2020 (7) TMI 598 - AT - Income Tax

Difference in receipt shown in the Profit Loss account and as per TDS certificate - receipt of labour charges - HELD THAT - On verification of the TDS certificate in Form no.16A, by Unity Infra Projects Ltd., learned Commissioner (Appeals) has also recorded a finding of fact that such certificate shows labour charges. As rightly observed by Commissioner (Appeals), AO has not made any in depth enquiry to ascertain the correctness of assessee s claim regarding the receipt of labour charges. By simply issuing a notice under section 133(6) of the Act to Unity Infra Projects Ltd., the AO has finished his part of the job without pursuing the concerned party any further even after not receiving any reply. Thus, the facts on record clearly show lack of proper enquiry by the Assessing Officer. It is a well settled legal principle that without making proper enquiry and bringing contrary material on record to falsify assessee s claim, the AO cannot make addition purely on conjecture and surmises. Addition u/s 69 - HELD THAT - As found by learned Commissioner (Appeals) that the payments were made from the current account standing in the name of Rounaq Construction, a proprietary concern of the assessee. As established from the facts on record that the investments in house property were out of business income of the assessee. To substantiate such claim, copy of bank statements was also furnished by the assessee. The aforesaid factual finding of the Commissioner (Appeals) remains uncontroverted before us - as established on record that source of investment in house property has been properly explained by the assessee. That being the case, the addition made has been rightly deleted by learned Commissioner (Appeals). This ground is dismissed. Addition of sundry creditors - HELD THAT - AO does not dispute the fact that the assessee has received quite substantial amount from Unity Infra Projects Ltd. towards labour charges, whereas, on the other hand, he disbelieves the expenditure incurred by the assessee towards labour charges. This, is completely unreasonable and illogical. When the work entrusted to the assessee is labour intensive and the assessee has shown receipt towards labour charges, it has to be accepted that the assessee must have incurred quite substantial amount towards labour charges. AO has not made any in-depth enquiry except making certain general queries with regard to the labour charges. In these circumstances, the addition made purely on conjecture and surmises cannot be sustained. We are inclined to agree with the conclusion reached by the learned Commissioner (Appeals). As regards the contention of the Departmental Representative that the assessee has furnished various evidences before learned Commissioner (Appeals) which were not submitted before the Assessing Officer, hence, the provision of rule 46A has been violated, we are unable to accept it. Firstly, the Revenue has not raised any specific ground challenging violation of rule 46A; secondly, the Revenue has failed to point out as to what is the fresh evidence filed before learned Commissioner (Appeals) which was not available before the Assessing Officer.

Issues Involved:
1. Deletion of addition due to the difference in receipt as per TDS certificate and Profit & Loss account.
2. Deletion of addition made under section 69 of the Act for unexplained investment in house property.
3. Deletion of addition on account of unexplained sundry creditors.

Issue-wise Detailed Analysis:

1. Deletion of Addition Due to Difference in Receipt as per TDS Certificate and Profit & Loss Account:
The Revenue challenged the deletion of ?17,59,509 added by the Assessing Officer due to a discrepancy between the receipts shown in the Profit & Loss account and the TDS certificate. The Assessing Officer noted that the assessee received ?3,52,36,706 from Unity Infra Projects Ltd. but reported ?3,34,77,197 in the Profit & Loss account. The Commissioner (Appeals) deleted the addition after verifying that the total bill raised was ?3,43,21,350, including service tax of ?8,44,153. The Commissioner found that the assessee correctly accounted for ?3,34,77,197 in the Profit & Loss account and showed the service tax payable under current liabilities. The Tribunal upheld the Commissioner’s decision, noting the lack of proper enquiry by the Assessing Officer and dismissing the ground raised by the Revenue.

2. Deletion of Addition Made Under Section 69 for Unexplained Investment in House Property:
The Revenue contested the deletion of ?10,89,000 added under section 69 for unexplained investment in house property. The Assessing Officer alleged that the assessee could not explain the source of investment. However, the Commissioner (Appeals) found that the property was purchased for ?8,00,000, with the remaining amount being for stamp duty purposes. The investment was made through a demand draft and cash payment from the assessee's business income, supported by bank statements. The Tribunal agreed with the Commissioner’s findings that the source of investment was properly explained and dismissed the Revenue's ground.

3. Deletion of Addition on Account of Unexplained Sundry Creditors:
The Revenue challenged the deletion of ?2,15,92,724 added as unexplained sundry creditors. The Assessing Officer questioned the genuineness of sundry creditors, particularly labour charges. The Commissioner (Appeals) found that the assessee, a labour contractor, had received ?3,34,77,197 from Unity Infra Projects Ltd. and incurred substantial labour expenses. The Commissioner noted that the outstanding labour charges were genuine, considering the nature of the business and the dispute between the assessee and Unity Infra Projects Ltd. The Tribunal upheld the Commissioner’s decision, emphasizing that the Assessing Officer’s addition was based on conjecture and lacked proper enquiry. The Tribunal also dismissed the Revenue's contention of rule 46A violation, as no specific ground was raised, and no fresh evidence was pointed out.

Procedural Issue on Pronouncement of the Order:
The Tribunal addressed the delay in pronouncing the order due to the COVID-19 lockdown, referencing the decision in DCIT V/s JSW Limited, which allowed the exclusion of lockdown periods from the 90-day limit for pronouncement. The Tribunal pronounced the order on 13th June 2020, considering the extraordinary circumstances.

Conclusion:
The Tribunal dismissed the Revenue’s appeal, upholding the Commissioner (Appeals)’s decisions on all contested additions.

← Previous Next →