M/S P.K.UPADHYAY vs. ITO WARD-3(5), PALAMAU

In response to the notice of hearing, no one has come present. In the past also, nobody has appeared on behalf of the assessee except once when assessee sought adjournment. We have been issuing notice time and again by Registered Post. Hence, in the absence of any representation at

The assessee has raised six grounds of appeal. Out of that, Ground No. 6 is general ground, which does not call for recording of any specific finding. Hence it is rejected.

In Grounds No. 1 & 2, the assessee has challenged the validity of reopening of the assessment by issuance of a notice under section 148 of the Income Tax Act. This ground was not taken by the assessee before the ld. 1st Appellate Authority. It has been taken for the first time before the Tribunal. The assessee has neither filed paper book nor placed on record copy of reasons for reopening of the assessment. A perusal of the statement of facts filed before the ld. 1st Appellate Authority, no submission is discernable. The original assessment order was passed under section 143(3) on 31.12.2012. A notice under section 148 of the Income Tax Ac was issued on 24.03.2015, i.e. within four years from the end of the relevant assessment year. Therefore, the interdiction available in the proviso appended to section 147 puts an embargo upon the powers of the ld. Assessing Officer for reopening of the assessment in the cases where scrutiny assessment was made and four years have expired. This protection is not available in the present case. In the absence of complete details, we are at a loss to record any specific finding on this aspect. It is difficult for us to appreciate whether the reopening of assessment is justifiable or not. The appeal is lying in the Tribunal since 2017, i.e. more than five years have expired, but not a single step has been taken by the assessee to place on record copies of the reasons. It is also pertinent to note that the appeal is on the Board since 19.04.2018. Therefore in the past also, the assessee has not taken any step to buttress its Ground No. 1 & 2. Hence, these grounds are rejected.

Ground No. 3: In this ground, the assessee has pleaded that the ld. CIT(Appeals) has erred in confirming the addition of Rs.5,55,280/-.

Brief facts of the case are that the assessee has filed its return of income on 06.12.2010 declaring total income of Rs.3,18,050/-. The case was taken up for scrutiny assessment and assessment order was passed under section 143(3) on 31.12.2012. The ld. Assessing Officer has determined the total income of the assessee at Rs.3,52,780/-. In the reopened assessment, the ld. Assessing Officer perused the record and recorded a finding that the assessee has debited a sum of Rs.5,11,164/- in the assets side of the balance-sheet on account of time extension, whereas the total amount of time extension comes to Rs.10,66,443/-. He noticed a discrepancy of Rs.5,55,280/- and accordingly he made an addition of this amount.

Appeal to the ld. CIT(Appeals) did not bring any relief to the assessee.

With the assistance of ld. D.R., we have gone through the record carefully. It is pertinent to observe that the assessee was engaged in civil construction and other activities. The time extension amounts are those funds, which the contractee does not disburse to the contractor on account of the contractor’s failure to complete the work on time. In other words, it is an amount, which was retained by the contractee for not completing the contract work in time. The total amount retained by the contractee under time extension was Rs.10,66,443/-. Out of that, Rs.5,11,164/- has been claimed by the assessee. It was shown on the assets side of the balance-sheet to be realised subsequently. Thus the ld. Assessing Officer was of the view that the balance amount ought to be recognised as a revenue receipt or it should be included in the gross contract receipts. On the other hand, the assessee has submitted that total amount retained ought to be debited from the assets side of the

Ground No. 4: In this ground of appeal, grievance of the assessee is that the ld. CIT(Appeals) has erred in confirming the addition of Rs.34,13,698/-.

Brief facts of the case are that there are two components:-

On due consideration of the facts and circumstances, we are of the view that the Revenue Authorities are not justified in making the above disallowance because on purchase of material, no TDS was required to be deducted by the assessee. Similarly it was submitted by the assessee that at different places, work was going on, where labours were hired. This single account was for maintaining the details otherwise there was no

Ground No. 5: In this ground of appeal, the grievance of the assessee is that the ld. CIT(Appeals) has erred in confirming the disallowance of Rs.8,20,511/-, which was disallowed by the ld. Assessing Officer out of interest and remuneration paid to the partners. The finding of the ld. CIT(Appeals) on this ground reads as under:- “8.4. I have considered the submissions of the appellant and have also perused the assessment order. Section 2(23) of the Act defines ‘firm’ as a firm shall have the meaning assigned to it in the Indian Partnership Act, 1932 (9 of 1932)......”. Section 4, 5 and 6 of the Indian Partnership Act, 1932 state:- “Section 4- DEFINITION OF “PARTNERSHIP”, ”PARTNER”, “FIRM” AND “FIRM-NAME”. "Partnership” is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually, "partners” and collectively "a firm", and the name under which their business is carried on is called the "firm-name".

Since the assessee failed to submit the copy of the partnership deed and other details before the ld. Assessing Officer, it was very difficult to decide whether genuine partnership was existing or not. The ld. 1st Appellate Authority has directed that the assessee be reassessed in the capacity of individual because there was no account of the partnership firm where contract receipts were received as per the finding of the ld. CIT(Appeals). After going through the finding of the ld. CIT(Appeals), we do not find any error. Hence this ground of appeal is rejected.

In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on August 3rd, 2022.