TMI Blog2023 (7) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Anil Aggarwal who is an alleged Entry Operator controlling the four tainted entities. The Statements are part of the assessment order itself and Ld. Counsel in the presence of ld. DR was able to canvass that in none of the statements no specific statement is made by these persons qua the assessee which may indicate that they were involved in showing bogus job work towards assessee. - There was no direct transaction of the assessee with the four tainted companies operated by Shri Anil Aggarwal. It can be appreciated that primarily on the basis of statements alone and no other corroborative evidence the Ld. AO has drawn the inferences without giving assessee an opportunity to cross examine the said persons, - In assessment order Ld. AO mentions notices issued to these four tainted companies were received unserved, then the onus was on the Ld. AO to have certainly give opportunity to cross examine Shri Anil Aggarwal, who was allegedly operating these tainted companies. The Bench is of considered view that AO had fallen in error in invoking the jurisdiction u/s 147/148 of the Act and otherwise the addition is not sustainable too - Decided in favour of assessee. - ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the assessee as on 31.03.2010 with regard to an amount of Rs. 27.55 crores incurred under the head job work charges (civil and others). On the basis of replies to the queries raised, the ld. AO issued show cause notice to the assessee that why the sum of Rs. 5.81 Cr. spent on job work for leveling of agricultural land for which the assessee company entered into an agreement with M/s. Dingle Buildcon Pvt. Ltd. and which was subsequently sub contracted to the alleged bogus entity controlled by Shri Anil Agarwal should not be disallowed and added to total income of assessee company. The assessee company claimed that it has no connection with the four sub contractors and assessee has not made any payment to these four sub contractors and that no expenditure is claimed on account of any payment to these four persons. It was also submitted that amount of Rs. 5,81,02,040/- against three bills of Dingle Buildcon Pvt. Ltd. has not been claimed as an expenditure. Since it is part of work in progress as evident from schedule 6 to balance sheet. Opportunity was also sought to cross examine Dingle Buildcon Pvt. Ltd. s Director Sh. Anil Agarwal. 2.3 Ld. AO observed that assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished before me. The appellant has not even submitted the area of land on which job work executed, nature of work, rate, how the amount of Rs. 5.81 crore has been arrived at, date when work was commenced, date on which the same was completed, details about material received at site, details of labour engaged at site by the Job worker, bill raised by the Job worker etc. 4. The assessee is in appeal raising following grounds; 1. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that action u/s 147/148 has been legally taken. 2. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that initiation of re assessment proceedings was fair and legal. 3. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in dismissing the ground of appeal of the assessee that action u/s 147/148 was legally incorrect in as much as there was no mention of any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Hence 147 action is illegal and without any juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject matter of appeal and thus as per 3rd proviso to section 147 such matter could not be taken into for the purpose of the reopening as held in the case of Metro Auto Corporation vs. ITO Ors., (2006) 286 ITR 618 (Bom). ii. There was no income which was chargeable to tax in the instant case as the above orders would show that the expenses were part of closing Work In Progress and in this year there was no income resulting. iii. It has been mentioned in the reason recorded (PB 29-31) that Mr. J L Kesarwani, director of the M/s Dingle Buildcon Pvt. Ltd. and Sh. Pankaj Jain, G.M. (marketing administration) of KWorld group has admitted that the above expenditure in respect of such work was bogus and that contract received M/s Tele Tower was also bogus. Page 13-15 of the assessment order reproduces the statement of Mr. J L Kesarwani wherein there is no such admission as alleged. (iv) There was no tangible fresh material with Ld. AO having live nexus to the belief that income chargeable to tax has escaped assessment. All that was available was some information from Ld. DDIT(Inv.), Unit V(2), New Delhi wherein allegation has been made that 4 entities namely, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and deserves to be quashed on this ground alone. He also refered to PB 48-49 is the copy of assessee s reply dated 21.12.2017 filed before Ld. AO submitting that there was no failure on part of assessee to disclose all material facts and further submitting that there is no specific allegation made in the reasons recorded as to what material facts has not been disclosed by assessee fully truly and PB 51-63 is the copy of written submissions filed before Ld. CIT(A) submitting that reasons do not provide as to what are the facts which have not been disclosed by assessee. 6.1 Further reliance was placed on the following judicial decisions for the propositioin that such reasons based on incorrect fact cannot lead to valid reason and to the belief that income has escaped assessment: Dr. Ajit Gupta vs. ACIT, (2016) 383 ITR 361 (Del). Shipra Srivastava Anr vs. ACIT, (2009) 319 ITR 221 (Del). Mumtaz Haji Mohmad Memon vs. ITO, (2018) 408 ITR 268, (Guj). Vijay Harishchandra Patel vs. ITO, (2018) 400 ITR 167(Guj). Reckitt Benckiser Healthcare India Ltd. vs. ACIT, (2014) 360 ITR 427(Guj). Balkrishna Hiralal Wani vs. ITO (2010) 321 ITR 519 (Bom). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s 37(1). PB 67-69 is the copy of assessment order passed u/s 143(3) for the impugned year wherein the said expenses has been duly accepted as is evident from the fact that no disallowance has been made qua this issue. 2. That the said expenses of Rs. 5,81,02,040/- has been shown by assessee in its closing stock as work in process. Therefore, firstly it has been debited in the Profit and loss account under the head Job Work Charges as an expense, thereafter, as a result of it being a part of closing stock, a credit of same amount has been given in the profit and loss account. Therefore, there was no impact on profit and in turn there was no impact on tax liability. The above facts are made evident from the following evidences: PB 4-27 is the copy of audited financial statement of Assessee Company wherein PB 20 r.w PB 16 is the schedule of Manufacturing/Direct Expenses (Schedule 12 of P/L account) wherein the said amount has been claimed as expense under the sub head Job work Charges (Civil Other) which is evident from the ledger account of Job work Charges (Civil Other) which is acknowledged by Ld. CIT(A) at in para 5 at page 7 of the appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: 1. Ld. AO in para 2 at page 1 of the assessment order has mentioned that Ld. AO received an information from Ld. DDIT(inv.), Unit-V(2), New Delhi about some search and seizure operation on one, K World Group and based upon this information Ld. AO has built his entire case. In reply, it is respectfully submitted that the said information does not relate to assessee and also has not been provided to assessee and therefore cannot be relied upon by Ld. AO in view of the decision of Hon ble Apex court in the case of Andaman Timber Industries vs. CCE 62 taxmane.com 3 (SC) and Kishinchand Chellaram vs. CIT 125 ITR 713 (SC) wherein their lordship have held that any information which has not been provided/confronted to assessee cannot be taken into consideration. 2. Ld. AO in para 6 at page 2 of the assessment order Ld. AO again has made reference to the information from investigation wing and further alleges that the contract awarded by assessee to M/s Dingle Buildcon Pvt. Ltd. was further subcontracted by it to 4 entities namely, M/s Seven Heaven Infrabuild, M/s. Rachaita Buildcon Pvt. Ltd., M/s Ellora Buildtech Pvt. Ltd. and M/s Anubhav Buildmart Pvt. Ltd. al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT 125 ITR 713 (SC) the said statement cannot be taken into consideration. 5. As far as the financials of these companies are concerned, it is submitted that these are not relevant to case of assessee as assessee has not undertaken any transaction with these companies. 6. PB 48-49 is the copy of reply dated 21.12.2017 filed before Ld. AO requesting to provide opportunity to cross examine the said person and further submitting that assessee has no connection or relation whatsoever with all these four entities. 7. Ld. AO in para 9(i)-9(ii) at page 4 of the assessment order has mentioned that the director of M/s Dingle Buildcon Pvt. Ltd., namely, SH. JL Kesarwani has admitted that the works contract given by assessee is bogus and reproduced the statement of Sh. JL Kesarwani and Sh. Pankaj Jain, GM of assessee company was reproduced at page 13-18 and 19-26 of the assessment order respectively and the same has been repeated by Ld. AO in para (xv) at page 32 of the assessment order. In reply, it is submitted that this observation of Ld. AO in incorrect at the face of it as the plain reading of these statements would show that no such admission has been mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings u/s 143(3) of the Act, for the relevant A.Y. 2010-11, the Ld. AO had examined the issue of receipt of Rs. 7,90,81,632/- from M/s Indu Project Limited which assessee had claimed was received against the work order dated 11.08.2009, regarding development of SEZ land as mobility advance. This amount given by M/s. Indu Projects Ltd. to the assessee company was considered by Ld. AO as the undisclosed revenue receipt, however, Ld. CIT(A) had sustained the claim of assessee that the amount were shown as advance in the books of account and as for the work contract the assessee had made certain expenses and these were shown as work in progress since the work was not complete. No expense and revenue was recognized on accounts of this advance as per books of accounts. The Tribunal had also sustained the order of Ld. CIT(A) where it was appreciated that assessee declared profit on these advances in assessment year 2011-12. 9. Now here in this case the claim of assessee is that the payments of Rs. 5.81 which were made to M/s. Dingle Buildcon Pvt. Ltd. was part of execution of work order received from M/s Indu Project Ltd. Though there is no material before the Bench to show the trail o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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