The ITO, Ward-4(3), Ahmedabad V. Indian Infra-Developers Pvt.Ltd., Ahmedabad

ITA 521/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6111 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 12-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Keywords: TDS; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N. S. SAINI, AM) ITA NO.521/AHD/2008 A. Y.: 2003-04 THE INCOME TAX OFFICER, WARD 4(3), ROOM NO.106,1 ST FLOOR, NAVJIVANI PRESS BUILDING, ASHRAM ROAD, AHMEDABAD-14 VS INDIAN INFRA-DEVELOPERS PVT. LTD. 77, SHREE KRISHNA CENTRE, NR. MITHAKALI SIX ROADS, AHMEDABAD, PA NO. AAACI 1002H (APPELLANT) (RESPONDENT) APPELLANT BY SMT. NEETA SHAH, DR RESPONDENT BY NONE O R D E R PER BHAVNESH SAINI, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-VI II, AHMEDABAD DATED 28-11-2007 FOR ASSESSMENT YEAR 2003-04 ON THE FOLLO WING GROUNDS: 1. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.6,72,522/-, BEING TH E DISCREPANCIES IN CONTRA ACCOUNT AND ADDITION OF RS.4,46,361/-, BEING THE DIFFERENCE IN RECEIPTS AS PER TDS CERTIFICATES AND THE INCOME ACCOUNTED AS PER P & L ACCOUNT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 2. WE HAVE HEARD THE LEARNED DR AND PERUSED THE FIN DINGS OF THE AUTHORITIES BELOW. NONE APPEARED ON BEHALF OF THE A SSESSEE AT THE TIME OF HEARING OF THE APPEAL DESPITE SERVICE OF NOTICE THR OUGH REGISTERED POST. A/D CARD DULY SERVED UPON THE ASSESSEE IS AVAILABLE ON RECORD. IN THE ABSENCE OF ANY REPRESENTATION FROM THE SIDE OF THE ASSESSEE, THE APPEAL OF THE REVENUE IS HEARD EX-PARTE. ITA NO.521/AHD/2008 ITO VS INDIAN INFRA-DEVELOPERS PVT. LTD. 2 3. BRIEFLY, THE FACTS OF THE CASE ON THE ABOVE GRO UNDS OF APPEAL ARE THAT THE AO MADE ADDITION OF RS.6,72,522/- BY DISAL LOWING EXPENSES OVERSTATED. THE AO OBSERVED THAT THE ASSESSEE CARRI ED OUT SUB CONTRACT WORK GIVEN BY LG E & C AND K. N. R. CONSTRUCTION LT D., HYDERABAD. ON RECEIPT OF CONTRA ACCOUNT FROM THE SAID PARTY IT WA S NOTICED THAT THE FIGURES APPEARING IN THE ACCOUNT OF THE ASSESSEE IN THE BOOKS OF K.N.R. CONSTRUCTIONS LTD. DID NOT TALLY WITH THE FIGURES S UBMITTED BY THE ASSESSEE. THE ASSESSEE DID NOT RECONCILE THE ACCOUN TS ALTHOUGH A PERIOD OF 3 YEARS HAD ELAPSED SINCE THE END OF THE RELEVAN T FINANCIAL YEAR. THE ASSESSEE CONTENDED THAT THE ENTRIES WERE NOT COMMUN ICATED TO IT. THE AO ACCORDINGLY MADE THE ABOVE ADDITION CONCLUDING THAT THE EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT HAVE BEEN OVE RSTATED BY RS.6,72,522/-. AS THERE WAS SUPPRESSION OF PROFIT B Y AN IDENTICAL AMOUNT, ADDITION WAS MADE. THE AO MADE FURTHER ADDI TION OF RS.4,46,361/- ON ACCOUNT OF DIFFERENCE BETWEEN THE RECEIPTS SHOWN IN TDS CERTIFICATES AND THE FIGURES AS PER THE PROFIT & LOSS ACCOUNT TOWARDS RECEIPTS ON ACCOUNT OF CONSTRUCTION WORK. THE ASSES SEE HAD SHOWN RECEIPT ON ACCOUNT OF CONSTRUCTION WORK OF RS.6,35, 49,775/-. AS PER THE TDS CERTIFICATES FILED BY THE ASSESSEE, THE TOTAL R ECEIPTS ON ACCOUNT OF SUB CONTRACT WORK WORKED OUT TO RS.6,39,96,136/- WHICH CONSISTED OF PAYMENT MADE BY LG E & C OF RS.1,69,26,464/- AND PA YMENTS MADE BY K. N. R. CONSTRUCTION LTD. OF RS.4,70,69,672/-, THU S THERE WAS A DIFFERENCE OF RS.4,46,361/- WHICH REMAINED UNEXPLAI NED. ADDITION WAS ACCORDINGLY MADE. 4. ADDITIONS WERE CHALLENGED BEFORE THE LEARNED CIT (A) AND IT WAS SUBMITTED THAT THE ASSESSEE FILED DETAILED REPLY BE FORE THE AO AND THAT THE ASSESSEE HAD DEALT WITH TWO CONTRACTORS DURING THE PERIOD MENTIONED ABOVE I.E. LG E & C AND K. N. R. CONSTRUCTIONS LTD . ONLY ON ONE WORK. IN FACT, THE WORK OF LG E & C WAS TAKEN OVER BY K. N. R. CONSTRUCTIONS LTD. AND THE ASSESSEE WAS THE SUB CONTRACTOR OF THE SAME WORK. DUE TO HEAVY ITA NO.521/AHD/2008 ITO VS INDIAN INFRA-DEVELOPERS PVT. LTD. 3 DISPUTE IN THE WORKING ATMOSPHERE NO ACCOUNT WAS EV ER TALLIED WITH THE CONTRACTOR OR LG E & C AND K. N. R. CONSTRUCTION LTD. IT WAS FURTHER SUBMITTED THAT DEBIT/CREDIT GIVEN BY K. N. R. CONST RUCTION LTD. AFTER SOMETIME WERE NOT ACCOUNTED BY THE ASSESSEE DUE TO NON-AVAILABILITY WHICH RESULTED INTO OVER STATEMENT OF THE EXPENSES. IT WAS, THEREFORE, SUBMITTED THAT THE AO HAS HOWEVER, CONVENIENTLY OVE RLOOKED THE FACT THAT THE ASSESSEE OVERSTATED THE INCOME BY RS.13,36,719/ - BEING DIFFERENCE IN THE ABOVE ACCOUNTS DUE TO NON-AVAILABILITY OF CONTR A ACCOUNTS. IT WAS THEREFORE, SUBMITTED THAT EVEN IF THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE SUBMISSIONS OF THE DIFFERENCE AS N OTED ABOVE BUT THE ADDITION WOULD BE COVERED BY THE ABOVE AMOUNT OF RS .13,36,719/-. AS REGARDS THE DIFFERENCE IN TDS CERTIFICATE ALSO IT W AS EXPLAINED THAT THERE WAS NO UNDERSTATEMENT BECAUSE OF THE FACTS EXPLAINE D ABOVE. IT WAS ALSO EXPLAINED THAT THE ASSESSEE HAS RIGHTLY CLAIMED THE CREDIT IN THE BOOKS OF ACCOUNT. 5. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS O F THE ASSESSEE AND THE MATERIAL AVAILABLE ON RECORD PRINCIPALLY AG REED WITH THE FINDINGS OF THE AO FOR MAKING THE ABOVE ADDITIONS. HOWEVER, THE LEARNED CIT(A) NOTED THAT THE ASSESSEE HAS ALREADY ACCOUNTED ADDIT IONAL INCOME OF RS.13,36,719/- AS DISCUSSED ABOVE. THEREFORE, BOTH THE ABOVE AMOUNTS WOULD BE COVERED BY THE ABOVE AMOUNTS AND NO SEPARA TE ADDITIONS ARE REQUIRED TO BE MADE. BOTH THE ADDITIONS WERE ACCORD INGLY DELETED. FINDINGS OF THE LEARNED CIT(A) IN PARA 7 ARE REPROD UCED AS UNDER: 7. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY THE LD. AUTHORISED REPRESENTATIVE. AS CONTENDED BY THE A. R. THE APPELLANT COULD NOT RECONCILE THE ACCOUNT OF LG E & C AND KNR CONSTRUCTIONS LTD. AS REGARDS THE PAYMENTS SHOW N BY THE LG TO THE APPELLANT OF RS.40,79,682/- AS PER CO PY OF ACCOUNT SUBMITTED BY THAT PARTY, THE APPELLANT HAS SHOWN CONTRACT RECEIPTS OF RS.54,16,401/- AS RATE DIFFER ENCE & RECOVERY L.G. IN SCHEDULE-9 FOR THE SAME PIECE OF SUB CONTRACT WORK. EARLIER THE APPELLANT HAD SUB CONTRA CT FROM ITA NO.521/AHD/2008 ITO VS INDIAN INFRA-DEVELOPERS PVT. LTD. 4 LG E & C AND THE WORK OF LG WAS TAKEN OVER BY KNR CONSTRUCTIONS LTD. AND THE APPELLANT CONTINUED TO C ARRY OUT THE WORK AS SUB CONTRACTOR FOR THE SAME PIECE OF WO RK. DUE TO DISPUTES WITH THE MAIN CONTRACTOR LG, THE APPELLANT COULD NOT RECONCILE AND COULD NOT TALLY THE ACCOUNTS AFTER 31 -3-2003. THE ACCOUNTS WERE TALLIED TILL 31-3-2003 AND THEREAFTER KNR HAS REIMBURSED SOME EXPENSES TO THE APPELLANT LIKE HIRE CHARGES ON MACHINERIES, COST OF MAN POWER SUPPLIED BY THE A PPELLANT AND FOR TRANSPORTATION OF WATER AND MATERIAL SUPPLI ED ON 31-3-2003 BY WAY OF JOURNAL VOUCHERS. TO THAT EXTEN T THERE IS AN OVERSTATEMENT OF EXPENSES BY THE APPELLANT TO TH E EXTENT OF EXPENSES BY THE APPELLANT TO THE EXTENT OF RS.6,72, 522/-. SIMILARLY, IT IS FOUND THAT AS AGAINST RECEIPT OF RS.1,06,25,085/- RECEIVED FROM LG AND CREDITED BY T HE APPELLANT IN THE BOOKS OF ACCOUNTS, IN THE TDS CERT IFICATE ISSUED BY LG THE BREAK UP HAS BEEN GIVEN AS RS.61,2 5,085/- AND RS.58,34,283/-. THUS, THERE IS A DIFFERENCE OF RS.4,46,361/- AS WORKED OUT BY THE ASSESSING OFFICE R. AS AGAINST THE TWO ADDITIONS OF RS.6,72,522/- AND RS.4 ,46,361/- MADE BY THE A. O. THE APPELLANT HAS ALREADY ACCOUNT ED ADDITIONAL INCOME OF RS.13,36,719/-. I. E. DIFFEREN CE BETWEEN RS.54,16,401/- AND RS.40,79,682/- AS DISCUSSED ABOV E, WHICH HAS BEEN CREDITED BY THE APPELLANT UNDER THE HEAD RATE DIFFERENCE INCOME. THIS ADDITIONAL INCOME HAS BEEN SHOWN BY THE APPELLANT IN ABSENCE OF EXACT INFORMATION AND R ECORDS FROM THE MAIN CONTRACTOR LG. THEREFORE, IT IS THE CONTEN TION OF THE A. R. THAT BOTH THE ADDITIONS ARE NOT REQUIRED TO B E MADE AS THE ADDITIONS ARE COVERED BY THE ADDITIONAL INCOME SHOWN BY THE APPELLANT. I FIND THE CONTENTION OF THE A. R. A CCEPTABLE AND ACCORDINGLY BOTH THE ADDITIONS ARE DELETED. 6. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE DIFFERENCE IN THE ACCOUNTS OF THE MAIN CONTRACTOR AS WELL AS THE TDS CERTIFICATES. THEREFORE, THE AO WAS JUSTIFIED IN MAKING THE ADDIT IONS. THE LEARNED DR FURTHER SUBMITTED THAT THE CIT(A) HAS PASSED A NON- SPEAKING ORDER AS WELL AS WITHOUT ANY BASIS DELETED THE ADDITIONS BY REFERRING THE ABOVE ADDITIONS WITH THE ADDITIONAL INCOME DECLARED BY TH E ASSESSEE. THE LEARNED DR SUBMITTED THAT THE FINDINGS OF THE LEARN ED CIT(A) HAVE NO BASIS AND ACCORDINGLY THE ORDER OF THE LEARNED CIT( A) MAY BE SET ASIDE AND THE ORDER OF THE AO MAY BE RESTORED. ITA NO.521/AHD/2008 ITO VS INDIAN INFRA-DEVELOPERS PVT. LTD. 5 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DR, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE AO FOUND DIFFERENCE IN T HE ACCOUNT SUBMITTED BY THE ASSESSEE AND THE ACCOUNTS OBTAINED FROM LG E & C AND K. N. R. CONSTRUCTION LTD., HYDERABAD. THE AO FOUND THAT THE RE WAS A DIFFERENCE BETWEEN THE ACCOUNT OF THE ASSESSEE AND THE ABOVE P ARTIES WITH REGARD TO OVERSTATEMENT OF THE EXPENDITURE. SIMILARLY, THERE WAS A DIFFERENCE IN THE CONTRACT RECEIPT AS PER THE ACCOUNT OF THE ASSESSEE AND THE TDS CERTIFICATES FILED BY THE ASSESSEE. ON GOING THROUG H THE FINDINGS OF THE LEARNED CIT(A), IT IS CLEAR THAT TH E LEARNED CIT(A) IN PRINCIPLE AGREED WITH THE FINDINGS OF THE AO IN MAK ING BOTH THE ABOVE ADDITIONS. THE ASSESSEE WAS ALSO NOT ABLE TO SUBSTA NTIATE ITS EXPLANATION BEFORE THE AUTHORITIES BELOW ABOUT THE DISCREPANCIE S IN THE ACCOUNTS AND THE TDS CERTIFICATES. THEREFORE, THE AUTHORITIES BE LOW WERE JUSTIFIED IN HOLDING THAT THE ASSESSEE HAS FAILED TO EXPLAIN BOT H THE ABOVE ADDITIONS MADE BY THE AO. THE ASSESSEE HAS HOWEVER, SPECIFICA LLY PLEADED BEFORE THE LEARNED CIT(A) THAT IT HAS SHOWN ADDITIONAL INC OME ON ACCOUNT OF THE ABOVE DIFFERENCE IN A SUM OF RS.13,36,719/-. THEREF ORE, ADDITIONAL INCOME SHOWN WOULD BE SUFFICIENT TO TAKE CARE OF BO TH THE ABOVE ADDITIONS. THE LEARNED CIT(A) ACCEPTED THE CONTENTI ONS OF THE ASSESSEE AND ONLY ON THIS REASON DELETED THE ADDITIONS. WE D O NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN DEL ETING THE ADDITIONS ON ACCOUNT OF ADDITIONAL INCOME DECLARED BY THE ASSESS EE ON THE SAME ISSUE. THE AO HAS ALSO NOTED THAT FACT IN THE ASSESSMENT O RDER THAT AS PER PROFIT & LOSS ACCOUNT AFTER DEBITING THE EXPENDITUR E ETC. LOSS OF [ (-) RS,17,33,949/-) ] WHICH IS WORKED OUT TO (-) RS.17,33,949/- AFTER MAKING ADJUSTMENT WITH THE TOTAL INCOME AS SHOWN AT (-) RS.69,590/-. IT WOULD, THEREFORE, SHOW THAT THE ASSESSEE HAS SURREN DERED ADDITIONAL INCOME ON ACCOUNT OF THE ABOVE DISCREPANCIES. AT PA GE 3 OF THE ASSESSMENT ORDER ALSO THE AO HAS REPRODUCED THE SUB MISSIONS OF THE ASSESSEE IN WHICH THE ASSESSEE HAS EXPLAINED THAT D UE TO MI- ITA NO.521/AHD/2008 ITO VS INDIAN INFRA-DEVELOPERS PVT. LTD. 6 COMMUNICATION THE ASSESSEE HAS SHOWN MORE INCOME OF RS.13,36,719/-. IT WOULD, THEREFORE, PROVE THAT THE ASSESSEE HAS MA DE SURRENDER OF ADDITIONAL INCOME WHICH WAS SUFFICIENT TO COVER UP BOTH THE ABOVE ADDITIONS. NO ADVERSE MATERIAL IS PRODUCED BEFORE U S TO CONTRADICT THE FINDINGS OF THE LEARNED CIT(A) THAT THE ASSESSEE HA S SHOWN ADDITIONAL INCOME TO COVER UP BOTH THE ABOVE ADDITIONS. WE, TH EREFORE, DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A) IN DELETING THE ADDITIONS BECAUSE BOTH ADDITIONS WERE COVERED BY THE ADDITIONAL INCOME SO OFFERED BY THE ASSESSEE. ON A CCOUNT OF THE ABOVE FACTS, THERE IS NO MERIT IN THE DEPARTMENTAL APPEAL . SAME IS ACCORDINGLY DISMISSED. 8. AS A RESULT, THE DEPARTMENTAL APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 04-06-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 04-06-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD