SHELTER INFRA PROJECTS LTD. ,KOLKATA vs. A.O. CIR. 11(1), KOLKATA

This is second round of appeal before us. Earlier, the Tribunal vide order dated 12.10.2018 had remanded the matter to the file of the Assessing Officer for de novo assessment. Thereafter, the Assessing Officer vide order dated 31.12.2019 made the impugned additions assessing the income of the assessee at Rs.23,98,20,955/-. The ld. CIT(A) confirmed the additions so made by the Assessing Officer vide

The assessee in this appeal has taken the following revised grounds of appeal:

For that on the facts and in the circumstances of the case. Ld, CIT(A) ought to have deleted the addition made by the A.O. to the tune of Rs. 6,27,00,000/- wrongly invoking the provisions of section 68 in respect of the transactions with M/s Growfast Realtors (P) Ltd.

For that on the facts and in the circumstances of the case, Ld. CIT(A) ought to have deleted the addition made by the A.0. to the tune of Rs. 19,13,40,000/- wrongly invoking the provisions of section 68 in respect of the transactions with M/s Sarda Vanijya (P) Ltd. 4. (a) For that on the facts and in the circumstances of the case, Ld. CIT(A) ought to have deleted the addition made by the A.0. to the tune of Rs. 3,75,799/- holding that the said amount represented ingenuine trading liability of M/s Bharat Enterprise though there is no provision in the Act for making such addition. 4. (b) For that on the facts and in the circumstances of the case, Ld. CIT(A) ought to have deleted the addition made by the A.0. to the tune of Rs. 9,00,246/- holding that the said amount represented ingenuine trading liability of M/s Nirman though there is no provision in the Act for making such addition.

For that on the facts and in the circumstances of the case, Ld. CIT(A) ought to have deleted the addition made by the A.0. totaling to Rs. 20,33,817/- in respect of the following parties holding that the said amount represented bogus trading liability in the assessee's books as on 31.03.2012 - (a) Kripa Infrastructure: Rs. 4,77,268/- (b) Ram Naresh Singh: Rs. 5,06,540/- (c) Swastik Engineering: Rs. 10,50,009/- Rs. 20,33,817/- 4. Ground No.1 – Ground No.1 is general in nature.

At the outset, the ld. counsel for the assessee has invited our attention to the earlier assessment orders passed u/s 143(3) of the Act as well as appellate orders to submit that the assessee had duly explained before the Assessing Officer that the records of the assessee for assessment year under consideration got lost/damaged/soiled, however, the assessee, later on, somehow, could retrieve some records which were produced before the Assessing Officer. The ld. counsel, at the outset, has submitted that both the lower authorities have misconstrued the aforesaid amount of Rs.6,27,00,000/- as credits and thereafter held that the same were unexplained/bogus credits, however, the said amount, in fact, represents the payments made by the assessee. He, in this respect, has brought our attention at page 94 of the paper-book, which is a copy of confirmation of accounts by said M/s Growfast Realtors (P) Ltd. and as per the ledger of the assessee in the books of accounts of the M/s Growfast Realtors (P) Ltd., the amount of Rs.8,06,12,143/- was outstanding as bill amount as on 09.01.2012, out of which an amount of Rs.16,12,243/- was transferred through journal entry and further an amount of Rs.1,27,00,000/- was transferred by the assessee to the said M/s Growfast Realtors (P) Ltd. through banking channel, further an amount of Rs.5,00,00,000/- was also transferred by the assessee to the said M/s Growfast Realtors (P) Ltd. through banking channel. The ld. counsel has further invited our attention to page 111 of the paper-book, which is a copy of bank account of M/s Growfast Realtors (P) Ltd. showing the aforesaid transfer of amount of Rs.1,27,00,000/- and Rs.50,00,000/- on 26.03.2012 from account no.105605500079. The ld. counsel has Assessment Year: 2012-13 Shelter Infra Projects Ltd further invited our attention to page 75 of the paper-book, which is a copy of letter addressed by the assessee to the Assessing Officer, whereby, the aforesaid transaction has been duly explained and it has been mentioned that the aforesaid amount of Rs.1,27,00,000/- and Rs.50,00,000/- were transferred by the assessee through banking channel vide cheque/RTGS no.107226 and 107227 respectively on 26.03.2012. The ld. counsel has further invited our attention to page 95 of the paper-book to show that even the TDS was duly deducted on the aforesaid payments made to the contractors.

In view of above, the assessee had duly proved on the file that the aforesaid amount represents the payment made by the assessee to the contractor M/s Growfast Realtors (P) Ltd. Therefore, both the lower authorities misconstrued the aforesaid amount as unexplained credits. The impugned addition is, therefore, not sustainable and the same is accordingly ordered to be deleted.

Ground No.3 – Vide ground no.3, the assessee has agitated against the confirmation of addition of Rs.19,13,40,000/- made by the Assessing Officer as unexplained credits from M/s Sarda Vanijya (P) Ltd.

The ld. counsel has submitted that in respect of the above amount/transaction, both the lower authorities have wrongly and mistakenly taken the said amount as unexplained credits, whereas, the said amount was a payment made to M/s Sarda Vanijya (P) Ltd. during the course of business. The payment was made through banking channel. The ld. counsel has invited our attention to page 139 of the paper-book, which is a copy of bank account of M/s Sarda Vanijya (P) Ltd. The ld. counsel has further invited our attention to credit/transfer entry of Rs. 5 crore dated 26.03.2012 and further entry of another amount of Rs.14,13,40,000/- dated 27.03.2012. The ld. counsel has Assessment Year: 2012-13 Shelter Infra Projects Ltd further invited our attention to pages 75-76 of the paper-book to submit that the details of the aforesaid transaction were duly furnished before the Assessing Officer. It was explained to the Assessing Officer that the aforesaid amounts of Rs.5 crore and Rs.14,13,40,000/- was duly transferred to said M/s Sarda Vanijya (P) Ltd. through banking channel vide cheque/RTGS no.107228 and 107229 respectively. The ld. counsel has further invited our attention to pages 114-115 of the paper book, which is a certificate of an accountant under first proviso to sub-section (1) of section 201 of the Act certifying the aforesaid payment to M/s Sarda Vanijya (P) Ltd. by the assessee and TDS was duly deducted thereupon and further that the payee had duly taken into consideration the aforesaid payments in its return of income. The ld. counsel has also invited our attention to pages 87 & 88 of the paper-book to submit that the aforesaid transaction was duly explained to the Assessing Officer. The aforesaid documents on record duly proved that the aforesaid amount was business payment by the assessee to M/s Sarda Vanijya (P) Ltd. and there is no question of addition on the same as unexplained credits into the income of the assessee. Therefore, the aforesaid addition made/confirmed by the lower authorities are ordered to be deleted. Ground No.4(a) & 4(b) – The assessee through the above grounds 9. of appeal has agitated against the order of the CIT(A) in confirming the addition made by the Assessing Officer of Rs.3,75,799/- and further of Rs.9,00,246/- in respect of parties M/s Bharat Enterprise and M/s Nirman treating the said amount as bogus trading liability.

A perusal of the impugned order of the Assessing Officer would reveal that the Assessing Officer has admitted that the assessee was in the business of civil contractor. Further during the assessment proceedings, the Assessing Officer enquired about the various trading Assessment Year: 2012-13 Shelter Infra Projects Ltd liabilities and found the same to be correctly recorded. However, the Assessing Officer made the impugned additions in respect of credit liabilities in respect of M/s Bharat Enterprise and M/s Nirman observing that the assessee could not furnish the required evidences in this respect. As observed above, the assessee had already duly explained to the Assessing Officer that the record of the assessee stood damaged and the assessee has been able to get accounts of trading liabilities from the respective parties to prove the transaction entered by the assessee. The assessee has been able to collect the document relating to trading liabilities and payments made by the assessee to various parties. The Assessing Officer has accepted the trading liabilities in respect of other parities.

Under the circumstances, the aforesaid trading liabilities of the small amounts cannot be merely added only because the assessee could not furnish the relevant documents in respect of the aforesaid two parties. The preponderance of probabilities in this respect lie in favour of the assessee. Considering that the assessee has been able to produce evidences in respect of the remaining parties and also considering that the assessee has collected records from the various parties, we do not find justification on the part of the lower authorities in making the addition in respect of the aforesaid two parties. The same is accordingly ordered to be deleted. Ground No.5 – Vide Ground No.5, the assessee has agitated 12. against the confirmation of addition of Rs.20,33,817/- in respect of the following parties:

At the outset, the ld. counsel for the assessee has invited our attention to page 148 of the paper-book, which is a copy of confirmation/letter issued by Ram Naresh Singh sent to the Assessing Officer in response to the summons issued u/s 133(6) of the Act, whereby, the said Ram Naresh Singh has confirmed that he had entered into business transaction with the assessee and further an agreement dated 07.04.2011 entered into by him with the assessee, copy of which has been placed at page 151 of the paper-book. It has also been confirmed that during the period from 01.04.2009 to 31.03.2010, he had supplied stone chips and during the period from 01.04.2011 to 31.03.2012, he had also worked as a contractor for construction of road at Madarana (Bihar). The ld. counsel has also placed reliance on page 149 of the paper-book, which is a copy of ledger of the assessee in the books of account of Ram Naresh Singh. The said Ram Naresh Singh has also issued the details of transactions entered with the assessee from the period from 01.04.2011 to 31.03.2012, whereby, date-wise bill value has been mentioned, TDS deduction has also been mentioned and the payment received has also been shown and the balance as on 31.03.2012 has been confirmed at Rs.1324941/- . The ld. counsel has also invited our attention to the assessment order dated 16.03.2015 to submit that the aforesaid documents had been duly furnished before the Assessing Officer. The Assessing Officer, however, noted that the assessee had shown trading liability of Rs.1831481/-, whereas, as per the details furnished by Ram Naresh Singh, the closing balance was as on 31.03.2012 of Rs.1324941/-, therefore, the addition was made on the difference of Rs.506540/-. The ld. counsel in this respect has submitted that the amount of trading liability of Rs.1831481/- was rightly claimed by the assessee, however, since the documents relating to the same have been damaged and lost Assessment Year: 2012-13 Shelter Infra Projects Ltd so the assessee at this stage was not able to reconcile the difference. He, therefore, has left to the wisdom of the Tribunal to make the proper order in this respect. Identical submissions have been made by the ld. counsel for the assessee in the case of trading liability in respect of Kripa Infrastructure and Swastik Engineering.

So far as the addition in respect of Ram Naresh Singh is concerned, since the said party has shown closing balance of Rs.13,24,941/-, and the assessee could not reconcile the difference of Rs.5,06,540/-, therefore, the addition to that extent is confirmed. However, in respect of other two parties, Kripa Infrastructure and Swastik Engineering is concerned, considering the overall facts and circumstances of the case and considering that the assessee has been able to explain most of the transactions and also considering that the record of the assessee got damaged and that the assessee has collected the record/document including the bank account etc. from the respective parties and produced before the Assessing Officer, therefore, taking a balanced view, the addition in respect of the aforesaid two parties i.e. Kripa Infrastructure and Swastik Engineering is restricted to 50% of the addition made by the Assessing Officer.

In view of the observations made above, the appeal of the assessee is treated as partly allowed.