2021 (3) TMI 86 - HC - Income Tax

Revision u/s 264 in favor of assessee - Additions based on 26AS statement - undisclosed income - Assessee contended that additions made by the AO is not correct as he as not received the amount as alleged by the AO - Lack of proper inquiry by the Commissioner, IT in respect of the payments allegedly made by the three concerns, while rejecting the application - HELD THAT - Petitioner has not made any complaint at any stage regarding any fictitious or wrong entries in the 26AS statement reflecting tax deduction at source against receipt of payments from these three concerns. It further appears that the assessing officer had undertaken inquiries from these three concerns who confirmed the payments made to the petitioner during the financial year 2010-11. Since the petitioner's books of account were not maintained or audited and the receipts were not only confirmed by the three concerns as above, but 26AS statement and Form-16A submitted by them revealed undisclosed income The conduct of the petitioner taken as a whole, therefore, does not appear to be clean and bonafide in disclosing proper income in his IT return. Further the contention of the petitioner relying upon the decision in the case of M/s Kishinchand Chellaram 1980 (9) TMI 3 - SUPREME COURT that the letter of confirmation relied upon by the AO and the revisional authority were not furnished to him, does not appear to be correct as the AO had confronted the assessee with these findings through letters dated 21 st January 2014 and 11th February 2014. Moreover, 26AS statements are maintained by the Department under Section 203AA of the Act and are not generated by the concerns from whom the petitioner has received the payments. As such, such arguments also do not cut ice. There is no quarrel about the scope of revisional jurisdiction of the CIT under Section 264 of the Act in support of which reliance has been placed by the petitioner upon the judgment of Delhi High Court in the case of Paradigm Geophysical Pty. Ltd. 2017 (11) TMI 1157 - DELHI HIGH COURT . No grounds made out for interference in the order of the learned CIT passed in revision. - Petition dismissed - Decided against the assessee.

Summary

Issues Involved:

1. Challenge to the revision order under Section 264 of the Income Tax Act, 1961.
2. Scrutiny assessment for the assessment year 2011-12.
3. Non-maintenance and non-auditing of books of accounts.
4. Discrepancies in income disclosure and TDS entries.
5. Verification of payments from three companies.
6. Jurisdiction and exercise of powers by the revisional authority.
7. Alleged bogus transactions and deductions.
8. Opportunity to rebut documents and evidence.
9. Request for remand for further verification.

Issue-wise Detailed Analysis:

1. Challenge to the revision order under Section 264 of the Income Tax Act, 1961:
The petitioner challenged the order dated 11th March 2016 dismissing the review petition under Section 264 of the Income Tax Act, 1961. The petitioner argued that the revisional authority failed to exercise its powers properly by not making necessary inquiries to verify the details of payments from three companies.

2. Scrutiny assessment for the assessment year 2011-12:
The petitioner filed a return for AY 2011-12 disclosing a total income of ?1,48,958/-. The case was selected for scrutiny under CASS, and notices were issued under Sections 143(2) and 142(1) of the Act. The petitioner disclosed an income of ?2,48,958/- from gross receipt of ?31,11,976/- as 8% of the gross receipt from M/s Sobha Developers Ltd., Karnataka. However, the 26AS statement showed the assessee's gross receipt at ?4,07,60,704/- from three companies.

3. Non-maintenance and non-auditing of books of accounts:
The petitioner did not maintain or audit books of accounts under Section 145 of the Act. Consequently, the books of accounts were rejected, and 8% of the gross receipt of ?32,60,856/- was taken as net profit. The balance of ?30,11,898/- was added back to the total income, and penalty proceedings under Section 271B were initiated for failure to get books of accounts audited.

4. Discrepancies in income disclosure and TDS entries:
The petitioner denied receiving any amount from the three companies and contended that the assessing officer did not conduct proper inquiries to confirm the payments. The petitioner argued that mere deduction of TDS did not prove the payment and alleged that the payments were fictitious.

5. Verification of payments from three companies:
During the assessment, letters were issued under Section 133(6) to the three companies, which confirmed the payments to the petitioner. The Commissioner, IT, also issued a letter to M/s HES Infra Pvt. Ltd. to verify the payments, but the company did not respond. The Commissioner relied on the 26AS statement and TDS certificates, which showed the payments were duly deposited in the Government account.

6. Jurisdiction and exercise of powers by the revisional authority:
The petitioner argued that the revisional authority should have made due inquiries to verify the payments. The revisional authority, however, took note of the confirmations from the three companies and the absence of any contrary evidence from the petitioner.

7. Alleged bogus transactions and deductions:
The petitioner contended that the deduction of tax at source by M/s HES Infra Pvt. Ltd. without making any payments amounted to a bogus transaction. The petitioner claimed to have no resources to verify such bogus payments and argued that the matter should be subjected to thorough verification.

8. Opportunity to rebut documents and evidence:
The petitioner argued that no proper opportunity was granted to rebut the documents collected by the assessing officer. The petitioner relied on the decision of the Apex Court in M/s Kishinchand Chellaram Vs. Commissioner of Income Tax, which emphasized the need to provide an opportunity to rebut documents relied upon by the authorities.

9. Request for remand for further verification:
The petitioner requested that the matter be remanded to the Commissioner, IT, for further verification of the alleged payments from M/s HES Infra Pvt. Ltd. The petitioner relied on the decision of the Apex Court in Sajan Kumar Bhawsinka Vs. Commissioner of Income Tax, which supported the plea for remand for proper inquiry.

Conclusion:
The Court found that the petitioner failed to maintain and audit books of accounts and did not disclose income from the other two concerns. The assessing officer conducted inquiries, and the three companies confirmed the payments. The revisional authority relied on the 26AS statement and TDS certificates, and the petitioner did not provide any contrary evidence. The Court dismissed the petition, finding no grounds for interference in the revisional order.