Sabari Foundations P Ltd., CHENNAI V. ITO Corporate Ward 6(1), CHENNAI

ITA 675/CHNY/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5533 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 17-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

आयकर अपीलीय अिधकरण, ‘ए’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI Įी महावीर ͧसंह, उपाÚय¢ एवं डॉ एम एल मीना, लेखा सदèय के सम¢ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND Dr. M.L. MEENA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 675/CHNY/2019 िनधाᭅरण वषᭅ /Assessment Year: 2012-13 M/s. Sabari Foundations P Ltd., No.23/11, Second Main Road, R.A. Puram, Chennai – 600 028. PAN: AAECS 0298R v. The Income Tax Officer, Corporate Ward 6(1), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri S. Sridhar, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri AR. V. Sreenivasan, Addl.CIT स ु नवाई कȧ तारȣख/Date of Hearing : 15.03.2022 घोषणा कȧ तारȣख/Date of Pronouncement : 31.03.2022 आदेश /O R D E R PER BENCH: This appeal by the assessee is arising out of the order of learned Commissioner of Income Tax (Appeals)-15, Chennai in ITA No.28/2017-18/CIT(A)-15 dated 29.11.2018. The original assessment was framed by the Assessing Officer u/s.143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide order dated 31.03.2015 for the assessment year 2012-13. This matter was 2 I.T.A. No.675/Chny/2019 challenged before CIT(A)-15, Chennai and the CIT(A) in ITA No.245/CIT(A)-15/2015-16, vide order dated 28.09.2016 restored the matter back to the file of the AO with specific directions. The ITO, Corporate Ward 6(1), Chennai in giving effect order to the order of CIT(A) u/s.250(6) in ITA No.245/CIT(A)-15/2015-16 dated 28.09.2016, vide order dated 20.01.2017 confirmed the addition. 2. This appeal is time barred by 10 days and the assessee has filed condonation petition supported by affidavit stating that the order of CIT(A) dated 29.11.2018 was received on 07.01.2019 and the counsel on record prepared appeal on 31.01.2019 and filed the appeal on 18.03.2019 as against the due date of filing of 08.03.2019. It was stated that the appeal papers prepared by the counsel on 31.01.2019 was signed by the assessee and it was handed over to its office for filing through the counsel on record. But, the appeal document was misplaced in assessee’s office and was forwarded to the counsel on record only on 18.03.2019 and on that day, the appeal was filed. It was stated that the delay on account of mistake committed inadvertently in assessee’s office due to misplacement of appeal papers for 10 days is reasonable. The ld.Senior DR, did not object for condonation of delay. As the delay is 3 I.T.A. No.675/Chny/2019 very small of 10 days and the cause seems reasonable, hence we condone the delay and admit the appeal. 3. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO in sustaining the disallowance @ 16.5% of civil work (work-in-progress WIP). For this, assessee has raised following five grounds:- “1. The order of the Commissioner of Income Tax (Appeals) 15, Chennai dated 29.11.2018 in I.T.A.No.28/2017-18/CIT(A)-15 for the above mentioned Assessment year is contrary to law, facts and in the circumstances of the case. 2. The CIT(Appeals) erred in sustaining the disallowance of 16.5% of civil works (WIP) amounting to Rs.3,02,25,944/- and consequently erred in sustaining the addition of such sum in the computation of taxable total income without assigning proper reasons and justification. 3. The CIT(Appeals) failed to appreciate that the incurring of such expenses was backed by evidence and ought to have appreciated that the evidence placed on record in support thereof would fortify the stand taken at every stage of the proceedings relating to assessment year under consideration. 4. The CIT(Appeals) went wrong in recording the findings in para 4.3.2 of the impugned order without assigning proper reasons and justification. 5. The CIT(Appeals) failed appreciate that there was no proper opportunity given before passing the impugned order and ought to have appreciated that any order passed in violation of the principles of natural justice should be reckoned as nullity in law.” 4. Brief facts are that the assessee is engaged in the business of real estate and civil construction work. The original assessment was 4 I.T.A. No.675/Chny/2019 framed by the AO whereby the AO disallowed 16.5% of civil works amounting to Rs.3,02,25,944/- in the first round. The assessee carried the matter before CIT(A) and CIT(A) in the first round in ITA No.245/CIT(A)-15/2015-16 vide order dated 28.09.2016 remanded the matter back to the AO with the specific direction that necessary verification in regard to work executed by M/s. Rasi Constructions and M/s. Inscale vide agreements dated 05.08.2008, 10.12.2008 & 04.03.2009 be verified as regards to the work executed by these parties towards project of the assessee from where the alleged work-in-progress was in the books of accounts of the assessee. The AO issued show cause notice and fixed the hearings on 07.11.2016, 21.11.2016 & 11.01.2017, but assessee filed copies of agreements with M/s. Rasi Constructions and M/s. Inscale but no corroborative evidence or supportive evidence in regard to work carried out were filed, despite opportunities provided. As the assessee could not produce any evidence such as confirmation from these parties or bills & vouchers or any evidences, the AO while giving appeal effect to the order of CIT(A) readopted the profit rate @ 16.5% of the civil works carried out at Rs.18,31,90,541/- and thereby added the same of Rs.3,02,25,944/-. Aggrieved, assessee preferred appeal before CIT(A) in second round against appeal effect order given by AO u/s.143(3) r.w.s. 250(6) of the Act. 5 I.T.A. No.675/Chny/2019 5. The CIT(A) confirmed the action of AO, as the assessee even before CIT(A) could not produce the proof of payments made, bills and vouchers or any other evidences to prove the genuineness of payment. Thereby, the CIT(A) confirmed the action of AO in disallowing the estimate made at the rate of 16.5% of the closing work-in-progress by observing in para 4.3.2 as under:- 4.3.2 Before the CIT(A), the appellant’s AR could not produce any corroborative evidence such as books of accounts, stock register, confirmation letter from the sub-contractors in respect of whom the appellant has claimed to have made the payments in the Profit & Loss account, bills and vouchers etc., the AR could only submit the copies of construction agreements. These construction agreements do not substantiate the genuineness of payment. Being a builder, the primary onus is on the appellant to prove genuineness of payment, since the appellant has failed to discharge its primary onus, I am of the considered opinion that the AO’s disallowance by estimation at the rate of 16.5% of the closing work- in-progress is fair and reasonable. Therefore, the AO’s addition is upheld and the appellant’s grounds are dismissed. 6. Before us the ld.counsel for the assessee only made a mercy plea that disallowance @ 16.5% of work-in-progress is on higher side but he could not produce any evidence in regard to proof of payment, bills & vouchers raised or the work done by these parties except agreements. In the absence of any proof, the ld.counsel for the assessee only submitted that reasonable estimate be made but for that also, he could not provide any basis of industry profit rates 6 I.T.A. No.675/Chny/2019 or any basis that this allowance should be restricted at a lower rate than estimated by the AO and confirmed by the CIT(A). 7. On the other hand, the ld. Senior DR heavily relied on the assessment order and the order of CIT(A). He stated that even now the assessee could not produce any evidence despite the matter was fixed on many occasions since July, 2019. 8. We have heard the rival contentions and gone through facts and circumstances of the case. We noted that the AO has disallowed 16.5% of civil works in regard to work-in-progress carried out by these two parties namely M/s. Rasi Constructions and M/s. Inscale, in the absence of any corroborative or supportive evidences. The assessee was provided ample opportunities even during first round by the AO as well as the CIT(A). The CIT(A) in the first round has specifically remanded the matter with a specific direction that necessary verification in the case of work executed by M/s. Rasi Constructions and M/s. Inscale be verified, as claimed vide agreement dated 05.08.2008, 10.12.2008 & 04.03.2009. As the assessee neither before AO nor before CIT(A), in the first or second round, and even now before us, could not produce any evidence, we have no alternative except to confirm the action of the CIT(A) 7 I.T.A. No.675/Chny/2019 confirming the disallowance made by the AO @ 16.5% of work-in- progress in regard to these two parties. As the assessee fails to discharge its onus despite numerous opportunities, we find no infirmity in the orders of lower authorities and hence, the same are confirmed and the appeal of assessee is dismissed. 8. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the court on 31 st March, 2022 at Chennai. Sd/- (डॉ एम एल मीना) (Dr. M.L. MEENA) लेखा सद᭭य /ACCOUNTANT MEMBER Sd/- (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 31 st March, 2022 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ (अपील)/CIT(A) 4. आयकर आयुᲦ /CIT 5. िवभागीय ᮧितिनिध/DR 6. गाडᭅ फाईल/GF.