Asstt.CIT,Cen.Cir.-1, Nashik, V. Sanjay Murlidhar Sonar(HUF), Nashik

ITA 521/PUN/2008

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1680 (ITAT-PUNE)
• Duration Of Justice: 8 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-01-2016
• Assessment Year: misc
• Appeal Filed On: 17-04-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Block assessment
• Section: 44AD; 143(3); 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 521/PN/2008 BLOCK PERIOD: 01-04-1996 TO 09-10-2002 ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, NASHIK ....... / APPELLANT ' / V/S. SHRI SANJAY MURLIDHAR SONAR (HUF), 16, VIJAY-GOPAL HSG. SOCIETY, TIDKE COLONY, NASHIK PAN : AAOHS1963G / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 26-04-2016 / DATE OF PRONOUNCEMENT : 27-06-2016 ( / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, NAGPUR DATED 25- 01-2008 FOR THE BLOCK ASSESSMENT PERIOD 01-04-1996 TO 09-10-2002. 2 ITA NO. 521/PN/2008, 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS AN HUF AND IS ENGAGED IN THE BUSINESS OF CON TRACTING/SUB- CONTRACTING AND IS ALSO ENGAGED IN TRANSPORTATION BUSINES S. THE CONTRACTING BUSINESS IS CARRIED IN THE NAME OF SANJAY MUR LIDHAR SONAR AND THE TRANSPORT BUSINESS IN THE NAME OF ATAL AND COMP ANY. DURING THE PERIOD RELEVANT TO BLOCK ASSESSMENT, THE ASSESSEE D ID NOT FILE REGULAR RETURN OF INCOME EITHER U/S. 139(1) OR U/S. 139(4) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). A SEARCH U/S. 132 OF THE ACT WAS CONDUCTED IN THE BUSIN ESS PREMISES OF M/S. PRAKASH CONSTRUWELL PVT. LTD. ON 09-10-20 02. DURING THE COURSE OF SEARCH, TDS CERTIFICATES ISSUED IN THE NAME OF ASSESSEE WERE SEIZED. DURING THE COURSE OF SEARCH STATEMENT OF SHRI SANJAY M. SONAR WAS ALSO RECORDED ON OATH. CONSEQUENTLY, NOTICE U/S. 158BD WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO NOTICE, THE ASSESSEE FILED RETURN OF INCOME FOR BLOCK PERIOD ON 18-02-2005 DECLARING TOTAL UNDISCLOSED INCOME OF ` 1,55,030/-. THE BREAKUP OF THE INCOME DISCLOSED BY THE ASSESSEE IS AS UNDER : SR. NO. A.Y. AMOUNT 1 1998 - 99 ` 15,560/ - 2 1999 - 2000 ` 63,080/ - 3 2000 - 2001 ` 76,390/ - TOTAL `1,55,030/ - UNDISPUTEDLY, THE ASSESSEE WAS NOT MAINTAINING REGULAR BO OKS OF ACCOUNT. THE ASSESSEE OFFERED THE INCOME FROM CONTRACT RECEIPTS UNDER THE PROVISIONS OF SECTION 44AD OF THE ACT. IN ADDITION TO THE RETURN FOR BLOCK PERIOD, THE ASSESSEE FILED RETURN OF INCOME IN SARAL F ORM FOR 3 ITA NO. 521/PN/2008, ASSESSMENT YEAR 2000-01 ON THE GROUND THAT SINCE TDS WAS DEDUCTED ON THE PAYMENTS RECEIVED BY ASSESSEE, THE INCOME CORR ESPONDING TO TDS CERTIFICATE IS DEEMED DISCLOSED INCOME. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER COMPUTED TH E TOTAL UNDISCLOSED INCOME OF THE ASSESSEE AS UNDER : I. UNDISCLOSED SUB-CONTRACT RECEIPTS FROM M/S. PRAKASH CONSTRUWELL PVT. LTD. ` 10,91,500/-. (ON PROTECTIVE BASIS) II. UNDISCLOSED CONTRACT RECEIPTS FROM M/S. Q-FAB CEMENT PVT. LTD. ` 12,50,000/-. III. UNDISCLOSED TRANSPORT RECEIPTS ` 19,30,145/-. TOTAL ` 42,71,645/- THE YEAR WISE BREAKUP OF THE UNDISCLOSED INCOME COMPUTED BY ASSESSING OFFICER IS AS UNDER : ASSESSMENT YEAR UNDISCLOSED INCOME 1998-99 ` 11,24,339/- (PROTECTIVE AMOUNT ` 9,55,500/-). 1999-2000 ` 8,26,604/- (PROTECTIVE AMOUNT ` 1,36,000/-). 2000-2001 ` 23,03,516/-. 2001-2002 ` 17,186/-. TOTAL ` 42,71,645/- AGGRIEVED BY THE ASSESSMENT ORDER DATED 29-01-2007 P ASSED U/S. 158BD R.W.S. 143(3) OF THE ACT, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ENTIRE ADDITION MADE ON PROTECTIVE BASIS IN RESPECT OF CONTRACT RECEIPTS FROM M/S. PRAKASH C ONSTRUWELL PVT. LTD. FURTHER, THE COMMISSIONER OF INCOME TAX (APPE ALS) DELETED 4 ITA NO. 521/PN/2008, THE ADDITION MADE BY ASSESSING OFFICER IN RESPECT OF TRANSP ORTATION RECEIPTS AS UNDISCLOSED INCOME. IN RESPECT OF CONTRACT RECEIPTS OF ` 12,50,000/- FROM Q-FAB CEMENT PVT. LTD. THE COMMISSIONER O F INCOME TAX (APPEALS) ASSESSED THE INCOME OF THE ASSESSEE AT 8% OF THE GROSS CONTRACT RECEIPTS U/S. 44AD OF THE ACT. AGAINST THE FINDIN GS OF COMMISSIONER OF INCOME TAX (APPEALS), THE DEPARTMENT IS IN A PPEAL BEFORE THE TRIBUNAL. 3. THE GROUNDS RAISED BY THE DEPARTMENT IN ITS APPEAL ARE AS UNDE R: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) HAS ERRED IN DIRECTING TO ASSESS THE INCOME FROM CO NTRACT RECEIPTS @ 8% AS PER PROVISIONS OF SECTION 44AD BY TREATING RECEI PTS OF RS.12,50,000/- AS CONTRACT RECEIPT IN THE BASIS OF TDS CERTIFICATE DTD. 18.2.08, WHICH WAS AN AFTERTHOUGHT TO GIVE COLOUR FOR AMOUNT OF RS.12, 50,000/- TO AVOID TAX ON IT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.10,91,500/ - IN RESPECT OF SUB- CONTRACT RECEIPTS ASSESSED BY A.O. ON PROTECTIVE BA SIS IN THE CASE OF THE ASSESSEE. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.19,30,145/ - MADE BY THE' AO IN RESPECT OF TRANSPORT RECEIPTS, AS THE RECEIPTS WERE DETECTED BY THE DEPARTMENT IN ACTION U/S.132 AND THE ASSESSEE IS HA VING NO TRUCK TO CARRY THE BUSINESS. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) HAS ERRED IN LAW IN DIRECTING TO ALLOW THE CREDIT O F TDS CERTIFICATES IN BLOCK ASSESSMENTS, FOR WHICH REGULAR RETURNS WERE N OT FILED WITHIN TIME ALLOWED U/S.139( 1) & 139(4) OF THE ACT, AND POWERS OF CONDONING DELAY U/S.119(2)(B) ARE NOT GIVEN TO HER. 4. SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT SUBM ITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED I N DELETING THE ADDITION OF ` 10,91,500/- I.E. THE SUB-CONTRACT RECEIPTS FROM M/S. 5 ITA NO. 521/PN/2008, PRAKASH CONSTRUWELL PVT. LTD. ON THE GROUND, THAT IF PARTIC ULAR ITEM OF INCOME IS TAXABLE IN THE HANDS OF PERSON SEARCHED, THE QUESTION OF TAXING IT AGAIN IN THE HANDS OF THIRD PERSON DOES NOT ARIS E, NOT EVEN ON PROTECTIVE BASIS. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT ONCE, THE SUB-CONTRACT PAYMENTS ARE TREATED AS BO GUS IN THE HANDS OF M/S. PRAKASH CONSTRUWELL PVT. LTD., THE SAME AMOUNT CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE BY INVOKIN G PROVISIONS OF SECTION 158BD OF THE ACT. THE LD. DR SUBMITTED THAT THE DEPARTMENT HAS FILED APPEAL IN ITA NO. 556/PN/2011 IN THE CASE OF M/S. PRAKASH CONSTRUWELL PVT. LTD., AS WELL. IF THE TRIBUNAL HOLDS THAT T HE PAYMENTS TO THE SUB-CONTRACTORS AS GENUINE, THE ADDITION OF THE S UB-CONTRACT PAYMENTS HAS TO BE MADE IN THE HANDS OF SUB-CONTRACTO RS. IN THAT EVENTUALITY, THE ADDITION MADE BY THE ASSESSING OFFICER ON P ROTECTIVE BASIS IN THE CASE OF ASSESSEE HAS TO BE CONFIRMED. 4.1 IN RESPECT OF CONTRACT RECEIPTS OF ` 12,50,000/- FROM Q-FAB CEMENT PVT. LTD. THE LD. DR SUBMITTED THAT THE COMMISSIONE R OF INCOME TAX (APPEALS) HAD ERRED IN RESTRICTING THE ADDITION TO 8% OF THE CONTRACT RECEIPTS UNDER THE PROVISIONS OF SECTION 44AD OF THE ACT. THE CONTRACT RECEIPTS FROM M/S. Q-FAB CEMENT PVT. LTD. WERE DETECTED DURING THE COURSE OF SEARCH. THE ASSESSEE HAD NOT DIS CLOSED THE SAID RECEIPTS IN THE REGULAR RETURN OF INCOME ALTHOUGH IT IS CLA IMED BY THE ASSESSEE THAT TDS WAS DEDUCTED ON SUCH PAYMENTS. TH E LD. DR REFERRED TO FORM NO. 16A I.E. CERTIFICATE OF DEDUCTION OF TAX AT SOURCE AT PAGE 33 OF THE PAPER BOOK. THE LD. DR SUBMITTED THAT A PERUSAL OF TDS CERTIFICATE WOULD SHOW THAT IT IS ISSUED ONE DAY PRIOR TO FILI NG OF RETURN OF INCOME AND IS HANDWRITTEN. WHEREAS, ALL THE OTHER CERTIFIC ATES PLACED ON RECORD BY ASSESSEE ARE PRINTED. THIS CLEARLY SHOWS THAT THE 6 ITA NO. 521/PN/2008, CERTIFICATE ISSUED BY M/S. Q-FAB CEMENT PVT. LTD. TO THE A SSESSEE FOR THE PERIOD 01-04-1999 TO 31-03-2000 IS AN AFTERTHOUGHT . THE LD. DR FURTHER CONTENDED THAT THE TDS CERTIFICATE AT PAGE 33 O F THE PAPER BOOK IS THE ONLY CERTIFICATE IN THE NAME OF ASSESSEE, WHEREAS, A LL THE OTHER CERTIFICATES PLACED ON RECORD ARE IN THE NAME OF M/S. ATAL AND COMPANY. THE LD. DR ASSERTED THAT THE TDS CERTIFICATE P LACED ON RECORD AT PAGE 33 OF THE PAPER BOOK ISSUED BY M/S. Q- FAB CEMENT PVT. LTD. IN RESPECT OF PAYMENT OF ` 12,50,000/- IS HIGHLY DOUBTFUL AND THUS, SHOULD NOT BE TAKEN INTO CONSIDERATION. 4.2 THE LD. DR MADE AN ALTERNATE PRAYER THAT IF THE TDS C ERTIFICATE ISSUED TO THE ASSESSEE BY M/S. Q-FAB CEMENT PVT. LTD. IS CONSIDERED TO BE GENUINE, THE RECEIPTS AGAINST THE SAID CERTIFICATE CANNO T BE CONSIDERED AS DECLARED INCOME. THE INCOME IS SAID TO BE D ECLARED ONLY IF THE ASSESSEE FILES RETURN OF INCOME. MERELY BECAUSE TDS IS DEDUCTED AND TDS CERTIFICATE HAS BEEN ISSUED, THE RECEIPTS IN THE H ANDS OF ASSESSEE WOULD NOT MAKE THE INCOME AS DEEMED DISCLOSED INCOME. IN SUPPORT OF HIS SUBMISSIONS, THE LD. DR PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF THE ASS ISTANT COMMISSIONER OF INCOME TAX VS. M/S. A.R. ENTERPRISES REPORT ED AS 1 S.C.R. 295. 4.3 THE LD. DR SUBMITTED THAT THE COMMISSIONER OF INCOME T AX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF ` 19,30,145/- ON ACCOUNT OF TRANSPORT RECEIPTS HOLDING THAT THE RECEIPTS ARE NET CONTRACT RECEIPTS. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDIN G THAT THE TRANSPORT RECEIPTS ARE NET OF EXPENSES. THE LD. D R VEHEMENTLY 7 ITA NO. 521/PN/2008, SUPPORTED THE FINDINGS OF ASSESSING OFFICER AND PRAYED FOR S ETTING ASIDE THE IMPUGNED ORDER. 5. ON THE OTHER HAND SHRI NIKHIL PATHAK APPEARING ON BEH ALF OF THE ASSESSEE STRONGLY DEFENDED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITIONS. THE LD. AR SUBMITTED THAT THE CONTRACT RECEIPTS FROM M/S. Q-FAB CEMENT PVT. LTD. AND T RANSPORT RECEIPTS CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE RESPECTIVE PARTIES MAKING PAYMENTS HAVE DEDUCTED TAX A T SOURCE AND ISSUED FORM NO. 16A AGAINST THE DEDUCTION OF TAX AT SOUR CE. THE RECEIPTS ON WHICH TAX AT SOURCE HAS BEEN DEDUCTED AR E TO BE TREATED AS DEEMED DISCLOSED INCOME. THE LD. AR FURTHER SUBMITTED THA T ENTIRE CONTRACT RECEIPTS CANNOT BE CONSIDERED AS UNDISCLOSED I NCOME, THE ENTIRE RECEIPTS CANNOT BE TAXED. IT IS ONLY THE NET R ECEIPTS AFTER EXCLUDING THE EXPENDITURE HAS TO BE TAXED. THE LD. AR SU BMITTED THAT ADMITTEDLY, THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACC OUNT AND HAS OFFERED THE INCOME FOR TAX UNDER THE PROVISIONS OF SECTION 44AD OF THE ACT. THUS, THE NET INCOME OF THE ASSESSEE WOULD BE 8% O F THE GROSS CONTRACT RECEIPTS. THE TAX CAN BE LEVIED ONLY ON THE NET RECEIPTS . 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. AFTER HEARING THE SUBMISSIONS AND EXAMINING THE DOCUMENTS IT HA S EMERGED THAT THE ASSESSEE HAS RECEIVED PAYMENTS FROM THREE SO URCES : (I) CONTRACT RECEIPTS FROM M/S. PRAKASH CONSTRUWELL PVT. LTD. ` 10,91,500/-, (II) CONTRACT RECEIPTS FROM M/S. Q-FAB CEMENT PV T. LTD. ` 12,50,000/-, AND (III) TRANSPORT RECEIPTS ` 19,30,145/-. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE ENTIRE CONTRACT 8 ITA NO. 521/PN/2008, RECEIPTS FROM M/S. PRAKASH CONSTRUWELL PVT. LTD., AS WELL AS TRANSPORT RECEIPTS. IN RESPECT OF M/S. Q-FAB CEMENT PVT. LTD. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS RESTRICTED THE ADDITION TO 8% OF THE TOTAL GROSS RECEIPTS. 7. THE FIRST GROUND RAISED IN THE APPEAL BY THE DEPARTME NT IS AGAINST RESTRICTING THE ADDITION IN RESPECT OF CONTRACT RE CEIPTS FROM M/S. Q-FAB CEMENT PVT. LTD. TO 8% OF THE TOTAL GROSS RECEIPT S UNDER THE PROVISIONS OF SECTION 44AD OF THE ACT. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNT. THE DETA ILS OF CONTRACT RECEIPTS FROM M/S. Q-FAB CEMENT PVT. LTD. WERE DETECTED DURING THE COURSE OF SEARCH PROCEEDINGS. A TDS CERTIFICATE WHICH IS AT PAGE 33 OF THE PAPER BOOK CLEARLY SHOWS THAT THE ASSESSEE HAD R ECEIVED PAYMENT OF ` 12,50,000/- FROM M/S. Q-FAB CEMENT PVT. LTD. HOWEVER, TH E TOTAL RECEIPTS FOR EXECUTING THE CONTRACT WORK VIZ. CONSTRUCTIO N OF FACTORY BUILDING CANNOT BE TREATED AS INCOME OF THE ASSESSEE. TH E INCOME OF THE ASSESSEE WOULD BE ONLY THE DIFFERENCE BETWEEN THE TO TAL RECEIPTS LESS EXPENDITURE I.E. THE NET RECEIPTS WHICH IN THE PRESENT CAS E HAS BEEN ESTIMATED AT 8% OF THE TOTAL GROSS RECEIPTS UNDER THE P ROVISIONS OF SECTION 44AD OF THE ACT. IN THE ABSENCE OF BOOKS OF ACC OUNT AND THE DETAILS OF EXPENDITURE MAINTAINED BY THE ASSESSEE, WE DO N OT FIND ANY INFIRMITY IN ESTIMATING THE NET PROFIT AT 8% OF THE TOTAL GRO SS RECEIPTS UNDER THE PROVISIONS OF SECTION 44AD OF THE ACT. THE LD. DR HAS RAISED SUSPICION OVER THE GENUINENESS OF TH E TDS CERTIFICATE ISSUED BY M/S. Q-FAB CEMENT PVT. LTD. PLACED ON RECORD BY THE ASSESSEE AT PAGE 33 OF THE PAPER BOOK. THE SUSPIC ION HAS BEEN RAISED AS THE TDS CERTIFICATE ISSUED BY M/S. Q-FAB CEMENT PVT. LTD. IS THE ONLY CERTIFICATE ISSUED IN THE NAME OF SHRI SANJAY M. S ONAR (HUF). 9 ITA NO. 521/PN/2008, ALL OTHER CERTIFICATES PLACED ON RECORD ARE ISSUED IN THE N AME OF ATAL AND COMPANY. THE SAID CERTIFICATE IS ONLY HANDWRITTEN WHE REAS THE OTHER CERTIFICATES ARE PRINTED. THE CERTIFICATE HAS BEEN IS SUED JUST ONE DAY PRIOR TO FILING OF THE RETURN OF INCOME. WE DO NOT FIND A NY MERIT IN THE SUBMISSIONS OF THE LD. DR RAISING SUCH SUSPICION. THE ISS UANCE OF PRINTED FORM 16A IS NOT MANDATORY REQUIREMENT UNDER TH E PROVISIONS OF THE ACT. AS PER REVENUES OWN CASE THE ASSESSEE H AS RECEIVED CONTRACT PAYMENTS FROM M/S. Q-FAB CEMENT PVT. LTD. AND M/S. PRAKASH CONSTRUWELL PVT. LTD. THUS, THE ASSESSEE WOULD HAVE RECEIVED TDS CERTIFICATES FOR CONTRACT RECEIPTS FROM THESE TWO COM PANIES ONLY. THE EXPENDITURE CLAIMED BY M/S. PRAKASH CONSTRUWELL PVT. L TD. ON ACCOUNT OF SUB-CONTRACT LABOUR WORK WAS UNDER SCANNER . THE ASSESSING OFFICER HAD DISALLOWED THE SUB-CONTRACT PAYMENTS IN THE HANDS OF M/S. PRAKASH CONSTRUWELL PVT. LTD. TREATING THE S AME TO BE BOGUS. THEREFORE, THE ASSESSEE HAD ONLY ONE CERTIFICATE FOR CONTRACT RECEIPTS ISSUED BY M/S. Q-FAB CEMENT PVT. LTD. THE OTHE R TDS CERTIFICATES PLACED ON RECORD ARE IN RESPECT OF TRANSPORT ATION RECEIPTS AGAINST WHICH NO QUESTIONS WERE RAISED BY THE REVENUE. EXCEPT FOR THESE SUPERFICIAL OBJECTIONS THERE WAS NO SUBSTANTIAL OBJE CTION BY REVENUE AGAINST THE TDS CERTIFICATE. THUS, WE DO NOT FIND ANY REASON TO DISBELIEVE THE TDS CERTIFICATE PLACED ON RECORD BY THE ASSESSEE. ACCORDINGLY, GROUND NO. 1 RAISED BY THE DEPARTMENT IN ITS APPEAL IS DISMISSED. 8. IN THE SECOND GROUND OF APPEAL, THE REVENUE HAS ASS AILED THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF ` 10,91,500/- IN RESPECT OF SUB-CONTRACT RECEIPTS FROM M/S. PRAKASH CONSTRUWELL PVT. LTD. THE ADDITION WAS MADE IN THE HANDS OF THE 10 ITA NO. 521/PN/2008, ASSESSEE ON PROTECTIVE BASIS. IN THE CASE OF M/S. PRAK ASH CONSTRUWELL PVT. LTD. THE ASSESSING OFFICER HAD DISALLOWED THE PAYMENTS MADE TO SUB-CONTRACTORS BY TREATING THE SAME AS BOGUS. HOWEV ER, DURING THE FIRST APPELLATE PROCEEDINGS THE COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND HELD THE PAYMENTS TO BE GENUINE. THE MATTER TRAVELLED TO THE TRIBUNAL. THE DEPA RTMENT IN ITA NO. 556/PN/2011 ASSAILED THE FINDINGS OF COMMISSIONER OF INCO ME TAX (APPEALS) IN ACCEPTING THE SUB-CONTRACT PAYMENTS TO BE G ENUINE. IN A SEPARATE ORDER OF EVEN DATE DECIDING THE AFORESAID APPEA L OF THE DEPARTMENT, WE HAVE UPHELD THE ORDER OF COMMISSIONER OF I NCOME TAX (APPEALS) AND ACCORDINGLY THE APPEAL OF THE DEPARTMENT H AS BEEN DISMISSED. THUS, THE LABOUR CONTRACT PAYMENTS MADE BY M /S. PRAKASH CONSTRUWELL PVT. LTD. HAS BEEN ACCEPTED TO BE GENUINE. SINCE, THE PAYMENTS HAVE BEEN ALLOWED IN THE CASE OF M/S. PRAKASH C ONSTRUWELL PVT. LTD., CORRESPONDING ADDITION HAS TO BE MADE IN THE H ANDS OF RESPECTIVE SUB-CONTRACTORS. THE ASSESSEE IS ONE OF THE SUB-CONTRACTORS TO WHOM PAYMENT HAS BEEN MADE BY M/S. PRAKASH CONSTR UWELL PVT. LTD. ADDITION OF GROSS CONTRACT RECEIPTS WAS MADE IN TH E HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. AS ALREADY STATED, ADDITIO N OF CONTRACT RECEIPTS HAVE BEEN DELETED IN THE CASE OF M/S. PRAKASH C ONSTRUWELL PVT. LTD., ACCORDINGLY, THE PAYMENTS RECEIVED BY THE ASSESSEE ON ACCOUNT OF SUB-CONTRACT PAYMENTS HAVE TO BE CONFIRMED IN THE HAND S OF THE ASSESSEE. THE GROSS PAYMENTS RECEIVED ON ACCOUNT OF C ONTRACT LABOUR CANNOT BE TREATED AS INCOME OF THE ASSESSEE. IT IS ONL Y THE NET RECEIPTS, I.E. AFTER EXCLUDING EXPENDITURE HAVE TO BE TREATED AS INCO ME OF THE ASSESSEE. AS IN THE CASE OF RECEIPTS FROM M/S. Q-FAB CEM ENT PVT. LTD., THE NET RECEIPTS FROM M/S. PRAKASH CONSTRUWELL PVT. LTD. ARE ESTIMATED 11 ITA NO. 521/PN/2008, AT 8% OF THE TOTAL GROSS RECEIPTS. ACCORDINGLY, GROUND N O. 2 RAISED BY THE DEPARTMENT IS PARTLY ALLOWED. 9. IN GROUND NO. 3 THE DEPARTMENT HAS ASSAILED THE DELE TION OF TRANSPORT RECEIPTS OF ` 19,30,145/-. DURING THE COURSE OF SEARCH AT THE PREMISES OF M/S. PRAKASH CONSTRUWELL PVT. LTD. DOCUMENTS W ERE SEIZED WHICH REVELED THE SAID TRANSPORT RECEIPTS BY ASSESSEE. THE CONTENTION OF THE ASSESSEE IS THAT THE TRANSPORT RECEIPTS ARE NOT UNDISCLOSED INCOME AS TAX HAS BEEN DEDUCTED AT SOURCE ON THE SAID RECEIPTS. THE ASSESSING OFFICER TAXED THE GROSS RECEIPTS AS UNDISCLOSED INCOME OF THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DE LETED THE ENTIRE ADDITION ON ACCOUNT OF TRANSPORT RECEIPTS. AFTER E XAMINING THE MATERIAL ON RECORD, WE OBSERVE THAT BOTH THE AUTHORITIES BELOW HAVE ERRED IN TAKING DIAGONALLY OPPOSITE EXTREME VIEWS. THERE IS NOTHING ON RECORD TO SHOW THAT THE RECEIPTS ARE NET OF EXPENDITUR E. THEREFORE, THE RECEIPTS HAVE TO BE TREATED AS GROSS RECEIPTS. AS WE HAVE OBSERVED EARLIER 8% OF THE TOTAL GROSS RECEIPTS ARE LIABLE TO BE TAX ED IN THE HANDS OF THE ASSESSEE. HENCE, THE GROUND NO. 3 RAISED BY THE DEPARTMENT IS PARTLY ACCEPTED. 10. THE NEXT ISSUE IN APPEAL IS, WHETHER THE TAX DEDUCTE D AT SOURCE BY VARIOUS PARTIES AND TDS CERTIFICATE ISSUED IN THE NAME OF ASSESSEE WOULD AMOUNT TO DEEMED DECLARATION OF INCOME? AND WHETHE R THE ASSESSEE IS ELIGIBLE TO CLAIM CREDIT OF TDS, WHERE REGULAR R ETURN OF INCOME IS NOT FILED WITHIN THE TIME ALLOWED U/S. 139(1) AND U/S. 139(4) OF THE ACT? IT IS OBLIGATORY ON THE PART OF PERSON MAKING PAYMENT TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE TO SERVICE PROVIDE R AT THE RATE 12 ITA NO. 521/PN/2008, SPECIFIED UNDER THE PROVISIONS OF INCOME TAX ACT. AFTER DE DUCTING THE TAX AT SOURCE AND DEPOSITING THE SAME WITH THE GOVT. EX -CHEQUER THE DEDUCTOR HAS TO ISSUE A CERTIFICATE IN THE PRESCRIBED FORM I.E. FORM 16A, TO THE DEDUCTEE SO THAT AT THE TIME OF FILING OF RETURN OF INCOME THE DEDUCTEE CAN CLAIM THE CREDIT OF TAX DEDUCTED AT SOURCE . THE DEDUCTION OF TAX AT SOURCE AND ISSUANCE OF TDS CERTIFICATE DOES NO T MEAN THAT THE INCOME AGAINST WHICH THE TAX HAS BEEN DEDUCTED HAS BEE N DECLARED BY THE PERSON ON WHOSE BEHALF TAX IS DEDUCTED. THE INCOME IS SAID TO BE DECLARED ONLY WHEN THE RETURN OF INCOME IS FILED. THE HON' BLE SUPREME COURT OF INDIA IN THE CASE OF THE ASSISTANT COMMISSIONER O F INCOME TAX VS. M/S. A.R. ENTERPRISES (SUPRA) HAS HELD THAT PAYMENT OF A DVANCE TAX BASED UPON ESTIMATED INCOME AND DEDUCTION OF TAX AT SOU RCE DOES NOT TANTAMOUNT TO DISCLOSURE OF INCOME. THE RELEVANT EXTRACT OF THE JUDGMENT OF HON'BLE APEX COURT IS REPRODUCED AS UNDER : 41. IN THE INSTANT CASE, AFTER THE SEARCH WAS COND UCTED ON 23RD FEBRUARY 2006, IT WAS FOUND THAT FOR THE ASSESSMENT YEAR 1995-96, THE RESPONDENT-ASSESSEE HAD NOT FILED ITS RETURN OF INC OME BY THE DUE DATE. IT IS ONLY WHEN BLOCK ASSESSMENT PROCEEDINGS WERE INIT IATED BY THE ASSESSING OFFICER, THAT THE ASSESSEE FILED ITS RETU RN FOR THE SAID ASSESSMENT YEAR ON 11TH JULY, 1996 UNDER SECTION 15 8BC OF THE ACT, SHOWING ITS TOTAL INCOME AS RS.7,02,768/-. THE ASSE SSEE CLAIMED, THAT SINCE ADVANCE TAX HAD BEEN PAID IN THREE INSTALLMEN TS, IT COULD NOT HAVE BEEN SAID THAT THE INCOME HAD NOT BEEN DISCLOSED OR THAT THERE WAS NO INTENTION TO DISCLOSE INCOME. WE HAVE ALREADY HELD THAT THE PAYMENT OF ADVANCE TAX, WHICH IS BASED UPON ESTIMATED INCOME, CANNOT TANTAMOUNT TO THE DISCLOSURE OF THE TOTAL INCOME, WHICH MUST B E DECLARED IN THE RETURN. IN OUR OPINION, THE FACT THAT THE ASSESSEE HAD NOT FILED ITS RETURN OF INCOME BY THE DUE DATE, THE ASSESSING OFFICER WA S CORRECT IN ASSUMING THAT THE ASSESSEE WOULD NOT HAVE DISCLOSED ITS TOTA L INCOME. FOR ALL THESE REASONS, THE DECISION OF THE HIGH COURT CANNOT BE S USTAINED. 42. LASTLY, SINCE C.A. NO. 2580/2010 REFERS TO A SL IGHTLY DIFFERENT ISSUE, WE DEEM IT FIT TO RECORD OUR OBSERVATIONS WI TH RESPECT TO THE SAME. IN THIS APPEAL, THE ISSUE IS WHETHER TAX DEDUCTED A T SOURCE (AND NOT PAYMENT OF ADVANCE TAX) AMOUNTS TO THE DISCLOSURE O F INCOME. 43. SECTION 190 OF THE ACT STATES- 190 (1) NOTWITHSTANDING THAT THE REGULAR ASSESSMENT IN RESPECT OF ANY INCOME IS TO BE MADE IN A LATER ASSESSMENT YEAR , THE TAX ON SUCH INCOME SHALL BE PAYABLE BY DEDUCTION 12[OR COL LECTION] AT 13 ITA NO. 521/PN/2008, SOURCE OR BY ADVANCE PAYMENT 13[OR BY PAYMENT UNDER SUB- SECTION (1A) OF SECTION 192], AS THE CASE MAY BE, I N ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER. (2) NOTHING IN THIS SECTION SHALL PREJUDICE THE CHA RGE OF TAX ON SUCH INCOME UNDER THE PROVISIONS OF SUB-SECTION (1) OF S ECTION 4. 44. SINCE THE TAX TO BE DEDUCTED AT SOURCE IS ALSO COMPUTED ON THE ESTIMATED INCOME OF AN ASSESSEE FOR THE RELEVANT FI NANCIAL YEAR, SUCH DEDUCTION CANNOT RESULT IN THE DISCLOSURE OF THE TO TAL INCOME FOR THE RELEVANT ASSESSMENT YEAR. SUBJECT TO THE MONETARY LIMIT OF THE TOTAL INCOME, EVERY PERSON IS OBLIGATED TO FILE HIS RETUR N OF INCOME EVEN AFTER TAX IS DEDUCTED AT SOURCE. HENCE, FOR THE REASONS S TATED IN THE PRECEDING PARAGRAPHS, WE ARE OF THE OPINION THAT MERE DEDUCTI ON OF TAX AT SOURCE, ALSO, DOES NOT AMOUNT TO DISCLOSURE OF INCOME, NOR DOES IT INDICATE THE INTENTION TO DISCLOSE INCOME MOST DEFINITELY WHEN T HE SAME IS NOT DISCLOSED IN THE RETURNS FILED FOR THE CONCERNED AS SESSMENT YEAR . 11. THUS, IN THE LIGHT OF OBSERVATIONS OF THE HON'BLE SUPR EME COURT OF INDIA, IT IS UNAMBIGUOUSLY CLEAR THAT MERE DEDUCTION OF T AX AT SOURCE WOULD NOT AMOUNT TO DEEMED DECLARATION OF INCOME. THE INCOME IS DECLARED WHEN THE RETURN OF INCOME IS FILED. IN THE INSTANT CASE NO REGULAR RETURN OF INCOME WAS FILED BY THE ASSESSEE. THE A SSESSEE FILED RETURN OF INCOME ON 18-02-2005 IN RESPONSE TO NOTICE ISS UED U/S. 158BD FOR THE BLOCK PERIOD 1997-98 TO 2003-04 (UP TO 09 -10-2002). THUS, THE INCOME OF THE ASSESSEE WHICH WAS UNEARTHED D URING SURVEY CANNOT BE HELD TO BE DEEMED DISCLOSED INCOME, EVEN IF TAX AT SOURCE WAS DEDUCTED ON SOME PART OF SUCH INCOME. THE NEXT ISSUE IS WHETHER THE ASSESSEE CAN TAKE CREDIT OF TAX DEDUCTED AT SOURCE WHERE NO REGULAR RETURN IS FILED. THE ASSESSEE HAS PLACED ON RECORD TDS CERTIFICATES ISSUED BY DEDUCTEES OF TAX AT SOURCE. THE ASSESSEE IS ELIGIBLE TO CLAIM CREDIT OF THE TAX DEDUCT ED AT SOURCE IN ITS RETURN OF INCOME EVEN IF IT IS FILED IN RESPONSE TO NOTICE U/S. 158 BD. HOWEVER, THE BENEFIT OF TDS SHALL BE AVAILABLE ONLY IN RESPE CT OF ASSESSMENT YEAR FOR WHICH THE TAX WAS DEDUCTED AT SOU RCE. IN OTHER WORDS THE TDS FOR A PARTICULAR ASSESSMENT YEAR SHOULD B E GIVEN CREDIT 14 ITA NO. 521/PN/2008, IN THAT PARTICULAR ASSESSMENT YEAR ITSELF. THERE IS NO PRO VISION UNDER THE ACT TO DIVIDE THE TDS IN DIFFERENT ASSESSMENT YEARS. ACCORDINGLY, THE GROUND NO. 4 RAISED IN THE APPEAL OF DEPARTMENT IS PARTLY ALLOWE D IN THE AFORESAID TERMS. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 27 TH DAY OF JUNE, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 27 TH JUNE, 2016 RK ()*%+,#-#.+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-I, NAGPUR 4. ' / THE CIT(CENTRAL), NAGPUR 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE