New India Construction Co. , Bally V. ITO, Wd-33(3), Kolkata. , Kolkata

ITA 827/KOL/2023

AI Insights

The case involves New India Construction Co., which appealed against the orders of the Learned Commissioner of Income-tax (Appeals)-NFAC, Delhi, for the Assessment Years 2013-14 & 2014-15. The primary issue was the addition of Rs. 1,32,877 as unexplained expenditure on the grounds of bogus purchases from two entities. The Assessing Officer had initially treated these purchases as bogus based on a report from the investigation wing, which claimed that the directors of the said entities admitted to providing accommodation entries. The assessee contested this by providing bills, vouchers, and certificates from government engineers, asserting that the materials were used in actual construction projects. However, both the Assessing Officer and the CIT(A) upheld the addition without substantial inquiry into the assessee's evidences. The Tribunal, after reviewing the materials and arguments, concluded that the addition was unjustified and allowed the appeals.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128741 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-10-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 10-08-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Competent authority
• Section: 69C

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'एसएमसी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA श्री राज े श क ु मार, ल े खा सदस्य क े समक्ष Before SRI RAJESH KUMAR, ACCOUNTANT MEMBER I.T.A. Nos.: 827 & 828/KOL/2023 Assessment Years: 2013-14 & 2014-15 New India Construction Co.......................................Appellant [PAN: AACFN 9800 H] Vs. ITO, Ward-33(3), Kolkata......................................Respondent Appearances: Assessee represented by: Sh. Miraj D. Shah, A/R. Department represented by: Smt. Nibedita Gupta, JCIT. Date of concluding the hearing : October 4 th , 2023 Date of pronouncing the order : October 12 th , 2023 ORDER Per Rajesh Kumar, Accountant Member: These are appeals preferred by the assessee against the order of Learned Commissioner of Income-tax (Appeals)-NFAC, Delhi [hereinafter referred to Ld. ‘CIT(A)’] dated 18.07.2023 & 21.06.2023 for the Assessment Years (in short ‘AY’) 2013-14 & 2014-15, respectively. First, we take ITA No. 828/KOL/2023 for AY 2014- 15. 2. The issue raised in ground no. 3 is against the confirmation of addition of Rs. 1,32,877/- being 7.99% of the disputed I.T.A. Nos.: 827 & 828/KOL/2023 Assessment Years: 2013-14 & 2014-15 New India Construction Co. Page 2 of 5 purchases by Ld. CIT(A) as made by the Assessing Officer (in short ld. 'AO') u/s 69C of the Act as unexplained expenditure in respect of bogus purchases. 3. The facts in brief are that the assessee is engaged in the business of civil contractors executing the Govt projects. During the year the assessee filed the return of income on 28.10.2014 declaring total income of Rs. 18,80,230/- which was selected under limited scrutiny. Thereafter the AO after obtaining approval from the competent authority converted the limited scrutiny to complete scrutiny after noticing that the assessee has taken accommodation entries in the form of bogus bills amounting to Rs. 16,63,045/- from two parties. Accordingly show cause notice was issued to the assessee and the assessee furnished before the AO from time to time details/evidences as called for by the AO. However, the AO, by relying on the report of the investigation wing to the effect directors of M/s. Gajgamini Sales Pvt. Ltd. and M/s. Raipur Trading Pvt. Ltd. having admitted to be involved in providing accommodation entries, treated the purchases made from these entities as bogus and called upon the assessee as to why the said purchases should not be added to the income of the assessee. The assessee replied the said show cause by submitting that the material purchased from these companies were in fact utilised in the construction of the project which is owned by the Government and duly certified by the Executive Engineer. The assessee furnished before the AO the bills and vouchers in respect of the purchase of materials and report of the Government executive engineer and also the tenders floated by the Government. It was I.T.A. Nos.: 827 & 828/KOL/2023 Assessment Years: 2013-14 & 2014-15 New India Construction Co. Page 3 of 5 pleaded that there is no scope for any bogus purchases in the project executed by the assessee as the material has been actually received and utilised in project as certified by the Government engineers. The reply of the assessee did not find favour of the AO and he applied a gross profit rate of 7.99% on the purchases thereby making an addition Rs. 1,32,877/- to the income of the assessee u/s 69C of the Act in the assessment framed. 4. In the appellate proceedings, Ld. CIT(A) simply confirmed the order of the AO on the same reasoning without considering the contentions and arguments of the assessee. 5. After hearing the rival contentions and perusing the material on record, we find that the assessee has executed a Government projects qua school buildings during the year. We note that the copy of the certificate of completion of the said works from the Executive Engineer, Social Sector, PW Directorate and PW(CB) Directorate were furnished certifying that the material purchased has been used in the construction of these buildings. We also note that the assessee has filed all the evidences before the AO as well as before Ld. CIT(A) and both the authorities below have failed to carry out any enquiry or investigation into the bills/evidences filed by the assessee and simply relied on the report of the Investigation wing. In our opinion, the order passed by Ld. CIT(A) confirming the addition without any substantive basis is wrong and cannot be sustained. Accordingly, we direct the AO to delete the said addition by setting aside the order passed by Ld. CIT(A). I.T.A. Nos.: 827 & 828/KOL/2023 Assessment Years: 2013-14 & 2014-15 New India Construction Co. Page 4 of 5 6. The other grounds were not pressed at the time of hearing and accordingly, they are dismissed as not pressed. 7. In the result, the appeal filed by the assessee is allowed. Now, we take ITA No. 827/KOL/2023 for AY 2013-14. 8. The issue raised in ITA No. 827/KOL/2023 is similar to one as decided by us in ITA No. 828/KOL/2023. Therefore, our decision in ITA No. 828/KOL/2023 would mutatis mutandis apply to this appeal as well and consequently, this appeal of the assessee is also allowed. 9. In the result, both the appeals filed by the assessee are allowed. Kolkata, the 12 th October, 2023. Sd/- [Rajesh Kumar] Accountant Member Dated: 12.10.2023 Bidhan (P.S.) I.T.A. Nos.: 827 & 828/KOL/2023 Assessment Years: 2013-14 & 2014-15 New India Construction Co. Page 5 of 5 Copy of the order forwarded to: 1. New India Construction Co, 708/2, Nischinda Ghoshpara, Bally-711 227. 2. ITO, Ward-33(3), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata