9911796707
TMI Blog2022 (11) TMI 1455X X X X Extracts X X X X X X X X Extracts X X X X ..... r Assessment Year (hereinafter referred to as 'A.Y.') 2010-11. Upon receipt of the notice on Revenue's appeal, the assessee also filed the aforesaid Cross Objection. Both are disposed of by this common order. 3. The Revenue has raised the following grounds of departmental appeal bearing ITA 216/Ind/2021: "1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.19,30,429/- made on account of disallowance of labor expense and has overlooked the findings of the AO mentioned in the assessment order. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.13,39,555/- made on account of disallowance of blasting expense and has overlooked the findings of the AO mentioned in the assessment order. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.75,23,136/- made on account of disallowance of site expense and has overlooked the findings of the AO mentioned in the assessment order. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case fixed on 23rd June, 2022 that it was noticed that cross objections had to be filed in respect of addition confirmed by the Ld. CIT(A) on one of the grounds. Having heard both the sides and perused the material on record, it appears that there is a bona fide reason for filing the instant cross objection with a delay of 113 days. Therefore, we condone delay in filing the instant cross objection. Likewise, there is delay of few days in filing departmental appeal. We find that due to Covid-19, the same happened. Therefore, the same is also condoned. 5. Brief facts as culled out from the records are that the assessee is a private limited company engaged in the business of government works contract for construction of roads. The income-tax return of the assessee for the A.Y. 2010-11 was filed on 15.10.2010 declaring total income at Rs.1,38,40,330/-. The case of the assessee was selected for scrutiny manually as per the statutory prescribed guidelines. The Ld. AO during the course of assessment proceedings made additions to the total income of the assessee on account of disallowance of various expenses debited in its profit and loss account for the year ended 31st March, 2010. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount. It was also submitted that no disallowance was justified under Section 40A(3) and Section 40(a)(ia) of the Act since the assessee did not make payment in cash to a single person on a single day in excess of Rs.20,000/- and that the assessee did not deduct TDS in respect of various other payments since those payments were not liable for deduction of TDS as per the provisions of the Act. The Ld. Counsel heavily emphasized on the fact that assessment in the case of the assessee was completed for the A.Y. 2009- 10 as well wherein the Ld. AO rejected the books of accounts of the assessee and estimated the net profit of the assessee at the rate of 6% which was later on reduced to 5% by the Ld. CIT(A) and the net profit rate of 5% was subsequently approved by the Hon'ble ITAT Indore Bench vide order dated 10.11.2014. Accordingly, it was argued by the Ld. Counsel that since the assessee itself declared net profit at the rate of 5.88% for the A.Y. 2010-11, there was no justification for making further addition to the total income of the assessee in the A.Y. 2010-11 on account of disallowance of various expenses in light of the decision of the Hon'ble ITAT, Indore Bench in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant has also deducted the TDS on the above payment made. Therefore, the addition made by the Assessing Officer amounting to Rs. 13,39,555/- is Deleted. Therefore, the appeal on this ground is Allowed. 4.3 Ground No 3:- Through this ground of appeal, the appellant has challenged addition of Rs. 75,23,136/- on account of disallowance of site expenses. The Assessing Officer during the course of assessment proceedings observed that the site expenses have increased from Rs.28,20,853/- in the earlier year to Rs.1,09,92,329/- during the year under consideration. The appellant submitted that during the year under consideration, the contract receipt has been increased from Rs.19,15,31,078/- to Rs.23,55,53,052/- i.e. by Rs.4,40,21,344/-. The Assessing Officer during the course of assessment proceedings has not pointed out any defect in the books of accounts. Most of the expenses were incurred through account payee cheque. The appellant has deducted the TDS payable wherever applicable. Therefore, the addition made by the Assessing Officer amounting to Rs. 75,23,136/- is Deleted. Therefore, the appeal on this ground is Allowed. 4.4 Ground No 4:- Through this ground of appeal, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conveyance, water & electricity, office running & maintenance expense, printing & accessory and travelling expenses. The above expenses are integral part of the business and appellant have to make the expenditure on this account. Therefore, the Assessing Officer is not justified in making the disallowance out of above expenses. Therefore, the addition made by the Assessing Officer amounting to Rs. 12,37,512/- is Deleted. Therefore, the appeal on this ground is Allowed." 9. Upon perusal of the above, we find that the facts discussed above squarely reveal that the Ld. AO did not point out any defects in the books of accounts of the assessee. It is also an undisputed fact that payment towards most of these expenses was made by the assessee through banking channels after deduction of TDS, wherever applicable. Further, all the expenses have been incurred by the assessee for the purpose of business. Merely because increase in turnover from 19.15 crores in the preceding year to 23.55 crores during the year, such expenses could not have been doubted. We noticed that the turnover of the assessee increased resulting into increase in expenses during the year. However, the Ld. AO allowed cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 17/Ind/2022: 10. The sole ground raised by the assessee in the instant cross objection is in respect of the addition of Rs. 1,55,000/- confirmed by the Ld. CIT(A) on account of amount deducted by PWD for delay in completion of work. 10.1 The brief facts leading to the case is this that there was delay in completion of site work allotted to the assessee by the PWD. Accordingly, PWD deducted an amount of Rs. 1,55,000/- on account of time extension for delay in completion of such work and the said amount of Rs. 1,55,000/- was debited in the books of accounts under the head 'Penalty' as a result of which the Ld. AO made addition and the Ld. CIT(A) confirmed the addition of Rs. 1,55,000/- made to the total income of the assessee by considering such payment to be penal in nature. Being aggrieved, the assessee is before this Tribunal in the instant cross objection. 11. Before us, the Ld. DR supported the orders of Ld. AO and Ld. CIT(A). Per contra Ld. Counsel for the assessee submitted that amount of Rs. 1,55,000/- was deducted by PWD as compensation for delay in completion of work. The Ld. Counsel submitted that though such amount was debited under the head 'penalty', yet, such amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any addition to the total income of the assessee and duly accepted the fact that amount deducted by PWD was compensatory in nature and not penal in nature. Thus, considering the entire aspect of the matter, we find no justification for sustaining addition of Rs. 1,55,000/- on account of amount deducted by PWD for delay in completion of work particularly for the reason that the assessee has categorically explained with the help of ample documentary evidences that such deduction of amount was compensatory in nature and not penal in nature. Hence, in our considered opinion, addition of Rs. 1,55,000/- made to the total income of the assessee on account of disallowance of the amount deducted by PWD is not sustainable and, thus, deleted. We thus set aside the findings of Ld. CIT(A) on this count. Hence, assessee's cross objection is allowed. Accordingly, the appeal filed by the Revenue is dismissed whereas cross objection filed by the assessee is allowed. ITA No.217/Ind/2021 A.Y. 2011-12 13. The instant appeal filed by the Revenue is directed against the order dated 16.08.2021 passed by the Ld. CIT(A)-3, Bhopal (hereinafter referred to as 'Ld. CIT(A)') arising out of the order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Ld. AO. Per contra Ld. Counsel for the assessee supported the findings of Ld. CIT(A) and submitted that the Ld. AO estimated the net profit rate for the year to be 6% merely on the basis of net profit rate of 6% as was estimated for the A.Y. 2009-10 without pointing out any defects in the books of accounts and without even rejecting the books of accounts of the assessee which were duly audited in terms of Statutory Provisions. The Ld. Counsel further submitted that the findings of the Ld. AO in the assessment order were self-contradictory as the Ld. AO estimated the net profit of the assessee by stating that the books of accounts of the assessee were not produced whereas the Ld. AO himself in other paragraphs of the assessment order specifically mentioned the fact that the assessee produced its books of accounts together with bills/ vouchers. The Ld. Counsel thereafter explained that the assessee declared loss during the year mainly for the reason that it made huge investment in plant and machinery out of the amount financed which resulted in increased burden of depreciation and finance charges debited in the profit and loss account for the year. It was for the said reason th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts increased in this year as compared the same with last year is as under:- S.No Nature of Expenses For the Period ended on Increased in this year 31.03.2010 31.03.2011 1 Finance Charges 3,15,245 1,51,31,945 1,48,16,700 2 Depreciation 14,96,344 1,17,69,466 1,02,73,122 2,50,89,822 1.7.4] That if the effect of the increase in the amount of increase in the finance cost and Depreciation is ignored the revised amount of net Profit and percentage of Net profit is calculated as under:- S.No Description Amount[Rs] 1 Income from Operation 34,41,03,054 2.1 Net Profit as declared in the books of account [-] 84,77,805 2.2 Increase in the amount of Finance Exp and Depreciation 2,50,89,822 Net Profit after ignoring the effect of Dep & Finance Cost 1,66,12,017 3 % of Net Profit after ignoring the effect of Dep & finance Cost 4.83% 1.8.1] The amount of Finance Cost as increased in this year is verifiable from the copy of account of SREI Equipment Finance P Limited in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account with supporting vouchers before the assessing officer and in these books of account, no defects were pin- point by the assessing officer. Hence, there was no justification for estimating the total income of the assessee. 1.14] That in view of the above, the assessing officer was not justified in estimating the net income of the assessee at Rs 2,04,60,184/- as against loss of Rs 67,64,838/- declared in the return of total income even without rejecting the books of account as maintained by the respondent assessee." 17. We find that the Ld. CIT(A) while allowing the appeal preferred by the assessee observed as follows: "4.1 Ground No. 1:- Through this ground of appeal the appellant has challenged the addition of Rs.2,04,60,184/- being net profit @6% of the total operational receipts. The AO during the course of assessment proceedings observed that AO has adopted NP @ 6% at Rs. 2,04,60,184/- against operation receipts of Rs. 34,41,03,054/-. The appellant has claimed deprecation equal to net profit amount, however, the AO denied the deprecation on plant and machinery stating the same has not been put to use during the year under consideration. Therefore, the AO relying to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g later half of the year. The AO on the other hand has only placed reliance on written submission dated 06.03.2014 which no where states that the plant and machinery was not put to use, the appellant has only stated that being automatic machinery, the Indian operator find it difficult to operate and for smooth function and execution of work contract in time machinery in addition to purchased machinery were hired on rent. Thus, the appellant has used both purchased and hired machinery for execution of work contract. Further, the AO has not brought on record any instance which could prove that neither of the purchased machinery was put to use during the entire year. As a matter of fact the majority of machinery was purchased in June 2010 and no prudent businessman would purchase machinery and made them rest in warehouse or at its business premises. There could be possibility that the machinery may have not worked for a short period of time till the operator was trained partly or fully but it cannot be said that the same was not used foe entire year. 4.1.2 Nonetheless, the AO has also adopted NP @ 5% for which the AO has stated that a NP @ 6% was adopted in Ay 2009-10 which has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee to be 6% was that the same rate of net profit was estimated for the A.Y. 2009-10. We find that the Ld. AO utterly failed to appreciate the fact that the assessee made huge investment of 11.97 crores in plant and machinery during the year out of the amount financed by M/s SREI Equipment Finance Pvt. Ltd. which resulted in huge increase in the amount of depreciation and finance charges during the year as compared to the preceding year. The amount of depreciation increased from Rs. 14,96,344/- during the year ended 31st March, 2010 to Rs. 1,17,69,466/- during the year ended 31st March, 2011. Similarly, the amount of finance charges increased from Rs. 3,15,245/- during the year ended 31st March, 2010 to Rs. 1,51,31,945/- during the year ended 31st March, 2011. Hence, there was additional burden of Rs. 2,50,89,822/- on account of depreciation and finance charges which was debited in the profit and loss account of the assessee which resulted in the figure of loss being declared by the assessee. The Ld. AO failed to appreciate the aforesaid factual position and he simply estimated the net profit rate to be 6% as was estimated during the A.Y. 2009-10 which in our consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny inspite of specific query being raised during assessment proceedings. Accordingly, the Ld. AO observed that genuineness of the transaction could not be proved and he made addition of Rs. 1,10,00,000/- to the total income of the assessee under Section 68 of the Act. The assessee filed all the documentary evidences before the Ld. CIT(A) during the course of appellate proceedings including the documentary evidences such as copy of ITR and bank account of the company which could not be filed before the Ld. AO. The Ld. CIT(A) forwarded the said documents to the Ld. AO for his comments after which the Ld. AO submitted the remand report wherein he simply challenged the applicability of Rule 46A and failed to controvert the documents furnished by the assessee on merits. The Ld. CIT(A) observed that the assessee filed ample documentary evidences and discharged the primary onus cast upon it under section 68 of the Act. Accordingly, the Ld. CIT(A) deleted the addition of Rs. 1,10,00,000/- made by the Ld. AO under Section 68 of the Act on account of share application money received from M/s SKS Ispat and Power Limited. Being aggrieved, the Revenue filed the appeal before this Tribunal. 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged the deletion of addition as made by the assessing officer in respect of share application money of Rs 1,10,00,000/- 2.2] The respondent assessee company received share application money of Rs 1,10,00,000/- in this year from M/s SKS Ispat and Power Limited. That M/s SKS Ispat and Power Limited is one of the promoter and major shareholder of the assessee company. 2.3] That as to justify the Identity, genuineness and capacity of the share applicant, in respect of an amount of Rs 1,10,00,000/- as received by the respondent assessee, following documents are enclosed: - S.No Nature of papers Page No 1 Copy of account of M/s SKS Ispat and Power Limited in the book of the assessee duly confirmed 121 - 123 2.1 Copy of Balance sheet of M/s SKS Ispat and Power Limited for the year ended on 31.03.2011 127 - 142 2.2 On perusal of the Balance sheet, your Honóur will find that the share applicant having share capital to the tune of Rs 46.57 crores as on 31.03.2011 and Reserve & Surplus to the tune of Rs 559.25 crores 127 2.3 On perusal of the Profit & Loss a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... free to take action against the persons who have contributed the same but in no case the same is to be added to the income of the assessee." 21. We find that the Ld. CIT(A) while allowing the appeal preferred by the assessee observed as follows: "4.2 Ground No. 2 and 3:- Through these grounds of appeal the appellant has challenged the addition of Rs.1,10,00,000/- being share application money u/s 68 of the Act. During the course of assessment proceedings, the AO observed that the assessee has introduced share application money from M/s SKS Ispat and Power Limited. As per the AO the assessee failed to furnish copy of ITR and bank account and therefore, genuineness of the transaction was not proved. 4.2.1 I have considered the facts of the case, material evidences on record & written submissions filed by the ld AR of the appellant. I have also given my thoughtful consideration to the facts and findings of the AO inter alia material brought on record. At the outset there is no denying of the fact that appellant has introduced share capital from M/s SKS Ispat and Power Limited. Appellant before the AO as well as before me has filed copies of PAN, bank account statement of invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant is in the receipt all amounts by cheque. Copies of bank statement of Investor Company is placed on record and perused. From perusing the bank statements of the Investor companies as furnished in the paper book, it is found that no cash was deposited in the bank account prior to issuance of cheque to the appellant for the said investment. iii. Creditworthiness of the investor - the investor company is income tax payer and filing the income tax return. The company has not only made investment in appellant company but also in other companies. From the above it is clear that the appellant has satisfied all the three conditions required for genuineness of the transaction. The same view has been upheld by the Hon'ble Apex Court, various High Courts and tribunals in the following cases:- (i) In the case of Goodview Trading (P) Ltd (2016) (Del-Trib), which has also been affirmed by Hon'ble Delhi high Court Goodview Trading (P) Ltd (2017) 77 taxmann.com 204 (Del HC) dt.21-11-16, wherein it has been held that: "3. The CIT(A) noticed that the details of the share applicants such as their IT returns as well as the 'net worth' were available on the file of the assessment re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o IT and that analysis of the bank statements furnished by such investors revealed that the amounts were deposited in cash and also routed through different entities. It was submitted that whereas the identity of the investors was no doubt established, neither the genuineness nor credit worthiness could be said to have been satisfied to pass the test of bona fide transactions. It is submitted that in these circumstances, the CIT(A)'s decision- as endorsed by the ITAT- is required to be set aside in this appeal. 6. This Court has considered the materials on record. 7. As against the AO's tabular appreciation of the facts, the CIT(A) also framed another chart which interestingly reveals the 'net worth' of the companies that had invested in the course of the share offerings, of the applicant. The chart extracted in para-4.2 of the CIT(A)'s order is reproduced below: S. No. Name of Party PAN No. Amount of investment in shares Net worth as on 31-306 1 Golden Suppliers P Ltd AADCG0724F 57,23,250 2 Web Tech International Ltd AAACW4551F 42,31,500 99,36,107 3 We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITJ 635 (Trib.-Agra): (2011) 131 ITD 127 : (2011) 141 TTJ Establishment of identity and credit-worthiness proved- Assessee produced the bank account of creditor in his bank account on the same day on which loan was given- Assessee furnished the cash flow statement of creditor-Based on inquiry, AO noted that creditor was engaged in providing accommodation entries-HELD- In group cases, it has been held that there was no evidence against the creditor to prove that he was providing accommodation entries-Further, mere deposit of money by the creditor on the same day, does not establish that the loan is not genuine-Assessee has proved the source of credit and also the source of source -Addition cannot be made. (iii) Aseem Singh v/s Asst. CIT (2012) 19 ITJ 52 (Trib.-Indore) Identity and credit-worthiness proved-Assessee took loan of Rs.1,00,000/- confirmation of creditor was filed-Lower authorities made addition u/s 68 holding that amount was deposited in cash in the bank account of lender immediately prior to date of loan - HELDAssessee has established the identity- The party has confirmed the transaction-If AO doubted the transaction, AO should have called creditor u/s 131-Addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rores in its profit and loss account for the year ended 31st March, 2011. Further, name of the assessee was duly reflected in 'Schedule 6 - Investments - Long Term' in the audited financial statements of the investor company. The investor company also showed total income of 6.19 crores in its income-tax return for the A.Y. 2011-12. The above-stated factual matrix has not been controverted by the Ld. DR. Hence, it can be seen that the assessee filed ample corroborative documentary evidences and satisfactorily discharged the primary onus cast upon it under section 68 of the Act to establish the identity and creditworthiness of the investor company and genuineness of the transaction. Further, the contention of the assessee that there was clear lack of enquiry on the part of the Ld. AO also has strong force because once the assessee had furnished all the material as mentioned above, in such eventuality, no addition can be made under Section 68 of the Act. It is also well settled that the AO cannot be permitted to blow hot and cold at the same time. In the case in hand, the Ld. AO accepted the amount of Rs. 95,00,000/- received from the same investor company during the A.Y. 2010-11 as g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f receipts not disclosed in income shown by the assessee. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in law in deleting the addition amounting to Rs. 7,42,880/- made by the Assessing Officer on account of difference between gross receipts and actual receipts of the assessee." The assessee has raised the following grounds in cross objection CO 15/Ind/2022: "1. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in upholding the action of the Ld Assessing Officer in reopening the completed case of the respondent based on similar set of facts which tantamounted to change of opinion as held by the Hon'ble Supreme Court of India in the case of CIT Vs Kelvinator of India as reported in 320 ITR 561. 2. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in upholding the action of the Ld Assessing Officer in reopening the case of the respondent after the expiry of four years from the end of the relevant assessment year more so when assessment had already been completed under section 143(3) of the Act and there was no failure on the part of the respondent to disclose f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,045/-. The Ld. AO during the course of reassessment proceedings made additions of Rs. 3,75,50,000/- and Rs. 7,42,880/- to the total income of the assessee on account of amount received from M/s Guna Sheopur Pathways Private Limited (hereinafter referred to as 'GSPPL') by treating it as income of the assessee and on account of difference between gross receipts and receipts actually accounted for as income from M/s SCC Projects Private Limited (hereinafter referred to as 'SCCPPL') respectively. Being aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) deleted both the additions made by the Ld. AO. Hence, the instant appeal has been filed before this Tribunal. Assessee's cross objection in CO No.15/Ind/2022 (A.Y. 2012-13): 26. The assessee challenges the maintainability of the reassessment proceeding under Section 143(3) r.w.s. 147 of the Act on multiple grounds. Since issue of maintainability of the reassessment proceeding has been raised by the assessee, at the threshold of the matter, we would like to address the same. The grounds raised by the assessee mainly challenge the maintainability of reassessment proceeding on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee as reopened on verification of the documents which were already placed on record amounted to change of opinion which was impermissible in light of the judgments of the Hon'ble Supreme Court of India in the case of CIT vs Kelvinator of India Limited 320 ITR 561 and in the case of ITO vs Tech Span India (P) Ltd [2018] 92 taxmann.com 361 (SC). He also relied upon the following judgments in support of his contentions:- (i) Debashis Moulik v. ACIT [2015] 62 taxmann.com 16 (Calcutta) (ii) Asiatic Oxygen Ltd. v. DCIT [2015] 60 taxmann.com 265 (Calcutta) (iii) Anil Kumar Bhandari v. JCIT [2008] 171 Taxman 428 (Calcutta) (iv) Badal Choudhary v. ITO [2001] 119 Taxman 952 (CAL.) (v) Bhagirathbhai Manubhai Baldha v. DCIT [2018] 94 taxmann.com 94 (Gujarat) (vi) Allied Strips Limited v. ACIT (2016) 96 CCH 0004 Del HC 29. The Ld. Counsel also challenged the reopening of the case of the assessee after the expiry of four years from the end of the relevant assessment year in light of the first proviso to section 147 of the Act which specifically provided that no action shall be taken under Section 147 of the Act after the expiry of four years from the end of the relevant assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xi) CIT v. Multiplex Trading & Industrial Co. Ltd. (2015) 378 ITR 0351 (Delhi) 30. The Ld. Counsel also challenged the reopening of the case after the expiry of four years from the end of the relevant assessment year as there was not even a whisper of allegation in the reasons recorded by the Ld. AO that escapement of income was due to failure on the part of the assessee to disclose fully and truly all the material facts necessary for assessment. The Ld. Counsel relied upon the following judgments in support of his contentions:- (i) Kanak Fabrics v. ITO [2014] 49 taxmann.com 108 (Gujarat) (ii) Aayojan Developers v. ITO [2011] 10 taxmann.com 226 (Gujarat) (iii) Shree Chalthan Vibhag Khand v. DCIT [2015] 60 taxmann.com 450 (Gujarat) (iv) Ashokjyot Oxygen (P.) Ltd. v. ITO as reported in [2013] 33 taxmann.com 538 (Gujarat) (v) Haryana Acrylic Manufacturing Co. v. CIT [2008] 175 Taxman 262 (Delhi) (vi) Balasubramanian Ramachandran v. ITO [2015] 57 taxmann.com 36 (Delhi) (vii) Rural Electrification Corpn. Ltd. v. CIT [2013] 34 taxmann.com 131 (Delhi) (viii) CIT v. Viniyas Finance & Investment (P.) Ltd. [2013] 33 taxmann.com 86 (Delhi) (ix) CIT v. Suren International ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original assessment proceedings itself. Hence, in our considered opinion, case of the assessee reopened subsequently for examination of the same issue tantamounted to change of opinion which is impermissible as per Section 147 of the Act. The AO has the 'power to reassess' but not the 'power to review' under Section 147 of the Act since otherwise in the garb of reopening the assessment, review would take place. In this regard, we have considered the judgment of the Hon'ble Supreme Court in the case of CIT v. Kelvinator of India Ltd. [2010] 187 Taxman 312 (SC) wherein it was held as under: - "4. On going through the changes, quoted above, made to s. 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the AO to make a back assessment, but in s. 147 of the Act (w.e.f. 1st April, 1989), they are given a go by and only one condition has remained, viz., that where the AO has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post 1st April, 1989, power to reopen is much wider. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the new s. 147, however, remain the same." 33. In light of the facts re-iterated above and after going through the findings of the Hon'ble Supreme Court cited supra, we are of the considered opinion that reassessment proceedings initiated in the case of the assessee were not maintainable since case of the assessee was reopened on account of mere change of opinion. 34. Secondly, as regards the contention of the Ld. Counsel that case of the assessee was reopened after the expiry of a period of four years from the end of the relevant assessment year, we would like to consider the relevant statutory provision on this aspect. The provision of Section 147 which deals with the issue in hand states as follows: "147. If the 13[Assessing] Officer 14[has reason to believe15] that any income chargeable to tax has escaped assessment15 for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess15 such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings15 under this section, or recompute the loss or the depreciation allowance or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held as under: - "9.................A plain reading of the said proviso makes it more than clear that where the provisions of section 147 are being invoked after the period of four years from the end of the relevant assessment year, in addition to the Assessing Officer having reason to believe that any income chargeable to tax has escaped assessment, it must also be established as a fact that such escapement of assessment has been occasioned by either the assessee falling to make a return under section 139 etc., or by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year. In the present case, the question of making of a return is not in issue and the only question is with regard to the second portion of the proviso, which relates to failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Insofar as this pre-condition is concerned, there is not a whisper of it in the reasons recorded by the Assessing Officer. In fact, as indicated above, the Assessing Officer could not have made this a ground because the Assessing Officer had required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asioned by the failure on the part of the assessee to disclose material facts, fully and truly. This is a necessary condition for overcoming the bar set up by the proviso to section 147. If this condition is not satisfied, the bar would operate and no action under section 147 could be taken. We have already mentioned above that the reasons supplied to the petitioner does not contain any such allegation. Consequently, one of the conditions precedent for removing the bar against taking action after the said four year period remains unfulfilled. In our recent decision in Wel Intertrade (P.) Ltd.'s (supra) we had agreed with the view taken by the Punjab and Haryana High Court in the case of Duli Chand Singhania (supra) that, in the absence of an allegation in the reasons recorded that the escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, any action taken by the Assessing Officer under section 147 beyond the four year period would be wholly without jurisdiction. Reiterating our view-point, we hold that the notice dated 29-3-2004 under section 148 based on the recorded reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the above said five assessment years. Insofar as the appeals filed against the order of assessment before the Commissioner (Appeals), we direct the appellate authority to dispose of the same, expeditiously." 40. We have further considered the judgment of the Hon'ble Karnataka High Court in the case of Deepak Extrusions (P.) Ltd. v. DCIT [2017] 80 taxmann.com 77 (Karnataka) relied upon by the Ld. Counsel. While discussing the issue the Hon'ble High Court has been pleased to observe as follows:- "9. The aforesaid shows that if the assessee desires to seek the reasons for issuing the notice, the Assessing Officer is bound to furnish the reasons and upon the receipt of such reasons, the assessee is entitled to file the objections to the issuing of the notice and the Assessing Officer thereafter is bound to dispose of the same by passing a speaking order. It is only thereafter the assessment may proceed in accordance with law unless there is any prohibitory order of the competent forum. 11. If the facts of the present case are examined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of amount received from GSPPL not shown as income during the year. The brief facts leading to the case are that the assessee received mobilization advance of Rs. 3,75,50,000/- from GSPPL during the year for shifting of its plants to the site of GSPPL. The assessee did not carry out any work during the year but merely received the amount of advance from GSPPL. However, the Ld. AO observed that the assessee received payment towards completion of specified work as per the Milestone schedule of payment and therefore such payment could not have been termed as advance. The Ld. AO further observed that the payment of Rs. 3,75,50,000/- had already accrued to the assessee as per the terms of contract with GSPPL and the assessee ought to have accounted for the payment as income which had not been done. Accordingly, the Ld. AO treated the amount of Rs. 3,75,50,000/- received by the assessee from GSPPL as income of the assessee and made addition of Rs. 3,75,50,000/- to the total income of the assessee. Being aggrieved, the Revenue is in appeal before this Tribunal. 45. Before us, the Ld. CIT-DR supported the order of Ld. AO. Per contra Ld. Counsel for the assessee supported the findings of L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant has challenged the addition of Rs.3,75,50,000/- on account of advance payment received from M/s Guna Sheopur Pathways Pvt Ltd. The AO during the course of assessment proceedings observed that the assessee company has received contract receipts of Rs. 20,13,76,532/-, however, in the return of income the contract receipts were shown at Rs. 14,67,79,360/- which was short by Rs. 5,45,97,172/-. Therefore, the AO required the assessee to explain the reason for showing short contract receipts. The assessee in reply through its Ld AR submitted that a contract receipts of Rs. 1,80,44,785/- was wrongly shown as contract receipts of assessee by PWD department which was rectified lateron. Further, an advance of Rs. 3,75,50,000/- was received from Guna Sheopur Pathways Pvt Ltd was received for contract work for road construction on which TDS was deducted by the payer. The assessee has accounted the same as advance for contract work in books of accounts. The AO after considering reply of the assessee did not find the same acceptable and stated that the payments were received after completion of work as per Milestone schedule of payment and were received after completion of each work. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egating to Rs. 3,7550,000/- were made as per Milestone Schedule of payments an were made after completion of work for each milestone. On perusal of EPC Contract it was observed that the payments shall be made as per clause 5.2 'terms of payment' which as per sub clause 5.2.1 reads as under; "The contract price shall be paid by the Concessionaire to the Contractor as per the milestone payment Schedule specified in Annexure I part III, along with format of item wise work executed as prescribed and certified by the lenders Engineer." The above mentioned sub clause 5.2.1 clearly mentions schedule of payment as per 'Annexure 1 Part III' which has also been filed by the appellant. For better understanding of alleged work executed by the appellant I find it important to reproduce the relevant extract of 'Annexure 1 Part III' :- As a matter of fact the appellant has received only sum of Rs. 3,75,50,000/- which as per 'Mile stone Payment Schedule' does not even constitutes total preliminaries expenses. The advance amount was given for all preliminary expenses which includes preliminary investigation, carrying out surveys (Geotechnical and Topographical surveys), design, installatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the audited financial statements of the assessee as on 31st March, 2012. Further, it is an uncontroverted finding of fact that the assessee duly offered the amount of advance received during the year as income in the subsequent year itself i.e. in A.Y. 2013-14. The assessee also produced a table containing the year-wise break-up of the amount of income and TDS accounted for in the books of accounts and as reflected in Form 26AS with respect to GSPPL which is as under:- S No Assessment Year As per books of accounts As per Form No. 26AS Difference [in Rs] Income [in Rs] TDS [in Rs] Income [in Rs] TDS [in Rs] 1 2012-13 NIL 7,51,000 3,75,50,000 7,51,000 [3,75,50,000] 2 2013-14 26,12,00,000 44,73,001 22,36,50,028 44,73,001 3,75,49,972 3 2014-15 16,31,00,000 32,62,000 16,30,99,975 32,62,000 25 4 2015-16 4,14,00,000 8,28,000 4,14,00,000 8,28,000 NIL Total 46,57,00,000 93,14,001 46,57,00,003 93,14,001 48. On perusal of the above table, we find that it is quite clear that the assessee accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that for the purposes of taxability that the income is not hypothetical and it has really accrued to the assessee. 21. Insofar as the present case is concerned, even if it is assumed that the assessee was entitled to the benefits under the advance licences as well as under the duty entitlement pass book, there was no corresponding liability on the customs authorities to pass on the benefit of duty free imports to the assessee until the goods are actually imported and made available for clearance. The benefits represent, at best, a hypothetical income which may or may not materialise and its money value is therefore, not the income of the assessee." 52. We are in agreement with the contention of the Ld. Counsel that the entire exercise undertaken by the Ld. AO was futile and tax-neutral as the assessee had already offered the amount of advance received during the year as income in subsequent year i.e. in A.Y. 2013-14. In this regard, we would again like to refer the judgment of the Hon'ble Supreme Court in the case of CIT v. Excel Industries Ltd. [2013] 358 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pts and receipts actually accounted for as income from SCCPPL. The brief facts leading to the case are that the assessee received contract receipts from SCCPPL during the year. SCCPPL deducted TDS on the gross amount of bill of Rs. 7,12,71,805/- which included the component of labour cess of Rs. 7,42,880/-. However, SCCPPL deposited the amount of labour cess of Rs. 7,42,880/- itself and remitted only the net amount of Rs. 7,05,28,925/- (Rs. 7,12,71,805/- less Rs. 7,42,880/-) to the assessee which was offered as income. However, the Ld. AO was of the opinion that the assessee should have offered the gross receipts of Rs. 7,12,71,805/- as income against which the assessee could have claimed deduction on account of payment of labour cess of Rs. 7,42,880/-. Accordingly, the Ld. AO made addition of Rs. 7,42,880/- to the total income of the assessee on account of difference between gross receipts and receipts actually accounted for as income from SCCPPL. Thus, the Revenue is in appeal before this Tribunal. 55. Before us, the Ld. DR supported the order of Ld. AO. Per contra Ld. Counsel for the assessee supported the findings of Ld. CIT(A). The Ld. Counsel for the assessee submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for your ready reference. On perusal of the income account, it is clear that labour cess was deducted by M/s SCC Projects Private Limited. However, TDS was deducted by M/s SCC Projects Private Limited on the gross amount of bill of Rs. 7,12,71,800/- which included the amount of labour cess of Rs. 7,42,875/-. Hence, the respondent assessee was required to offer only net amount of bill of Rs. 7,05,28,925/- as its income which was rightly offered as income by the appellant. 2.5] The assessing officer was of the view that the respondent assessee first offered gross receipt and then claimed deduction on account of labour cess. This is the issue of mere presentation in books of account. That in both the cases, the amount of net income remains same. 2.6] The respondent assessee in its books of account offered receipts from M/s SCC Projects (P) Limited was to the tune of Rs 7,05,28,925/- whereas as per the contention of the assessing officer, first gross receipt of Rs 7,12,71,805/- was offered as income and then deduction was claimed on account of labour cess of Rs 7,42,880/- which ultimate result same. 2.7] The Ld CIT(A) vide his order dated 16-08-2021 in Para 4.3 to 4.3.1 on inn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO was not justified in making addition on this account. Thus, addition made by the AO amounting to Rs. 7,42,880/- is Deleted. Therefore, appeal on this ground is Allowed." 57. We have heard the rival submissions made by the respective parties and we have gone through the materials available on record. We find that the facts discussed above squarely reveal that the assessee had correctly offered the net amount of Rs. 7,05,28,925/- received from SCCPPL as its income during the year. It is an undisputed fact that the amount of labour cess of Rs. 7,42,880/- was directly deposited by SCCPPL and only the balance amount of Rs. 7,05,28,925/- was remitted to the assessee. Hence, the assessee could not have been expected to offer the gross amount mentioned in the bill of Rs. 7,12,71,805/- as its income since the actual amount received by the assessee after deducting the amount of labour cess was of Rs. 7,05,28,925/- (Gross amount of Rs. 7,12,71,805/- less amount of labour cess of Rs. 7,42,880/-) only which had already been offered for tax by the assessee. We further find that the observation of the Ld. AO that the assessee should have offered the gross receipts of Rs. 7,12,71,805/- as in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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