NEW INDIA CONSTRUCTION CO. ,BALLY vs. ITO, WD-33(3), KOLKATA. , KOLKATA

The issue raised in ground no. 3 is against the confirmation of addition of Rs. 1,32,877/- being 7.99% of the disputed I.T.A. Nos.: 827 & 828/KOL/2023 Assessment Years: 2013-14 & 2014-15 New India Construction Co. purchases by Ld. CIT(A) as made by the Assessing Officer (in short ld. 'AO') u/s 69C of the Act as unexplained expenditure in respect of bogus purchases.

The facts in brief are that the assessee is engaged in the business of civil contractors executing the Govt projects. During the year the assessee filed the return of income on 28.10.2014 declaring total income of Rs. 18,80,230/- which was selected under limited scrutiny. Thereafter the AO after obtaining approval from the competent authority converted the limited scrutiny to complete scrutiny after noticing that the assessee has taken accommodation entries in the form of bogus bills amounting to Rs. 16,63,045/- from two parties. Accordingly show cause notice was issued to the assessee and the assessee furnished before the AO from time to time details/evidences as called for by the AO. However, the AO, by relying on the report of the investigation wing to the effect directors of M/s. Gajgamini Sales Pvt. Ltd. and M/s. Raipur Trading Pvt. Ltd. having admitted to be involved in providing accommodation entries, treated the purchases made from these entities as bogus and called upon the assessee as to why the said purchases should not be added to the income of the assessee. The assessee replied the said show cause by submitting that the material purchased from these companies were in fact utilised in the construction of the project which is owned by the Government and duly certified by the Executive Engineer. The assessee furnished before the AO the bills and vouchers in respect of the purchase of materials and report of the Government executive engineer and also the tenders floated by the Government. It was .: 827 & 828/KOL/2023 Assessment Years: 2013-14 & 2014-15 New India Construction Co. pleaded that there is no scope for any bogus purchases in the project executed by the assessee as the material has been actually received and utilised in project as certified by the Government engineers. The reply of the assessee did not find favour of the AO and he applied a gross profit rate of 7.99% on the purchases thereby making an addition Rs. 1,32,877/- to the income of the assessee u/s 69C of the Act in the assessment framed.

In the appellate proceedings, Ld. CIT(A) simply confirmed the order of the AO on the same reasoning without considering the contentions and arguments of the assessee.

After hearing the rival contentions and perusing the material on record, we find that the assessee has executed a Government projects qua school buildings during the year. We note that the copy of the certificate of completion of the said works from the Executive Engineer, Social Sector, PW Directorate and PW(CB) Directorate were furnished certifying that the material purchased has been used in the construction of these buildings. We also note that the assessee has filed all the evidences before the AO as well as before Ld. CIT(A) and both the authorities below have failed to carry out any enquiry or investigation into the bills/evidences filed by the assessee and simply relied on the report of the Investigation wing. In our opinion, the order passed by Ld. CIT(A) confirming the addition without any substantive basis is wrong and cannot be sustained. Accordingly, we direct the AO to delete the said addition by setting aside the order passed by Ld. CIT(A). .: 827 & 828/KOL/2023 Assessment Years: 2013-14 & 2014-15 New India Construction Co.

The other grounds were not pressed at the time of hearing and accordingly, they are dismissed as not pressed.

In the result, the appeal filed by the assessee is allowed. Now, we take AY 2013-14.

The issue raised in ITA No. 828/KOL/2023. Therefore, our decision in would mutatis mutandis apply to this appeal as well and consequently, this appeal of the assessee is also allowed.

In the result, both the appeals filed by the assessee are allowed.