SHRI KAMALPUR GO SEVASAHAKARI MANDLI LTD,GOTHAVA vs. INCOME TAX OFFICER WARD 1 PATAN, PATAN

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

The Ld. CIT(A) has erred in confirming the addition of Rs.22,36,143/- on the ground that appellant has erred in not disclosing the income of work contract to the tune of Rs 22,36,143/- purely on the basis of Form 26AS. It is submitted that appellant Cooperative Society is not at all engaged or involved in any such contract work or contract receipts under Section 194C list in contract of Rs 22,36,143/-, It appears that information received on the wrong PAN Number is straightaway added without appreciating the facts and records. It is submitted that such incorrect addition be deleted 2. The Ld. CIT(A) has erred in confirming the additions of RS. 22,36,143/- purely on the basis of information in his possession in Form 26AS, wherein the PAN Number of the appellant appears to have been mention by somebody else by mistake The appellant trust has never received or executed or any such work at any time in its history. In view

Shri Sunil Talati, the Ld. AR of the assessee submitted that the case of the assessee was reopened on the basis of information available in Form 26AS as per which the assessee had received contract receipt of Rs. 22,82,136/- on which TDS of Rs. 45,643/- was made. He submitted that this information was in respect of PAN No. AAAAS1489S, which was duplicate PAN of the assessee and not in use. He explained that someone else had misused the duplicate PAN of the assessee and carried on this contract work. He explained that the contract receipts of Rs. 22,82,136/- as appearing in Form 26AS was not received by the assesse in its bank account as no such work was carried out by the assessee. As regards submissions made before the AO, the Ld. AR submitted that the accountant of the assessee in order to avoid litigation had wrongly submitted before the AO that the contract amount was received by the assessee. He further submitted that the assessee had did not take credit of TDS of Rs. 45,463/- deducted on this contract receipt in the return filed. The Ld. AR further submitted that since no contract was carried out by the assessee and there was no contract receipt there could not have been any evidence for expenses incurred in respect of this contract. He, therefore, requested that the matter may be set aside to the file of the AO with a direction to verify the correct facts and thereafter re-adjudicate the matter.

We have considered the rival submissions. There is no dispute to the fact that the contract receipts of Rs. 22,82,136/- was reflected in PAN No AAAAS1489C belonging to the assessee on which TDS of Rs. 45,643/- was made. Before the AO, the assessee had admitted the receipt of this contract amount against which contract expense of Rs. 22,36,143/- was debited to P&L account. In the absence of any evidence for the contract expense, the AO had disallowed the entire expense of Rs. 22,36,143/-. The action of the AO in disallowing the entire contract expense could not be justified. By disallowing the contract expense, the AO had brought to tax the entire contract receipt, which was not correct. If the assessee was unable to bring on record any evidence for the contract expense, the AO should have rejected the trading account and worked out the profit out of contract receipt by applying the provision of section 44AD of the Act. Before the CIT(A) as well as before us, the assessee has taken a plea that no contract work was executed by it and the contract amount was never received. In support thereof, the assessee

In the result, the appeal of the assessee is allowed for statistical purpose.