUGH CHEQUES OR DEMAND DRAFT REGARDING PAYMENT OF ANY EX PENSE ON ACCOUNT OF ALLEGED CONTRACT WORK. 2.1 THE AO ALSO CALLED FOR THE COPY OF BANK ACCOUN T OF THE ASSESSEE WHICH REVEALED TOTAL DEPOSITS OF ` 33,96,760/- DURING THE YEAR UNDER CONSIDERATION WHEREAS IN THE RETURN, THE ASSESSEE REFLECTED INCOM E OF ` ` 2,36,160/- U/S 44AD OF THE ACT @8% OF THE RECEIPTS OF ` `29,52,000/-. ACCORDINGLY, THE AO CONCLUDED THAT THE ASSESSEE SUPPRESSED RECEIPTS OF ` `4,44,760/-. SINCE THERE WAS NOTHING ITA NO.4708 /DEL/2011 3 3 TO SUGGEST THAT THE ASSESSEE UNDERTOOK ANY WORK FOR PACL INDIA LTD., THE AO ASSESSED THE ENTIRE RECEIPTS OF ` ` 33,96,760/- UNDER THE HEAD INCOME FROM OTHER SOURCES ON PROTECTIVE BASIS, SUBSTANTIVE ADDITION HAVING BEEN MADE IN THE CASE OF PACL INDIA LTD.. 3. ON APPEAL, THE LEARNED CIT(A) DELETED THE ADDIT ION WHILE FOLLOWING A NUMBER OF DECISIONS OF THE ITAT, IN THE FOLLOWING T ERMS:- 4. THE AR MADE SUBMISSIONS ON SIMILAR LINES AS IN APPEAL NOS.426 TO 434/RTK/08-09, 489 & 492/RTK/08-09, 475 TO 488, 490 & 491/RTK/08-09 AND 439 TO 442, 457 TO 460/RTK/09-10. THE AR FURTHER SUBMITTED THAT THE A DDITIONS MADE IN THE CASE OF M/S PACL LTD. FOR THE ASSESSMEN T YEAR 2006-07 WAS DELETED BY THE CIT(A) AS THE LAND DEVEL OPMENT EXPENSES HAVE NOT BEEN CLAIMED BUT ONLY CAPITALIZED BY M/S PACL LTD. 5. THE FACTS AND CIRCUMSTANCES HAVE BEEN DISCUSSED IN DETAIL BY THE ASSESSING OFFICER IN EACH OF THE ASSESSMENT ORDERS PASSED ON PROTECTIVE BASIS. SUBSTANTIVE ADDITION H AS BEEN MADE BY THE ASSESSING OFFICER OF M/S PACL INDIA LTD . IN THE ORDER PASSED U/S 153A(B)/143(3) OF THE I.T. ACT ON 31.12.2008. ALL THE APPELLANTS IN THE APPEALS UNDE R CONSIDERATION HAVE SHOWN THEMSELVES AS SUBCONTRACTO RS OF M/S PACL INDIA LTD. THE ASSESSING OFFICER HAS FOLL OWED THE ASSESSMENT ORDERS PASSED BY HIS PREDECESSOR IN OTHE R CASES WHO HAVE ALSO SHOWN THEMSELVES AS SUBCONTRACTORS OF M/S PACL INDIA LTD. THESE APPEALS HAVE BEEN DECIDED BY MY PREDECESSOR IN FOUR CONSOLIDATED ORDERS; TWO DATED 18.11.2009 IN APPEAL NOS.426 TO 434/RTK/08-09 AND 4 89 & 492/RTK/08-09; ONE DATED 6.11.2009 IN APPEALS NO. 4 75 TO 488, 490 AND 491/RTK/08-09 AND ONE DATED 04.05.2010 IN APPEALS NO.439 TO 442, 457 TO 460/RTK/09-10. THE I SSUES HAVE BEEN DISCUSSED IN DETAIL FROM ALL ANGLES IN TH E AFORESAID APPEAL ORDERS. 5.1 THE DEPARTMENT HAS FILED APPEALS BEFORE THE HONBLE ITAT AND THE HONBLE ITAT,DELHI BENCH,NEW DELHI HAS DECI DED THE APPEALS IN TWELVE CASES NAMELY SMT. KAMLESH,SH. LUXMI CHAND AND SH. VIKRAM VIDE ORDER DATED 31.3.2010 IN ITA NOS. 225,230 & 231/DEL./2010,MS. DAIZY SHARMA VIDE ORDER DATED 14.3.2010 IN ITA NO. 2271/DEL./2010,SHRI KRIS HAN KANT VIDE ORDER DATED 31.5.2010 VIDE ITA NO.366(DEL)/201 0,UMA D/O SHRI PARKASH CHAND,SHRI VIPIN SHARMA ORDER DATE D 14.5.2010 VIDE ITA NOS.220 & 221/DEL./2010,SMT. MEE NU ARORA VIDE ORDER DATED 13.5.2010 VIDE ITA NO. 370/D EL./2010 ITA NO.4708 /DEL/2011 4 4 AND SURINDER KAPOOR,SHRI SANJAY KUMAR,SMT. SUDESH R ANI AND SH. SOM NATH VIDE ORDER DATED 24.6.2010 VIDE IT A NOS. 369,374 TO 376/DEL./2010 IN WHICH THE VIEW TAKEN BY MY PREDECESSOR ,INCLUDING THAT OF GIVING CREDIT FOR TD S HAS BEEN CONFIRMED AND APPEALS OF THE DEPARTMENT HAVE BEEN DISMISSED. 5.2 IN THE APPEALS UNDER CONSIDERATION, SINCE FACT S AND CIRCUMSTANCES ARE SIMILAR AND THE ISSUES RAISED BY THE APPELLANTS ARE ALSO SIMILAR, THESE APPEALS ARE DISP OSED OFF ON THE SAME LINES AS THE ABOVE MENTIONED ORDERS DATED 6.11.2009,18.11.2009 & 4.5.2010. 6. IN GROUND NO.5 OF APPEAL, THE APPELLANT CONTESTE D THE ACTION OF THE ASSESSING OFFICER IN WRONGLY ADDING ` ` 4,44,760/- TO THE INCOME OF THE APPELLANT. IT IS SUBMITTED BEFORE ME THAT THE APPELLANT RECEIVED GROSS CONTRACT RECEIPTS OF ` ` 29,52,000/- AND ` ` 4.61 LACS AS LOAN FROM SH. MANOJ KUMAR POONIA AND DEPOSITED CASH OF ` ` 40,000/- FROM WITHDRAWALS OF CURRENT YEAR. THE ASSESSING OFFICER WITHOUT VERIFYING THE RECORDS, ADDED ` ` 4,44,760/- TO THE INCOME OF THE APPELLANT. IN SUPP ORT OF THE CONTENTION THE AR FILED CONFIRMATION OF SHRI MANOJ KUMAR POONIA ALONG WITH COPY OF I.T. RETURN AND BAN K STATEMENT AND SOUGHT IT TO BE ADMITTED AS ADDITIONA L EVIDENCE U/R 46A OF THE I.T. RULES. THE ADDITIONAL EVIDENCE HAS BEEN ADMITTED IN TERMS OF THE PROVISIONS OF RUL E 46A AND REMANDED TO THE ASSESSING OFFICER FOR ENQUIRY AND R EPORT. THE ASSESSING OFFICER IN HIS REMAND REPORT AGREED W ITH THE CONTENTION OF THE AR. IN VIEW OF THE ABOVE, ADDITI ON MADE BY THE ASSESSING OFFICER TO THIS EXTENT IS DELETED. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LEARNED DR SUPPORTE D THE FINDINGS OF THE AO WHILE NONE APPEARED ON BEHALF OF THE ASSESSEE NOR A NY REQUEST FOR ADJOURNMENT WAS FILED. 5. WE HAVE HEARD THE LEARNED DR AND GONE THROUGH T HE FACTS OF THE CASE .WE FIND THAT WHILE ADJUDICATING THE SIMILAR ISSUE IN THE CASE OF SHRI KRISHAN KANT IN I.T.A. NO.366/D/2010 FOR ASSESSMENT YEAR 20 06-07, A CO-ORDINATE BENCH IN THEIR DECISION DATED 31.5.2010 CONCLUDED IN THE FOLLOWING TERMS:- 2.2 IN REPLY, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF SMT. KAMLESH & OTHERS IN I.T.A. NO.225/D/2010 ETC. DATED 31.3.2010, A COPY OF WHICH HAS BEEN PLACED BEFORE US. THE OPERATIVE PORTION OF THE ORD ER IS CONTAINED IN PARAGRAPHS 4 AND 5, WHICH ARE REPRODUCED BELOW:- ITA NO.4708 /DEL/2011 5 5 4. WE HAVE HEARD THE LEARNED DR. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE AND HENCE WITH THE HELP OF T HE LEARNED DR WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . IF THE ASSESSING OFFICER WAS OF THE VIEW THAT NO WORK HAS BEEN DONE BY ANY OF THE CONTRACTOR, THE AMOUNT RECEIVED ITSELF C ANNOT BE CONSIDERED TO BE INCOME OF THE ASSESSEE BUT ONLY TH E PROFIT FROM SUCH RECEIPT CAN BE BROUGHT TO TAX. THE ASSESSEE H EREIN BEING FOUND TO BE NAME LENDERS COULD HAVE CHARGED ONLY TH E COMMISSION FOR SO LENDING THE NAME. IN THE FORM OF BANK STATE MENT IT IS ALSO EVIDENT THAT /THE AMOUNT RECEIVED WAS PURPORTED TO BE REFUNDED BACK TO PACL INDIA LTD. THEREFORE, INCOME OF THE P RESENT ASSESSEES ARE ONLY TO THE EXTENT OF RECEIVING COMMISSION AND SINCE ALL THESE PERSONS HAVE OFFERED 8% OF THEIR INCOME, NO FURTHER AMOUNT IS TAXABLE. AT THE SAME TIME, THE LEARNED CIT(A) HAS FOUND THAT THE INCOME IS NOT ASSESSABLE AS BUSINESS INCOME OR UNDE R SECTION 44AD OF THE ACT BUT ONLY AS INCOME FROM OTHER SOURCES, W HICH IN ANY CASE COULD NOT HAVE EXCEEDED THE AMOUNT OFFERED FO R TAX. SINCE CORRECT INCOME HAS BEEN OFFERED FOR TAX BY THE ASSE SSEES HEREIN, THE ASSESSING OFFICER WAS, THEREFORE, IN ERROR IN T AXING THE ENTIRE SUM RECEIVED AS INCOME. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). 5. AS REGARDS CREDIT FOR TDS, SINCE THE INCOME H AS BEEN ASSESSED IN THE HANDS OF THE ASSESSEES AND THE TAX WAS DEDUC TED FROM THEIR INCOME, THE PERSONS ARE ENTITLED TO CREDIT FOR THE TAX DEDUCTED AT SOURCE. THEREFORE, HERE ALSO THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A). 3. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS MADE BEFORE US. WE ARE OF THE VIEW THAT THE SUBMIS SIONS OF THE REVENUE STAND ON SOUNDER FOOTING IN THIS CASE THAN ANY OTHER CASES AS FURTHER FACTS HAVE COME TO LIGHT UPON RECORDING THE STATEMENT OF THE ASSESSEE. NONETHELESS, IT IS THE CASE OF THE A SSESSEE THAT HE HAS NOT CONDUCTED ANY BUSINESS AND THE WHOLE SHOW W AS PUT UP ON THE DIRECTIONS OF SHRI DEV RAJ. IN SUCH A CIRCUMST ANCES, HE CAN ONLY BE TAKEN AS A NAME-LENDER, WHOSE INCOME MAY NO T EXCEED 8% OF THE AMOUNT, FOR WHICH ENTRIES WERE PROVIDED. IN THIS VIEW OF THE MATTER, THE ORDER OF THE TRIBUNAL IN THE CASE OF SM T. 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 CLAIMED BY WAY OF JOB WORK WAS BOGUS. 5.1 IN THE LIGHT OF VIEW TAKEN BY THE CO-ORDINA TE BENCH IN THEIR AFORESAID DECISION DATED 31.05.2010 ,ESPECIALLY WHEN FACTS IN THE INSTANT CASE ARE SIMILAR TO THE FACTS IN THE AFORESAID DECISION AND THE REVENUE HAVE NOT BROUGHT TO OUR ITA NO.4708 /DEL/2011 6 6 NOTICE ANY CONTRARY DECISION NOR PLACED BEFORE US ANY MATERIAL SO AS ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INCLINED TO INTERFERE. IN VIEW THEREOF, WE HAVE NO HESITATION IN REJECTING GROUND NO.1 IN THE APPEAL SUBJECT TO THE RIGHT OF THE REVENUE TO ARGUE INDEPENDENTLY IN THE CASE OF PACL INDIA LTD. THAT EXPENDITURE CLAIMED BY WAY OF JOB WORK WAS BOG US. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFOR E US IN TERMS OF THE RESIDUARY GROUND NO.2 IN THE APPEAL, ACCORDINGLY, THIS GROUND IS DISMISSED. 7. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US 8. IN RESULT, APPEAL IS DISMISSED SUBJECT TO OUR O BSERVATIONS IN PARA 5.1 ABOVE. ORDER PRONOUNCED IN OPEN COURT SOON AFTER THE HEARI NG WAS CONCLUDED. SD/- SD/- (R.P. TOLANI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER NS COPY OF THE ORDER FORWARDED TO: 1. SHRI GOVIND KUMAR S/O SHRI KAILASH CHAND H.NO.18 4/19, WARD NO.30, CHINYOT COLONY, ROHTAK 2. INCOME TAX OFFICER, WARD-2, ROHTAK. 3. CIT CONCERNED. 4. CIT(A), ROHTAK. 5. DR, ITAT, DELHI BENCH-C, NEW DELHI 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, NEW DELHI