J.S.P Constructions, New Delhi v. ACIT Circle 62(1), New Delhi

ITA 3234/DEL/2019 | 2012-2013
Pronouncement Date: 01-03-2021 | Result: Allowed

Appeal Details

RSA Number 323420114 RSA 2019
Assessee PAN AACFJ9831E
Bench Delhi
Appeal Number ITA 3234/DEL/2019
Duration Of Justice 1 year(s) 10 month(s) 15 day(s)
Appellant J.S.P Constructions, New Delhi
Respondent ACIT Circle 62(1), New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 01-03-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 01-03-2021
Last Hearing Date 20-01-2020
First Hearing Date 20-01-2020
Assessment Year 2012-2013
Appeal Filed On 15-04-2019
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SH. AMIT SHUKLA JUDICIAL MEMBER DR. B. R. R. KUMAR ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 3234/DEL/2019 : ASSTT. YEAR : 2012-13 J.S.P. CONSTRUCTIONS C/O KAPIL GOEL ADV. F-26/124 SECTOR-7 ROHINI NEW DELHI-110085 VS ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-62(1) NEW DELHI-110002 (APPELLANT) (RESPONDENT) PAN NO. A A CFJ9831E ASSESSEE BY : SH. KAPIL GOEL ADV. REVENUE BY : SH. VED PRAKASH MISHRA SR. DR DATE OF HEARING: 14.01.2021 DATE OF PRONOUNCEMENT: 01.03.2021 ORDER PER DR. B. R. R. KUMAR ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-20 NEW DELHI DATED 26. 02.2019. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: THE INITIATION OF ACTION U/S 148 IS BAD IN LAW (I) BEING BASED ON BALD ALLEGATIONS; 2. THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE PROCEEDINGS INITIATED U/S 147/148 BY LD. A.O. ARE INVALID AND ILLEGAL AS THE VAGUE REASONS RECORDED DO NOT REFLECT ANY INDEPENDENT APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER SO AS TO FORM A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. FURTHER CORROBORATE FROM THE FACT THAT ITA NO. 3234/DEL/2019 JSP CONSTRUCTIONS 2 FIRSTLY NO BASIS IS AVAILABLE AS TO HOW FIGURE OF RS. 1.10 CRORE HAS BEEN ARRIVED IN THE REASONS MENTIONED WHEREAS ASSESSMENT FRAMED ON RS.1 24 84 178/-. SECONDLY AFTER REOPENING LD. A.O. GATHERED THE BASIC INFORMATION OF CONTRACTS AWARDED TO THE ASSESSEE DURING THE TENURE OF MR. YADAV SINGH VIDE LETTER .DATED 19/12/2016 ISSUED U/S 133(6) OF I.T. ACT JUST FEW DAYS BEFORE THE FINALISATION OF ASSESSMENT THIRDLY CONTENTS OF STATEMENT OF RAMENDRA SINGH ARE NOWHERE DESCRIBED IN THE REASONS MENTIONED. FOURTHLY NO EVIDENCE WORTH NAME TO LINK THE ASSESSEE WITH RAMENDRA SINGH/ YADAV SINGH HAS BEEN DESCRIBED IN THE REASONS MENTIONED. 3. THAT THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THAT THE PROCEEDINGS INITIATED U/S 147/148 ARE INVALID AND ILLEGAL AS THE REASONS RECORDED DO NOT REFLECT ANY LIVE NEXUS (CAUSE AND EFFECT RELATIONSHIP BETWEEN FINDINGS OF SEARCH AND SEIZURE OPERATION ON MR. RAMENDRA SINGH AND ASSESSEE HEREIN) THEREFORE SATISFACTION OF THE ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOME ARE BASED UPON BORROWED SATISFACTION OF THE INVESTIGATION WING OF THE DEPARTMENT. 4. THAT ORDERS PASSED BY LD AO AND LD CIT-A ARE BAD IN LAW AS REASONS STATED IN ASSESSMENT ORDER WAS NEVER ACCOMPANIED WITH ANY BACK MATERIAL AVAILABLE WITH A.O. AT THE TIME OF REASONS RECORDIN G (EVEN DURING ASSESSMENT/ FIRST APPEAL PROCEEDINGS SAID MATERIAL WAS NEVER CONFRONTED TO ASSESSEE) THEREFORE SANS CONFRONTATION OF STATED MATERIAL ACCORDINGLY NOTICE ISSUED U/S 148 AND ALL SUBSEQUE NT PROCEEDINGS INCLUDING ORDERS OF LD. A.O. AND LD. CIT(A) ARE VOID-AB-INITIO. [REFER PAGE 12 OF CIT(A) ORDER)] 5. THAT LD. A.O. ERRED IN ASSUMING JURISDICTION U/ S 148 OF THE ACT WHERE PROVISION OF SECTION 153C COU LD ITA NO. 3234/DEL/2019 JSP CONSTRUCTIONS 3 HAVE BEEN INVOKED WHICH OVERRIDE THE PROVISION OF SECTION 148 OF THE ACT. ACCORDINGLY NOTICE U/S 148 AND ALL PROCEEDINGS SUBSEQUENT THERETO ARE LIABLE T O BE CANCELLED WITHOUT VALID ISSUE OF NOTICE U/S 145( 2) AFTER DUE APPLICATION OF MIND AND ACCORDINGLY ORD ER PASSED BY LD. A.O. AND CIT(A) IS VOID-AB-INITIO. 6. THAT LD. A.O. ERRED IN ASSUMING JURISDICTION U/S 143(2) OF THE ACT WITHOUT VALID ISSUE OF NOTICE U/S 143(2) AFTER DUE APPLICATION OF MIND AND ACCORDINGLY ORDER PASSED BY LD. ASSESSING OFFICER. AND CIT(A) IS VOI-AB-INITIO. 7. THAT LD. A.O. HAS ERRED IN PASSING ORDER U/S 147/148 WITHOUT FORMALLY SUPPLYING THE REASONS RECORDED AS PER SUPREME COURT DECISION IN THE CASE OF GKN DRIVESHATS (INDIA) LTD. VS. ITO 259 ITR19 (SC) BEFORE COMPLETION OF ASSESSMENT PROCEEDINGS EVEN MANDATORY APPROVAL U/S 151 REFERRED IS NEVER SUPPLIED TO THE ASSESSEE ASSESSMENT ORDER DATED 31/12/2016 IS PASSED AFTER TIME BARRING DATE (REFER DISPATCH RECORD) THEREFORE ORDERS PASSED BY A.O./ CIT(A) ARE VOID-AB-INITIO. 8. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW ID CIT(A) ERRED IN SUSTAINING THE ACTION OF AO IN MAKING ADDITION OF RS.83 09 389/- WITHOUT APPRECIATING THAT NO OPPORTUNITY IS GIVEN T O THE ASSESSEE TO BE CONFRONTED WITH BACK MATERIAL AN D NO OPPORTUNITY TO CROSS EXAMINE THE REVENUE'S WITNESS WAS GIVEN DESPITE MANDATED IN REVENUE OFFICE MANUAL WHICH IS FLOUTED BY THE LD. A.O. AND CIT(A). 9. THAT WITHOUT PREJUDICE TO ABOVE ADDITION OF RS.41 74 789/- AS MADE BY THE ASSESSING OFFICER U/S 40A(3) AND CONFIRMED BY CIT(A) IS OUTSIDE THE PURVIEW OF REASONS RECORDED AND NO SUBSEQUENT INFORMATION HAS COME TO A.O. WITHIN THE MEANING OF EXPLANATION 3 OF SECTION 147 NO NOTICE U/S 148 IS ISSUED FOR THAT ITEM ADDITION SUSTAINED IS PATENTL Y INVALID. FURTHER GENUINENESS OF PAYMENT NEVER DOUBTED AS PER CIRCULAR 6P OF 1968 ISSUED BY CBDT THEREFORE ADDITION SUSTAINED IS BAD MERIT ALSO. ITA NO. 3234/DEL/2019 JSP CONSTRUCTIONS 4 10. THAT WITHOUT PREJUDICE TO ABOVE ESTIMATED/ AD- HOC ADDITION OF RS.1 24 84 178/- AS MADE BY ASSESSING OFFICER ON ACCOUNT OF ALLEGED PAYMENT OF COMMISSION @ 5% TO MR. YADAV SINGH AND CONFIRMED BY CIT(A) TO THE TUNE OF RS.82 09 389/- IS WITHOUT ANY BASIS AND APPELLANT HAD NOT MADE ANY PAYMENT TO YADAV SINGH THROUGH RAMENDRA SINGH AS ALLEGED. 3. THE ASSESSEE IS A CIVIL CONTRACTOR DOING WORK FO R GOVERNMENT AND SEMI-GOVERNMENT AGENCY NAMELY GNOIDA NBCC PWD ETC. THE CASE HAS BEEN REOPENED U/S 147 O F THE INCOME TAX ACT 1961 VIDE ISSUE OF NOTICE DATED 03. 09.2015 ON THE GROUNDS THAT THE ASSESSEE PAID COMMISSION @ 5% ON THE CONTRACTS AWARDED BY THE AUTHORITIES. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER DIRECTED THE ASSESSEE TO PRODUCE BOOKS OF ACCOUNTS FOR VERIFICATION. FURTHER NOTICE U/S 133( 6) OF THE ACT WAS ISSUED TO CEO NOIDA CALLING FOR INFORMATION OF CONTRACTS AWARDED BY THE NOIDA DURING THE FINANCIAL YEAR 2011 -12 FOR WHICH THE NOIDA REPLIED THAT THE ASSESSEE HAS BEEN AWARDED CONTRACTS TO THE TUNE OF RS.24.96 CRORES. DURING TH E ASSESSMENT PROCEEDINGS THE AO ASKED THE ASSESSEE TO PRODUCE D ETAILS OF PURCHASES LABOUR EXPENSES WAGES FREIGHT EXPENSE S ALONG WITH REQUISITE BILLS VOUCHERS AND MUSTER ROLL. THE AO ISSUED SHOW-CAUSE NOTICE WHY NOT THE PROFITS BE ESTIMATED @ 8% OF THE TOTAL RECEIPTS OWING TO NON-SUBMISSION OF BILLS . THE ASSESSEE VIDE LETTER DATED 28.12.2016 SUBMITTED THAT ALL FIN ANCIAL AND NECESSARY DOCUMENTS HAVE BEEN SUBMITTED AND EXPLAIN ED EVERY DEBIT ENTRY OF WITHDRAWAL AND PAYMENT FROM BANK ACC OUNT. THE AO NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND HAS DISALLOWED AN AMOUNT @ 5% OF THE CONTRACT WORK AWAR DED BY NOIDA. ITA NO. 3234/DEL/2019 JSP CONSTRUCTIONS 5 5. THE RELEVANT PART OF THE ASSESSMENT ORDER IS REP RODUCED AS UNDER FOR READY REFERENCE: CONSIDERING THE TOTALITY OF FACTS OF THIS CASE AS A LSO CONSIDERING THE NATURE OF CONSTRUCTION BUSINESS ALSO RELYING O N N.P. RATE DECLARED BY OTHER ASSESSEES IN SIMILAR LINE OF BUSI NESS AND ALSO CONSIDERING THE LARGE TURNOVER OF RS.1 60 53 89 443 /- SHOWN DURING THE YEAR APPLICATION OF 8% ON THE TOTAL TUR NOVER IN THE CASE OF THE ASSESSEE APPEARS TO BE EXCESSIVE. DESPI TE SO ASSESSEE FAILED TO PRODUCE ORIGINAL BILLS/VOUCHERS MUSTER ROLL ETC. FOR VERIFICATION AND FURTHER SEEN THAT MOST OF THE TRANSACTIONS HAVE BEEN MADE IN CASH. ALSO VARIOUS D ISCREPANCIES HAVE BEEN NOTICED FROM THE LEDGER FURNISHED BY THE ASSESSEE WHICH ARE BEING DISCUSSED IN SUBSEQUENT PARA. PERUS AL OF THE LEDGER REVEALS THAT THE ASSESSEE HAS MADE CASH PAYM ENTS EXCEEDING RS.20 000/- TO A SINGLE PARTY AND THE ASS ESSEE HAS WILLFULLY BIFURCATED THE ABOVE PAYMENTS BELOW THE T HRESHOLD LIMIT TO OUTWINK THE REVENUE. AND THE PAYMENTS HAV E BEEN EXCLUSIVELY MADE IN CASH FOR WHICH ASSESSEE HAS FA ILED TO PRODUCE ORIGINAL BILLS/VOUCHERS FOR VERIFICATION. U NDER THE PREVAILING CIRCUMSTANCES AS THE ASSESSEE CANNOT SUB STANTIATE THE ABOVE DISCREPANCY IT CANNOT BE DENIED THAT THE ASSESSEE HAD DIVERTED THE FUNDS FOR PAYING COMMISSIONS IN TH E GUISE OF VARIOUS EXPENSES SHOWN IN THE BOOKS MAJORITY OF WH ICH HAS BEEN INCURRED IN CASH. MOREOVER IN THE ABSENCE OF PROPER BILLS/VOUCHERS/DOCUMENTARY EVIDENCES THE SOURCE OF CASH PAYMENTS REMAINED UNCONFIRMED. HENCE IT IS NOT POS SIBLE TO VOUCH THE SOURCE OF COMMISSION PAID BY THE ASSESSEE @ 5% OF CONTRACT WORK AWARDED IN THE TENURE OF SH. YADAV SI NGH. AS ALREADY DISCUSSED ABOVE TOTAL WORK CONTRACT IS ITA NO. 3234/DEL/2019 JSP CONSTRUCTIONS 6 RS.24 96 83 556/-. HENCE 5% OF RS.24 96 83 556/- W ORKED OUT TO BE RS.1 24 84 178/- WHICH IS BEING DISALLOWED AN D ADDED TO THE INCOME OF THE ASSESSEE . 6. THE LD. CIT (A) CONFIRMED THE ADDITION. WHILE CO NFIRMING THE LD. CIT (A) ASSUMED THAT THE ASSESSING OFFICER HAS GIVEN A FINDING THAT 5% OF THE TOTAL TURNOVER MUST HAVE BEEN PAID BY THE APPELLANT AS COMMISSION BY DIVERTING FUNDS IN T HE GUISE OF VARIOUS EXPENSES SHOWN IN THE BOOKS MAJORITY OF WHI CH HAS BEEN INCURRED IN CASH. THE AO HAS ALSO GIVEN A FIND ING THAT THE APPELLANT HAD PAID RS.41 74 789/- IN CONTRAVENTION TO PROVISIONS OF SECTION 40A(3) OF THE ACT. THE ADDITI ON MADE BY THE ASSESSING OFFICER OF RS.41 74 789/- IS CONFIRME D. HOWEVER SINCE THIS AMOUNT IS ALSO EMBEDDED IN THE 5% COMMIS SION MADE IN CASH I.E. AMOUNT OF RS.1 24 84 178/- THE SAID A DDITION IS TO BE REDUCED BY RS.41 74 789/-. THE ASSESSING OFFICER IS DIRECTED TO MAKE AN ADDITION OF RS.83 09 389/- ON THIS ACCOU NT . 7. THUS THE QUESTION BEFORE US TO ADJUDICATE REMAI NS AS TO WHETHER THE AMOUNT OF RS.83 09 389/- CONFIRMED BY THE LD. CIT (A) OUT OF THE DISALLOWANCE MADE BY THE ASSESSING O FFICER ON ACCOUNT OF EXPENSES WHICH IS A SOURCE OF ALLEGED CO MMISSION PAID IS CORRECT OR NOT ? 8. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. 9. FROM THE ASSESSMENT ORDER WE FIND THAT A. THE ASSESSEE RECEIVED CONTRACTS FROM NOIDA TO THE T UNE OF RS.24.96 CRORES. B. THE TOTAL TURNOVER OF THE ASSESSEE WAS RS.160.53 CR ORES ITA NO. 3234/DEL/2019 JSP CONSTRUCTIONS 7 C. THE SHOW-CAUSE NOTICE HAS BEEN ISSUED FOR DETERMINA TION OF ESTIMATION OF PROFITS @8% D. THE NET PROFIT DISCLOSED BY THE ASSESSEE WAS 6.77% 10. AT THE OUTSET WE FIND THAT WHILE THE SHOW-CAUS E HAS BEEN ISSUED FOR DETERMINATION OF PROFITS @8% THE DISALL OWANCE HAS BEEN MADE @5% ON THE CONTRACTS OF RS.24.96 CRORES. IN ADDITION TO THE NET PROFITS DISCLOSED THE ASSESSIN G OFFICER HAS DISALLOWED 5% OF THE EXPENSES ON THE TOTAL CONTRACT WORK AWARDED BY NOIDA. THE AO ALSO HELD THAT THE APPLICA TION OF 8% ON THE TURNOVER APPEARS TO BE EXCESSIVE. WHILE DOIN G SO THE ASSESSING OFFICER HAS HELD THAT PAYMENTS EXCEEDING RS.20 000/- WERE MADE TO A SINGLE PARTY AND THE ASSESSEE HAS WI LLFULLY BIFURCATED THE PAYMENTS TO KEEP IT WITHIN THE THRES HOLD LIMIT. BEYOND THIS THE ASSESSING OFFICER HAS NOT BROUGHT ANYTHING ON RECORD TO DISALLOW 5% OF THE EXPENSES. HE HAS NOT D ETERMINED EVEN THE HEAD UNDER WHICH THE EXPENSES HAVE BEEN IN FLATED OR BOGUS. EVEN IN THE CASE OF PAYMENTS MADE IN CASH ABSOLUTELY NO ENQUIRIES HAVE BEEN CONDUCTED. THE ASSESSING OFF ICER HELD THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE DISCRE PANCIES BUT DID NOT MENTION ANYTHING AS TO WHAT ARE ALL THE DIS CREPANCIES FOUND. THE MERE ALLEGATIONS CANNOT BE TREATED AS EV IDENCES. THE FUNDAMENTAL PRINCIPLE OF JUSTICE REQUIRES THE A SSESSING OFFICER TO DISCOVER AND COLLECT EVIDENCE AND CONFRO NT THE ASSESSEE BEFORE MAKING ANY DISALLOWANCE. IN THE INS TANT CASE THERE WAS NO MENTION AT ALL AS TO WHICH OF THE EXPE NSES IS BOGUS OR INFLATED. IN THE INSTANT CASE WE FIND NO PRIMARY EVIDENCES OR SECONDARY EVIDENCES OR EVEN ANY PROBAB ILITIES BROUGHT OUT BY THE REVENUE TO RESORT TO DISALLOWANC E OF 5% EXPENSES OVER AND ABOVE 6.77% NET PROFIT DISCLOSED BY THE ITA NO. 3234/DEL/2019 JSP CONSTRUCTIONS 8 ASSESSEE. ANY DISALLOWANCE MADE BY THE REVENUE WITH OUT BRINGING ANY EVIDENCE ON RECORD IS LIABLE TO BE SET ASIDE. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. 12. SINCE THE ASSESSEE GETS RELIEF ON MERITS OF TH E CASE WE REFRAIN TO ADJUDICATE ON THE TECHNICAL GROUNDS BEIN G ACADEMIC IN NATURE. ORDER PRONOUNCED IN THE OPEN COURT ON 01/03/2021. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 01/03/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR