SHAILESH BANSILAL DESAI ,MUMBAI vs. INCOME TAX OFFICER, WARD 17(3)(2), MUMBAI

The CIT (A) has erred in passing the appellate order without service of the notice to the appellant in the required manner and thereby denying the opportunity of being heard to the appellant. The appellant respectfully submits that the notices said to have been served through the ITBA portal have not been served on the appellant and the appellant has also not received any real time alert in respect of the said notices.

The CIT (A) has erred in confirming the addition of Rs. 85,50,860/- made by the assessing officer without appreciating the correct facts of the case and in disregard of the explanations given by the appellant during the course of the assessment proceedings.

Without prejudice to any of the above grounds, the CIT (A) has erred in confirming the order of the assessing officer making the addition for the total amount of alleged difference in the receipts without appreciating the fact that the appellant has been disclosing incomes at 10% of total contract receipts and the said treatment has also been accepted by the revenue in regular assessment for earlier years.”

The assessee is an individual and is a proprietor of Ms.Purvi Constructions engaged in the business of Building Contractor. The assessee filed the return of income for AY 2013-14 on 29.09.2013 declaring a total income of Rs.4,76,770/-. The assessee offers 10% of the gross receipts as the revenue from the construction business. The case was selected for scrutiny under CASS and the statutory notices were duly served on the assessee. The Assessing Officer (AO) during the course of hearing issued notice under section 133(6) to two of the parties to whom assessee has rendered services in order to verify the correctness of the income declared by the assessee. After perusing the responses received from the parties with regard to the payments made to the assessee during the year under consideration the AO was of the view that the assessee has understated the revenue and called on the assessee to provide explanation for the difference. The assessee submitted that the difference may arise for the reason that the payments may be towards advances or retention money etc., and that the entire receipt may not be treated as income by the assessee. The AO did not accept the submissions of the assessee and accordingly treated the difference amount of Rs.85,50,860/- as the income of the assessee. Aggrieved the assessee filed further appeal before the CIT(A). Since the assessee did not respond to the notices, the CIT(A) decided the appeal ex-parte based on the material available on record confirming the additions made by the AO. The assessee is in appeal before the Tribunal against the order of the CIT(A).

We heard the parties and perused the material on record. The ld. AR during the course hearing submitted a table containing the details of each of the payments made by the two parties to substantiate that the entire payments have been accounted by the assessee in the books of accounts. The ld. AR further argued that the payments made by the parties cannot be equated with the income since the payments may related to income accrued earlier or towards advance etc. The ld. AR also argued that some of the receipts are towards retention money which are not income in the hands of the assessee. From the perusal of the AO's order we notice that the AO has admitted the fact that the assessee has offered the income which matches with the 26AS. However the AO in order check the completeness of the income offered issued notice under section 133(6) of the Act to two parties. We further notice that the details furnished by the parties in response pertain to the payments made to the assessee which is an admitted fact by the AO. The issue of whether the entire payment made by these parties are in the nature of income or whether they are payments made towards advance or against earlier outstanding etc., need to be examined factually. It is noticed that the AO has not examined the issue based on any evidences or did not call for any records from the assessee. It is further noticed that the AO has made the addition merely based on the response received from the parties without going into the details. It is also noticed that the CIT(A) has passed the order ex-parte confirming the addition since the assessee has not responded. In view of these discussions and considering that the details of the payments made by the parties (as submitted in the statement by the ld. AR before us) needs factual examination, we are remitting issue back to the AO. The AO is directed to examine the details of the payments as submitted by the parties whether in the nature of income or advance or receipts against outstanding etc., and give relief to the assessee accordingly. Needless to say that the assessee be given a reasonable opportunity being heard. It is ordered accordingly.

In result the appeal of the assessee is allowed for statistical purposed.