Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
This appeal is filed by the Assessee against order dated 14.05.2024 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2013-14.
The assessee has raised the following grounds of appeal:-
“1. The order passed u/s.250 by Commissioner of Income Tax (Appeals) – NFAC confirming addition of Rs.29,71,651/- is against law, equity and justice. 2 The order u/s.250 upholding reopening of assessment is bads in law, vague and illegal as reason recorded for reopening are vague, non- specific, based on material already considered and for verification.
The Ld. CIT(A)- NFAC erred in law and or on facts in confirming the addition of Rs.29,71,651/- treating entire transaction of genuine labor expense as bogus merely based on information received from Investigation Wing ignoring submission made and documentary evidences filed.
4. The Ld. CIT(A)- NFAC erred in law and or on facts in confirming the addition of Rs.29,71,651/- without adjusting alternative arguments that at the most additions at Rs.12.5% of total expense keeping in view observation made Honourable ITAT and finally confirming addition of 12.5% in appeal filed against earlier order u/s.143(3).
5. The Ld. CIT(A)- NFAC erred in law and or on facts in confirming the addition of Rs.29,71,651/- without disposing grounds of appeal
no.4 raised before authority below
3. Action under Section 147 of the Income Tax Act, 1961 was initiated in the assessee’s case on the basis of reasons recorded. Notice under Section 148 of the Act was issued and served to the assessee on 18.03.2020. The return of income declaring total income of Rs.21,52,650/-was filed on 05.06.2020. The notice under Section 143(2) of the Act was issued and served on 31.10.2020. Later on, notices under Section 142(1) of the Act were issued dated 15.02.2021 and 22.03.2021. The assessee filed replies on 19.02.2021, 01.03.2021 & 24.03.2021. Show cause notice alongwith copy of draft order was issued on 08.09.2021. The assessee filed reply on 11.09.2021 & 13.09.2021 which was considered by the Assessing Officer. The reasons sought by the assessee was provided by the Assessing Officer and the same was disposed of by the Assessing Officer. The Assessing Officer observed that there is a bogus entry of Rs.29,71,651/- from a bogus entity i.e. Task Management Service. The Assessing Officer further observed that the modus operandi of this was that service provider provides the bill to service receiver and the service receiver makes the payment of the said bill. As well as the service provider deposits this cheque in his bank account. Subsequently, at clearance of cheque, service provider withdraws cash from his Bank account and after deduction of such commission, the service provider gives back cash to service receiver. The Assessing Officer held that the assessee has only furnished four bills issued by Task Management Service for labour work but no compliance was made by the third party related to the issuance of letter to the said party by the Assessing Officer. Therefore, in absence of the confirmation from the third party, the Assessing Officer held that the transaction of Rs.29,71,651/- with Task Management Service is bogus and the same is an accommodation entry to inflate the expenses so as to reduce the profit and added the said amount.
Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
5. The Ld. AR submitted that the solitary issue involved in the present appeal is confirmation of additions by NFAC, Delhi of Rs.29,71,651/- vide order u/s.250 dated 15/05/2024. The Assessing Officer made addition treating Construction Labor rendered by M/s. Task Management Services as non-genuine merely based on information received from Investigation Wing of Revenue Department without appreciating submission, explanation and evidences filed in right prospective and summarily adjudicated appeal including Alternative Ground of Appeal No.4. At the most he could have confirmed the addition of Rs.3,71,456/- being 12.5% of Rs.29,71,651/-. The Ld. AR submitted that the Assessing Officer received information from Investigation Wing that dealings with M/s. Task Management Services are not genuine. The Assessing Officer, based on above information, recorded reasons for escapement of income to the extent of dealing of Rs.29,71,651/- with said party and issued notice u/s.148 after procuring approval from PCIT, a Competent Authority. The Ld. AR submitted that the assessee filed objection to reasons recorded for escapement of income and also objected to approval granted by PCIT stating as review of case, reopening based on insufficient material, absence of new material coming to the notice and very basis for alleging escapement has been examined in depth during assessment under Section 143. The approval granted by PCIT is mechanically ignoring submissions, explanation and evidences. The Ld. AR further submitted that the assessee during reassessment proceeding explained with documentary evidences pointing out that dealings with said party were genuine. The assessee further filed evidences viz. Invoices, ledger accounts of above party, proof of payment through banking channel, ledger account of labour expenses and Profit and Loss Accounts. The Assessing Officer had not disproved any of evidences filed. The assessee also categorically pointed out that issue of bogus purchases and labour expenses was examined in details and after verifying details of all the parties certain parties were identified as bogus other than above party as depicted. The Assessing Officer made additions of dealing with parties identified as bogus and concluded assessment under Section 143(3). The Ld. AR submitted that the assessee carried matter of additions made while concluding assessment under Section 143(3) before the CIT(A). The CIT(A), after considering submission, facts and evidences, restricted additions to 25% of total additions made by the Assessing Officer. The Ld. AR submitted that the assessee, not satisfied with the decision of CIT(A), carried the matter in appeal before the ITAT. The ITAT, considering factual aspect of the case, granted further relief and restricted to 12.5% of total addition made by Assessing Officer. It was further observed by appellate authorities that Assessing Officer accepted Books of Accounts, Book Result, Sales, Purchases and Stock without any adverse comment. The Ld. AR further submitted that the assessee brought above aspect to the notice of Assessing Officer during reassessment proceeding and to the notice of CIT(A). The CIT(A) without appreciating above facts, submission, documents in right perception confirmed the action of Assessing Officer for addition of Rs.29,71,651/- made treating dealing with M/s. Task Management Service as bogus.
The Ld. DR relied upon the Assessment Order and the Order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that at the time of hearing, the ld. AR has produced one letter dated 09.07.2015 thereby stating that the assessee has given relevant documents during the scrutiny assessment. Besides this, the Ld. AR’s submission that the assessee will provide the confirmation of the said M/s. Task Management Service including the relevant documents whether the said transaction was that of bogus accommodation entries or genuine entries and the commission earned thereon. From the perusal of the order of the CIT(A) it appears that necessary documents though taken into account has not been verified by the Assessing Officer thereby calling upon the remand report and this new material requires to be verified by the Assessing Officer. Therefore, it will be appropriate to remand back this matter to the file of the Assessing Officer to verify the aspect of so-called accommodation entries as well as whether there were genuine transactions and the commission earned by the assessee through documents produced by the assessee before the Assessing Officer. Needless to say, the assessee be given opportunity of hearing by following the principles of natural justice. The Assessing Officer is further directed to adjudicate these issues after verifying the documents produced by the assessee which explains genuineness of the assessee’s transaction and adjudicate the same as per Income Tax Statute.
In the result, appeal filed by the assessee is partly allowed for statistical purpose.
Order pronounced in the open Court on this 8th October, 2024.