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Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI
Before: SHRI NARENDRA KUMAR BILLAIYA & SHRI KUL BHARAT
O R D E R PER KUL BHARAT, JM:
This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals)-38, New Delhi, dated 07.02.2019, pertaining to the assessment year 2010-11. The assessee has raised following grounds of appeal:
“1. Because the impugned Assessment Order dated 24.11.2017 passed by Ld. Assessing Officer and Appellate Order dated 07.02.2019 passed by Ld. CIT- 38(Appeal), New Delhi are illegal and perverse because whimsical and arbitrary additions made to the Returned Income by the Ld. Assessing Officer Ward 62(3), New Delhi has been upheld by Ld.CIT-38(Appeal), New Delhi without considering/working out element of Profit out of such Receipts.
2. Because the entire Work Contract Receipts of Rs.6,33,832/-(Six Laces Thirty Three Thousands Eight Hundreds Thirty Two Only)received/credited from M/s. MAHAVIR HANUMAN DEVELOPERS PRIVATE LIMITED (PAN/TAN:DELM13493E) cannot be added to the Returned Income because the entire Contractual Receipts cannot be presumed to be escaped Income and therefore only Profits Elements/Income part out of such Receipts by working out either on estimated basis or on average Net Profit Ratio basis be treated as income of the Appellant to which both the Assessing Officer and Ld. CIT- 38(Appeal) have miserably failed to construe/consider.
3. That the Appellant craves the leave of this Hon’ble Court to add, amend, alter or withdraw any ground of appeal at the time of hearing.
The present appeal is barred by time. It is stated by the assessee that the impugned order was passed on 07.02.2019, which was communicated to the assessee on 23.02.2019. However, the unintentional delay of 326 days has occurred in filing the present appeal, excluding the period extended by the Hon’ble Supreme Court from time to time. Learned counsel has also placed on record the affidavit filed by the assessee in support of the application seeking condonation of delay. Learned DR has opposed the submissions. However, looking to the facts stated in the affidavit we are of the considered view that there was a reasonable cause for delay in filing the appeal. The same is hereby condoned. Appeal of the assessee is taken up for hearing on merit of the case.
3. Facts giving rise to the present appeal are that the case of the assessee was reopened u/s 147 of the Income-tax Act, 1961 (in short “the Act”). The basis for reopening of the assessment, as recorded in the assessment order, was that the assessee had not filed his income-tax return for the assessment year under consideration. However, as per the details appearing in Form 26AS, a sum of Rs. 81,12,754/- was paid to the assessee on which TDS u/s 194C of the Act was deducted. In response to the statutory notice u/s 148, the Authorized Representative of the assessee attended the proceedings.
After considering the explanation of assessee, the Assessing officer made addition of Rs. 6,33,832/- on account of the difference between the gross contract receipts and as declared by the assessee in its return of income. Further, the Assessing Officer made addition of Rs. 2,14,176/- being the interest received from the bank, which was not disclosed by the assessee. Hence, the Assessing officer computed the total income of Rs. 11,42,928/-.
4. Aggrieved against this the assessee preferred appeal before the learned CIT(Appeals), who sustained the addition made by the Assessing Officer on account of the contract receipts and the interest income. The assessee has preferred the present appeal against sustaining the addition of Rs. 6,33,832/- being the contractual receipts.
5. Apropos to the grounds of appeal, learned counsel for the assessee reiterated the submissions as made in the statement of facts. For the sake of clarity the submissions of the assessee are reproduced as under;
“1. That during the year under consideration i.e. Assessment Year 2010-11, the Appellant/Assessee was engaged in the business of Civil Construction Works and had performed /executed Works Contracts for M/s. EXECUTIVE ENGINEER CENTRAL SECTT DIVISION (PAN/TAN:DELE0369E) aggregating Rs.72,64,748/-(Seventy Two Laces Sixty Four Thousands Seven Hundreds Forty Eight Only)and M/s. MAHAVIR HANUMAN DEVELOPERS PRIVATE LIMITED (PAN / TANrDELM 13493E) aggregating Rs.6,33,832/-(Six Laces Thirty Three Thousands Eight Hundreds Thirty Two Only) and had also earned interest on FDR/SB Account amounting Rs.2,14,176/-(Two Laces Fourteen Thousands One Hundred Seventy Six Only.)The Income Tax Return for the pertinent Assessment Year was filed on 20.09.2010 by declaring Returned Income at Rs.2,94,920/-(Two Laces Ninety Four Thousands Nine Hundreds Twenty Only) wherein Receipts/Credit of Rs.6,33,832/-(Six Laces Thirty Three Thousands Eight Hundreds Thirty Two Only) from M/s. MAHAVIR HANUMAN DEVELOPERS PRIVATE LIMITED (PAN/TAN:DELM13493E) and interest on FDR/SB Account amounting Rs.2,14,176/-(Two Laces Fourteen Thousands One Hundred Seventy Six Only) inadvertently could not be included/reflected and in view of which the case of the Appellant was selected under NMS Cycle and after recording reason that the Appellant has not filed Income Tax Return for A.Y. 2010-11 and thereby has escaped assessment of income as per details of payment/credit of Rs.81,12,754/-(Eighty One Laces Twelve Thousands Seven Hundred Fifty Four Only) reflecting into the account of the Appellant and as evident from 26AS(ITD) and on which TDS U/s 194C 8s 194A has been deducted.
2. That After taking necessary approval a Notice was issued U/s 148 of The Act to the Appellant on 31.03.2017 for the purpose of commencing reassessment proceedings in case of Appellant and consequently a Notice U/s 143(2) of The Act was also issued and the A.R. of the Appellant in compliance to abovesaid Statutory Notice attended the Assessment proceedings from time to time and provided/furnished relevant document/details as and when directed. After conclusion of assessment proceedings, Ld. Assessing Officer passed an Assessment Order on 24.11.2017 U/s. 143(3) of The Income Tax Act, 1961 by making unjustified, whimsical and arbitrary addition of Rs.6,33,832/-(Six Laces Thirty Three Thousands Eight Hundreds Thirty Two Only) being difference of Gross Receipt of Rs.72,64,748/-(Seventy Two Laces Sixty Four Thousands Seven Hundreds Forty Eight Only)as claimed in the Profit & Loss Account and Gross Receipts /Payment of Rs.78,98,580/- (Seventy Eight Laces Ninety Eight Thousands Five Hundreds Eighty Only) as reflecting in 26AS (ITD) and further sum of Rs.2,14,176/-(Two Laces Fourteen Thousands One Hundred Seventy Six Only) being interest on FDR/Saving Bank Account as not disclosed at the time of filing Income Tax Return for the relevant A.Y. 2010-11.
That aggrieved from the impugned Assessment Order dated 2^.11.2017,the Appellant preferred an Appeal before Ld. CIT- 38(Appeals), New Delhi on 23.01.2018 whereby it was agitated that the entire Work Contract Receipts of Rs.6,33,832/-(Six Laces Thirty Three Thousands Eight Hundreds Thirty Two Only)received/credited from M/s. MAHAVIR HANUMAN DEVELOPERS PRIVATE LIMITED (PAN/TAN:DELM13493E) cannot be added to the Returned Income because the entire Contractual Receipts cannot be presumed to be escaped Income and therefore only Profits Elements/Income part out of such Receipts by working out either on estimated basis or on average Net Profit Ratio basis be treated as income of the Appellant .
That the Ld. CIT-38(Appeal) disposed off the Appeal vide Order dated 07.02.2019(communicated on 23.02.2019) and irrationally and unjustifiably upheld impugned additions made by Ld. Assessing Officer and thereby dismissed the Appeal of the Appellant merely by observing that the Appellant/Assessee has not discharged the amount of Work Contract Receipts of Rs. Rs.6,33,832/-(Six Laces Thirty Three Thousands Eight Hundreds Thirty Two Only)received/credited from M/s. MAHAVIR HANUMAN DEVELOPERS PRIVATE LIMITED (PAN/TAN:DELM13493E) and hence this addition is sustained and further that the Assessee has not disclosed the Interest Income of Rs. 2,14,176/-(Two Laces Fourteen Thousands One Hundred Seventy Six Only)in ITR therefore this addition is also sustained.
That the Ld. CIT(Appeal)while passing Appeal Order miserably failed to appreciate that by adding entire Work Contract Receipts of Rs.6,33,832/-(Six Laces Thirty Three Thousands Eight Hundreds Thirty Two Only)which inadvertently missed /left out be included in the Gross Receipts of Rs.72,64,748/- (Seventy Two Laces Sixty Four Thousands Seven Hundreds Forty Eight Only) shall result unjustified demand of tax liability because the entire Receipts of Rs.6,33,832/-(Six Laces Thirty Three Thousands Eight Hundreds Thirty Two Only) does not contain the element of Profits/Income and the income escaped from addition/assessment could be worked out by taking estimated/average Net Profit ratio of the inadvertently excluded Receipts. Hence the approach and conduct of Ld.AO and Ld.CIT is illegal and perverse and if the impugned additions is not deleted /modified it will result unjust financial burden upon the Appellant because of injustice done by the Assessing Officer and Appellate Commissioner of Income Tax.”
On the contrary, learned Sr. DR opposed the submissions and submitted that the Assessing Officer has pointed out that there was a difference of Rs. 6,33,832/-, which the assessee failed to disclose. Therefore, the Assessing officer was justified in making the addition. He contended that it was incumbent upon the assessee to disclose true and correct particulars of the income of the assessee.
In rejoinder, learned counsel for the assessee submitted that only profit element embedded in such receipts could be added. The authorities below grossly erred in making addition of entire receipts.
We have heard rival contentions and perused the material available on record. We find that the Assessing officer has stated in the assessment order that during the year under consideration the assessee had received gross contract receipts of Rs. 78,98,580/- whereas in the return filed originally the assessee had declared gross receipts of Rs. 72,64,748/-. Hence, there was difference of Rs. 6,33,832/-. We find that the reason for reopening of the assessment was that the assessee failed to file his income-tax return for the assessment year under consideration. However, it was pointed out by the assessee that the assessment for the assessment year 2010-11 was completed u/s 143(3) of the Act.
Copy of income-tax return for A.Y. 2010-11 and the copy of the order passed u/s 143(3) of the Act were enclosed for ready reference. It was sated that the assessment was made on PAN AFVPG4351E and request for cancellation of other PAN AANPG5093Q was submitted verbally at the time of assessment. It was pointed out that the credit of TDS was duly taken and the relevant income was duly shown in income-tax return filed for the assessment year 2010-11. This fact is not rebutted by the Revenue. Therefore, looking to the facts and the assessment order which has duly recorded about the contract receipts, since the assessee has pointed out before the Assessing Officer about the return filed by him and the disclosure of income as business receipts, the Assessing Officer should not have made addition of the entire receipts. We, therefore, restrict the addition to the extent
12.5% of the contract receipt, being the profit element embedded into such contractual receipts, which was not disclosed in the return of income, which comes to Rs. 79,229/-.
Ground raised by the assessee is partly allowed.
In the result, appeal of the assessee is partly allowed.
Order pronounced in open court during the course of hearing on 22.11.2022.