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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
आयकर अपीलीय अधिकरण “E” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI श्री महावीर स िंह, न्याययक दस्य एविं श्री व ीम अहमद, लेखा दस्य के मक्ष । BEFORE SRI MAHAVIR SINGH, JM AND SRI WASEEM AHMED, AM आयकर अपील सुं./ (यिर्ाारण वर्ा / Assessment Year 2009-10) Supertech Construction Co. The Asst. Commissioner of 601, Dwarka Apartment, Income Tax, Circle 32(3), बनाम/ Sheth Bajanlal Marg, Borivali Room No.108, 1st Floor, C-11, Vs. (east), Mumbai-400 066 BKC, Mumbai-400 050 (अपीलार्थी / Appellant) (प्रत्यर्थी/ Respondent) स्र्थायी लेखा सुं./PAN No. ABLFS5099K अपीलार्थी की ओर े / Appellant by : Shri Sashi Tulsiyan, ARs’ प्रत्यर्थी की ओर े / Respondent by : Shri Amit Pratap Singh, DR ुिवाई की तारीख / Date of hearing: 13.11.2019 घोर्णा की तारीख / Date of pronouncement : 29.11.2019 आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:
This appeal by assessee is arising out of order of the Commissioner of Income Tax (Appeals)]-44, Mumbai [in short CIT(A)], in Appeal No. CIT(A)-44/ACIT 32(3)/ITA-89/15-16 vide dated 06.10.2016. The Assessment was framed by the Asst. Commissioner of Income Tax, Circle-32(3), Mumbai (in short ACIT/ AO) for the A.Y. 2009-10 vide order dated 27.02.2015 under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
2 | P a g e Supertech Construction Co. 2. The first issue in this appeal of assessee is against the reopening of assessment and for this, assessee has raised the following ground No.1: -
1. On the facts and circumstances of the case as well as in law the Learned AO has erred in re-opening the assessment under section 148 of the I.T. Act. Appellant contends that the issuance of notice for reopening of the assessment itself was bad in law and consequently the reassessment order/ passed under section 147/143(3) is liable to be quashed.”
The learned Counsel for the assessee has not made any argument on this ground and hence, the same is dismissed as not argued.
The second issue on merits is as regards to the rejection of books of account and thereby applying profit rate at the rate of 8.17% on the gross receipts by relying on the decision of settlement commission for AY 2011-12. For this, assessee has raised the following grounds: - “2. On the facts and circumstances of the case as well as in Law the Learned A.O has erred in concluding the assessment by rejecting the books of account of the appellant without issuing 3 | P a g e Supertech Construction Co. any show cause or without providing reasonable opportunity of being heard to appellant and reasons assigned by him for doing the same are wrong and insufficient.
3. On the facts and circumstances of the case as well as in Law the Learned A.O. has erred in passing assessment for the year by relaying on the Settlement Commission Order for the AY 2010-11 reasons assigned by him for doing the same are wrong and insufficient.
Further, on the fact and circumstances of the case as well as in law the (earned A.O. has erred in applying 8.17% on the gross receipt of the Appellant to determine the total income of the appellant for the year in question and he has further arrived this 8.17% on the basis settlement order in the case of the appellant for the AY 2010-2011 as under: - A) Total income Determined by the Hon 67,89,069 Settlement Commission for AY 2010-11 B) Total turnover of the Appellant for the AY 8,30,28,539 2010-11 C) % of total income to turnover = (A) / (B) * 100 8.17% 4 | P a g e Supertech Construction Co. and simply applied this 8.17% on the gross receipts of the appellant for the year in clues even after understanding the details working of Total income determined by the settlement commission proceeding which was submitted and reproduced in the assessment order by the A.O.
4) a) On the facts and circumstances of the case as well as in Law the Learned CIT (A) erred in confirming the addition made by the AO on the ground that appellant is not interested in pursuing the appeal when appellant representative filed request Letter for short adjournment due to the pressure of submitting the Tax audit return. b) While sustaining the addition of Rs.34,83,474/- the Learned CIT (A) failed to appreciate that the AO made the said addition by oversight and mistake and correct working for the year in question according to Settlement commission were reported in the assessment order also and AO has accepted in principle that income for the year will be determined as per 5 | P a g e Supertech Construction Co. settlement commission order and the same thing were noted in Para 5.4 of the Assessment order. however, while passing the order applied the Settlement commission rate for the Year to the receipt which is devoid of any merit, arbitrary, uncalled for and bad in law, the appellant be given such relief or relief's as prayed for.”
We have heard the rival contentions and gone through the facts and circumstances of the case. Briefly stated facts are that the assessee is a civil contractor and executed his contract during the year awarded by Municipal Corporation of Greater Mumbai (MCGM) in his capacity of sub-contractor. The Assessing Officer received information from DGIT Investigation, Mumbai that the assessee has obtained bogus bills of purchase from various parties amounting to Rs.1,09,12,729/- and thereby assessment was reopened by notice under section 148 of the Act. We noted that the sales tax department, Mumbai, Government of Maharashtra carried out detailed enquiries in respect of the parties and recorded statements, deposition, affidavit etc. of main persons of these concerns which indicated that these concerns were into providing bogus bills and no actual goods or services were delivered by these parties and only bogus bills were issued after charging small amount of commission. The assessee submitted on its own that the total 6 | P a g e Supertech Construction Co. purchases from the 10 suspected parties was actually to the tune of ₹1,50,25,860/- as against ₹1,09,12,929/- about which the AO had received the information. In-spite of submitting all the evidences regarding the genuineness of the purchases the AO estimated the income of the assessee at 8.17% of the total turnover. The assessee’s gross contract receipt was taken at ₹6,50,58,621/- and applied the gross profit rate at the rate of 8.17% on gross receipts and assessed the income at ₹53,15,289/- as against the income declared by the assessee at ₹18,31,815/- thereby differential amount of Rs.34,84,474/- was added to total income of the assessee by observing in Para 5.4 as under: -
5.4 The submission of the assessee have been considered at length. In view of the fact that the assessee h ad gone to the Settlement Commission, Mumbai for the AY 2010-11 & 2011-12 and also taking into consideration the various decisions of settlement commission in the case of contractors, who had procured goods from the bogus hawala parties, I am of the considered opinion that 8.17% of the Gross contract receipt of the assessee should be taken as business income of the assessee as accepted by the settlement commission for AY 2010-11. In view of 7 | P a g e Supertech Construction Co. the above, books of accounts of the assessee are hereby rejected and the gross contract receipts are brought to the tax as under;
Aggrieved, assessee preferred the appeal before CIT(A), who also confirmed the action of the Assessing Officer. We noted that during the course of assessment proceedings, the assessee filed party wise details of purchase along with VAT numbers and as per information provided by the Assessing Officer purchase from the suspicious parties was to the tune of ₹1,09,12,929/-. But we noted that the assessee suo moto informed that the actual purchase from these two parties were amounting to ₹1,50,25,860/-. It was contended by assessee’s counsel before us that all the payment made to these parties were by cheque and during the course of assessment following evidences were provided: - “a. Copy of bank settlements b. Copy of ledger account of parties along with copies of bills and challans. c. Quantitative details of material purchased. d. Comparative statement showing total raw material required as per 8 | P a g e Supertech Construction Co. standard and actual raw material purchased. e. Working of total requirement of the major material as per standard issued by the MCGM in respect of the various work undertaken by the appellant firm. f. Summary of total activity carried out by the appellant firm on the basis of payment certificate.”
The assessee also filed the following evidences: - “a. Purchase bills b. Transportation bills c. Confirmed copy of accounts d. Payment through account payee cheques. e. VAT registration of the sellers and their Income Tax Return.”