SMO DEVELOPERS,MUMBAI vs. INCOME TAX OFFICER 17(3)(3), MUMBAI

आदेश / O R D E R

Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 29/11/2017 of the Ld. First Appellate Authority, Mumbai, making addition of Rs.24,93,565/- out of labour contract payments aggregating Rs.74,39,000/- and making enhancement of Rs.49,45,435/- on the ground that such payments remained unproved.

2.1. On the other hand, the Ld. DR, Shri Ram Tiwari, strongly defended the impugned order by contending that the genuineness of payments were not established by the assessee beyond doubt and the contractor died on 08/07/2014. It was submitted that the receipt of labour contract were not confirmed by Shri Dabholkar, therefore, it is a sham transactions and bank accounts needs to be analyzed. Another objection raised by Ld. DR was that it is not clear from the record whether the contract was given for the same project. In reply, the ld. counsel for the assessee invited our attention to the relevant documents (page-25 and 27 of the paper book) by explaining that the SMO Developers completion certificate was granted for the same survey number. This factual aspect was not contradicted by Ld. DR. 2.2. We have considered the rival submissions and perused the material available on record. The sole effective ground raised by the assessee pertains to labour contract payment of Rs.74,39,000/- made to labour contractor Shri Shanu T. Dabholkar. The facts, in brief, are that the assessee is engaged in the business of land development and civil contractor declared income of Rs.81,790/- in its return filed on 31/08/2012 which was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter the Act). Later on, the case of the assessee was selected for scrutiny, therefore, statutory notices were sent to the assessee dated 06/08/2013 and thereafter notice under section 142(1) of the Act, along with questionnaire were served upon the assessee. The assessee was asked to furnish the details of expenses incurred in connection with construction activities carried out by it during the year. The assessee filed the details from which it was found by the Ld. Assessing Officer that assessee made labour expenses

SMO Developers of Rs.74,39,000/-. The assessee was asked to file the copy of agreement with the labour contractor Mr. Shanu T.

Dabholkar and further to establish the genuineness of payments to him. In order to verify, the genuineness of payments of labour contract, notice under section 133(6) of the Act was issued to the contractor. The assessee duly filed the details of TDS with PAN of labour contractor. In reply to the notice, it was claimed that the contractor has expired on 08/07/2014 and the copy of the death certificate was enclosed. The Ld. Assessing Officer made the addition on the plea that the necessary details of payments were not filed by Shri Dabholkar and even copy of bank statement was not filed and thus, the addition was made.

2.3. On appeal before the Ld. Commissioner of Income Tax (Appeal), additional evidence like bank account of Shri Dabholkar was filed, remand report was sought from the Ld. Assessing Officer and finally, the contention of the Ld. Assessing Officer was affirmed. Now the assessee is in further appeal before this Tribunal.

SMO Developers 2.4. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, from para-5 of the impugned order, we note that in the remand report, the Ld. Assessing Officer verified that payments were made to Shri Dabholkar and TDS was duly deducted. There is also no dispute that there was an agreement of labour contract between the assessee and the contractor (pages 25 to 38 of the paper book), wherein, Shri Shanu Tukaram Dabholkar has been mentioned as contractor and from page-27, it is evident that the labour payment contract was given for the property bearing survey number 286/12A of village Saligao, Bardez, Goa. The nature of work to be completed along with structure, wall, doors, windows, railing, plaster and paints, flooring shirting, sanitary blocks, etc. The payment schedule has been mentioned in Schedule-III (page-36 of the agreement). The ledger account of Shri Shanu T.

Dabholkar is available at page-39 of the paper book evidencing that the labour contract payments were made

SMO Developers through banking channel(Page-39 of the paper book). At page-40, the details of payments (as per schedule-III) made to Shri S. T. Dabholkar are available evidencing that the TDS was deducted on such payments. At page-41 of the paper book, the completion certificate issued by office of Senior Town Planner (Town and Country Planning Department), Mapusa, Goa, reference no. Inward No.648, dated 20/02/2012, mentioning the technical clearance granted by the planning department vide order number DB/21751/2010/2317 dated 23/06/2010 of survey number 286/12A and 4-A-A has been provided and completion was granted to the assessee. Thus, the contention of the Ld. DR that it is not known whether the payments were made for the same project are duly explained by the assessee. The payments made to the contractor and consequent deduction of TDS is also not in dispute and rather duly explained by the assessee and even this fact has been confirmed by the Ld. Assessing Officer himself in reply to the remand report filed before the Ld. Commissioner of Income Tax (Appeal). Another fact to be mentioned is that at page-42 of the paper book NOC to SMO Developers occupancy certificate was issued by Directorate of Health Service, Govt. of Goa to the assessee vide communication dated 03/04/2012. The occupancy certificate is also duly issued by the Village Panchayat Saligaon vide occupancy certificate dated 09/04/2012 (page-43 of the paper book).

The assessee has also annexed a no objection certificate from Secretary of the Village panchayat dated 09/04/2012 (page 44 of the paper book). The assessee has also produced the ledger account of Shri Shanu T. Dabholkar from 01/04/2010 to 31/03/2011 (page 45 evidencing that the payments were made). Further, page 46, 47, and page 48 shows the ledger account of Shanu T. Dabholkar from 01/04/2011 to 31/03/2012, 01/04/2013 to 31/03/2013 and 01/04/2013 to 31/03/2014 evidencing that the payments were made through banking channel. Agreement for sale of flats are available in the paper book at page 50 onwards evidencing that the construction work was completed and that’s why the sale could be affected. It is further noted that the remaining payments made to the contractor were accepted by the ld. Assessing Officer himself for Assessment Year 2014-15 while framing the SMO Developers assessment under section 143(3), vide assessment order dated 18/10/2016. It is further noted that in the remand report dated 17/04/2017, addressed to the Ld. Commissioner of Income Tax (Appeal) in para-6, the Ld. Assessing Officer has observed as under:-

I have gone through the details filed by assessee before CIT(A)-28, Mumbai and I found that payment made to Shanu T. Dabholkar is reflected in Bank Pass Book and also TDS has been deducted from payment made to contractor. Therefore, the same may kindly be considered, after due verification.”

Thus, it is abundantly clear that even factum of payment has been accepted by the Ld. Assessing Officer. So far as, the contention of the ld. DR and the observation of the Ld. Commissioner of Income Tax (Appeal) that no reply was filed by the contractor, is concerned, the contractor has already died on 08/07/2014 and the death certificate was duly filed before the Revenue authorities. Therefore, how a reply can be expected from a dead person. So far as, the relevant details are concerned, as mentioned earlier, clearly establishes that the payments were made on which TDS was also deducted. The totality of facts, clearly establishes

SMO Developers that the payments were genuinely made by the assessee to the contractor, therefore, the addition so made deserves to be deleted. We hold so. The appeal of the assessee is allowed.

Finally, the appeal of the assessee is allowed and the stay application of the assessee is dismissed as in- fructuous.

This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 11/07/2018.