BALAJI CONSTRUCTION, MUMBAI V. PRINCIPAL COMMISSIONER OF INCOME TAX 33(1), MUMBAI

ITA 5050/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8511 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 25-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Principle of natural justice; TDS; Set aside
• Section: 143(3); 40(b); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BEFORE HONBLE SHRI SAKTIJIT DEY, JM HONBLE SHRI MANOJ ( BALAJI CONSTRUCTION F/803, PRUTHVI CLASSIQUE, MODI PARK IRANI WADI, ROAD NO.3 KANDIVALI (WEST) MUMBAI-400 067 ( APPELLANT A SSESSEE RE DATE OF HEARING DATE OF PRONOUNCEMENT PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. BY WAY OF THIS APPEAL ASSESSEE CONTEST THE ASSESSMENT YEAR IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI !' #$ '% & &' , '% &() BEFORE HONBLE SHRI SAKTIJIT DEY, JM SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO. 5050/MUM/2017 ASSESSMENT YEAR: 2012- 13 F/803, PRUTHVI CLASSIQUE, MODI PARK VS. PRINCIPAL COMMISSIONER OF INCOME TAX- 33(1) ROOM NO.711, 7 TH C- 12, BANDRA KURLA COMPLEX BANDRA (EAST), MUMBAI PAN/GIR NO. AAGFB- 7408 APPELLANT ) : ( *+ RESPONDENT SSESSEE BY : S. SRIRAM , LD. AR RE VENUE BY : ANADI VARMA , LD. DATE OF HEARING : 04/10/2018 / DATE OF PRONOUNCEMENT : 01/01/2019 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) BY WAY OF THIS APPEAL FOR ASSESSMENT YEAR [AY] 20 THE VALIDITY OF REVISIONAL JURISDICTION U/S 263 BY LD. ITA NO.5050/MUM/2017 BALAJI CONSTRUCTION ASSESSMENT YEAR S :2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL '% &() BEFORE HONBLE SHRI SAKTIJIT DEY, JM AND KUMAR AGGARWAL, AM 5050/MUM/2017 13 ) PRINCIPAL COMMISSIONER OF 33(1) TH FLOOR 12, BANDRA KURLA COMPLEX BANDRA (EAST), MUMBAI -400 051 7408 -P RESPONDENT ) , LD. AR , LD. CIT DR ASSESSMENT YEAR [AY] 20 12-13, THE OF REVISIONAL JURISDICTION U/S 263 BY LD. PRINCIPAL COMMI SSIONER OF INCOME DATED 31/03/2017 . THE ONLY GROUNDS PRESSED BEFORE US ARE GROUND NUMBERS A, B AND F , WHICH A. THE LD. PRINCIPAL CIT ERRED IN RELATION TO EXPENDITURE CLAIM FOR WAGES, WITHOUT ESTABLISHING ANY ERROR IN THE ORDER PASSED U/S 143(3) OF THE IT ACT, MERELY O N THE ERRONEOUS PRESUMPTION THAT THE CLAIMS MADE BY THE APPELLANT W AS NOT VER THE COURSE OF ASSESSMENT. B. THE LD. PRINCIPAL CIT ERRED IN EXERCISING JURISDICT ION U/S 263 OF THE IT ACT IN RELATION TO INCOME EARNED AND ACCOUNTED BY THE A PPELLANT, WITHOUT ESTABLISHING ANY ERROR IN THE BOOKS OF ACCOUNTS MAI NTAINED BY THE AP PELLANT AND EXAMINED BY THE ASSESSING OFFICER WHILE PASSING AN ORDER U/S 143(3) OF THE IT ACT. F. THE LD. PRINCIPAL CIT ERRED IN EXERCISING JURISDICT ION U/S 263 OF THE IT ACT IN RELATION VALUATION OF CLOSING STOCK BY THE APPEL LANT, MERELY ON THE BASIS OF C ONJUNCTURE AND SURMISES, AND WITHOUT ESTABLISHING A NY ERROR IN THE METHOD OF VALUATION ADOPTED BY THE APPELLANT. THE REGISTRY HAS NOTED A DELAY OF 55 DAYS IN FILING THE CONDONATION OF WHICH HAS BEEN SOUGHT BY THE ASSESSEE VIDE PETITION DATED 24/07/2017 21/07/2017 OF THE PARTNER OF THE ASSESSEE ATTRIBUTED TO RESIGNATION OF THE STAFF OF THE ASSESSEE WHO WAS HA NDLING THE MATTER WHICH LED THE DELAY IN HANDING OVER THE DOCUMENTS TO THE TAX CONSULTANT OF THE ASSESSEE. KE EPING IN VIEW THE QUANTUM OF DELAY AND WE CONDONE THE DELAY AND PROCEED WITH THE APPEAL ON MERITS ARGUED BEFORE US. 2.1 AS EVIDENT FROM GROUNDS OF APPEAL, THE ASSESSEE IS AGGRIEVED BY EXERCISE OF REVISIONAL JURISDICTION U/S 263 ASSESSMENT YEAR SSIONER OF INCOME -TAX-33[PR.CIT], MUMBAI . THE ONLY GROUNDS PRESSED BEFORE US ARE GROUND , WHICH READS AS UNDER: - THE LD. PRINCIPAL CIT ERRED IN EXERCISING JURISDICTION U/S 263 OF THE IT ACT IN RELATION TO EXPENDITURE CLAIM FOR WAGES, WITHOUT ESTABLISHING ANY ERROR IN THE ORDER PASSED U/S 143(3) OF THE IT ACT, MERELY O N THE ERRONEOUS PRESUMPTION THAT THE CLAIMS MADE BY THE APPELLANT W AS NOT VER THE COURSE OF ASSESSMENT. THE LD. PRINCIPAL CIT ERRED IN EXERCISING JURISDICT ION U/S 263 OF THE IT ACT IN RELATION TO INCOME EARNED AND ACCOUNTED BY THE A PPELLANT, WITHOUT ESTABLISHING ANY ERROR IN THE BOOKS OF ACCOUNTS MAI NTAINED BY THE PELLANT AND EXAMINED BY THE ASSESSING OFFICER WHILE PASSING AN ORDER U/S 143(3) OF THE IT ACT. THE LD. PRINCIPAL CIT ERRED IN EXERCISING JURISDICT ION U/S 263 OF THE IT ACT IN RELATION VALUATION OF CLOSING STOCK BY THE APPEL LANT, MERELY ON THE BASIS ONJUNCTURE AND SURMISES, AND WITHOUT ESTABLISHING A NY ERROR IN THE METHOD OF VALUATION ADOPTED BY THE APPELLANT. NOTED A DELAY OF 55 DAYS IN FILING THE PRESENT APPEAL, WHICH HAS BEEN SOUGHT BY THE ASSESSEE VIDE PETITION DATED 24/07/2017 DULY SUPPORTED BY AN OF THE PARTNER OF THE ASSESSEE FIRM. T HE DELAY HAS BEEN RESIGNATION OF THE STAFF OF THE ASSESSEE WHO WAS HA NDLING WHICH LED THE DELAY IN HANDING OVER THE RELEVANT DOCUMENTS TO THE TAX CONSULTANT OF THE ASSESSEE. KE EPING IN VIEW THE QUANTUM OF DELAY AND KEEPING IN VIEW OF PRINCIPLE OF NATURAL JUSTICE, WE CONDONE THE DELAY AND PROCEED WITH THE APPEAL ON MERITS AS EVIDENT FROM GROUNDS OF APPEAL, THE ASSESSEE IS AGGRIEVED BY EXERCISE OF REVISIONAL JURISDICTION U/S 263 BY LD. PR.CIT ITA NO.5050/MUM/2017 BALAJI CONSTRUCTION ASSESSMENT YEAR S :2012-13 MUMBAI VIDE ORDER . THE ONLY GROUNDS PRESSED BEFORE US ARE GROUND IN EXERCISING JURISDICTION U/S 263 OF THE IT ACT IN RELATION TO EXPENDITURE CLAIM FOR WAGES, WITHOUT ESTABLISHING ANY ERROR IN THE ORDER PASSED U/S 143(3) OF THE IT ACT, MERELY O N THE ERRONEOUS PRESUMPTION THAT THE CLAIMS MADE BY THE APPELLANT W AS NOT VER IFIED DURING THE LD. PRINCIPAL CIT ERRED IN EXERCISING JURISDICT ION U/S 263 OF THE IT ACT IN RELATION TO INCOME EARNED AND ACCOUNTED BY THE A PPELLANT, WITHOUT ESTABLISHING ANY ERROR IN THE BOOKS OF ACCOUNTS MAI NTAINED BY THE PELLANT AND EXAMINED BY THE ASSESSING OFFICER WHILE PASSING AN ORDER THE LD. PRINCIPAL CIT ERRED IN EXERCISING JURISDICT ION U/S 263 OF THE IT ACT IN RELATION VALUATION OF CLOSING STOCK BY THE APPEL LANT, MERELY ON THE BASIS ONJUNCTURE AND SURMISES, AND WITHOUT ESTABLISHING A NY ERROR IN THE THE PRESENT APPEAL, WHICH HAS BEEN SOUGHT BY THE ASSESSEE VIDE AN AFFIDAVIT DATED HE DELAY HAS BEEN RESIGNATION OF THE STAFF OF THE ASSESSEE WHO WAS HA NDLING RELEVANT NOTICES / DOCUMENTS TO THE TAX CONSULTANT OF THE ASSESSEE. KE EPING IN VIEW THE IN VIEW OF PRINCIPLE OF NATURAL JUSTICE, WE CONDONE THE DELAY AND PROCEED WITH THE APPEAL ON MERITS AS AS EVIDENT FROM GROUNDS OF APPEAL, THE ASSESSEE IS AGGRIEVED BY BY LD. PR.CIT VIDE ORDER DATED 31/03/2017 , THE GENESIS OF WHICH LIES IN DATED 04/07/2016, THE RELEVANT THE FOLLOWING MANNER: 2. ON EXAMINATION IT WAS FOUND THAT THE ASSISTANT COMM ISSIONER OF INCOME TAX CIRCLE 33(1)(1) (HEREINAFTER REFERRED TO AS AO) HAS NOT CARRIED OUT PROPER EXAMINATION IN THIS CASE. THE ASSESSEE H ON ACCOUNT OF MATERIAL AT THE SITE. SINCE THE PROJE CTS UNDER CONSTRUCTION HAVE NOT BEEN COMPLETED AS AT 31.03.2012 THERE SHOULD ALSO B E WORK IN PROGRESS. WORK IN PROGRESS WILL ALWAYS HAVE MORE VALUE THAN THE MATER IAL A COMPONENTS OF LABOUR AND OTHER OVERHEADS INCLUDED I N IT. BUT ASSESSEE HAS NOT SHOWN WORK IN PROGRESS IN THE P&L ACCOUNT. STILL FU RTHER, IN CASE OF CONSTRUCTION ON CONTRACT BASIS THERE IS A CERTAIN PERCENTAGE OF THE BUILDING CONSTRUCT WHICH BILLS ARE NOT RAISED AND IT FORMS PART OF CLO SING STOCK. THE ASSESSEE HAS NOT SHOWN ANY CLOSING STOCK ON THIS ACCOUNT. I ALSO FIN D THAT IN THE P&L ACCOUNT THE ASSESSEE HAS DEBITED WAGES RS.4.89 CRORES. THE ASSE SSEE HAS NOT FURNISHED ANY DETAIL S OF THIS EXPENDITURE. THIS ASPECT REQUIRED PROPER EXAMINATION BEFORE ALLOWING THIS AMOUNT BY THE AO. THE AO HAS NOT MADE ANY INQUIRIES ON THESE ISSUES. 3. IN THE CIRCUMSTANCES DISCUSSED ABOVE IN THIS NOTICE I CONSIDER THAT THE ORDER PASSED BY THE AO UNDER IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INT EREST OF REVENUE. THEREFORE, I PROPOSE TO PASS THE APPROPRIATE ORDER UNDER SECTION 263 OF THE ACT. THE PERUSAL OF THE SAME REVEAL THAT REVISIONAL JURI SDICTI INVOKED IN VIEW OF THE FACT THAT THE ASSESSEE DID N OT REFLECT ANY IN- PROGRESS SINCE IT WAS ENGAGED IN CONSTRUCTION ACTIV ITIES AND THE QUANTUM OF WAGES DEBITED BY THE ASSESSEE IN THE PRO FIT & LOSS ACCOUNT HAVE NOT EXAMINED BY LD. AO. 2.2 A LTHOUGH THE ASSESSEE DATED 30/08/2016 & 24/03/2017, HOWEVER, NOT CONVINC ED SET ASIDE THE ASSESSMENT ORDER DATED 30/03/2015 PAS SED BY LD. AO WITH A DIRECTION TO PASS THE ORDER AFRESH AFTER MAK ING PROPER ASSESSMENT YEAR , THE GENESIS OF WHICH LIES IN SHOW DATED 04/07/2016, THE RELEVANT PORTION OF WHICH COULD BE THE FOLLOWING MANNER: - ON EXAMINATION IT WAS FOUND THAT THE ASSISTANT COMM ISSIONER OF INCOME TAX CIRCLE 33(1)(1) (HEREINAFTER REFERRED TO AS AO) HAS NOT CARRIED OUT PROPER EXAMINATION IN THIS CASE. THE ASSESSEE H AS SHOWN CLOSING STOCK RS.1.59 CRORES ON ACCOUNT OF MATERIAL AT THE SITE. SINCE THE PROJE CTS UNDER CONSTRUCTION HAVE NOT BEEN COMPLETED AS AT 31.03.2012 THERE SHOULD ALSO B E WORK IN PROGRESS. WORK IN PROGRESS WILL ALWAYS HAVE MORE VALUE THAN THE MATER IAL A T SITE AS IT WILL HAVE COMPONENTS OF LABOUR AND OTHER OVERHEADS INCLUDED I N IT. BUT ASSESSEE HAS NOT SHOWN WORK IN PROGRESS IN THE P&L ACCOUNT. STILL FU RTHER, IN CASE OF CONSTRUCTION ON CONTRACT BASIS THERE IS A CERTAIN PERCENTAGE OF THE BUILDING CONSTRUCT WHICH BILLS ARE NOT RAISED AND IT FORMS PART OF CLO SING STOCK. THE ASSESSEE HAS NOT SHOWN ANY CLOSING STOCK ON THIS ACCOUNT. I ALSO FIN D THAT IN THE P&L ACCOUNT THE ASSESSEE HAS DEBITED WAGES RS.4.89 CRORES. THE ASSE SSEE HAS NOT FURNISHED S OF THIS EXPENDITURE. THIS ASPECT REQUIRED PROPER EXAMINATION BEFORE ALLOWING THIS AMOUNT BY THE AO. THE AO HAS NOT MADE ANY INQUIRIES ON THESE IN THE CIRCUMSTANCES DISCUSSED ABOVE IN THIS NOTICE I CONSIDER THAT THE ORDER PASSED BY THE AO UNDER SECTION 143(3) OF INCOME TAX ACT ON 30.03.2015 IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INT EREST OF REVENUE. THEREFORE, I PROPOSE TO PASS THE APPROPRIATE ORDER UNDER SECTION 263 OF THE ACT. THE PERUSAL OF THE SAME REVEAL THAT REVISIONAL JURI SDICTI INVOKED IN VIEW OF THE FACT THAT THE ASSESSEE DID N OT REFLECT ANY PROGRESS SINCE IT WAS ENGAGED IN CONSTRUCTION ACTIV ITIES AND THE QUANTUM OF WAGES DEBITED BY THE ASSESSEE IN THE PRO FIT & LOSS ACCOUNT HAVE NOT EXAMINED BY LD. AO. LTHOUGH THE ASSESSEE DEFENDED THE ASSESSMENT DATED 30/08/2016 & 24/03/2017, HOWEVER, NOT CONVINC ED SET ASIDE THE ASSESSMENT ORDER DATED 30/03/2015 PAS SED BY LD. AO WITH A DIRECTION TO PASS THE ORDER AFRESH AFTER MAK ING PROPER ITA NO.5050/MUM/2017 BALAJI CONSTRUCTION ASSESSMENT YEAR S :2012-13 SHOW -CAUSE NOTICE PORTION OF WHICH COULD BE EXTRACTED IN ON EXAMINATION IT WAS FOUND THAT THE ASSISTANT COMM ISSIONER OF INCOME TAX CIRCLE 33(1)(1) (HEREINAFTER REFERRED TO AS AO) HAS NOT CARRIED OUT PROPER AS SHOWN CLOSING STOCK RS.1.59 CRORES ON ACCOUNT OF MATERIAL AT THE SITE. SINCE THE PROJE CTS UNDER CONSTRUCTION HAVE NOT BEEN COMPLETED AS AT 31.03.2012 THERE SHOULD ALSO B E WORK IN PROGRESS. WORK IN T SITE AS IT WILL HAVE COMPONENTS OF LABOUR AND OTHER OVERHEADS INCLUDED I N IT. BUT ASSESSEE HAS NOT SHOWN WORK IN PROGRESS IN THE P&L ACCOUNT. STILL FU RTHER, IN CASE OF CONSTRUCTION ON CONTRACT BASIS THERE IS A CERTAIN PERCENTAGE OF THE BUILDING CONSTRUCT ED FOR WHICH BILLS ARE NOT RAISED AND IT FORMS PART OF CLO SING STOCK. THE ASSESSEE HAS NOT SHOWN ANY CLOSING STOCK ON THIS ACCOUNT. I ALSO FIN D THAT IN THE P&L ACCOUNT THE ASSESSEE HAS DEBITED WAGES RS.4.89 CRORES. THE ASSE SSEE HAS NOT FURNISHED S OF THIS EXPENDITURE. THIS ASPECT REQUIRED PROPER EXAMINATION BEFORE ALLOWING THIS AMOUNT BY THE AO. THE AO HAS NOT MADE ANY INQUIRIES ON THESE IN THE CIRCUMSTANCES DISCUSSED ABOVE IN THIS NOTICE I CONSIDER THAT THE SECTION 143(3) OF INCOME TAX ACT ON 30.03.2015 IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INT EREST OF REVENUE. THEREFORE, I PROPOSE TO PASS THE APPROPRIATE ORDER UNDER SECTION 263 OF THE ACT. THE PERUSAL OF THE SAME REVEAL THAT REVISIONAL JURI SDICTI ON HAS BEEN INVOKED IN VIEW OF THE FACT THAT THE ASSESSEE DID N OT REFLECT ANY WORK- PROGRESS SINCE IT WAS ENGAGED IN CONSTRUCTION ACTIV ITIES AND THE QUANTUM OF WAGES DEBITED BY THE ASSESSEE IN THE PRO FIT & LOSS DEFENDED THE ASSESSMENT VIDE REPLIES DATED 30/08/2016 & 24/03/2017, HOWEVER, NOT CONVINC ED , LD. PR.CIT SET ASIDE THE ASSESSMENT ORDER DATED 30/03/2015 PAS SED BY LD. AO WITH A DIRECTION TO PASS THE ORDER AFRESH AFTER MAK ING PROPER EXAMI NATION OF WAGES OF RS.4.89 CRORES AND ALSO EXAMINE THE FACT THAT THE CONTRACT RECEIPTS WERE SHORT BY RS.3.69 CRORES. ALSO DIRECTED TO VERIFY THE TDS ADJUSTMENT IN RELAT ION TO CONTRACT RECEIPTS, EXAMINE CORRECTNESS OF CLOSING WORK ADD BACK CERTAIN ITEMS REPORTED IN TAX AUDIT REPORT AS NON ADMISSIBLE. BY WAY OF PRESENT APPEAL, THE THE REVISIONAL JURISDICTION U/S 263 EXERCISED BY LD. PR.CIT. THE SCOPE OF OUR ADJUDICATION, UNDER THE APPEAL, EXAMINING THE VALIDITY OF JURISDICTION U/S 263 3. FACTS IN BRIEF ARE THAT THE AS CIVIL CONTRACTOR PROVIDING SERVICES TO BUILDERS FOR CONSTRUCTION OF BUILDING INCLUSIVE OF MATERIAL & LABOR, ASSESSMENT U/S 143(3) ON 30/0 ASSESSEE WAS DETERMINED AT RS.2 INTEREST ON TDS FOR RS.7,119/ RS.248.04 LACS FILED BY THE ASSESSEE ON 30/09/2012 UPON PERUSAL OF CASE RECORDS, T MATTER OF REVISIONAL JURISDICTION BY LD. PR.CIT U/S 263. 4. THE PRIME ARGUMENTS OF LD. ASSESSEE [AR], SHRI S.SRIRAM INQUIRIES WERE MADE BY LD.AO DURING ORIGINAL PROCEEDINGS AND THE ASSESSMENT WAS FRAMED WITH DUE APPLICATION OF MIND AND THEREFORE THE PROCEEDINGS U/S 263 WERE NOT JUSTIFIED. T ASSESSMENT YEAR NATION OF WAGES OF RS.4.89 CRORES AND ALSO EXAMINE THE FACT THAT THE CONTRACT RECEIPTS WERE SHORT BY RS.3.69 CRORES. THE LD. AO WAS ALSO DIRECTED TO VERIFY THE TDS ADJUSTMENT IN RELAT ION TO CONTRACT RECEIPTS, EXAMINE CORRECTNESS OF CLOSING WORK -IN- PROGRESS ADD BACK CERTAIN ITEMS REPORTED IN TAX AUDIT REPORT AS NON BY WAY OF PRESENT APPEAL, THE ASSESSEE HAS CHALLENGED JURISDICTION U/S 263 EXERCISED BY LD. PR.CIT. THE SCOPE OF OUR ADJUDICATION, UNDER THE APPEAL, EXAMINING THE VALIDITY OF JURISDICTION U/S 263 . FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT FIRM PROVIDING SERVICES TO BUILDERS FOR CONSTRUCTION OF BUILDING INCLUSIVE OF MATERIAL & LABOR, WAS ASSESSED U/S 143(3) ON 30/0 3 /2015 WHEREIN THE INCOME ASSESSEE WAS DETERMINED AT RS.2 48.11 LACS AFTER SOLE ADDITION OF INTEREST ON TDS FOR RS.7,119/ - AS AGAINST RETURNED INCOME OF RS.248.04 LACS FILED BY THE ASSESSEE ON 30/09/2012 UPON PERUSAL OF CASE RECORDS, T HIS ASSESSMENT ORDER MATTER OF REVISIONAL JURISDICTION BY LD. PR.CIT U/S 263. THE PRIME ARGUMENTS OF LD. AUTHORIZED REPRESENTATIVE SHRI S.SRIRAM REVOLVES AROUND THE FACT THAT ADEQUATE INQUIRIES WERE MADE BY LD.AO DURING ORIGINAL THE ASSESSMENT WAS FRAMED WITH DUE APPLICATION OF MIND AND THEREFORE THE PROCEEDINGS U/S 263 WERE NOT JUSTIFIED. T ITA NO.5050/MUM/2017 BALAJI CONSTRUCTION ASSESSMENT YEAR S :2012-13 NATION OF WAGES OF RS.4.89 CRORES AND ALSO EXAMINE THE FACT THAT THE LD. AO WAS ALSO DIRECTED TO VERIFY THE TDS ADJUSTMENT IN RELAT ION TO CONTRACT PROGRESS AND ALSO ADD BACK CERTAIN ITEMS REPORTED IN TAX AUDIT REPORT AS NON - ASSESSEE HAS CHALLENGED JURISDICTION U/S 263 EXERCISED BY LD. PR.CIT. THEREFORE, THE SCOPE OF OUR ADJUDICATION, UNDER THE APPEAL, IS LIMITED TO RESIDENT FIRM ENGAGED PROVIDING SERVICES TO BUILDERS FOR CONSTRUCTION OF WAS ASSESSED IN SCRUTINY /2015 WHEREIN THE INCOME OF THE AFTER SOLE ADDITION OF AS AGAINST RETURNED INCOME OF RS.248.04 LACS FILED BY THE ASSESSEE ON 30/09/2012 . SUBSEQUENTLY HIS ASSESSMENT ORDER WAS SUBJECT REPRESENTATIVE FOR REVOLVES AROUND THE FACT THAT ADEQUATE INQUIRIES WERE MADE BY LD.AO DURING ORIGINAL ASSESSMENT THE ASSESSMENT WAS FRAMED WITH DUE APPLICATION OF MIND AND THEREFORE THE PROCEEDINGS U/S 263 WERE NOT JUSTIFIED. T HE SU BMISSIONS ARE SOUGHT TO BE PLACED IN PAPER- BOOK. PRONOUNCEMENTS TO SUGGEST THAT CONTRA, LD. DR SUBMITTED THAT THE NO INQUIRY WHATSOEVER, WE RE MADE BY LD. AO ON MANY PER THEREFORE, THE JURISDICTION U/S 263 WAS PERFECTLY V ALID SINCE IT WAS ONLY RECOURSE AVAILABLE TO THE REVENUE, UNDER THE CIRCUM STANCES. 5.1 WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AND P ERUSED RELEVANT MATERIAL O N RECORD INCLUDING THE IMPUGNED ORDER, JUDICIAL PRONOUNCEMENTS AND DOCUMENTS PLACE IN THE REFERENCE, THE WHOLE PREMISE WHICH HAS LED TO INVOC ATION OF JURISDICTION U/S 263, AS EVIDENT FROM IMPUGNED ORDE R, COULD BE EXTRACTED IN THE FOLLOWING MANNER: 4 .AS MENTIONED IN THE NOTICE U/S 263(1) OF THE ACT, THE ASSESSING OFFICER HAS NOT VERIFIED THE GENUINENESS OF EXPENDITURE RS.4,89,55, 949/ WAGES IN THE PROFIT AND LOSS ACCOUNT. EVEN IN THE R ETURN OF INCOME, INCLUD 3CD REPORT NO DETAILS IN RESPECT TO THIS AMOUNT PAI D AS WAGES HAVE BEEN FURNISHED BY THE ASSESSEE AS WELL AS THE AUDITOR WH O HAS PREPARED THE 3CD REPORT. THOUGH THE ASSESSEE CLAIMS THAT DETAILS WER E FILED BEFORE THE AO ON 9.02.2015 BUT THERE IS NO EVEN DURING THE PROCEEDINGS NOR ANY EVIDENCE IN SUPPORT OF FILING SUCH DETAILS BEFORE THE AO ON 9.02.2015. 4.1 THE ASSESSEE IN THE PROFIT AND LOSS ON LABOUR FOR VARIOUS WORK WHICH ARE AS FOLLOWS: LABOUR CHARGES: SR.NO. 1 2 3 4 5 6 ASSESSMENT YEAR BMISSIONS ARE SOUGHT TO BE FORTIFIED ON THE BASIS OF DOCUMENTS BOOK. RELIANCE HAS BEEN PLACED ON SEVERAL JUDICIAL TO SUGGEST THAT JURISDICTION WAS BAD IN LAW. LD. DR SUBMITTED THAT THE NO INQUIRY WHATSOEVER, WE RE MADE BY LD. AO ON MANY PER TINENT ISSUES AS NOTED BY LD. PR.CIT AND THEREFORE, THE JURISDICTION U/S 263 WAS PERFECTLY V ALID SINCE IT WAS ONLY RECOURSE AVAILABLE TO THE REVENUE, UNDER THE CIRCUM STANCES. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AND P ERUSED N RECORD INCLUDING THE IMPUGNED ORDER, JUDICIAL PRONOUNCEMENTS AND DOCUMENTS PLACE IN THE PAPER- BOOK REFERENCE, THE WHOLE PREMISE WHICH HAS LED TO INVOC ATION OF JURISDICTION U/S 263, AS EVIDENT FROM IMPUGNED ORDE R, COULD BE FOLLOWING MANNER: - .AS MENTIONED IN THE NOTICE U/S 263(1) OF THE ACT, THE ASSESSING OFFICER HAS NOT VERIFIED THE GENUINENESS OF EXPENDITURE RS.4,89,55, 949/ - DEBITED UNDER THE HEAD WAGES IN THE PROFIT AND LOSS ACCOUNT. EVEN IN THE R ETURN OF INCOME, INCLUD 3CD REPORT NO DETAILS IN RESPECT TO THIS AMOUNT PAI D AS WAGES HAVE BEEN FURNISHED BY THE ASSESSEE AS WELL AS THE AUDITOR WH O HAS PREPARED THE 3CD REPORT. THOUGH THE ASSESSEE CLAIMS THAT DETAILS WER E FILED BEFORE THE AO ON 9.02.2015 BUT THERE IS NO EVIDENCE ON RECORD OF ASSESSEE EVER FILING SUCH DET AILS. PROCEEDINGS UNDER SECTION 263 NEITHER ASSESSEE HAS FILED NOR ANY EVIDENCE IN SUPPORT OF FILING SUCH DETAILS BEFORE THE AO ON 9.02.2015. THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT HAS DEBITED DIRECT EXPENSES ON LABOUR FOR VARIOUS WORK WHICH ARE AS FOLLOWS: LABOUR CHARGES: EXPENSES AMOUNT IN RS. FOR ACID WASH 450000 FOR POP 1700000 LABOUR CHARGES 9955254 ELECTRIC WORK 300045 PLASTER 5375000 POLISHING 15000 ITA NO.5050/MUM/2017 BALAJI CONSTRUCTION ASSESSMENT YEAR S :2012-13 FORTIFIED ON THE BASIS OF DOCUMENTS ON SEVERAL JUDICIAL BAD IN LAW. PER LD. DR SUBMITTED THAT THE NO INQUIRY WHATSOEVER, WE RE MADE TINENT ISSUES AS NOTED BY LD. PR.CIT AND THEREFORE, THE JURISDICTION U/S 263 WAS PERFECTLY V ALID SINCE IT WAS ONLY RECOURSE AVAILABLE TO THE REVENUE, UNDER THE CIRCUM STANCES. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AND P ERUSED N RECORD INCLUDING THE IMPUGNED ORDER, JUDICIAL BOOK . FOR EASE OF REFERENCE, THE WHOLE PREMISE WHICH HAS LED TO INVOC ATION OF JURISDICTION U/S 263, AS EVIDENT FROM IMPUGNED ORDE R, COULD BE .AS MENTIONED IN THE NOTICE U/S 263(1) OF THE ACT, THE ASSESSING OFFICER HAS NOT DEBITED UNDER THE HEAD WAGES IN THE PROFIT AND LOSS ACCOUNT. EVEN IN THE R ETURN OF INCOME, INCLUD ING THE 3CD REPORT NO DETAILS IN RESPECT TO THIS AMOUNT PAI D AS WAGES HAVE BEEN FURNISHED BY THE ASSESSEE AS WELL AS THE AUDITOR WH O HAS PREPARED THE 3CD REPORT. THOUGH THE ASSESSEE CLAIMS THAT DETAILS WER E FILED BEFORE THE AO ON EVIDENCE ON RECORD OF ASSESSEE EVER FILING SUCH DET AILS. UNDER SECTION 263 NEITHER ASSESSEE HAS FILED DETAILS NOR ANY EVIDENCE IN SUPPORT OF FILING SUCH DETAILS BEFORE THE AO ON 9.02.2015. ACCOUNT HAS DEBITED DIRECT EXPENSES 7 8 9 10 11 12 13 14 15 4.2THE ASSESSEE HAS DEBITED AMOUNT RS.39698595 ON A CCOUNT OF LABOUR CHARGES FOR VARIOUS FOR SPECIFIC WORK HAVE BEEN INCURRED SUCH AS ELECTR IC WORK, WOODEN WORK, POLISHING WORK, PAINTING WORK, ETC. IT TO THE COMPLETION STAGE. IN SUCH SITUATION MATERIAL COST DUE TO WORK SUCH AS WOODWORK, PAINTS, INTERIORS ETC. GOES UP BUT WAGES ON CIVIL WORK SHOULD COME DOWN AND FORM A SMALL PERCENTAGE OF TOTAL COST ON L ABOUR A OF CIVIL WORK SUCH WORK ARE UNDERTAKEN. 4.3THE ASSESSEE HAS FILED DURING 263 PROCEEDINGS TH E INVOICES WHICH THE ASSESSEE HAS RAISED ON THE BUILDER. I HAVE VERIFIED THE TAX INVOICES WHICH THE ASSESSEE HAS RAISED ON UNNAT 31.03.2012 A RUNNING BILL NO. UN/11 RS.6,52,53,760/- ON UNNATHI ESTATE. THE BILL HAS NOT BEEN STAMPED BY M/S UNNATH I ESTATE UNLIKE OTHER BILLS WHICH ARE DULY STAMPED. IT MERELY STA WORK @1150 PER SQ FT FOR 52000 SQ.FT.SPECIFIC DETAI LS HAVE NOT BEEN FURNISHED. HUGE CIVIL WORK WITHOUT ANY SUPPORTING DOCUMENT GIV ING DETAILS AS TO HOW TOTAL MEASUREMENT 52000 SQ FT IS ARRIVED AT FOR WHICH INV OICE HAS BEEN RAISED ON 31.03.2012 DOE S NOT APPEAR GENUINE. AS AGAINST IT AS PER 26 AS UN NAT HAS CREDITED THE ASSESSEE ON 31.03.2012 BY 13,00,00 ,000 ON ACCRUAL BASIS AND DEDUCTED TDS @ 2% FOR RS.26 LAKHS THEREON. UNNATHI ESTATE IN THIS YEAR ON ALL OTHER EARLIER OCCASIONS HAS MADE TDS ASSESSEE AND NOT WHEN THE INVOICES WERE RECEIVED TH AT WERE RAISED BY THE ASSESSEE ON UNANTHI ESTATE. UNNATHI ESTATE HAS CRED ITED THE ASSESSEE FOR RS.13,00,00,000/- DID TDS THEREON WHEREAS THE ASSESSEE HAS RAISED INV OICES O NLY FOR RS.6,52,53,760/ ONLY. THUS THERE IS DIFFERENCE OF RS.3,69,57,741/ ACCRUED AND TDS MADE BY UNNATHI ESTATE AND CONTRACT RECEIPTS TAKE BY THE ASSESSEE AS PER COPY OF ACCO THAT HAVE BEEN OFFERED SHORT BY THE ASSESSEE IN THE P&L ACCOUNT. AS DISCUSSED EARLIER THE ASSESSEE HAS DEBITED ON 31.03.2012 RS.4 .89 CR. IN THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF WAGES. 4.4 THUS, THE ASSESSEE HAS DEBITED EXPENDITURE UNDE R THE CR. THAT IS NOT VERIFIED. FURTHER THE ASSESSEE HAS TAKEN TO PROFIT AND LOSS CONTRACT RECEIPTS THAT ARE SHORT BY RS.3,69,57,741/ ASSESSMENT YEAR TILING WORK 2965000 WATER PROOFING 525000 WOODEN WORK 3055659 PAINTING WORK 6117974 FOR ALUMINIUM 100000 FOR MARBLE 5225000 LABOUR WELFARE 89763 PLUMBING 3825000 WAGES 48955949 4.2THE ASSESSEE HAS DEBITED AMOUNT RS.39698595 ON A CCOUNT OF LABOUR CHARGES FOR VARIOUS OTHER WORKS DESCRIBED ABOVE. WHEN ALREADY LABOUR CHARGES FOR SPECIFIC WORK HAVE BEEN INCURRED SUCH AS ELECTR IC WORK, WOODEN WORK, POLISHING WORK, PAINTING WORK, ETC. IT MEANS THAT WORK IN THE PROJECT HAS REACHED TO THE COMPLETION STAGE. IN SUCH SITUATION MATERIAL COST DUE TO WORK SUCH AS WOODWORK, PAINTS, INTERIORS ETC. GOES UP BUT WAGES ON CIVIL WORK SHOULD COME DOWN AND FORM A SMALL PERCENTAGE OF TOTAL COST ON L ABOUR A S ONLY ON COMPLETION OF CIVIL WORK SUCH WORK ARE UNDERTAKEN. 4.3THE ASSESSEE HAS FILED DURING 263 PROCEEDINGS TH E INVOICES WHICH THE ASSESSEE HAS RAISED ON THE BUILDER. I HAVE VERIFIED THE TAX INVOICES WHICH THE ASSESSEE HAS RAISED ON UNNAT HI ESTATE. I FIN D THAT THE ASSESSEE HAS RAISED ON 31.03.2012 A RUNNING BILL NO. UN/11 - 12/368 DATED 31.03.2012 FOR CIVIL WORK OF ON UNNATHI ESTATE. THE BILL HAS NOT BEEN STAMPED BY M/S I ESTATE UNLIKE OTHER BILLS WHICH ARE DULY STAMPED. IT MERELY STA WORK @1150 PER SQ FT FOR 52000 SQ.FT.SPECIFIC DETAI LS HAVE NOT BEEN FURNISHED. HUGE CIVIL WORK WITHOUT ANY SUPPORTING DOCUMENT GIV ING DETAILS AS TO HOW TOTAL MEASUREMENT 52000 SQ FT IS ARRIVED AT FOR WHICH INV OICE HAS BEEN RAISED ON S NOT APPEAR GENUINE. AS AGAINST IT AS PER 26 AS UN NAT HAS CREDITED THE ASSESSEE ON 31.03.2012 BY 13,00,00 ,000 ON ACCRUAL BASIS AND DEDUCTED TDS @ 2% FOR RS.26 LAKHS THEREON. UNNATHI ESTATE IN THIS YEAR ON ALL OTHER EARLIER OCCASIONS HAS MADE TDS WHEN THE PAYMENT WAS MADE TO THE ASSESSEE AND NOT WHEN THE INVOICES WERE RECEIVED TH AT WERE RAISED BY THE ASSESSEE ON UNANTHI ESTATE. UNNATHI ESTATE HAS CRED ITED THE ASSESSEE FOR DID TDS THEREON WHEREAS THE ASSESSEE HAS RAISED INV OICES NLY FOR RS.6,52,53,760/ - AND RS.2,77,88,499 WHICH TOTALS UP TO RS.9,30,42,25 9 ONLY. THUS THERE IS DIFFERENCE OF RS.3,69,57,741/ - BETWEEN CONTRACT RECEIPTS ACCRUED AND TDS MADE BY UNNATHI ESTATE AND CONTRACT RECEIPTS TAKE BY THE ASSESSEE AS PER COPY OF ACCO UNT OF UNNA THI ESTATE IN THE BOOKS OF THE ASSESSEE THAT HAVE BEEN OFFERED SHORT BY THE ASSESSEE IN THE P&L ACCOUNT. AS DISCUSSED EARLIER THE ASSESSEE HAS DEBITED ON 31.03.2012 RS.4 .89 CR. IN THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF WAGES. 4.4 THUS, THE ASSESSEE HAS DEBITED EXPENDITURE UNDE R THE HEAD CR. THAT IS NOT VERIFIED. FURTHER THE ASSESSEE HAS TAKEN TO PROFIT AND LOSS CONTRACT RECEIPTS THAT ARE SHORT BY RS.3,69,57,741/ - ITA NO.5050/MUM/2017 BALAJI CONSTRUCTION ASSESSMENT YEAR S :2012-13 4.2THE ASSESSEE HAS DEBITED AMOUNT RS.39698595 ON A CCOUNT OF LABOUR WORKS DESCRIBED ABOVE. WHEN ALREADY LABOUR CHARGES FOR SPECIFIC WORK HAVE BEEN INCURRED SUCH AS ELECTR IC WORK, WOODEN WORK, THAT WORK IN THE PROJECT HAS REACHED TO THE COMPLETION STAGE. IN SUCH SITUATION MATERIAL COST DUE TO WORK SUCH AS WOODWORK, PAINTS, INTERIORS ETC. GOES UP BUT WAGES ON CIVIL WORK SHOULD COME S ONLY ON COMPLETION 4.3THE ASSESSEE HAS FILED DURING 263 PROCEEDINGS TH E INVOICES WHICH THE ASSESSEE HAS RAISED ON THE BUILDER. I HAVE VERIFIED THE TAX INVOICES WHICH THE D THAT THE ASSESSEE HAS RAISED ON 12/368 DATED 31.03.2012 FOR CIVIL WORK OF ON UNNATHI ESTATE. THE BILL HAS NOT BEEN STAMPED BY M/S I ESTATE UNLIKE OTHER BILLS WHICH ARE DULY STAMPED. IT MERELY STA TES CIVIL WORK @1150 PER SQ FT FOR 52000 SQ.FT.SPECIFIC DETAI LS HAVE NOT BEEN FURNISHED. HUGE CIVIL WORK WITHOUT ANY SUPPORTING DOCUMENT GIV ING DETAILS AS TO HOW TOTAL MEASUREMENT 52000 SQ FT IS ARRIVED AT FOR WHICH INV OICE HAS BEEN RAISED ON S NOT APPEAR GENUINE. AS AGAINST IT AS PER 26 AS UN NAT HI ESTATE HAS CREDITED THE ASSESSEE ON 31.03.2012 BY 13,00,00 ,000 ON ACCRUAL BASIS AND DEDUCTED TDS @ 2% FOR RS.26 LAKHS THEREON. UNNATHI ESTATE IN THIS YEAR ON ALL WHEN THE PAYMENT WAS MADE TO THE ASSESSEE AND NOT WHEN THE INVOICES WERE RECEIVED TH AT WERE RAISED BY THE ASSESSEE ON UNANTHI ESTATE. UNNATHI ESTATE HAS CRED ITED THE ASSESSEE FOR DID TDS THEREON WHEREAS THE ASSESSEE HAS RAISED INV OICES AND RS.2,77,88,499 WHICH TOTALS UP TO RS.9,30,42,25 9 BETWEEN CONTRACT RECEIPTS ACCRUED AND TDS MADE BY UNNATHI ESTATE AND CONTRACT RECEIPTS TAKE BY THE THI ESTATE IN THE BOOKS OF THE ASSESSEE THAT HAVE BEEN OFFERED SHORT BY THE ASSESSEE IN THE P&L ACCOUNT. AS DISCUSSED EARLIER THE ASSESSEE HAS DEBITED ON 31.03.2012 RS.4 .89 CR. IN THE PROFIT AND LOSS HEAD WAGES RS.4.89 CR. THAT IS NOT VERIFIED. FURTHER THE ASSESSEE HAS TAKEN TO PROFIT AND LOSS CONTRACT 4.5 FURTHER, PRIME FACIE IT IS ALSO NOTICED THAT TD COMPARED TO THE CONTRACT ASSESSEE . IT ASPECT MUST BE LOOKED INTO BY THE AO. 4.6 THE ASSESSING OFFICER WORK IN PROGRESS AS ON 31.03.201 4.7 IN THE 3CD REPORT AUDITOR HAS GIVEN THE DETAILS OF THE EXPENDITURE DEBITED IN P&L ACCOUNT THAT MUST BE DISALLOWED IN SCHEDULE 17B AT RS.34,31,052/ INADMISSIBLE EXPENSES U/S 40(B) OF THE ACT AND RS.5 ,07,015 AS PERSONAL EXPENSES. THE ASSESSEE HOWE INCOME HAS CLAIMED AS DEDUCTION. IT SHOULD HAVE BEE N ADDED BACK BY THE AO IN THE TOTAL INCOME. BUT AO HAS NOT DONE SO. 5.THEREFORE, I SET ASIDE THE ASSESSMENT ORDER PASSE D BY THE ASSESSING OFFICER FOR A.Y. 2012- 13 DATED 30.03.2015 AND DIRECT THE ASSESSING OFFICE R TO PASS THE ORDER AFRESH AFTER MAKING PROPER EXAMINATION ON THE ISSUES MENTIONED IN PARA 4.4 TO PARA 4.7 AFTER GIVING THE ASSESSEE PROPER OP PORTUNITY OF BEING HEARD. UPON PERUSAL, IT COULD BE GATHE INVOKED IN VIEW OF THE FACT THAT THE ASSESSEE CLAIM ED WAGES OF RS.4,89,55,949/- WHICH WERE NOT VERIFIE THAT ADDITIONAL LABOR CHARGES OF RS.3,96,98,595/ ASSESSEE, INCOME TO THE EXTENT OF RS.3,69,57,741/ FROM 26AS WAS SHORT CREDITED, EXCESSIVE CLAIM OF TDS WAS MADE , VALUATIONS OF CLOSING STOCK WAS NOT VERIFIED AND DISALLOWANCE OF EXPENDITURE AS REPORTED IN DURING ORIGINAL ASSESSMENT PROCEEDINGS. ASSESSMENT ORDER U/S 143(3) AGAINST WHICH THIS JURI SDICTION HAS BEEN EXERCISED, IS CONCERNED, WE FIND THAT THERE IS NO D ISCUSSION WHATSOEVER IN THE SAME REGARDING ISSUES. ASSESSMENT YEAR FURTHER, PRIME FACIE IT IS ALSO NOTICED THAT TD S ADJUSTMENT IS MORE COMPARED TO THE CONTRACT RECEIPTS SHOWN IN PROFIT AND LOSS ACCOUNT BY THE . IT ASPECT MUST BE LOOKED INTO BY THE AO. OFFICER SHOULD ALSO EXAMINE CORRECTNESS OF CLOSING STOCK OF WORK IN PROGRESS AS ON 31.03.201 2. IN THE 3CD REPORT AUDITOR HAS GIVEN THE DETAILS OF THE EXPENDITURE DEBITED IN P&L ACCOUNT THAT MUST BE DISALLOWED IN SCHEDULE 17B AT RS.34,31,052/ INADMISSIBLE EXPENSES U/S 40(B) OF THE ACT AND RS.5 ,07,015 AS PERSONAL EXPENSES. THE ASSESSEE HOWE VER IN COMPUTATION OF INCOME FILED WITH RETURN OF INCOME HAS CLAIMED AS DEDUCTION. IT SHOULD HAVE BEE N ADDED BACK BY THE AO IN THE TOTAL INCOME. BUT AO HAS NOT DONE SO. 5.THEREFORE, I SET ASIDE THE ASSESSMENT ORDER PASSE D BY THE ASSESSING OFFICER 13 DATED 30.03.2015 AND DIRECT THE ASSESSING OFFICE R TO PASS THE ORDER AFRESH AFTER MAKING PROPER EXAMINATION ON THE ISSUES MENTIONED IN PARA 4.4 TO PARA 4.7 AFTER GIVING THE ASSESSEE PROPER OP PORTUNITY OF BEING HEARD. UPON PERUSAL, IT COULD BE GATHE RED THAT JURISDICTION U/S 263 HAS BEEN INVOKED IN VIEW OF THE FACT THAT THE ASSESSEE CLAIM ED WAGES OF WHICH WERE NOT VERIFIE D PARTICULARLY IN VIEW OF THE FACT THAT ADDITIONAL LABOR CHARGES OF RS.3,96,98,595/ - WERE DEBITED BY THE INCOME TO THE EXTENT OF RS.3,69,57,741/ - WAS SHORT CREDITED, EXCESSIVE CLAIM OF TDS WAS MADE , OF CLOSING STOCK WAS NOT VERIFIED AND DISALLOWANCE OF AS REPORTED IN FORM 3CD WERE NOT CONSIDERED BY LD. AO DURING ORIGINAL ASSESSMENT PROCEEDINGS. SO FAR AS THE QUANTUM ASSESSMENT ORDER U/S 143(3) AGAINST WHICH THIS JURI SDICTION HAS BEEN EXERCISED, IS CONCERNED, WE FIND THAT THERE IS NO D ISCUSSION WHATSOEVER IN THE SAME REGARDING ANY OF THE ABOVE STATED POINTS ITA NO.5050/MUM/2017 BALAJI CONSTRUCTION ASSESSMENT YEAR S :2012-13 S ADJUSTMENT IS MORE SHOWN IN PROFIT AND LOSS ACCOUNT BY THE SHOULD ALSO EXAMINE CORRECTNESS OF CLOSING STOCK OF IN THE 3CD REPORT AUDITOR HAS GIVEN THE DETAILS OF THE EXPENDITURE DEBITED IN P&L ACCOUNT THAT MUST BE DISALLOWED IN SCHEDULE 17B AT RS.34,31,052/ - AS INADMISSIBLE EXPENSES U/S 40(B) OF THE ACT AND RS.5 ,07,015 AS PERSONAL VER IN COMPUTATION OF INCOME FILED WITH RETURN OF INCOME HAS CLAIMED AS DEDUCTION. IT SHOULD HAVE BEE N ADDED BACK BY THE AO IN 5.THEREFORE, I SET ASIDE THE ASSESSMENT ORDER PASSE D BY THE ASSESSING OFFICER 13 DATED 30.03.2015 AND DIRECT THE ASSESSING OFFICE R TO PASS THE ORDER AFRESH AFTER MAKING PROPER EXAMINATION ON THE ISSUES MENTIONED IN PARA 4.4 TO PARA 4.7 AFTER GIVING THE ASSESSEE PROPER OP PORTUNITY OF BEING HEARD. RED THAT JURISDICTION U/S 263 HAS BEEN INVOKED IN VIEW OF THE FACT THAT THE ASSESSEE CLAIM ED WAGES OF D PARTICULARLY IN VIEW OF THE FACT WERE DEBITED BY THE - AS REFLECTED IN WAS SHORT CREDITED, EXCESSIVE CLAIM OF TDS WAS MADE , OF CLOSING STOCK WAS NOT VERIFIED AND DISALLOWANCE OF WERE NOT CONSIDERED BY LD. AO SO FAR AS THE QUANTUM ASSESSMENT ORDER U/S 143(3) AGAINST WHICH THIS JURI SDICTION HAS BEEN EXERCISED, IS CONCERNED, WE FIND THAT THERE IS NO D ISCUSSION ANY OF THE ABOVE STATED POINTS / 5.2 THE PERUSAL OF DOCUMENTS 90] AS FILED BY THE ASSESSEE DURING VIDE REPLY DATED 02/02/2015, REVEAL THAT IN RESPONS E TO QUERY RAISED BY LD. AO R EGARDING DETAILS OF EXPENDITURE EXCEEDING RS.5 LACS , THE ASSESSEE HAD FILED THE DETAILS OF EXPENDITURE, NATURE OF WORK, NAME OF THE CONTRACTOR AND THE AMOUNT PAID TO THEM LACS WITH RESPECT TO HOWEVER, SO FAR AS THE CONCERNED, THE ASSESSEE HAS FILED ONLY EXPENDITURE WITH SAMPLE WAGE SHEET DETAILS . NOTHING ON RECORD SUGGEST THAT LD. FURTHER EXAMINED THE NATURE THE PERSONS TO WHOM SUCH PAYMENTS WERE MADE THE LD. AR HAS CANVASSED THE POINT THAT THE TO THE MARGINAL LABORERS COULD NOT BE PROVIDED OUR FINDINGS IN THE INSTANT APPEAL ARE LIMITED TO T HE EXTENT WHETHER THE SAID CLAIM OF THE ASSESSEE WAS EVER EXA MINED / VERIFIED BY LD.AO AT ASSESSMENT STAGE U/S 263. W E FIND THAT NO SUCH VERIFICATION WAS CARRIED OUT BY THE LD. AO DURING ASSESSMENT PROCEEDINGS 5.3 SIMILAR IS THE POSITION WITH RS.369.57 LACS AND EXCESSIVE CLAIM OF TDS ASSESSMENT YEAR THE PERUSAL OF DOCUMENTS PLACED ON RECORD [ PAGE NUMBERS 71 TO FILED BY THE ASSESSEE DURING ORIGINAL ASSESSMENT PROCEEDINGS VIDE REPLY DATED 02/02/2015, REVEAL THAT IN RESPONS E TO QUERY RAISED EGARDING DETAILS OF EXPENDITURE EXCEEDING RS.5 LACS , THE THE DETAILS OF EXPENDITURE, NATURE OF WORK, NAME OF THE CONTRACTOR AND THE AMOUNT PAID TO THEM AGGREGATING TO RS.396.98 WITH RESPECT TO ITEM NUMBERS 1 TO 14 LISTED IN THE HOWEVER, SO FAR AS THE LABOR CHARGES OF RS.489.55 LACS ARE CONCERNED, THE ASSESSEE HAS FILED ONLY MONTH- WISE SUMMARY WITH SAMPLE WAGE SHEET WITHOUT PROVIDING ANY OTHER . NOTHING ON RECORD SUGGEST THAT LD. ASSESSING OFFICER NATURE / DETAILS OF WORK CARRIED OUT BY THE LABOR THE PERSONS TO WHOM SUCH PAYMENTS WERE MADE BY THE ASSESSEE THE LD. AR HAS CANVASSED THE POINT THAT THE LABOR CHARGES TO THE MARGINAL LABORERS AND TH EREOF ADEQUATE DETAILS IN THAT RESPECT COULD NOT BE PROVIDED BY THE ASSESSEE. HOWEVER, AS STATED EARLIER, OUR FINDINGS IN THE INSTANT APPEAL ARE LIMITED TO T HE EXTENT WHETHER THE SAID CLAIM OF THE ASSESSEE WAS EVER EXA MINED / VERIFIED AT ASSESSMENT STAGE OR NOT SO AS TO TEST THE VALIDITY OF E FIND THAT NO SUCH VERIFICATION WAS CARRIED OUT BY THE LD. AO DURING ASSESSMENT PROCEEDINGS . SIMILAR IS THE POSITION WITH RESPECT TO SHORT CONTRACTUAL AND EXCESSIVE CLAIM OF TDS . IT IS NOTED THAT THE ITA NO.5050/MUM/2017 BALAJI CONSTRUCTION ASSESSMENT YEAR S :2012-13 PAGE NUMBERS 71 TO ASSESSMENT PROCEEDINGS , VIDE REPLY DATED 02/02/2015, REVEAL THAT IN RESPONS E TO QUERY RAISED EGARDING DETAILS OF EXPENDITURE EXCEEDING RS.5 LACS , THE THE DETAILS OF EXPENDITURE, NATURE OF WORK, NAME OF AGGREGATING TO RS.396.98 LISTED IN THE ABOVE TABLE. OF RS.489.55 LACS ARE WISE SUMMARY OF THE WITHOUT PROVIDING ANY OTHER ASSESSING OFFICER HAD CARRIED OUT BY THE LABOR OR BY THE ASSESSEE . LABOR CHARGES WERE PAID EREOF ADEQUATE DETAILS IN THAT RESPECT AS STATED EARLIER, OUR FINDINGS IN THE INSTANT APPEAL ARE LIMITED TO T HE EXTENT OF FINDING OUT WHETHER THE SAID CLAIM OF THE ASSESSEE WAS EVER EXA MINED / VERIFIED TEST THE VALIDITY OF ACTION E FIND THAT NO SUCH VERIFICATION WAS CARRIED OUT BY THE LD. CONTRACTUAL RECEIPTS OF IT IS NOTED THAT THE ASPECT OF CONTRACTUAL RECEIPTS ACCOUNT VIS-- VIS RECEIPTS REFLECTED IN LD. AO WHICH IS EVIDENT FROM THE FACT THAT FILED COPY OF RELEVANT AGREEMENT AND AMOUNT RECEIVA BLE FROM THE DEBT ORS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HO WEVER RECONCILIATION OF RECEIPTS VIS FILED / EXAMINED AND ACCOUNT OF TDS REMAINED UNVERIFIED. THE LD. AR HAS CANVASSED POINT THAT THE CONTRACTUAL RECEIPTS WERE OFFERED TO TAX IN SUBSEQU ENT YEARS FOLLOWING CONSISTENT METHOD OF ACCOUNTING ISSUE WAS TAX NEU TRAL. IT HAS FURTHER BEEN SUBMITTED THAT THE EXCESSIVE TDS WAS NEVER PR.CIT AND THEREFORE, REVISION WAS NOT JUSTIFIED PRINCIPLE OF NATURAL JUSTICE THE FACT THAT THE ISSUE WAS LD. AO AND SECONDLY, THE ISSUE OF TDS WAS THE FACT THAT THERE WAS SHORT CREDIT OF CONTRACTUAL RECEIPTS IN THE BOOKS OF THE ASSESSEE . THEREFORE, THE LD. P JUSTIFIED ON THIS ACCOUNT ALSO. 5.4 THE LAST PREMISE ON WHICH REVISION HAS BEEN SOUGHT PR.CIT IS THE FACT THAT THE CLOSING STOCK REFLECTED BY THE ASSESSEE CONSTITUTED ONLY THE MATERIAL PORTION ELEMENT OF LABOR AND OVERHEADS ASSESSMENT YEAR RECEIPTS AS REFLECTED BY THE ASSESSEE IN THE PROFIT & LOSS VIS RECEIPTS REFLECTED IN FORM 26AS W AS NOT EXAMINED BY WHICH IS EVIDENT FROM THE FACT THAT ALTHOUGH T HE ASSESSEE HAD FILED COPY OF RELEVANT AGREEMENT AND AMOUNT RECEIVA BLE FROM THE ORS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HO WEVER RECONCILIATION OF RECEIPTS VIS --VIS FORM 26AS WERE NEVER AND FURTHER, THE JUSTIFICATION OF ASSESSEES CLAIM TDS REMAINED UNVERIFIED. THE LD. AR HAS CANVASSED CONTRACTUAL RECEIPTS WERE OFFERED TO TAX IN SUBSEQU ENT FOLLOWING CONSISTENT METHOD OF ACCOUNTING AND THEREFORE, THE TRAL. IT HAS FURTHER BEEN SUBMITTED THAT THE EXCESSIVE TDS WAS NEVER PART OF THE SHOW-CAUSE NOTICE PR.CIT AND THEREFORE, REVISION WAS NOT JUSTIFIED , BEING IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE . HOWEVER, NOTHING ON RECORD SUBST THE FACT THAT THE ISSUE WAS TAX NEUTRAL SINCE IT WAS NEVER EXAMINED BY LD. AO AND SECONDLY, THE ISSUE OF TDS WAS MERELY CONSEQUENTIAL TO THE FACT THAT THERE WAS SHORT CREDIT OF CONTRACTUAL RECEIPTS IN THE BOOKS . THEREFORE, THE LD. P R.CIT , IN OUR OPINION, ACCOUNT ALSO. THE LAST PREMISE ON WHICH REVISION HAS BEEN SOUGHT IS THE FACT THAT THE CLOSING STOCK REFLECTED BY THE ASSESSEE ONLY THE MATERIAL PORTION WITHOUT INCLUDING THEREIN THE ELEMENT OF LABOR AND OVERHEADS AS AGAINST THE FACT THAT THE ASSESSEE ITA NO.5050/MUM/2017 BALAJI CONSTRUCTION ASSESSMENT YEAR S :2012-13 BY THE ASSESSEE IN THE PROFIT & LOSS AS NOT EXAMINED BY HE ASSESSEE HAD FILED COPY OF RELEVANT AGREEMENT AND AMOUNT RECEIVA BLE FROM THE ORS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HO WEVER , THE WERE NEVER CALLED FOR / ASSESSEES CLAIM ON TDS REMAINED UNVERIFIED. THE LD. AR HAS CANVASSED THE CONTRACTUAL RECEIPTS WERE OFFERED TO TAX IN SUBSEQU ENT AND THEREFORE, THE TRAL. IT HAS FURTHER BEEN SUBMITTED THAT THE ISSUE OF NOTICE ISSUED BY LD. , BEING IN VIOLATION OF NOTHING ON RECORD SUBST ANTIATE NEUTRAL SINCE IT WAS NEVER EXAMINED BY MERELY CONSEQUENTIAL TO THE FACT THAT THERE WAS SHORT CREDIT OF CONTRACTUAL RECEIPTS IN THE BOOKS , IN OUR OPINION, WAS THE LAST PREMISE ON WHICH REVISION HAS BEEN SOUGHT BY LD. IS THE FACT THAT THE CLOSING STOCK REFLECTED BY THE ASSESSEE WITHOUT INCLUDING THEREIN THE AS AGAINST THE FACT THAT THE ASSESSEE CARRIED OUT CONSTRUCTION WORK INCLUDING MATERIAL AN D LABOR AND THEREFORE, THE UNCOMPLETED WORK SHOULD HAVE BEEN REFLECTE SUBMITTED THAT THE VALUATION HAS BEEN DONE AS PER C ONSISTENT ACCOUNTING POLICY BE SUBMITTED THAT, WITHOUT QUANTIFYING THE SAME, LD. P R.CIT WAS NOT JUSTIFIED IN EXERCISING REVISI CONSIDERATION, WE FIND THAT THE ASSESSEE HAD PLACED ON RECORD ONLY THE STOCK VA LUATION AT YEAR END. NO FURTHER QUERY HAS SAME, WHICH, PRIMA FACIE, MADE BY LD. AO ON THIS ASPECT SUBJECTED TO REVISIONAL JURISDICTION U/S 263. STAGE, WAS NOT REQUIRED TO QUANTIFY THE EXACT AMOUN T IN VIEW OF THE FACT THAT IT WAS FACTUAL ASPECT AND REQUIRED FURTHE R VERIFICATIONS AND THEREFORE THE ARGUMENTS AS ADVANCED BY LD. AR, IN T HIS REGARD, COULD NOT BE ACCEPTED. 5.5 THE OTHER GROUNDS ON WHICH THE REVISIONAL JURISDICT ION HAS BEEN INVOKED HAS NOT BEEN CONTESTED ADJUSTMENT QUA THE SAME HAS BEEN MADE IN THE CONSEQUENTIAL ORDER. THEREFORE, THE SAME REQUIRE NO DELIBERATIONS 5.6 KEEPING IN VIEW THE A CONSIDERED OPINION THAT ASSESSMENT YEAR CARRIED OUT CONSTRUCTION WORK INCLUDING MATERIAL AN D LABOR AND THEREFORE, THE UNCOMPLETED WORK INCLUDING MATERIAL, LABOR & OVERHEAD SHOULD HAVE BEEN REFLECTE D AS WORK-IN-PROGRESS . THE SUBMITTED THAT THE VALUATION HAS BEEN DONE AS PER C ONSISTENT ACCOUNTING POLICY BE ING FOLLOWED BY THE ASSESSEE. IT HAS BEEN SUBMITTED THAT, WITHOUT QUANTIFYING THE SAME, LD. P R.CIT WAS NOT JUSTIFIED IN EXERCISING REVISI ONAL JURISDICTION U/S 263. CONSIDERATION, WE FIND THAT DURING ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD PLACED ON RECORD ONLY THE STOCK VA LUATION AT YEAR END. NO FURTHER QUERY HAS EVER BEEN RAISED BY LD. AO AGAINST THE FACIE, REVEAL THAT NO INQUIRY, WHATSOEVER, HAS BEEN ON THIS ASPECT AND THEREFORE, THE ISSUE WAS R SUBJECTED TO REVISIONAL JURISDICTION U/S 263. THE LD. PR.CIT, AT THIS STAGE, WAS NOT REQUIRED TO QUANTIFY THE EXACT AMOUN T IN VIEW OF THE FACT THAT IT WAS FACTUAL ASPECT AND REQUIRED FURTHE R VERIFICATIONS AND THEREFORE THE ARGUMENTS AS ADVANCED BY LD. AR, IN T HIS REGARD, COULD THE OTHER GROUNDS ON WHICH THE REVISIONAL JURISDICT ION HAS BEEN INVOKED HAS NOT BEEN CONTESTED BY LD. AR IN VIEW OF THE FACT THE NO THE SAME HAS BEEN MADE IN THE CONSEQUENTIAL ORDER. THEREFORE, THE SAME REQUIRE NO DELIBERATIONS ON OUR PART KEEPING IN VIEW THE A BOVE STATED POSITION, WE ARE OF THE CONSIDERED OPINION THAT IT IS A CASE OF NO INQUIRY ITA NO.5050/MUM/2017 BALAJI CONSTRUCTION ASSESSMENT YEAR S :2012-13 CARRIED OUT CONSTRUCTION WORK INCLUDING MATERIAL AN D LABOR AND INCLUDING MATERIAL, LABOR & OVERHEAD THE LD. AR HAS SUBMITTED THAT THE VALUATION HAS BEEN DONE AS PER C ONSISTENT FOLLOWED BY THE ASSESSEE. IT HAS BEEN SUBMITTED THAT, WITHOUT QUANTIFYING THE SAME, LD. P R.CIT WAS NOT JURISDICTION U/S 263. AFTER DUE DURING ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD PLACED ON RECORD ONLY THE STOCK VA LUATION AT YEAR - BEEN RAISED BY LD. AO AGAINST THE REVEAL THAT NO INQUIRY, WHATSOEVER, HAS BEEN ISSUE WAS R IGHTLY THE LD. PR.CIT, AT THIS STAGE, WAS NOT REQUIRED TO QUANTIFY THE EXACT AMOUN T IN VIEW OF THE FACT THAT IT WAS FACTUAL ASPECT AND REQUIRED FURTHE R VERIFICATIONS AND THEREFORE THE ARGUMENTS AS ADVANCED BY LD. AR, IN T HIS REGARD, COULD THE OTHER GROUNDS ON WHICH THE REVISIONAL JURISDICT ION HAS BEEN IN VIEW OF THE FACT THE NO THE SAME HAS BEEN MADE IN THE CONSEQUENTIAL ORDER. ON OUR PART . POSITION, WE ARE OF THE NO INQUIRY RATHER THAN OF INADEQUATE INQUIRY BY LD.AO AND THEREFORE, U/S 263 WERE RIGHTLY INVOKED BY LD. PR.CIT. HENCE, WE ARE UPHOLD THE SAME. 6. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE STAND S DIS ORDER PR ONOUNCED IN THE OPEN COURT SD/- (SAKTIJIT DEY) #$ '% / JUDICIAL MEMBER & MUMBAI; $' DATED : SR.PS:- JAISY VARGHESE, SR. PS COPY OF THE ORDER FORWARDED TO 1. / THE APPELLANT 2. *+ / THE RESPONDENT 3. ! / THE CIT(A) 4. ! / CIT CONCERNED 5. $,-*$$$. $. 6. -/01 GUARD FILE ASSESSMENT YEAR BY LD.AO AND THEREFORE, THE REVISIONAL JURISDICTION INVOKED BY LD. PR.CIT. HENCE, WE ARE RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE STAND S DIS ONOUNCED IN THE OPEN COURT ON 1ST JANUARY, 2019. SD/- (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER '% / ACCOUNTANT MEMBER DATED : 01/01/2019. JAISY VARGHESE, SR. PS COPY OF THE ORDER FORWARDED TO : / THE APPELLANT / THE RESPONDENT / THE CIT(A) CONCERNED $. & / DR, ITAT, MUMBAI ! ' !# $ & ITA NO.5050/MUM/2017 BALAJI CONSTRUCTION ASSESSMENT YEAR S :2012-13 THE REVISIONAL JURISDICTION INVOKED BY LD. PR.CIT. HENCE, WE ARE INCLINED TO RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE STAND S DIS MISSED. ON 1ST JANUARY, 2019. (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER / DR, ITAT, MUMBAI ! / BY ORDER, (DY./ASSTT.REGISTRAR) & / ITAT, MUMBAI.