×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
These are two cross appeals filed by the assessee and the revenue directed against the common orders of the ld. Commissioner of Income Tax (Appeals)-18 (hereinafter the “ld.CIT(A)”), passed u/s. 250 of the Income Tax Act, 1961 (the ‘Act’), for the Assessment Years 2011-12 & 2012-13
2. The assessee is a company and is engaged in the business of civil contractors as well as in development of infrastructure. It is engaged in various infrastructural projects such as construction of flyovers, sewerage projects etc. It filed its return of income for the Assessment Year 2011-12 on 28/11/2011, declaring total income of Rs.74,73,80,890/-. Later it filed a revised return of income on 30/03/2013, declaring the same income. The Assessing Officer completed assessment u/s 143(3) of the Act on 30/03/2014 interalia making disallowances on account of (a) bogus purchases and bogus sub-contract expenses, (b) deduction u/s 80-IA(4) of the Act, (c) disallowance u/s 14A r.w.r. 8D and (d) disallowance of employee’s contribution towards ESI & PF. Aggrieved the assessee carried the matter in appeal. The ld. CIT(A) deleted all the disallowance made by the Assessing Officer, except d sallowance on account of bogus purchases/sub-contract expenses.
3. Further aggrieved both the assessee as well as the revenue are in appeal before us.
4. We have heard Shri, S.K. Tulsiyan, the ld. Counsel for the assessee and Shri A.K. Nayak, the ld. CIT D/R on behalf of the revenue. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:-
5. We first take up the assessee’s appeal in ITA No.1572/Kol/2017; Assessment Year 2011-12.
6. The sole issue that is agitated by the assessee is the disallowance of purchases and disallowances of sub-contract labour expenses on the ground that they are bogus. The Assessing Officer disallowed the purchases made by the assessee company from M/s. Brytex Industries & M/s. Nikhil Enterprises on the ground that the same are bogus purchases. He also disallowed labour expenses paid to M/s. Supreme Constructions, M/s. Nova Constructions and M/s. Purnima Constructions. The assessee’s case is that it is a professionally managed company and the top management is not involved in the decision making at the project implementation level, as there are numerous projects being carried out by the assessee company all over the country. It is argued that the top management has put standard operating procedures in place for all expenses in various projects and these systems are followed. It was submitted that the above parties were issued purchase orders, supplier invoices were given, tax invoices were raised, delivery challans were produced and payments were made after approval of the bills through banking channels. Copy of these documents were produced before the Assessing Officer and also placed before us at pages 1 to 53 of the paper book.
The ld. Counsel for the assessee referred to a letter dt. 14/03/2014 which is at pages 101 to 105 of the paper book and submitted that the assessee has explained the entire process of standard operating procedure to the revenue. Ledger copies recevied from all these parties were filed, along with bills received from them and copies of the order of the site engineers certifying work execu ed. It was argued that the Assessing Officer made the addition for the sole reason that the notice u/s 133(6) of the Act, were issued to these parties to verify the genuineness and only M/s Purnima Constructions, M/s. Nikhil Enterprises and M/s Brytex Industries did not respond as the notices and the same got returned unserved. The assessee thereafter furnished the correct addresses of these parties and notices were served and complied with by the parties except in the case of M/s. Nikhil Enterprises. In the case of M/s. Nikhil Enterprises, it was pleaded that after the lapse of two years, the whereabouts are not known about that party and the assessee has not control over it. As regards all other parties, they have responded to the notice u/s 133(6) of the Act and have confirmed the transactions.
6.1. On the statements recorded by the Assessing Officer from the five parties, the ld. Counsel for the assessee submits that wrong inferences were drawn based on certain discrepancies in the statements. Even otherwise, it was submitted that no opportunity for cross-examination of the parties was given to the assessee. He listed out the reasons cited out by the Assessing Officer for the above disallowances and controverted the same point wise. He submitted that simply because these parties were found to provide