THE DEPUTY COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI vs. M/S MBC INFRA SPACE PRIVATE LIMITED, VAPI

Brief facts of the case as extracted from the lower authorities are that the assessee is a Private Limited Company, engaged in the business of civil construction of factory building, repair and maintenance and work contract. The assessee filed its return of income for assessment year 2013-14 on 28.09.2013, declaring total income of Rs. 57,45,077/-. The case was selected for scrutiny. During the assessment proceeding Assessing Officer while going through Form 26AS, obtained from TDS application, noted that assessee received contractual payment from two parties namely Met Trade India Ltd. and Jindal Buildsys Ltd. on which TDS by said two parties. The Assessing Officer made the following tabulated details of payment received as per From 26AS and payment shown in the books of accounts as under:- S. No. Name of the party Payment received Payment received Difference as per 26AS shown as per books in receipt 1. Net Trade India Ltd. 11,87,09,643 8,32,82,130 3,54,27,513 2. Jindal Buildsys Ltd. 20,00,000 0 20,00,000 Total 12,07,09,643 8,32,82,130 3,74,27,513 3. On the basis of aforesaid observation, the Assessing Officer took his view that assessee has not fully disclosed income receipt in his return of income. Accordingly a show cause notice dated 12.03.2016 was issued to the assessee as to why a difference of Rs. 3.74 Crore is not added back to the total income of assessee. The Assessing Officer recorded that in response to show cause 2 M/s MBC Infra Space Pvt. Ltd. notice Authorised Representative (AR) of the assessee attended the hearing on 22.03.2016 and stated that M/s Met Trade India Ltd. has made TDS at the time of bill raised and also at the time of payment made on certain bills. The Assessing Officer further recorded that the assessee failed to produce such bills and confirmation of the parties.

In order to verify the transaction the Assessing Officer issued noticed under section 133(6) of the Act to M/s Met Trade India Ltd. and M/s Jindal Buildsys Ltd. M/s Jindal Buildsys confirmed the payment made to the assessee of Rs.20,00,000/-. No reply was receipt on M/s Met Trade India Ltd. The assessee explained that the payment receipt from M/s Jindal Buildsys Ltd. is the same amount which have been received on behalf of M/s Met Trade India Ltd. The AO recorded that M/s Met Trade India Ltd. has failed to produce confirmation. Thus on the basis of difference reflected in Form 26AS and receipt shown in the books of accounts the Assessing Officer made addition of Rs. 3.74 Crore.

Aggrieved by the addition, the assessee filed before ld. CIT(A). Before Ld. CIT(A) the assessee filed its details of written submissions. The submissions of the assessee is recorded in para 3.2 of the order of ld. CIT(A). The assessee in its submission stated that the assessee-company had a contract with Metenere Ltd. (formerly known as Met Trade India Ltd) for supply and M/s MBC Infra Space Pvt. Ltd. commissioning of lead, aluminium foil and aluminium extrusion plants at Kutch and Damtal in Himachal Pradesh for a total value of Rs. 10.20 Crores. In A.Y. 2013-14, the assessee-company raised running bills of Rs. 8.32 Crores and further paid to various parties of Rs. 20 lacs on behalf of contractee parties and as per their request and balance of Rs. 2.36 Crores for A.Y. 2014-15. The assessee furnished the extract of ledger accounts of M/s Met Trade India Ltd. as appearing in their books of account of assessee for A.Ys. 2013-14 & 2014- 15. The assessee also furnished copy of bills and details of payment received against such bills with bank statement. The contractee parties deducted and paid TDS of Rs. 23,74,191/- on total value of Rs. 11.87 Crores. The Assessing Officer while making the assessee has relied on the details 26AS and not on the books of account of the assessee and made addition of Rs. 3.74 Crores without any confirmation from the payer (M/s Met Trade India Ltd.) The assessee also explained all his efforts to get confirmation of its turnover from the parties before filing return, or during the assessment proceedings but there is no response from the party. The assessee prayed for deleted the entire addition.

On the submissions of the assessee the ld. CIT(A) called remand report from Assessing Officer. The Assessing Officer furnished his remand report dated 22.01.2018. In the remand report, the Assessing Officer stated that the M/s MBC Infra Space Pvt. Ltd. assessee claimed that there are four cases where Met Trade India Ltd deducted tax at source, once, at the time of booking stage and again on at the time of payment. Further, in one case, where the tax was deducted at source twice, once by the third party and secondly by Met Trade India Ltd. The Assessing Officer recorded that he issued letter to Met Trade India Pvt. Ltd. for calling the details of their ledger extracts of M/s Jindal Buildsys Ltd. The assessee was also asked to furnish name, address, e-mail address and ledger extracts of Met Trade Ltd And Jindal Buildsys Ltd. The assessee was also asked to furnish reconciliation of receipt and TDS with supporting evidences. The AO recorded that the assessee retreated the same contention as raised before CIT(A). The AO further recorded that he again issued notice to the Met Trade India Ltd dated 04.9.2017 and again on 29.9.217 but no response was received, therefore, the authenticity of the claims of the assessee were not verified. The Assessing Officer reported that no details for M/s Jindal Buildsys Ltd. are given, which leads to belief that the assessee accepted the difference of Rs. 20 lacs in the receipt from M/s Jindal Buildsys Ltd. as per 26AS.

In response, to the remand report the assessee furnished his rejoinder/reply dated 12.02.2018. In reply, the assessee reiterated its contention as raised earlier. The assessee further stated that under the Income Tax Act the assessee M/s MBC Infra Space Pvt. Ltd. is expected to be taxed after completion of assessment. In order to ensure the recovery of tax, income tax act provides the payment of tax and advances, to be treated as payment of tax. The payer deducted the tax as per scheme of the Income Tax Act in respect of payment made by them, amount deducted by the payer towards TDS has to be treated as payment of tax. The assessee claims that there was wrong entry and wrong credit, the assessing Officer has to examine the same with open mind and find out, if there was a genuine credit and found in Form 26AS. The payer is also tax payer in the country. The Revenue cannot seek the burden to the assessee on the ground that the payer could not be contacted, the prayer is a Company registered under the Companies Act. The assessee requested the prayer company’s Director can be very well be contacted by the Assessing Officer and to ascertain error in TDS return. The assessee also explained that initially burden to prove is on the assessee to prove the genuineness of credit shown in 26AS and accordingly the assessee provided all documentary evidence like bank statement, company of contracts, reconciliation of 26AS at the time of assessment, the Assessing Officer is also respectfully to find out real nature of transactions whether credit shown in Form 26AS is genuine or not, by excursing the power conferred on him.

The ld. CIT(A) after considering the assessment order, credit shown in Form 26AS and the submission made by the assessee. The ld CIT(A) noted that as per 26AS the turnover of the assessee was of Rs. 12.07 Crores whereas the assessee has shown receipts at Rs. 8.32 Crores in its return of income. On the basis of difference the Assessing Officer called for explanation from the assessee. The assessee during the assessment stated that payer Met Trade India Ltd. has deducted TDS twice, once at the time of raising bills and second time of payment was made on some of the bills, which led to the discrepancies. In response to notice under section 133(6) of the Act, no response was made by Met Trade India Ltd. and other parties M/s Jindal Buildsys Ltd. The Assessing Officer added an amount of Rs. 3.74 Crores. During the appellate proceedings, the assessee furnished a copy of contractual agreement with the payer Met Trade India Ltd. dated 01.06.2012, wherein the total contract price is of Rs. 10.20 Crores. The assessee has shown its summary of sales turnover for AY 2013-14 and 2014-15 and total receivable from the said contract was Rs. 10.89 Cr. On such basis the assessee claimed that there is not logic of payment of Rs. 12.07 Crore, for the partly completed project in the current AY 2013-14. The assessee is also furnished the bills of current assessment year of Rs. 8.32 Crore, against which the payment of Rs. 7.70 Crore was received. The ld. CIT(A) after referring the remand report wherein the M/s MBC Infra Space Pvt. Ltd. Assessing Officer reiterated the similar contention as made for assessment order, the ld. CIT(A) held that from the credit of receipt in the bank statement, copy of running account (RA) bills, the assessee raised for total amount of Rs. 9.32 Crore, which is with regard to partial completion of project, out of total contract value of Rs. 10.20 Cr. Thus, the case of the assessee bonafide and the addition is not sustainable. Aggrieved by the order of ld. CIT(A) for the Revenue is filed the present appeal this Tribunal.

Notice of hearing of appeal was served upon the assessee. Despite service of notice through registered post with acknowledgement due (RPAD), as well as through process server of the department. We find that the assessee has been served on more than two occasions. The assessee neither sent any written submission nor did anybody attend on behalf of the assessee. In these circumstances we left no option, except to her the submission of ld. Commissioner of income tax-Departmental Representative (CIT-DR) for the revenue and the material available on record. The ld. CIT-DR for the Revenue submits that during the assessment, the Assessing officer found discrepancy qua the income offered and the total receipt shown in the statement in Form 26AS. As per Form 26AS the assessee received Rs. 12.07 Crore, however the assessee has shown in its books only Rs. 8.32 Crore. The AO, in order to verify the same issued notice to the payer. No reply was received from the M/s MBC Infra Space Pvt. Ltd. payer. The assessee could not reconcile the difference in the statement on Form-26AS and the income shown in hits return of income, accordingly the Assessing Officer made an addition of Rs. 3.74 Crore. The ld.CIT(A) accepted the explanation furnished by the assessee, despite the fact that during the remand proceedings, the assessee gain failed to reconcile of the statement shown in Form 26AS. The ld. CIT(A) deleted entire addition without proper matching. The ld. CIT-DR for the Revenue submits the order passed by AO may be restored.

We have considered the submissions of ld CIT-DR for the revenue and perused the material available on record. As noted above the AO made addition on account of difference as per statement shown in Form 26AS and the total receipt shown by the assessee. There was a difference of Rs. 3.74 Crore, qua the statement shown in Form 26AS and total receipt shown by the assessee. The AO made addition for want of proper verification. The ld. CIT(A) deleted the addition by accepting the version that total value of contract was at Rs. 10.20 Cr. and the assessee has shown total receipt of contract of Rs. 10.89 Crore, out of which Rs. 8.32 Crore was shown during the assessment year 2013-14 and remaining year in subsequent assessment year. We find that ld. CIT(A) deleted the addition after giving proper opportunity to the AO by seeking his remand report. The AO in his remand