SHRI RAJ KUMAR AGARWAL,,BHARUCH vs. THE INCOME TAX OFFICER, WARD-3,, BHARUCH

This appeal, filed by the assessee, challenges correctness of learned CIT(A)’s order dated 1st November 2013 in the matter of assessment under section 143(3) of the Income Tax Act, 1961 (‘the Act’ hereinafter) for the assessment year 2004-05.

Grievances raised by the appellant are as follows:-

To adjudicate on the above grievances, only a few material facts need to be taken note of. The assessee has mainly earned income embedded in contract receipts from ONGC Limited, aggregating to Rs.1,32,38,175/-, sale of agricultural products, aggregating to Rs.26,23,493/-, contract from Himalaya Tea Estates, aggregating to Rs.14,57,987/-/ and petty contract receipts aggregating to

I have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position.

As learned Counsel for the assessee rightly points out, the amount of Rs.14,57,987/-, which has been added to the returned income, was already included in the gross receipts disclosed by the assessee. What is already included in the computation of business profits cannot be added again to the income returned by the assessee. The disallowance, if at all, could only be for the expenses incurred on execution of a contract, which is found to be a bogus or sham arrangement, but then no such disallowable expenses have been identified by the authorities below. The Assessing Officer has added entire contract receipt and the learned CIT(A) has confirmed the same. To this extent, Assessing Officer as well as CITA were clearly in error. These authorities proceeded on the assumption that entire receipts were claimed as deductions in expenses but then the Assessing Officer has made observation to indicate that the assessee has not claimed deduction for expenses. 6. In view of the above discussions, in my considered view, the matter deserves to be remitted to the file of the Assessing Officer with a direction to restrict the addition to disallowance of such direct expenses, in connection with the works contract with Himalaya Tea Estate, as has been claimed as deduction by the assessee. In case there are no such expenses claimed by the assessee, obviously there will be no occasion for disallowance of expenses. With these directions, the matter stands restored to the file of the Assessing Officer. As we have remitted the matter to the file of the Assessing Officer on the above short ground, all other issues remain open and the assessee is at liberty to seek adjudication on the same. 7. In the result, the appeal is allowed for statistical purposes in the terms indicated above. Pronounced in the open court today on the 14th February, 2018.