9911796707
TMI Blog2024 (11) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 (6) TMI 1076 - SC ORDER] wherein quashed the assessment order on the ground that the jurisdiction to issue notice u/s 143(2) of the Act in case of assessee laid with JCIT (OSD) (Exemption), Bhubaneswar, whereas the notice u/s 143(2) of the Act was issued by the ACIT, Corporate Circle 1(2), Bhubaneswar, who has no jurisdiction but SC set aside the order of the Hon ble High Court and allowed the appeal filed by the Revenue on the ground that the records revealed that the assessee had participated pursuant to the notice issued u/s 142(1) of the Act and had not questioned the jurisdiction of the Assessing Officer and therefore, in such case, the order of the Hon ble High Court could not be sustained. Since the assessee in the instant case had participated in the assessment proceedings and had never challenged the jurisdiction of the ACIT, Panvel Circle who had issued the notice u/s 142(1) of the Act, therefore, we hold that the assessment order passed by the ACIT, Panvel Circle is valid. Bogus expenses - details provided by the assessee are not sufficient to verify the genuineness of the expenses claimed, the assessee has not provided the complete addresses of the parties to carry ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransferred to the ACIT, Circle-1, Panvel since the jurisdiction over the case vests with him. Due to change in the incumbent and in order to complete the proceedings, a notice u/s 142(1) of the Act was issued to the assessee on 07.11.2019. 3. During the course of assessment proceedings the Assessing Officer noted that the assessee has shown gross receipts of Rs. 10,97,01,606/- from its contract work on which profit of Rs. 99,88,362/- was declared. The assessee has claimed expenses of Rs. 8,45,92,754/- on account of labour charges and material expenses which is almost 78% of the gross receipts. Since the case was selected to verify the contract expenses, the Assessing Officer asked for the details. The assessee submitted the list of payments made for wall painting charges of Rs. 6,35,81,436/- and payments made for labour charges amounting to Rs. 1,84,25,720/- along with the copies of bills in respect of wall painting charges. The Assessing Officer thereafter asked the assessee to furnish the following details in respect of painting charges: 1. Complete Postal address, contact nos. PAN and email ids of the vendors who executed the wall painting jobs. 2. Details of the TDS made with s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer accordingly determined the total income of the assessee at Rs. 3,05,33,900/-. 6. Before the CIT(A) / NFAC, the assessee made elaborate submissions. It was submitted that the contract expenses incurred by the assessee are in the nature of sub-contract expenses for wall painting and incidental labour charges. Since the jobs undertaken by the assessee are in remote locations across the country, the parties / sub-contractors hired by the assessee are local labourers who did not submit proper bills and vouchers for the work done. The assessee filed the works undertaken by it in the states of Maharashtra, Madhya Pradesh, Uttar Pradesh, Odisha, Bihar, Tamil Nadu, West Bengal, Karnataka, Andhra Pradesh, etc. It was submitted that the payments were made in the normal course of business through proper banking channel either by account payee cheque or RTGS. Relying on various decisions, it was argued that the Assessing Officer was not justified in making addition of 25% of the contract expenses and the labour charges as bogus expenses. 7. Based on the arguments advanced by the assessee, the Ld. CIT(A) / NFAC deleted the addition by observing as under: 8.0 The submissions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untry. Thus, the basic nature of business is contractual in nature. The contract expenses incurred have been duly reflected in the books of accounts of the Appellant. Moreover, all the payments for the said purchases have been made through normal banking channels ie either by way of account payee cheques or through Real Time Gross Settlement RTGS. Thus, the genuineness of the purchases has been proved by corroborated by way of invoices and bank payments. The case laws relied by the appellant are found to be applicable to the facts of the case in hand and supports the appellants case. 8.3 Considering the fact that, the A.O has not brought on record any defect in the books of accounts maintained by the appellant, the books of accounts have not been rejected before estimating the disallowances, the payments in respect of expenses disallowed are made through banking channels, nothing is brought on record to illustrate and no such finding is made that the payments made through banking channels are not legitimate or self-withdrawals have been made by the appellant after making such payments, which is routed back to the appellant, the net profit declared is around 9%, which is quite reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. 10. Referring to the above ground, Ld. Counsel for the assessee submitted that the assessee is a respondent in the matter against the appeal filed by the Revenue. He submitted that the assessment order dated 16.12.2019 passed by the ACIT, Panvel Circle was the subject matter of challenge before the CIT(A) / NFAC. The CIT(A) / NFAC had allowed the appeal filed by the assessee wherein the disallowance made by the Assessing Officer was deleted. He submitted that the assessee through this legal ground filed as per rule 27 of the Income Tax (Appellate Tribunal) Rules would like to submit that the assessment order passed by the Assessing Officer is not valid since the notice u/s 143(2) of the Act was issued by the ITO, Ward-2, Panvel whereas the said notice u/s 143(2) of the Act should have been issued by the Assessing Officer who has the jurisdiction over the assessee. Since the Assessing Officer having jurisdiction over the assessee has not issued the notice u/s 143(2) of the Act, therefore, such order passed by the ACIT, Panvel Circle becomes a nullity. For the above proposition, the Ld. Counsel for the assessee relied on the following decisions: i) Ashok Devichand Jain vs. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hannel, deducted TDS from the said payments and those persons have done the work as per the specifications of the assessee. The assessee has no control over those to whom the payments have been made regarding filing of their tax returns. He submitted that since the CIT(A) / NFAC has passed a detailed order giving the reasons while deleting the disallowance made by the Assessing Officer, the same should be upheld and the grounds raised by the Revenue should be dismissed. 14. The Ld. DR on the other hand strongly challenged the order of the CIT(A) / NFAC as well as the ground raised by the assessee as per Rule 27 of the Rules. He submitted that the assessee filed return with ITO, Ward 2, Panvel though the jurisdiction as per first letter of the assessee s name i.e. O was with another officer i.e. ITO, Ward -5, Panvel. As per the monetary limit of income returned, the jurisdiction was with the ACIT, Circle Panvel. Since the ITO, Ward 2, Panvel had issued the notice u/s 143(2) of the Act as the PAN and the return of income was with the said charge, however, on noticing the monetary limit, he transferred the file to the ACIT, Panvel Circle and subsequently, the ACIT, Panvel Circle passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pated in the assessment proceedings pursuant to the notice issued u/s 142(1) and not questioned the jurisdiction of the Assessing Officer. Accordingly the Hon ble Apex Court reversed the view of the High Court and held that the assessee cannot challenge the jurisdiction of the Assessing Officer since he had participated in the assessment proceedings after receipt of notice u/s 142(1) and had not challenged the jurisdiction of the Assessing Officer within 30 days as per the provisions of sub-section (3) of section 124. He submitted that the ratio of the decision of the Hon'ble Supreme Court in the case of DCIT vs. Kalinga Institute of Industrial Technology (supra) squarely applies to the facts of the present case especially when the assessee had participated in the assessment proceedings pursuant to the notice u/s 142(1) of the Act by the ACIT, Panvel Circle and has never questioned the jurisdiction of the Assessing Officer either before the Assessing Officer or the CIT(A) / NFAC. He also relied on the following decisions: a) Abhishek Jain vs. ITO 405 ITR 1 (Del) b) Arun Kumar Muchhala vs. CIT 399 ITR 256 (Bom) c) Shivaaditya Jems and Jewellery (P) Ltd. vs. ITO (2022) 143 taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice was duly served on the assessee through speed post as well as through email. The assessee was specifically asked to respond through e-proceeding only. In response, the assessee submitted its response vide letter dated 28.08.2018 through RPAD (received on 04.10.2018) along with list of Contract Expenses incurred along with the copies of bills. The details submitted were duly examined and taken on record. Later on, the case was received on transferred to this charge as the jurisdiction over the case vests with this charge. Accordingly, due to change in incumbent and in order to complete the proceedings, a notice u/s 142(1) of the Act was issued to the assessee on 07.11.2019. 19. It is also an admitted fact that the assessee never challenged the jurisdiction of the ACIT, Panvel Circle for not issuing notice u/s 143(2) either before him or before the CIT(A) / NFAC and has participated in such assessment proceedings. The provisions of section 124(3)(a) and 124(4) of the Act read as under: 124(1) .. .. (3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer (a) where he has made a return under sub-section (1) of section 115WD or under sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The impugned order set asides the assessment for AY 2014-2015 on the ground that the jurisdictional officer had not adjudicated upon the returns. The jurisdiction had been changed after the returns were filed. However, the records also reveals that the assessee had participated pursuant to the notice issued under Section 142 (1) and had not questioned the jurisdiction of the assessing officer. Section 124(3)(a) of the Income Tax Act precludes the assessee from questioning the jurisdiction of the assessing officer, if he does not do so within 30 days of receipt of notice under Section 142 (1). 2. In the present case, the facts did not warrant the order made by the High Court. At the same time, this Court notices that the High Court had granted liberty to the concerned authority to issue appropriate notice. 3. It is clarified, therefore, that the assessing officer is free to complete the assessment (in case the assessment order has not been issued) within the next 60 days. In such event, the question of limitation shall not be raised by the assessee. 4. The special leave petition is allowed in the above terms. 5. Pending application, if any, are disposed of. 21. Since the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as undertaken wall painting jobs at different locations across the country, contract expenses incurred have been duly reflected in the books of accounts of the assessee, all the payments have been made through normal banking channels, genuineness of the purchases have been corroborated by way of invoices and bank payments, net profit declared by the assessee at 9% is quite reasonable in line of the assessee s business and that there are no self-withdrawals made by the assessee after making such payments which is routed back to the assessee, etc. Although we agree with the order of the CIT(A) / NFAC to some extent that the payments have been made through normal banking channel and the other parties have raised bills and the Assessing Officer has not pointed out any defect in the books of account, however, at the same time, it is also a fact that the assessee had not given the complete details i.e. complete addresses of the parties to whom the payments have been made and there are same PAN numbers for different parties. Para 23 of the written submission filed by the assessee before the Tribunal reads as under: 23. From a perusal of the above table, the Appellant did not apply his min ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
