TMI Blog2023 (3) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the ld. AO for an amount as the assessee has already declared profit @ 8 % of the recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ..... ur Bench. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without 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 Pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mechanically, 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 Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SSIONS 1.1. Assessee is engaged 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red for execution of the work. As a result, the same could not be presented before the lower authorities. 1.7. Assessee during the proceeding and the subsequent years had been offering his income for tax under Section 44AD and, accordingly, was not maintaining the requisite details for the expenses incurred as the assessee, as was not required so under the law. Lower authorities could have ascertained the work completed by the assessee, using their wide powers as provided under the Act. Also, necessary enquiry could have been done from DRPL. 1.8. Lower authorities did not point any defect/discrepancy in the documents submitted before them, still went ahead in making additions to the income of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of Runway at Air Force Station, Nal Site Bikaner. Considering the nature of work the ld. AO has not done any independent inquiry because the work in the military area/organization is to be strictly based on the evidence and attendance is strictly under observation in that matter how the expenditure of this work can be considered as bogus. The reasons recorded are vague and not specific information that the work carried out is bogus and considering the air force work how it can be considered as bogus. The assessee was never confronted with the information or statement if any relied upon and there is no finding except the general allegation made. Even the work carried out by the assessee is not doubted then there is no basis of doubting this work also. The ld. AR of the assessee alternatively submitted that even if the work can be considered as accommodative or bogus then in that case also the whole amount cannot be added to the income of the assessee but only the profit can be added. To drive home to this contention the ld. AR of the assessee relied upon the decision of Hon ble Rajasthan High Court in the case of Khokhar Construction Co. 34 Taxmann.com 180 wherein the Hon ble cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) dismissed the appeal of the assessee stating that the nowhere the assessee had requested for any documents from the AO or any cross examination and therefore, with this observation the appeal of the assessee was dismissed. 10. Based on the entire episode bench noted that there is no discussion in the assessment order about the tangible material or statement the addition made. It is based on the general information received the assessment was re-opened. The ld. AR of the assessee demonstrated before us that he has discharged primary onus casted upon him and has proved the performance of the work and the same is supported by the tangible evidence placed on record. The records so produced was not disputed but also not tested for its correctness and in the absence of these exercise the documents placed on record cannot be placed a side and the decision be made merely based on some information on which there is no basis discussed or confronted to the assessee. As regards the 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. Dinesh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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