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TMI Blog2023 (3) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the decision be made merely based on some information on which there is no basis discussed or confronted to the assessee. Allegation of work that is disputed by the revenue considering that the same are bogus in nature cannot be considered so because the assessee has demonstrated before us with the work order issued by M/s. Dineshchandra R. Agarwal Infracon Private Limited wherein the address of the work is mentioned as Painting Runway Airfoce Station, Nal Site Bikaner and work at Runway resurfacing project AT Nal AF station Bikaner . Both these work were required to be carried out at the Nation pride military organization and the entry and attention are strictly monitored and therefore, there is no reason to be believe that though M/s. Dineshchandra R. Agarwal Infracon Private Limited may be indulged in booking for some bogus expenditure but in this case the primary material does not suggest so and in spite of the relevant material placed by the assessee the revenue did not prove that the work has not been carried out - allegation made by the revenue is general in nature and the addition of the whole of the receipt is not warranted. No hesitation to vacate the addition made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t documents as relied upon by the Id. AO for making addition in the hands of the assessee. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of case. Relief may please be granted by deleting the entire such addition made by the Id. AO and confirmed by the Id. CIT(A). The assessee craves his rights to add, amend or alter any of the grounds on or before the hearing." 3. The fact as culled out from the records is that notice was issued in this case u/s. 148 of the Act. On 28.03.2018 after recording the reason for reopening the case & getting necessary approval by the Pr. Commissioner of Income Tax-1, Jaipur, which was duly served upon the assessee through speed post on 29.03.2018. In compliance, the assessee filed e-ROI on dated 16.04.2018 declaring return income of Rs. 9,38,400/-. During proceedings, assessee asked the reasons for reopening the case and the same were provided. During assessment proceedings, notice issued u/s 143(2) for fixing the case and notice issued u/s 142(1) for query mentioned therein. In compliance assessee filed, necessary details/information required during the course of assessment proceedings. During the assessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant. The appellant has only reiterated the documents submitted before the AO, which also find mention in the assessment order. So, the appellant has not brought anything new on record. The main issue is that the appellant was not able to furnish any that the app evidence of the expenses incurred for the work actually executed by him for M/s. Dineshchandra R. Agarwal Infracon Pvt. Ltd. If the appellant has received the work order, raised invoice and received payment, then surely, he would have some evidence in his possession to demonstrate the actual execution of the work of sub- contract. The appellant neither furnished any such evidence before the AO nor did he produce the same during the course of appellate proceedings. In the absence of the same, it clearly shows that no real job work was carried out by the appellant and he received the impugned amount from M/s. Dineshchandra R. Agarwal Infracon Pvt. Ltd. as a bogus sub-contractor to that extent. In view of the same, the action of the AO in treating the receipts from M/s. Dineshchandra R. Agarwal InfraconPvt. Ltd. to the extent of Rs. 18,43,234/- as Income from other sources, is upheld. Ground Nos. 3 & 4 are Dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch. GROUND NO. 1 REOPENING UNDER SECTION 148 1. SUBMISSIONS 1.1. Apropos the aspects of reopening, ld. AO completely relied on the so called information received from the Joint Commissioner of Income Tax (OSD) Central Circle - (2) (1), Ahmedabad. 1.2. In formation of belief qua assessee's involvement in giving bogus invoices, ld AO did not have access to the search inquiries, documents statements recorded from DRPL, on the date of search. As a result, no copy of such documents/statements was provided by the ld AO, during the course of reassessment proceedings. Thus, in such formation of belief, ld AO did not analyse the contents of the documents seized/statements made by DRPL, which could prove the involvement of the assessee in any manner. 1.3. Further, reasons recorded by the ld. AO were silent whether the group was examined to establish the reasonableness of the allegation. Similarly, whether addition for the same in their hands was made or not was not discernible from the reasons recorded. 1.4. Conclusion with regard to all the facets of the alleged bogus invoices was drawn by the ld. AO, only on the basis of the information received. Ld. AO, on his own, nowhere trie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut any independent enquiry, of even the minutest order. 1.11. It is for this reason that, in the below mentioned judicial pronouncements, Hon'ble Delhi High Court has held that Information received from the Investigation Wing cannot per se be considered to be a tangible material for warranting reopening:- 1.11.i SFIL Stock Broking Ltd. [2010] 325 ITR 285 (Delhi) 1.11.ii Insecticides (India) Ltd. [2013] 357 ITR 330 (Delhi) 1.11.iii Krown Agro Foods (P.) Ltd. [2015] 375 ITR 460 (Delhi) 1.12. Thus, what was required and expected, as per the settled principles of reopening, was corroboration, checking and cross checking of the information, received from the Investigation Wing, with independent evidences and establishing a clear trail suggesting, even if prima facie, issuing of bogus invoices from the assessee. However, as against that, reopening has been done by directly considering the information received from the Investigation Wing by considering it to be sacrosanct. 1.13. This is nothing but a case of "BORROWED SATISFACTION" which renders the entire proceedings of reopening to be illegal and voidab- initio. 1.14. Hon'ble Delhi High Court in case of RMG Polyvinyl (I)B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is void. Also, if the reasons refer to any document, a copy should be provided to the assessee. Failure to do so results in breach of natural justice and renders the reopening void. 1.19. It is submitted that the sole basis, emerging out of the reasons recorded, of reopening the case of the assessee was the incriminating documents found during the course of search on DRPL. 1.20. Reassessment pursuant to material found in search can be done through recourse to Section 153C only and not by invoking the provisions of section 147/148. The provisions of section 153C are over-riding in nature and contain non obstante clause for sections 139,147,148,149,151 and 153. 1.21. Section 147 and 153C are not interchangeable but are mutually exclusive sections. It is not the choice of the revenue to invoke either of the two sections at its whims. The scope of the two sections has been legislated differently with a definitive purpose. 1.22. For the above ratio, reliance is placed on the following judicial pronouncements:- 1.22.i Arun Kumar Kapoor [2011] 140 TTJ 249 (Amritsar) 1.22.ii G. Koteswara Rao [2015] 64 taxmann.com 159 (Visakhapatna - Trib. 1.22.iii Rajat Shubra Chatterji, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the business of taking Job work of Road Marking and painting of pavements/roads/runways etc. on work contract basis under the name of style of M/s Rajshree Construction Co., since May 2009. 1.2. During the year under consideration, assessee received work of painting of runway at Airforce Station, Nal site Bikaner from DRPL. In this regard, below mentioned documents were submitted to the lower authorities:- 1.2.i Copy of Work order Copy from DRPL [PB : 13-14] 1.2.ii Copy of Invoices of raised on DRAIPL [PB : 15-16] 1.2.iii Copy of Ledger account of DRPL [PB : 17-18] 1.2.iv Copy of Bank Statement indicating payment received from DRPL. [PB : 19-31] 1.3. Assessee has been regularly involved in carrying out job work, in the construction sector, for various large entities. The same is evident from Form 26AS of the assessee for the year under consideration. Summary of the receipts and the TDS deducted, for the year under consideration are as under [PB: 32-33]:- S.No. Name of Deductor Amount Credited (In Rs.) TDS Deducted (In Rs.) 1 Dineshchandra R Agarwal Infracon Pvt Ltd 10,10,101 10,101 2 Ultratech Cement Limited 74,287 743 3 B.R. Goyal Infrastructure Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. 1.9. Without prejudice to the submission made above, if the assessee is considered to have entered into a bogus transaction, then also the entire receipts cannot be taxed. Element of income, even in case of bogus transactions is not more than 2-5%. Whereas, in the present case, the assessee has already offered 8% of the receipts for tax. Accordingly, no further addition should be made to the assessee. In view of the above, additions made by ld. AO and confirmed by the ld. CIT(A) to the income of the assessee deserves to be deleted in to-to. 6. In addition to the above written submission the ld. AR of the assessee also filed a paper book containing following set of evidences: S. No. Particulars Page No. 1 Copy of the Income Tax Return filed by the assessee for the relevant previous year. 1-3 2 Copy of the reasons recorded by the ld. AO for reopening the case of the assessee, for the relevant previous year. 4-7 3 Copy of the reply, dated 10.08.2018, filed by the assessee before the ld. AO 8-10 4 Copy of the reply, dated 16.11.2018, filed by the assessee before the ld. AO 11-12 5 Copy of work order received by the assessee from Dineshchand A Agarw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontractor 8 % of profit declared is reasonable. 8. The ld DR is heard who has relied on the findings of the lower authorities and submitted that the main reason to reopen the case of the assessee was that the assessee has worked for M/s. Dineshchandra R. Agarwal Infracon Private Limited, whose business premises were searched by the revenue and found that main contractor has debited certain expenses as sub-contractor and has thus inflated the expenditure and the assessee has undertaken the work of sub-contractor of these DRA group. Thus, based on that she relied upon the findings of the lower authorities but at the same time not objected to the alternative argument of the ld. AR of the assessee that in such case whole amount cannot be added as income. 9. We have considered the rival contention and perused the orders of the lower authorities and the material available on record arguments advanced by both the parties and gone through the judicial decision relied upon to drive home to the contentions so raised before us. The bench noted the apple of discord is the receipt of contract amount of Rs. 20,03,515/- from M/s. Dineshchandra R. Agarwal Infracon Private Limited whose business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned as "Painting Runway Airfoce Station, Nal Site Bikaner" and work at "Runway resurfacing project AT Nal AF station Bikaner". Both these work were required to be carried out at the Nation pride military organization and the entry and attention are strictly monitored and therefore, there is no reason to be believe that though M/s. Dineshchandra R. Agarwal Infracon Private Limited may be indulged in booking for some bogus expenditure but in this case the primary material does not suggest so and in spite of the relevant material placed by the assessee the revenue did not prove that the work has not been carried out. Based on these observation we are of the considered view that the allegation made by the revenue is general in nature and the addition of the whole of the receipt is not warranted. As regards the alternative petition of estimating the profit the ld. AR of the assessee based on the decision of the Hon'ble Rajasthan High Court in the case of Khokhar Construction Co. 34 Taxmann.com 180 wherein the Hon'ble court dismissed the appeal of the department by holding that in case of civil contractor 8 % of profit declared is reasonable. Respectfully, following the finding of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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