M/S GUNESH INDIA PVT.LTD.JAIPUR,JAIPUR V. DCIT, CENTRAL CIRCLE-3, JAIPUR

MA 48/JPR/2025

AI Insights

The case involves M/s Gunesh India Pvt. Ltd., which filed a Miscellaneous Application under section 254(2) of the Income Tax Act, 1961, seeking rectification of apparent mistakes in an earlier ITAT order concerning disallowances made on payments to masked sub-contractors. The original dispute centered on a disallowance of Rs. 3,40,11,858 made by the Assessing Officer (AO), which was partially upheld by the CIT(A) and further contested by both the assessee and the department in the ITAT. The ITAT had earlier reduced the disallowance but the assessee sought further clarification and rectification regarding the application of the gross profit rate used in the disallowance. The Tribunal found the delay in filing the Miscellaneous Application to be unjustifiable and thus dismissed the application, but provided a clarified interpretation of its previous order to ensure correct implementation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717588 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 25-06-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV AWASTHI
• Assessee Lawyers: TARUN MITTAL
• Keywords: Condonation of delay; Tax effect; Bogus

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,’B’ JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI M.A. No. 48/JP/2025 (Arising out of ITA No. 38/JP/2021) fu/kZkj.k o\"kZ@Assessment Years : 2012-13 M/s Gunesh (India) Pvt. Ltd. 3-NA-51, Jawahar Nagar, Jaipur cuke Vs. DCIT, Central Circle-03, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCG5360R vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Tarun Mittal, CA jktLo dh vksj ls@ Revenue by : Sh. Gaurav Awasthi, JCIT, Sr.DR lquokbZ dh rkjh[k@ Date of Hearing : 06/08/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 14/08/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, A.M. The Present Miscellaneous Application has been filed by the assessee u/s 254(2) of the Act against the order of ITAT, Jaipur Benches, Jaipur in ITA No. 38/JP/2021 dated 14.07.2022 praying therein following reasons to suitably modify or recall of its order: Printed from counselvise.com MA No. 48/JP/2025 M/s Gunesh India Pvt. Ltd. vs. DCIT 2 This Miscellaneous Application u/s 254(2) of the Income Tax Act, 1961 is being presented with the prayer to rectify certain apparent mistakes in the abovementioned order of this Hon’ble Bench on the backdrop of following facts: 1. That, the abovementioned appeal i.e. ITA Nos.: 38/JP/2021 and 21/JP/2021 were filed by the department and assessee respectively against the order of Ld. CIT(A)- 4, Jaipur dated 25.3.2021 which was decided by this Hon’ble Bench on 14.07.2022. 2. That, the only issue involved in appeal was related to disallowance of Rs. 3,40 11,858/- made by ld.AO on account of payment made by assessee to masked sub-contractors by alleging that these sub-contractors had not provided any services and thus payment made to them was considered as bogus. 3. That, the director of assessee company, Sh. Mahesh Gupta in his statements recorded u/s 132(4) had categorically submitted that work was in fact done, but by himself in his individual capacity and therefore entire payment could not be held as bogus. Also, Sh. Mahesh Gupta offered additional income @ 3.5% on turnover of sub contractors in his individual capacity. 4. That, on appeal, ld.CIT(A) rejected books of accounts by invoking provisions of section 145(3) and confirmed part disallowance of Rs. 91,85,756/- by applying gross profit of 4% in respect of entire turnover. 5. That, both assessee and the department filed appeal before hon’ble bench against order so passed by ld.CIT(A). 6. That, department argued that entire payment made to masked subcontractors was rightly disallowed by ld.AO and the same deserves to be upheld. 7. That, assessee argued that though ld.CIT(A) agreed that profit is required to be estimated on the basis of past history of the case of assessee itself (according to which average GP comes to 1.94%), however erroneously conformed disallowance @ 4%. Printed from counselvise.com MA No. 48/JP/2025 M/s Gunesh India Pvt. Ltd. vs. DCIT 3 8. That, assessee thus requested before hon’ble bench that Shri Mahesh Gupta has already offered an additional income of 3.50% on the masked contractors in his individual assessment proceedings before the ld. AO which also include the year under consideration and therefore the GP rate of 1.59% declared by the appellant in his return of income on the entire turnover including the turnover of masked contractors deserves to be accepted and in case of transportation business, there cannot be a high margin as compared with what has been narrated in the deeming provisions of the Income Tax Act, 1961 and alternatively it was argued that disallowance, if any, be sustained at GP rate declared by assessee, i.e. 1.59% in respect of turnover of masked sub-contractors only or at the most equivalent to average GP rate of past 3 years being 1.94% thereby making an increase in margin in masked contractors by 0.35% [1.94% - 1.59%] however, while dealing with the final appeal, the order has been passed and the alternative plea has not been dealt with. 9. That, after hearing appeal on merits, hon’ble bench in adjudicating para, observed that “In the case of the assessee ld. CIT(A) has already by passed a reasoned order stated that the profit can be estimated @ 4 %.” Also, hon’ble bench further observed that- - Revenue has not brought anything on record that in real terms the transportation work billed to corporate client is in fact not done. - Even in the search only the statement of Shri Mahesh Gupta is relied upon wherein he has stated in fact work is done. - Revenue has in this case only taken a plea that the transaction has been done though the employee for which the assessee has already established that the work has been done and the reason behind that also explained in that case the whole expenditure cannot be disallowed as revenue failed established that in real terms the work is not done and the expenses are bogus. - Per contra the ld. AR argued that the work is executed and even the AO has accepted the turnover related this expenditure and there is no adverse finding at the time search or in the assessment order except that in the name of employees. - Thus, in that state of affairs the only question is whether the expenses claimed through the employee’s name and ultimately paid to other transporter are at arm’s length or not? 10. That, it is thus apparent that hon’ble bench clearly agreed that disallowance by applying GP rate could have been made only w.r.t. employees appointed as sub-contractors and not on entire turnover and Printed from counselvise.com MA No. 48/JP/2025 M/s Gunesh India Pvt. Ltd. vs. DCIT 4 moreover credence was given to surplus offered by Shri Mahesh Gupta in his individual capacity in his assessment proceedings based on the statement recorded during the course of search. 11. That, from perusal of last 3 lines of para 11 of the Hon’ble ITAT order dated 14.07.2022, i.e. Decision para, some words seem to missing as the same does not gel with the entire remaining observations (reproduced at point 9 above). 12. That, it is requested before hon’ble bench that final concluding remarks in operative part of decision para may please be clarified to provide the interpretation so that the probability of creating an ambiguity can be done away with. 2. During the course of hearing, the ld. AR of the assessee has filed an application for condonation of delay giving therein following reasoning. Sub: Application seeking Condonation of delay in filing of Miscellaneous Application M/s Gunesh (India) Pvt. Ltd. Assessment Year 2012-13 -ITA Nos, 38/JP/21 & 21/JP/21 In the aforesaid context, it is humbly submitted that an order dated 14.7.2022 was passed by hon'ble bench in the case of assessee in ITA Nos. 38/JP/21 and 21/JP/21, which were filed by the department and assessee respectively. 1. That the abovementioned appeals were filed against the order of Id. CIT(A)- 4, Jaipur dated 25.3.2021. 2. That, the only issue involved in appeal was related to disallowance of Rs. 3,40,11,858/-made by Id.AO on account of payment made by assessee to masked sub-contractors in the course of its transportation business by alleging that these sub-contractors had not provided any services and thus payment made to them was considered as bogus. Printed from counselvise.com MA No. 48/JP/2025 M/s Gunesh India Pvt. Ltd. vs. DCIT 5 3. That, Id. CIT(A)-4, Jaipur, vide order dated 25.3.2021 allowed part relief in respect of above disallowance and restricted the same to Rs.91,85,756/-, i.e. @4% of entire turnover. 4. That, on further appeals filed by assessee as well as department before hon'ble ITAT. disallowance was further reduced and as per our interpretation to the ITAT order, tax effect being very low, the same skipped attention of assessee. 5. That, recently during course of hearing of appeal for A.Υ. 2013-14 to 2019- 20 pertaining to the appellant before ld.CIT(A)-4, Jaipur, when order so passed by hon'ble ITAT was to be relied upon, it was realized by the counsel that some words were missing in the operative part of decision para of the ITAT order, due to which conclusion given in last few lines of the order was not in parity with detailed findings given in the forgoing part of decision para. 6. That, counsel then verified the order giving effect to the order of hon'ble ITAT and it was observed that the detailed observations of hon'ble ITAT were not considered while giving appeal effect. 7. That, it was thus advised by the counsel that an application may be filed before hon'ble bench seeking clarification on the final operative part of the order, so as to avoid any ambiguity in interpretation, however by the time, due date of filing Miscellaneous Application was already barred by limitation. 8. Thus, it is submitted that only clarification is being sought in terms of last few lines of the operative para and the delay in filing Miscellaneous Application is absolutely inadvertent and has occurred due to circumstances beyond the control of assessee. 9. That, the assessee always has acted in bonafide and the delay is of 874 days. 10. As Affidavit signed by assessee deposing the above facts is enclosed herewith. In the circumstances of the matter, it is humbly prayed before your honours to please accept the application/prayer of the condonation of delay which is of 874 days and to please be kind enough to direct the listing of the Miscellaneous Application for disposal on the merits. Printed from counselvise.com MA No. 48/JP/2025 M/s Gunesh India Pvt. Ltd. vs. DCIT 6 Your kindness would go a long way to impart effective justice to the ignorant litigants. 3. As is evident from the above application and as pointed out by the registry that the present MA is barred by limitation of 876 days. The Bench noted that the assessee has advanced an application for condonation of delay. The Bench considered the application of the assessee for condonation of delay but did not find any sufficient reason to condone the delay. Hence, the same is not maintainable and thus it is dismissed for which the Department has no objection. 4. But at the same time as submitted that while giving effect the order of this Bench dated 14.07.2022 as filed by the ld. AR of the assessee, the Bench noted para No. 11 of ITAT’s order needs to be more clarified so as to give correct effect on the issue. The para No. 11 of ITAT’s order to be now read as under:- 11. We have considered the rival contentions, submissions and decisions relied upon by both the parties. It is not disputed by both the parties that the transportation work has not been undertaken even through these 13 people who are also employee of the company. The only issue that the transportation charges are inflated by steering part of the transaction with that of the employee’s name. The director of the company has already replied vide question no. 39 extracted above that the whole amount is not consist of bogus expenditure. In the case of the assessee ld. CIT(A) has already by passing a reasoned order stated that the profit can be estimated @ 4 %. The revenue has challenged that action of the ld. CIT(A) and assessee has also contended that the profit declared by the assessee company @ 1.59 % be accepted. As Printed from counselvise.com MA No. 48/JP/2025 M/s Gunesh India Pvt. Ltd. vs. DCIT 7 regards the contention of the revenue that the whole tainted amount should be added has no base, there is no cogent evidence or argument placed before us as to why the detailed and reasoned finding of the ld. CIT(A) is not sustainable. Revenue has not brought anything on record that in real terms the transportation work billed to corporate client is in fact not done. Even in the search only the statement of Shri Mahesh Gupta is relied upon where in he has stated in fact work is done. Revenue has in this case only taken a plea that the transaction has been done though the employee for which the assessee has already established that the work has been done and the reason behind that also explained in that case the whole expenditure cannot be disallowed as revenue failed established that in real terms the work is not done and the expenses are bogus. Per contra the ld. AR argued that the work is executed and even the AO has accepted the turnover related this expenditure and there is no adverse finding at the time search or in the assessment order except that in the name of employees. Thus, in that state of affairs the only question is whether the expenses claimed through the employee’s name and ultimately paid to other transporter are at arm’s length or not? Since at this stage we have not been provided such analysis, we feel that it in the interest of the justice at best 3.5 % which is accepted by Shri Mahesh Gupta offered by him in assessment and he is also key person in this case and therefore, we are of the considered view that an addition @ 3.5 % can be sustained in this case on account of the turnover related to employee of the assessee only for an amount of Rs. 3,40,11,858/- to settle the issue in the interest of justice for an amount of Rs. 11,90,415/-. 5. Except above, there is no change in the ITAT order dated 14- 07-2022. 6. In the result, the Misc. Application of the assessee is disposed off as indicated hereinabove. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Printed from counselvise.com MA No. 48/JP/2025 M/s Gunesh India Pvt. Ltd. vs. DCIT 8 Tk;iqj@Jaipur fnukad@Dated:-14/08/2025 *Ganesh Kumar, PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- M/s Gunesh India Pvt. Ltd., Jaipur 2. izR;FkhZ@ The Respondent- DCIT, Central Circle-03, Jaipur 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File {MA No. 48/JP/2025} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar Printed from counselvise.com MA No. 48/JP/2025 M/s Gunesh India Pvt. Ltd. vs. DCIT 9 Printed from counselvise.com "