JV OF KIRAN INFRA ENGINEERS LTD. & ELIOP,JAIPUR vs. INCOME TAX OFFICER, WARD-4-2, JAIPUR

ORDER PER: SANDEEP GOSAIN, J.M. The present appeal has been filed by the assessee against the order of the ld. CIT(A), Ajmer dated 01/03/2019 for the A.Y. 2010-11, wherein the assessee has raised following grounds of appeal:

2. On the facts and in the circumstances of the case and in law, ld. CIT(A) has grossly erred in confirming addition of Rs.1,18,96,853/- in the hands of M/s JV of Kiran Infra Engineers Ltd. and ELIOP and thereby taxing the income, which was already offered for taxation in the hands of Kiran Infra Engineers Ltd. and thereby the addition is against the settled principles of law that the same income cannot be taxed twice. Appellant prays addition so made deserves to be deleted.”

3 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO equipment with Route Setting Panel Interlocking at 21 stations in connection with MG (Meter Gauge) to BG (Broad Gauge) conversion on Samdari-Bhildi Railway Track (223.44 KM) of North Western Railways in terms of the joint venture agreement made and executed on 18.12.2007. Upon formation of such Joint Venture, they become eligible to participate in the bidding process and excepting this there was no role assigned to the joint venture. Having been awarded the contract by M/s Rail Vikas Nigam Ltd., it was decided between the parties that, the responsibility of the execution of work awarded, project administration, financial, legal and other documentation work was to be the sole responsibility of the lead partner of the JV i.e. M/s Kiran Infra Engg. Ltd. (hereinafter referred to as KIEL) and responsibility of other partner i.e. Eliop SA was to provide technical support to Lead partner in execution of work. Accordingly, M/s KIEL took the initiative and discharged its obligation of execution of project, provided administrative and financial support and entire contractual receipts released to assessee by Railways in consideration to the projects carried out were transferred to KIEL. Apart from this, assessee had neither received any income nor incurred any expenditure except bank charges amounting to Rs.550/- and accordingly, net result of trading operations of assessee JV was loss of Rs.550/-. Assessee, under bonafide belief that since total

4 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO income was below maximum amount not chargeable to tax, did not file Return of Income nor claimed the credit of TDS of Rs. 30,85,720/-. Subsequently, case of assessee was reopened by issuance of notice u/s 148 of the Income Tax Act, 1961. In response to such notice, assessee furnished return of income declaring loss of Rs.550/-. Details and explanation as required by AO were furnished and assessment was completed by the AO vide order dated 27.12.2017 by assessing total income of assessee at Rs.1,18,96,853/- by applying net profit rate of 8% on contract receipts by assuming that the contract work was executed by the assessee itself and not by its lead partner M/s KIEL though the payments made to it were not doubted.

5 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO the written submissions filed before the ITAT and the contents of the written submissions regarding grounds taken are as under:

“All these grounds of appeal relates to the action of the ld. AO in making addition of Rs. Rs.1,18,96,853/- made by ld.AO by applying profit rate of 8% on contract receipts amounting to Rs.14,87,10,667/- in arbitrary manner without appreciating the true nature of transaction which is duly supported by the Joint venture Agreement and rejection of the appeal by the Ld. CIT(A) without appreciating the true character of the income / loss in the hands of the appellant.

Facts pertaining to the grounds of appeal as stated above are that assessee Joint Venture was formed for participating in the bids invited by M/s Rail Vikas Nigam Ltd. for the Supply, Installation, Testing and Commissioning of Signalling Equipment with Route Setting Panel. Interlocking at 21 stations in connection with MG (Meter Gauge) to BG (Broad Gauge) Gauge Conversion on Samdari - Bhildi (223.44 Km) of North Western Railway. (Copy of Joint Venture Agreement is placed at APB 6-8).

The contract was awarded after objective analysis of the tender submitted and the work executed is subject to the critical inspection and supervision by the Railways Authorities requiring frequent re- doing of the job as any failure in signalling system involves precious public life. Safety and the infallibility of the Indian Railway signalling system is a well known feature thus the job entails very high technical competence and is always material intensive i.e. the cost of material involved in the works is very high and quite substantial in comparison to other elements of cost like labour etc. The material involved in such jobs is of special grade and requires constant development for 6 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO obtaining specially designed products which makes it a high cost affair.

During the year under consideration, assessee received a sum of Rs. 14,87,10,667/-towards execution of the work awarded by Rail Vikas Nigam Limited (RVNL) (Copy of work order enclosed at APB 9-11). As per clause 4 of the joint venture agreement, the work awarded to assessee was to be fully and totally executed by the lead party to Joint Venture i.e. KIEL and accordingly M/s KIEL (lead partner) executed the entire work and appellant JV transferred the entire receipts of the year at Rs.14,87,10,667/- to M/s KIEL the executant company in its books of accounts and treated such receipts as its business receipts and after claiming the deduction of the expenditure involved, the gross income of Rs. 88,76,377.40 was declared on this receipt in its Financial statements, copies of which were submitted to Id. AO as well as to ld. CIT(A) (APB 16-34 relevant pages 17, 25 and 34). However, ld.AO did not accept the submission made by assessee by observing as under: - That assessee could not produce books of accounts and supporting bills and vouchers of M/s KIEL thus claim of assessee remained unverified and unproved; - That the assessment in case of KIEL was completed u/s 143(1) thus the income declared by it remained unverified by the department. - That assessee has not declared such receipts in its return of income nor got it's accounts audited. - That in subsequent assessment years, the appellant has declared certain profits on the receipts from the same contract. Ld. CIT(A) concurred with the findings of ld. AO and further observed that if at all it is a case of double taxation, the remedial action has to be 7 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO taken by M/s KIEL and not by the appellant as the income relates to appellant company. In this regard, at the outset, it is submitted that KIEL is a closely held public limited company and is a distinct legal entity over which the assessee appellant has no power to compel KIEL to produce its books of accounts, financial results and despite above, the assessee furnished copy of ITR alongwith computation of income of M/s KIEL and also the balance sheet set of M/s KIEL duly evidencing the contract receipts and contract expenses from the project of assessee JV. However Ld. AO ignored these details and evidences and proceeded to make additions without rebutting these documents and evidences and without bringing on record any contrary evidence any by merely observing that books of accounts of M/s KIEL were not produced by assessee JV. It is submitted that if ld. AO was so keen to verify the books of account of another party (namely M/s KIEL) in case of assessment proceedings of assessee JV, then as ld.AO has vast powers and could have issued summons u/s 131 and directed the company KIEL to produce the books before him. However, ld. AO, opted not to call the records of KIEL directly. Without prejudice to above, it is submitted that the books of accounts of M/s KIEL are duly audited by qualified chartered accountants without any adverse remarks and the income earned by it from the execution of the contract was forming part of the total income declared for which all the necessary evidences were submitted before the ld. AO as well as before the ld. CIT(A). It is further submitted that as per the terms of joint venture agreement, parties to the agreement had to make their own arrangements to bring all the resources may it be manpower, plant, equipments or any other resources required for execution of their respective portions. Accordingly

8 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO appellant was neither owning any assets nor had employed any manpower for execution of contract and rather got the work executed through its JV partners who had discharged the obligation of the assessee JV. Accordingly, for the sake of convenience and instead of routing all the entries through JV, which would have inter alia included notional charges for various resources held by JV partners and utilized for the execution of projects, it was mutually decided by KIEL and ELIOP, the other consequent of the JV, that entire receipts would be taken by the lead partner i.e. KIEL, who ultimately executed the work after incurring all the expenses and also paid to ELIOP towards technical support services provided by it. In support of such contention, assessee furnished Cost Control account (contract wise summary of contract receipts and expenses) maintained by KIEL (APB 34) wherein M/s KIEL has duly declared entire receipts of Rs.14,87,10,667/- in its books of accounts and after claiming expenses towards such contractual receipts, has declared profit to the tune of Rs.88,76,377.40 from impugned project, which gives a profit rate of around 6% and due taxes were paid on that by it. It is further submitted that both the assessee as well as KIEL are under same tax slab, therefore there was no loss to revenue in the event the work receipts were declared by KIEL. At this juncture, attention of the hon'ble bench is invited to the decision of Hon'ble Jaipur ITAT of a group firm namely M/s Kiran Tirupati Mangla JV in (APB 35-55), where similar activity was carried out and AO had taxed the entire receipts in the hands of JV though the work was executed by one of the constituent i.e. Kiran Infra Engineers Ltd. (the appellant itself) Hon'ble bench after considering the facts, has held that since the entire receipts were owned and declared by one of the constituent of JV, no addition

9 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO could be made in the hands of JV and thereby upheld the order of ld. CIT(A) rejecting the appeal of department. In the present case also, the facts are identical. Here also the same company M/s KIEL has entered into JV and assessee JV got the contract as per agreement, same was executed fully by M/s KIEL and M/s KIEL has shown entire receipts in its books of account and paid due tax as resultant profit earned out of this project is forming part of total income of M/s KIEL and thus already included in its profit. Thus the ratio laid down in this case is fully applicable here. However, ld. CIT(A) has ignored the order of the Hon'ble Bench in its entirety and by grossly ignoring the para 2 at page 19 of the order (APB 53) had tried to take shelter of subsequent para to reject the appeal of the assessee. Ld. CIT(A) based on the observation of hon'ble bench as contained in last para of order at page 19 (APB 53) had observed that in the above stated case an application u/s 264 was filed by the company KIEL before the ld. CIT(Adm.) which stood rejected thus there was no option available to declare such income in the proper hands. Here in the present case since no such application was filed, addition cannot be deleted. Section 5 of the Income Tax Act, 1961 provides for scope of income chargeable to tax and to the extent relevant to the issue it reads: "accrues or arises or is deemed to accrue or arise to him . . . .". What is chargeable to tax is income, which has accrued or arisen to a person. The concept of accrual was considered in E. D. Sassoon & Co. v. CIT, (1954) 26 ITR 27 (SC) and it was held: "What is sought to be taxed must be income and it cannot be taxed unless it has arrived at a stage when it can be called income". In the present case no income whatsoever has arisen to the appellant joint venture as the project was not executed by the assessee joint venture but was actually 10 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO executed by M/s KIEL and entire receipts from such execution have been declared by M/s KIEL. In this regard reliance is placed on the following: 374 ITR 35 CIT Vs. Oriental Structural Engineers Pvt. Ltd. (Delhi) 372 ITR 429 CIT Vs. SMSL-UANRCL (JV) (Bom.) 37 DTR 49 Hyundai Rotem Co., In Re (AAR) He has further submitted that further the concept of real income is applied in the case as the assessee has not earned any income eligible for payment of tax. In this regard he has relied on the decision of the Hon'ble Supreme Court in case of CIT V/s. Shoorji Vallabhdas and Co.[1962] 046 ITR 0144. He has also relied on the decision of the Hon'ble Karnataka High Court in case of CIT (Asst.) V/s. Industrial Credit and Development Syndicate Ltd.120061 285 ITR 0310. The ld AR has also relied on the decision of the Hon’ble Supreme Court report in 225 ITR 746 Godhara Electricity Co. Vs. CIT (SC) In view of above, it is submitted that in the present case all the receipts related to work as well as profit earned were only belonged to M/s. KIEL and have been duly accounted in the book of accounts of M/s. KIEL and taxes have been paid. Now after the lapse of almost 7 years, by holding the same as the income of the appellant joint venture without at all appreciating the true nature of income, the Joint venture is made liable for payment of tax on the same income which has already suffered tax in the hands of M/s KIEL where the return filed stood accepted u/s 143(1). Such an act of the ld. AO is taxation of an income twice. It is a settled proposition of law that an income cannot be taxed twice unless otherwise expressly provided. Hon'ble Supreme court in the case of Laxmipat Singhania v. CIT (72 ITR 291) held that "Taxing Statute should not be interpreted in such a manner that its effect will be to cast a burden twice over the payment of tax 11 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO on the taxpayer unless the language of the statute is so compellingly certain that the court has no other alternative than to accept it." He has relied on the decision of the Hon'ble Apex court in case of Jain Brothers and Others vs. Union of India and Others (1970) 77 ITR 107 (SC). The ld AR has also relied on the decision in the case of R. Natrajan Vs ACIT (Third Member, ITAT, Chennai D Bench) in ITA NO. 1058/Mad/2010. The ld AR has also relied on the following decisions : Mahaveer Kumar Jain Vs. CIT (SC) in Civil Appeal No. 4166 of 2006 order dt.19.4.2018 49 ITD 6 Kirtikumar Vinodray, vs ITO (ITAT- Ahmedabad ) M/s Delite Properties Pvt. Ltd. -versus- I.T.O. (ITAT, Kolkatta-A Bench) Further, with respect to allegation of ld. AO regarding not furnishing bills and supporting vouchers in respect of expenses claimed by KIEL, as submitted above, M/s KIEL is a separate legal entity and assessee had neither access to books of accounts of KIEL nor had authority to direct its office bearers to provide books of accounts to be produced before ld. AO. Therefore, during the course of assessment proceedings, it was requested before ld. AO that direct enquiry may please be made from KIEL by issuing notice u/s 133(6) and it may be directed to furnish books of accounts. However, no action was taken by ld.A0 and rather adverse inference was drawn in the case of assessee and it was presumed that assessee JV may have executed the project, which is quite contrary to the facts on record. Further without having any material in possession and also without bringing on record any comparable case, profit rate of 8% is applied. Ld. CIT(A) while upholding this exorbitant profit rate has observed that in the case of M/s KIEL the profit rate of 8% is applied in its assessment completed u/s 143(3) and failed to appreciate the fact that such a 12 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO high rate of profit as applied was deleted in appellate proceedings in the case of M/s KIEL. Regarding the remedial action u/s 264 not taken by M/s KIEL, as has been observed by ld. CIT(A) making it as a ground for not following the earlier order of this bench of Hon'ble ITAT, it is submitted that the return of income for AY 2010-11 was originally filed by M/s KIEL on 25.9.2010 (APB 20) and the same was revised on 23.3.2011(APB 16). As per section 264, application can be filed by the assessee within a period of one year from the communication of order in question. In the present case, since no order was passed in the case of M/s KIEL, thus there was no occasion with M/s KIEL to file any petition u/s 264. Further the appellant has the option of filing of appeal wherein it has every hope of success thus it had pursued the appellate proceedings. Here it is also relevant to state that as under identical circumstances, hon'ble Bench has allowed the appeal in one of the group Joint Venture namely M/s Kiran Tirupati Mangla JV (supra), assessee was confident that following the judicial precedent, it would get the relief in appellate proceedings. In view of above, it is again submitted that the Joint venture was entered into for getting the eligibility for participating in the tender and accordingly in the Joint Venture Agreement, specific role of the parties was defined i.e. the execution of entire contract work was to be done by KIEL that too from its own resources, manpower, equipment etc., and other party Eliop, SA would be responsible for providing the technical support. Since the receipts in the year solely towards the execution of the work therefore, entire receipts were owned by M/s KIEL and profit earned thereon was offered by M/s KIEL for taxation in the return of income filed in due course after incorporation such income in its financial statements. Now making 13 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO trading addition in the case of assessee on the same receipts again by holding the same as its income, amounts to double taxation of an income, which is contrary to the provisions of law and deserves to be deleted.”

16. We have considered the rival submissions and perused the material available on record. As the facts emerge from the record, the impugned M/s Rail Vikas Nigam Ltd. Contract for all practical purposes was executed by M/s Kiran Infra Engg. Ltd. being a lead partner of the joint venture who was fastened with 18 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO various obligations for effective completion of project including use of its own funds and resources; providing administrative and other necessary support as required from time to time. The receipts and income arising thereon was accounted for in the books of accounts of M/s Kiran Infra Engg. Ltd. The project income was offered to tax in its return of income, which is accepted by the department and the TDS credit was also given. This JV constituent having taken over all the responsibilities regarding execution of the work including administrative and financial support etc., department also has not disputed the facts of Kiran Infra s being lead partner. In these circumstances it cannot be assumed that department taxed the income in wrong hand.

The concept of accrual of income is considered by the Hon’ble Supreme Court in the case of E. D. Sassoon & Co. Vs CIT (26 ITR 27) (SC) wherein it was held that what was sought to be taxed must be income. As per the harmonious reading of JV agreement, respective obligation, the project income was accruable to said Kiran Infra. Since the income was already taxed in the hands of Kiran Infra there is no occasion to hold that it accrued to the assessee so as to tax it again. Thus the action of the AO to tax the assessee on the income already taxed in the hands of M/s Kiran Infra tantamount to double addition which is not permissible in law.

The petition U/s 264 was filed by M/s Kiran Infra on 04.03.2011 before CIT-II, Jaipur to avoid the hardship proposed by the department in taxing the assessee again. The approach of the department is incomprehensible as on one hand it accepted the assessment in the hands of Kiran Infra, then it desired to tax assessee as a logical consequence Kiran Infra approached under 19 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO a statutory provision of law to revise the order u/s 264. Sec. 264 being a statutory remedy is to be exercised with judicious approach. If the CIT rejects the petition it also implies that department accepts the assessment in the hands of Kiran Infra. In this situation ld. CIT(A) is justified in deleting the assessment in the hands of the assessee as tantamount to double taxation. Assessee’s predicament is discernible since the petition U/s 264 had been rejected, time to file the revised return had already expired on 31.03.2010 and the income stood taxed in the hands of M/s Kiran Infra Engineering Ltd. This left the assessee in a precarious situation of denying the legal remedy; consequently the impugned appeal became necessary. The department cannot insist on unjust enrichment by taxing twice the same income in the pretext of some technicalities. In view of the facts, circumstances and various judgment authorities cited above on these issues, we see no infirmity in the order of ld. CIT(A) in deleting the assessment and impugned additions in the hands of the assessee. The order of ld. CIT(A) is upheld and revenue grounds are rejected.”

Association of persons — Finding that joint venture formed only to secure contract —Each partner's task distinctly outlined — Entire work split 20 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO between two partners —Partners completing task through sub-contracts — Partners responsible for satisfaction of contract — Joint venture not to be treated as association of persons liable to tax —Income Tax Act, 1961, s. 2(31). In the case of CIT Vs. SMSL-UANRCL (JV) (Bom.) 372 ITR 429, the Hon’ble High Court has held:

Assessment — In whose hands taxed —.Assessee a joint venture project work done by one of assessee's constituents — Receipts for project work reflected in books of account and in return of constituent — Return accepted and assessment completed — Income cannot be taxed in hands of assessee — Income Tax Act, 1961, s. 3. In the case of Hyundai Rotem Co., In Re (AAR) 37 DTR 49 has held that:

Four companies having formed a consortium for the purpose of bidding and executing a contract under an agreement whereby each member is assigned a specific and distinct field of work, and existence of partnership or joint venture among the parties is expressly denied, and each member is retaining profits and bearing losses individually, the consortium cannot be treated as an AOP and therefore, the applicants can only be subjected to taxation on the basis that they are separate taxable entities. The Hon'ble Supreme Court in case of CIT V/s. Shoorji Vallabhdas and Co.[1962] 046 ITR 0144 has held as under:

"Income-tax is a levy on income. Though the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt, yet the 21 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a "hypothetical income", which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account." The Hon'ble Karnataka High Court in case of CIT (Asst.) V/s. Industrial Credit and Development Syndicate Ltd.120061 285 ITR 0310 has held that only real income alone is taxable. The relevant observations of the Hon'ble court are as under:

Income-tax—General principles--Income--Definition--Inclusive-But to be construed by natural connotation--Real income alone taxable. The inclusive definition of the word "income" in section 2(24) of the Income-tax Act, 1961 adds several artificial categories to the concept of income, but on that account, the expression does not lose its natural connotation. It has to be construed as comprehending only such things which are income according to the natural import of the term. It is the income which has really accrued or arisen to the assessee that is taxable. Whether the income has really accrued or arisen to the assessee must be judged in the light of the reality of the situation. When in reality there is neither accrual nor receipt of income by the assessee, even though an entry to that effect might in certain circumstances have been made in the books of account, it would not constitute income for the 22 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO purpose of levy of tax. A rebate obtained by the purchaser or remission of debt by a creditor would not result in the creation of income in the hands of the purchaser or debtor. The Hon’ble Supreme Court in the case of Godhara Electricity Co. Vs. CIT 225 ITR 746 (SC) has held that:

Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a hypothetical income, which does not materialize.

Hon'ble Apex court in case of Jain Brothers and Others vs. Union of India and Others (1970) 77 ITR 107 (SC), has held as under:-

"6 It is not disputed that there can be double taxation if the legislature has distinctly enacted it. It is only when there are general words of taxation and they have to be interpreted, they cannot be so interpreted as to tax the subject twice over to the same tax..... If any double taxation is involved, the Legislature itself has, in express words, sanctioned it. It is not open to any one thereafter to invoke the general principles that the subject cannot be taxed twice over." The above referred cases make it clear that there is no prohibition as such on double taxation provided that the legislature contains a special provision in this regard. Now, the only question remains to be decided is whether in fact there is a specific provision for including the income earned from the Sikkim lottery ticket prior to 01.04.1990 and after 1975, in the income-tax return or not. We have gone through the relevant provisions but there seems to be no such provision in the IT Act wherein a specific provision has been made by the legislature for including such an income by an assessee from lottery ticket. In the absence of any such provision, the assessee in the present case cannot be subjected to double taxation. Furthermore, a taxing Statute should not be interpreted in such a manner that its effect will be to cast a burden twice over for the payment of tax on the taxpayer unless the language of the Statute is so compelling that the court has no alternative than to accept it. In a case of reasonable doubt, the construction most beneficial to the taxpayer is to be adopted. So, it is clear enough that the income in the present 24 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO case is taxable only under one law. By virtue of clause (k) to Article 371F of the Constitution which starts with a non-obstante clause, it would be clear that only the Sikkim Regulations on Income-tax would be applicable in the present case. Therefore, the income cannot be brought to tax any further by applying the rates of the IT Act.

Taxes not to be imposed save by authority of law.- No tax shall be levied or collected except by authority of law.

25 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO 2. Complaints are still being received that while Income tax Officers are prompt in making assessments likely to result into demands and in effecting their recovery, they are lethargic and indifferent in granting refunds and giving reliefs due to the assessees under the Act. Dilatoriness or indifference in dealing with refund claims (either under section 48 or due to appellate, revisional, etc. orders) must be' completely avoided so that the public may feel that the Government are actually prompt and careful in the matter of collecting taxes and granting refunds and giving reliefs.

3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should— (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. 4. ………… 5. While officers should, when requested, freely advise assessees the way in which entries should be made in various forms, they should not themselves make any in them on their behalf. Where such advice is given, it should be clearly explained to them that they are responsible for the entries made in any form and that they cannot be allowed to plead that they were made under official instructions. This equally applies to the Public Relation Officers.

26 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO 6. The intention of this circular is not that tax due should not be charged or that any favour should be shown to anybody in the matter of assessment, or that where investigations are called for, they should not be made. Whatever the legitimate tax it must be assessed and must be collected. The purpose of this circular is merely to emphasis that we should not take advantage of an assessee's ignorance to collect more tax out of him than is legitimately due from him." 17. ….. 18. …….

19. The Income-tax Department is collecting tax not for itself. It is collecting tax for the Sovereign State, that is, Union of India. Union of India as the sovereign authority does not require to levy tax on an amount returned by mistake. The sovereign authority does not want to take advantage of a mistake committed by an innocuous assessee. It is not the policy of the Sovereign State to crave for undue enrichment. “ 15. We also found from the perusal of the record that with respect to allegation of AO regarding not furnishing bills and supporting vouchers in respect of expenses claimed by KIEL, as submitted above, M/s KIEL is a separate legal entity and assessee had neither access to books of accounts of KIEL nor had authority to direct its office bearers to provide books of accounts to be produced before AO. Therefore, during the course of assessment proceedings, it was requested by the assessee before AO that direct enquiry may be made from KIEL by issuing notice u/s 133(6) of the Act and it may be directed to furnish books of accounts. However, no action was taken by AO and rather adverse inference was drawn against the assessee and it was 27 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO presumed that assessee JV may have executed the project, which is quite contrary to the facts on record. Further without having any material in possession and also without bringing on record any comparable case, profit rate of 8% is applied. Ld. CIT(A) while upholding this exorbitant profit rate has observed that in the case of M/s KIEL the profit rate of 8% is applied in its assessment completed u/s 143(3) of the Act and failed to appreciate the fact that such a high rate of profit as applied was deleted in appellate proceedings in the case of M/s KIEL.

16. We also observe that regarding the remedial action u/s 264 not taken by M/s KIEL, as has been observed by ld. CIT(A) making it as a ground for not following the earlier order of this bench of ITAT, in this regard, it is submitted that the return of income for AY 2010-11 was originally filed by M/s KIEL on 25.9.2010 which is at page No. 20 of the paper book and the same was revised on 23.3.2011 which is also available at page No. 16 of the paper book. As per Section 264 of the Act, application can be filed by the assessee within a period of one year from the communication of order in question. In the present case, since no order was passed in the case of M/s KIEL, thus there was no occasion with M/s KIEL to file any petition u/s 264 of the Act. Further the assessee has the option of filing of appeal, thus had pursued the 28 ITA 711/JP/2019_ JV of Kiran Infra Engineers Ltd & ELIOP Vs ITO appellate proceedings. Even under the identical circumstances, the Coordinate Bench has allowed the appeal in one of the group Joint Venture namely M/s Kiran Tirupati Mangla JV (supra) and therefore, under such circumstances, assessee was confident of getting the relief in appellate proceedings.

सहायक पंजीकार@Aेेज. त्महपेजतंत