2018 (6) TMI 891 - AT - Income Tax

Additions u/s 69 - understatement of contractual receipts - undisclosed investments - Held that - AO had treated the contractual amount as one having no material component whereas the assessee had claimed that ₹ 44,16,544/- was material component in the bill raised against the said contractee - AO had not given any finding as to why he had treated the whole contractual amount as having no material component inspite of the assessee s said claim before him - CIT(A) observed that the identical question arose in the AY 2012-13 in assessee s own case and since the same contract was executed in the current year for the same contractee, and that there is no other contract having been executed by the assessee, he followed the view taken by him in the AY 2012-13 and granted relief to the assessee - no infirmity in the order passed by the ld CIT(A) - thus the grounds raised by the revenue are dismissed.

Summary

Issues:
1. Justification of deleting addition made under section 69 for understatement of contractual receipts.

Analysis:
The appeal pertains to the deletion of an addition of ?47,36,821 made under section 69 of the Income Tax Act for understatement of contractual receipts. The Assessing Officer (AO) observed that the assessee had disclosed only a portion of the contractual receipts, leading to the addition. The Commissioner of Income Tax Appeals (CITA) found that the AO had not considered the material component claimed by the assessee in the bill raised against the contractee. The CITA referred to a previous year's decision where a similar issue was resolved in favor of the assessee. The Tribunal upheld the CITA's decision, emphasizing that the AO had not provided sufficient reasoning for treating the entire contract amount as one for services only.

The Tribunal analyzed the agreement between the parties, which mandated the supply of materials and labor by the assessee. The Tribunal found that the AO's conclusion was incorrect as the assessee had indeed supplied materials, as evidenced by the details submitted. The Tribunal dismissed the revenue's appeal, stating that there was no evidence to support the addition made under section 69 for undisclosed investment. The Tribunal upheld the CITA's order based on the facts and evidence presented.

In conclusion, the Tribunal dismissed the revenue's appeal, citing the lack of evidence to support the additions made under section 69. The decision was based on a thorough analysis of the contractual terms, material supplies, and supporting documentation provided by the assessee. The Tribunal's decision aligned with previous rulings in the assessee's favor and emphasized the importance of considering all relevant facts and evidence in such cases.