ACIT, New Delhi V. M/s. Chemitech Engineers Pvt. Ltd., Delhi

ITA 4873/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2198 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 27-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Opportunity of being heard; Additional evidence; Corroborative evidences
• Section: 40A(3); 142(1)

Judgement Text

ITA NO. 4873/DEL/2015 A.Y. 2009-10 CHEMITECH ENGINEERS PVT. LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F, NEW DELHI BEFORE SHRI SMT. BEENA A PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 4873/DEL/2015 AY: 2009-10 ACIT CIRCLE 6(1), ROOM NO. 390 C.R. BUILDING, NEW DELHI. VS . CHEMITECH ENGINEERS P. LTD. 104, ROOF TOWER, PLOT NO. 7, LAXMI NAGAR, DISTT. CENTER, DELHI. AAACC8828P (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. SURENDER PAL, SR. DR ASSESSEE BY : SH. RAJESH JAIN, CA DATE OF HEARING : 05/11/2018 DATE OF PRONOUNCEMENT : 16/11/2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY REVENUE AGAINST O RDER DATED 30/03/15 PASSED BY LD. CIT (A)-2, NEW DELHI F OR ASSESSMENT YEAR 2009-10 ON FOLLOWING GROUNDS OF APP EAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS. 98,28,965/- ON ACCOUNT OF DIFFERENCE BETWEEN RECEIP TS AS PER FORM 26AS AND THE AMOUNT DECLARED BY THE ASSESS EE IGNORING THE FACT THAT THE ASSESSEE COMPANY HAD VIO LATED THE PROVISIONS OF SECTION 199 OF THE INCOME TAX ACT , 1961. ITA NO. 4873/DEL/2015 A.Y. 2009-10 CHEMITECH ENGINEERS PVT. LTD. 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS. 13,49,305/- MADE U/S 40A(3) OF THE INCOME TAX ACT, 1961. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS AP PEAL. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : ASSESSEE FILED ITS RETURN OF INCOME ON 29/09/09 DEC LARING INCOME OF RS.71,43,050/-. SUBSEQUENTLY, RETURN WAS PROCESS ED UNDER SECTION 143(1) OF THE ACT, AND NOTICE UNDER SECTION 143(2) ALONG WITH QUESTIONNAIRE AND NOTICE UNDER SECTION 142(1) WAS ISSUED TO ASSESSEE. IN RESPONSE TO STATUTORY NOTICES, REPRESE NTATIVE OF ASSESSEE APPEARED BEFORE LD.AO AND FILED NECESSARY DETAILS. 3. LD.AO OBSERVED THAT ASSESSEE IS ENGAGED IN BUSIN ESS OF TRADING IN CHEMICALS, MANUFACTURING OF MINERAL WATE R AND CONTRACT WORK. HE OBSERVED THAT ASSESSEE DURING THE YEAR SHOWN GROSS RECEIPTS FROM CONTRACT WORK AMOUNTING TO RS.12,63,76,901/- IN PROFIT AND LOSS ACCOUNT. THE R ECEIPTS SHOWN BY ASSESSEE WERE EXAMINED WITH RESPECT TO TDS CERTI FICATE, AND IT WAS FOUND THAT, AS PER TDS CERTIFICATE GROSS RECEIP TS OF ASSESSEE WAS AT RS.13,62,05,866/-. ASSESSEE CLAIMED TDS AT RS.3,30,86,675/-. LD.AO WAS OF THE OPINION THAT ASS ESSEE HAS DISCLOSED ALLEGED RECEIPTS IN CONTRACT ACCOUNT AND ACCORDINGLY, CALLED UPON ASSESSEE FOR RECONCILIATION OF CONTRACT RECEIPTS WITH TDS RECEIPTS. IN COMPLIANCE TO NOTICE ISSUED, ASSES SEE FILED RECONCILIATION CHART AND, AS PER THE CHART CROSS RE CEIPTS WERE WORTH RS.13,62,05,866/-, BUT WHILE ARRIVING AT AMOU NT OF RS.12,63,76,901/-, ASSESSEE DEDUCTED FOLLOWING AMOU NTS BEING OTHER SERVICES AMOUNTING TO RS.84,05,649/- AND DIFF ERENCE OF RS.4,19,014/-. ITA NO. 4873/DEL/2015 A.Y. 2009-10 CHEMITECH ENGINEERS PVT. LTD. 3 4. ASSESSEE WAS REQUIRED TO EXPLAIN EXCLUSION OF TH ESE TWO ITEMS. IN COMPLIANCE THERETO, ASSESSEE SUBMITTED TH AT, OTHER RECOVERIES ARE AMOUNTS, WHICH REVENUE DID NOT PAY, AND REGARDING DIFFERENCE OF AMOUNT, ASSESSEE DID NOT FU RNISH ANY EXPLANATION. 5. LD.AO, THUS, WAS OF THE VIEW THAT ASSESSEE SHORT DECLARED CONTRACT RECEIPTS AND THUS, ADDED DIFFERENCE AMOUNT ING TO RS.98,28,965/-. 6. FURTHER, LD.AO OBSERVED THAT ASSESSEE INCURRED S OME EXPENSES IN CASH EXCEEDING RS.20,000/- ON PERUSAL O F DETAILS, LD.AO WAS OF OPINION THAT ASSESSEE FAILED TO JUSTIF Y, WHY PAYMENT HAS TO BE MADE IN CASH AND HE INVOKED PROVISIONS OF SECTION 40A(3) READ WITH RULE 6DD OF THE ACT. LD. AO, THUS, MADE ADDITION OF RS.13,49,305/- IN HANDS OF ASSESSEE. 7. AGGRIEVED BY ADDITION MADE BY LD.AO, ASSESSEE PR EFERRED APPEAL BEFORE LD.CIT (A), WHO ALLOWED APPEAL FILED BY ASSESSEE. 8. GROUND NO. 1 : IS IN RESPECT OF DIFFERENCE BETWEEN RECEIPT AS PER 26A-S AND AMOUNT DECLARED BY ASSESSEE. 9. LD.AR SUBMITTED THAT FORM NO. 26A-S IS STATEMENT GENERATED AT END OF DEPARTMENT, AND ASSESSEE CANNOT BE IN ANY MANNER HELD RESPONSIBLE FOR ANY DISCREPANCY THEREIN . IT WAS SUBMITTED THAT FOR YEAR UNDER CONSIDERATION, ASSESS EE FILED RECONCILIATION STATEMENT, WHICH HAS NOT BEEN CONSID ERED BY LD. AO IN RIGHT PERSPECTIVE. 10. ON THE CONTRARY, LD. SR. DR SUBMITTED THAT ISSU E MAY BE SET-ASIDE TO LD. AO FOR VERIFICATION ONCE AGAIN, ON THE BASIS OF RECONCILIATION FILED BY ASSESSEE. ITA NO. 4873/DEL/2015 A.Y. 2009-10 CHEMITECH ENGINEERS PVT. LTD. 4 11. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOT H SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. 12. IT HAS BEEN ARGUED BY LD. COUNSEL THAT INCOME H AS TO BE ASSESSED ON THE BASIS OF SYSTEM OF ACCOUNTING FOLLO WED BY ASSESSEE CONSISTENTLY, AND NOT MERELY WITH REFERENC E TO AMOUNT ON WHICH DEDUCTION AT SOURCE HAS BEEN MADE AS TDS I S MADE ON PAYMENTS MADE IN ADVANCE ALSO AND THAT, ASSESSEE NE ED NOT DECLARE INCOME ON BASIS OF TDS DEDUCTED RATHER ON B ASIS OF ACCRUAL OF INCOME. IT HAS BEEN SUBMITTED BEFORE LD. CIT(A) THAT CONTRACTOR BY NAME M/S NATIONAL BUILDING CONSTRUCTI ON CORPORATION LTD. WRONGLY CREDITED AMOUNT OF RUNNING BILLS OF RS.3,34,07,386/- PERTAINING TO FINANCIAL YEAR 2009- 10 DURING YEAR UNDER CONSIDERATION, WHEREAS, THESE BILLS WERE CERT IFIED IN MONTH OF APRIL/MAY 2009. ADMITTEDLY, ASSESSEE SUBMITTED D ETAILED RECONCILIATION CHART PERTAINING TO ASSESSMENT YEARS 2008-09, 2009-10 AND 2010-11 FOR SUPPORTING THAT THERE IS NO SUPPRESSION OF CONTRACT RECEIPTS DURING YEAR UNDER CONSIDERATIO N AND DIFFERENCE IS REASON ONLY DUE TO DIFFERENCE IN METH OD OF ACCOUNTING FOLLOWED BY CONTRACTOR AND ASSESSEE. WE HAVE OBSERVED THAT LD. CIT(A) HAS CONSIDERED CHART AT PA GE 9 OF HIS ORDER. 12.1 THEREFORE, CONTENTIONS OF ASSESSEE ARE SUFFICI ENT FOR PURPOSE OF RESTORING ISSUE BACK TO FILE OF LD.AO TO AFFORD OPPORTUNITY OF BEING HEARD TO ASSESSEE. 13. WE, ACCORDINGLY, SET ASIDE THIS ISSUE BACK TO L D.AO FOR VERIFICATION ON BASIS OF RECONCILIATION STATEMENT F ILED BY ASSESSEE, AND TO ALLOW CLAIM AS PER LAW. NEEDLESS TO SAY THAT PROPER OPPORTUNITY MAY BE GRANTED TO ASSESSEE OF BEING HEA RD. ITA NO. 4873/DEL/2015 A.Y. 2009-10 CHEMITECH ENGINEERS PVT. LTD. 5 ACCORDINGLY, THIS GROUND RAISED BY REVENUE STANDS A LLOWED FOR STATISTICAL PURPOSES . 14. GROUND NO. 2 : IS IN RESPECT OF ADDITION AMOUNTING TO RS.13,49,305/- MADE UNDER SECTION 40A(3) OF THE ACT , HAVING DELETED BY LD. CIT (A). 14.1 IT HAS BEEN SUBMITTED THAT PAYMENTS REFLECTED IN LEDGER ACCOUNT IS NOT SINGLE PAYMENT MADE ON DATE BUT, PAY MENTS MADE TO SEVERAL PERSONS ON ACCOUNT OF SALARY AND PAYMENT S MADE ON ACCOUNT OF SEVERAL EXPENSES INCURRED IN CASH ON VAR IOUS SITES OF ASSESSEE, WHEREIN DIFFERENT CONTRACTS WERE BEING CA RRIED OUT. ASSESSEE SUBMITTED COPY OF MASTER ROLE IN SUPPORT O F ITS CONTENTION AS REGARDS TO SALARY IS CONCERNED AND FO R EXPENSES INCURRED UNDER THE HEAD SITE EXPENSES ASSESSEE SU BMITTED PHOTOCOPY OF VOUCHERS TO PROVE EACH EXPENSES INCURR ED IN CASH WAS LESS THAN RS.20,000/-. LD.AR SUBMITTED THAT BEF ORE LD.CIT (A) ASSESSEE ALSO FILED ADDITIONAL EVIDENCES WHICH WERE FORWARDED TO LD.AO FOR EXAMINATION OF THE SAME, IN RESPECT OF WHICH REMAND REPORT WAS NOT RECEIVED BY LD.CIT (A). HE THUS, SUB MITTED THAT THERE WAS NO JUSTIFICATION OF LD.AO FOR INVOKING PR OVISIONS OF SECTION 40A(3) OF THE ACT. 15. ON THE CONTRARY, LD. SR. DR PLACED RELIANCE UPO N ORDERS OF LD.AO. 16. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOT H SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. 17. IS OBSERVED THAT LD.AO HAS TABULATED 39 ITEMS O F EXPENDITURE TOTALLING TO RS.13,49,305/-, GIVING DAT E OF AMOUNT AND VOUCHERS NUMBER OF EACH EXPENSES. IT WAS CONTEN TION OF LD.AO THAT AS ASSESSEE DID NOT FILE ANY JUSTIFICATI ON FOR INCURRING ITA NO. 4873/DEL/2015 A.Y. 2009-10 CHEMITECH ENGINEERS PVT. LTD. 6 CASH EXPENDITURE EXCEEDING RS.20,000/-, LD.AO INVOK ED PROVISIONS OF SECTION 40A(3) OF THE ACT. 18. LD. CIT (A) WHILE DECIDING THE ISSUE OBSERVED T HAT LD.AO HAS NOT DOUBTED GENUINENESS OF EXPENDITURE AND DISALLOW ED IT ONLY DUE TO CONTRAVENTION OF PROVISIONS OF SECTION 40A(3 ) OF THE ACT. HOWEVER, ASSESSEE CONTENDED THAT THESE EXPENSES WER E INCURRED ON DIFFERENT DATES AND PAYMENTS MADE TO EACH PERSON WAS LESS THAN RS.20,000/- WHICH IS VERIFIABLE FROM VOUCHERS FILED BEFORE LD. CIT (A). IT HAS BEEN SUBMITTED THAT THESE ARE I NDIRECT EXPENSES. FURTHER, IT IS OBSERVED THAT LD. CIT (A) VERIFIED VOUCHERS AND SUPPORTING EVIDENCES AND FOUND CONTENTION OF AS SESSEE TO BE CORRECT. 19. UNDER SUCH CIRCUMSTANCES, WE DO NOT FIND ANY IN FIRMITY IN OBSERVATIONS OF LD. CIT (A) AND WE UPHOLD THE SAME. ACCORDINGLY THIS GROUND RAISED BY REVENUE STANDS DI SMISSED. 20. GROUND NO. 3 IS GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATION. IN THE RESULT APPEAL FILED BY REVENUE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/11/2018 SD/- SD/- (PRASHANT MAHARISHI) (BE ENA A PILLAI) ACCOUNTANT MEMBER JUDICIA L MEMBER DT. 16 TH NOVEMBER,2018 *KAVITA ARORA ITA NO. 4873/DEL/2015 A.Y. 2009-10 CHEMITECH ENGINEERS PVT. LTD. 7 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES DATE DRAFT DICTATED ON 14.11.18 DRAFT PLACED BEFORE AUTHOR 15.11.18 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 16.11.18 KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : 16.11.18 FILE SENT TO THE BENCH CLERK 16.11.18 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.