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2024 (6) TMI 1276 - AT - Income TaxIssues Involved: 1. Deletion of addition made under excess receipts from contract works. 2. Deletion of addition towards Short Term Capital Gains (STCG). Issue-wise Detailed Analysis: 1. Deletion of Addition Made Under Excess Receipts from Contract Works: The Revenue filed an appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which deleted the addition of Rs. 116,04,55,413/- made under section 68 of the Income Tax Act, 1961. The Assessing Officer (AO) had made this addition on the grounds that the assessee had shown excess receipts from contract works. The AO contended that the assessee had only incurred direct construction expenses of Rs. 14,65,65,865/- and had not satisfactorily explained the remaining amount. The AO treated the excess receipts as unexplained cash credits under section 68. During the appellate proceedings, the assessee provided detailed explanations and additional evidence, including segment-wise allocation of total expenditure, work orders, TDS details, and bank statements. The CIT(A) concluded that the identity, creditworthiness, and genuineness of the transactions with M/s. Megha Engineering & Infrastructures Ltd. (MEIL) were established. The CIT(A) found that the AO's invocation of section 68 was harsh and incorrect, as the receipts were confirmed by the parties involved and adequately documented. The CIT(A) also noted that there was no basis to presume unexplained expenditure under section 69C, as the segment-wise breakup of expenses provided by the assessee was not doubted by the AO. However, upon further appeal, the Tribunal found discrepancies in the expenditure details provided by the assessee before the AO and the CIT(A). The Tribunal observed that the CIT(A) had not thoroughly examined the details and had wrongly accepted the expenditure claimed by the assessee. The Tribunal noted that the huge profit margin claimed by the assessee was beyond human comprehension and required thorough verification. The Tribunal remanded the matter back to the AO for fresh examination, directing the AO to verify the details with the assistance of state government development agencies and other statutory enforcement agencies to ensure the funds meant for development were not diverted. 2. Deletion of Addition Towards Short Term Capital Gains (STCG): The Revenue also contested the deletion of the addition towards STCG. The AO had questioned the value of shares sold by the assessee at a meager price of Rs.10/-, suspecting it to be a means to bring unaccounted money into the books. The CIT(A) had deleted this addition as well, but the Tribunal decided to remand this issue back to the AO to maintain consistency with the remand of the first issue. Both parties did not substantiate their claims with written submissions during the Tribunal proceedings. Conclusion: The Tribunal allowed the Revenue's appeal for statistical purposes, remanding the issues back to the AO for fresh examination and verification. The Tribunal emphasized the need for thorough scrutiny of the expenditure claims and the genuineness of the transactions to ensure that the funds meant for development were not misused. The order pronounced on 22nd February 2024 directed the AO to decide the matter in accordance with the law after granting due opportunity of hearing to the assessee.
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