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TMI Blog2025 (5) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... bility with IOC Limited as on the last day of the previous year was Rs. NIL. 3. The Ld. CIT(A) ought to have considered the fact that the amount of Rs. 38,14,269/- was paid to IOCL after 31/03/2004 which already clearly indicates that there was no closing balance of rs. 38,14,269/- as on 31/03/2004. 4. The Ld. CIT (A) erred in confirming the action of the Assessing Officer in disallowing the payments to sub-contractors of Rs. 45,36,262/- and further erred in treating the said amount as income of the appellant. 5. Any other ground/grounds that may be urged at the time of hearing." 3. Succinctly stated, the assessee firm which is engaged in the business of a civil contractor i.e laying of roads and earth-works, had filed its return of income for the A.Y 2004-05 on 01/11/2004, declaring an income of Rs. 50,12,860/-. 4. Originally, the assessment was framed by the A.O. vide his order passed under Section 143(3) of the Act, dated 28/11/2006, determining the income of the assessee firm at Rs. 78,55,027/-. 5. Subsequently, the Commissioner of Income Tax-VI, Hyderabad vide his order passed under Section 263 of the Act, dated 26/06/2009, set aside the assessment order with a direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the outstanding liability towards IOC Limited: Rs. 38,14,269/-; and (ii) disallowance of the assessee's claim for deduction of sub-contract payments: Rs. 45,36,282/-. 10. Aggrieved, the assessee firm carried the matter in appeal before the CIT(A), but without success. For the sake of clarity, the observations of the CIT(A) are culled out as under: b. In Ground No. 2, the assessee raised the issue of making addition of Rs. 38,14,269/-, as unsubstantiated outstanding liability, on purchase of Bitumen from IOCL. It is seen that this issue had been examined by the Ld. ITAT twice. In the combined order of ITAT dated 22/06/2012, in Appeal No. 1204/Hyd./2011 against the appeal filed by the Department, the Tribunal held that it was evident from the assessment order as well as from the order passed by the CIT (Appeal) that no proper enquiry was made to find out the correctness of the claim of the outstanding liability. The Hon'ble Bench found it prudent to restore the matter to the file of the AO and directed him to conduct necessary enquiry with IOCL to find out the actual liability as on 31.03.2004 and also the payments made by the assessee towards outstanding liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal, the assessee failed to submit any documentary evidence in support of its claim. On the other hand, the IOCL, as per its letter dated 14/03/2014 clearly submitted that no amount was outstanding as on 31/03/2014. Under the above stated facts, I am constrained to confirm the addition made by the AO for the sum of Rs. 38,14,269/- and the Ground of Appeal of the assessee is dismissed. c. In Ground No. 3, the assessee challenged the decision of Disallowance of payment of Rs. 45,36,282/- as made by the AO in the order passed u/s. 254 on 19/03/2014. I find that this issue was subject matter of appeal before the Hon'ble ITAT, as raised from the order u/s. 263 of the PCIT. In the order dated 22.06.2012, the Hon'ble Tribunal directed the AO to verify whether the sub-contractee, Shri Krishna Kumar Raju, had actually executed any work under the sub-contract agreement, before finalizing any decision of the addition of the said sum. In the assessment order passed u/s. 254 on 19/03/2014, the AO asked the AR of the assessee to produce the details of work done by the said sub-contractee. The AO, however, found that the AR could not produce any evidence to this extent, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Sri Krishna Kumar Raju, i.e a sub-contractor for the construction work that was claimed to have been executed by him during the subject year: Rs. 45,36,282/-. 14. We shall deal with the aforesaid two issues in a chronologically, as under: (A): Addition of liability to IOC Limited: Rs. 38, 14,269/- 15. As is discernable from the assessment order, we find that the A.O in the course of the set-aside proceedings had called upon IOC Limited, Hyderabad and New Dehi to furnish a copy of the ledger account of the assessee firm as appearing in their books of account for the FY 2003- 04. In response, IOC Limited, had replied vide its letter dated 26/02/2014, that as per their records there were three different accounts in the name of the assessee firm with different customer codes, as under: Lalaiah & Co., Hyd Cust. Code 158367 S. Laaiah & Co Cust. Code 158439 S. Lalaiah & Co Cust. Code: 143755 & 135816 LAXMI NAGAR, KOTHAPET, HYDERABAD 10-107/1, VIJAYAPURI COLONY, KOTHAPET, HYDERABAD 3-2-130, LB NAGAR, X ROADS, HYDERABAD Also, it was stated by IOC Limited that since they had w.e.f 2004-05 migrated from the conventional IBS manual system to SAP software, therefore, the ledger stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed Representatives of both parties on the aforesaid issue. Admittedly, as it is a matter of fact borne from the record that the letter/confirmation dated 23/12/2024 of IOC Limited could be obtained by the assessee firm much after the passing of the order by the CIT(A), therefore, the same could not be filed by it in the course of the proceedings before the lower authorities. We may herein observe, that even in the course of the assessment proceedings IOC Limited had time and again expressed its inability to provide a copy of the account of the assessee firm as appearing in its books of account to the AO for the reason that it had w.e.f FY 2004-05 migrated to SAP software for maintaining its accounts. Accordingly, we are of a firm conviction that there were justifiable reasons for the assessee firm in not filing the letter/confirmation from IOC Limited in the course of the assessment proceedings or before the CIT(A). We, thus, in terms of our aforesaid deliberations admit the letter/confirmation dated 23/12/2024 (supra) alongwith the copy of the ledger account of the assessee firm (as appearing in the books of account of IOC Limited) as additional evidence under Rule 29 of the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h work on Kodad Revoor Road and Mirayaaguda-Kodad Road in Nalgonda District, therefore, there was no justification for the lower authorities to have disallowed the same. The ld.AR further, to fortify his contention, had drawn our attention to the copies of the vouchers which evidenced the payment of the aforementioned amount by the assessee firm to Sri Krishna Kumar Raju (supra). It was, thus, the ld. AR's averment that as the claim of the assessee firm for deduction of sub- contract expenditure was duly substantiated based on supporting documentary evidence, therefore, the orders of the lower authorities who had disallowed the same were liable to be set-aside. 24. Per contra, the Learned Departmental Representative (in short "Ld. DR"), submitted, that as the assessee firm, had despite multiple rounds of litigation, failed to substantiate that the payments to Sri Krishna Kumar Raju (supra) were for the sub-contract work that was executed by him, therefore, the A.O had rightly disallowed the same. 25. We have thoughtfully considered the contentions advanced by the Learned Authorized Representatives of both the parties in the backdrop of the orders of the lower authorities. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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