Lamba Construction Co. vs. ITO, Ward-62(4), New Delhi: Dispute Over Cash Deposits and Contractual Receipts

Case Analysis: ITA No. 4801/DEL/2019

This article provides an in-depth analysis of the case ITA No. 4801/DEL/2019, where the appellant, Lamba Construction Co. from Greater Noida, filed an appeal against the Income Tax Officer (ITO), Ward-62(4), New Delhi, for the assessment year 2010-11. The appeal was filed on May 27, 2019, and the final tribunal order was pronounced on August 31, 2022.

Background

Lamba Construction Co., represented by their counsel Shri Suresh Wadhwa, appealed against the order of the CIT(A)-38, New Delhi, dated March 28, 2019. The case involved additions made by the Assessing Officer (AO) related to cash deposits and contractual receipts based on AIR information.

Grounds of Appeal

The appellant raised the following grounds of appeal:

1. The order of the Ld. Commissioner of Income Tax (Appeals) dated 28.03.2019 upholding the additions of INR 8,09,697/- made by the Ld. Assessing Officer vide his assessment order passed on 07.12.2017 under section 144 read with section 147 of the Income Tax Act, 1961, is bad in law and on the facts and circumstances of the case.
2. The Ld. Commissioner of Income Tax (Appeals) has grossly erred in law while upholding the Order passed by Ld. AO in the light of the fact that the Appellant has not been served any valid notice u/s 148 of the Income Tax Act, 1961.
3. The Ld. Commissioner of Income Tax (Appeals) has grossly erred in law while upholding the Order passed by Ld. AO, without providing to the Appellant (a) a copy of reasons recorded in writing for opening the assessment proceedings u/s 148; (b) copy of AIR Information in the possession of the Ld. AO and (c) without providing reasonable opportunities to present the case.
4. The Ld. Commissioner of Income Tax (Appeals) has grossly erred in law while upholding the Order passed by Ld. AO, treating the Cash Deposits of INR 6,10,000/- in the Bank Account of the Firm, solely based upon AIR Information received, as Unexplained Money u/s 69A of the Income Tax Act, 1961.
5. The Ld. Commissioner of Income Tax (Appeals) has grossly erred in law while upholding the Order passed by Ld. AO, without adjudicating/addressing the issue of difference between two amounts of contractual receipts i.e. (a) Amount of INR 24,96,217/- as per AIR Information in the possession of Ld. AO and (b) Amount of INR 17,82,469/- as per Form-26AS filed by the Appellant for the AY under consideration.
6. The Ld. Commissioner of Income Tax (Appeals) has grossly erred in law while upholding the Order passed by Ld. AO, disallowing a TDS credit of INR 66,511/- to the appellant which is duly reflected in the Form-26AS for the AY under consideration.
7. The above grounds are without prejudice to each other.
8. The appellant craves the leave to add, amend or alter all or any of the grounds of appeal.

Facts of the Case

The case of the assessee was reopened for assessment under section 147 of the Income Tax Act on the basis that the assessee did not file any return of income. As per details provided in AIR Report against PAN-AAAFL1242P, it was disclosed that the assessee received a sum of Rs. 24,96,217/- on which TDS under section 194C of the Act was deducted. Further, the assessee had deposited cash of Rs. 6,10,000/-. Accordingly, a notice under section 148 of the Act was issued to the assessee. It was recorded by the Assessing Officer (AO) that the assessee did not raise any objection regarding reopening of the assessment proceedings under section 148 of the Act and did not challenge the jurisdiction of the AO. No one attended the assessment proceedings on behalf of the assessee. Therefore, the AO framed the assessment under section 144/147 of the Act vide order dated 07.12.2017 and made an addition of Rs. 8,09,697/-.

Tribunal’s Decision

The tribunal observed that the Ld. CIT(A) had admitted the additional evidence but sustained the impugned addition by observing that the assessee’s contention regarding the incorrectness of the contractual receipts could not be entertained. The Ld. CIT(A) noted that the amount of Rs. 24,96,217/- appeared in the AIR record of the department, and the onus on the appellant was not discharged by merely filing copies of bank statements. Additionally, the Ld. CIT(A) sustained the cash deposit addition as the source of the cash deposits could not be established merely by filing an account statement without any books of account.

The tribunal found merit in the assessee’s contention that if the gross receipts are taken at Rs. 17,82,469/- but not at Rs. 24,96,217/- after giving effect to the reversal entry of Rs. 7,13,748/- as reflected in the Form 26AS, the income of the assessee firm would be Rs. 1,42,598/- if computed at 8% of the contractual receipts on a presumptive basis. The tribunal concluded that the impugned addition made by the AO and sustained by the Ld. CIT(A) was unjustified and deserved to be deleted.

Conclusion

The case ITA No. 4801/DEL/2019 concluded with the tribunal deleting the impugned addition and allowing the appeal of Lamba Construction Co. The tribunal emphasized the need for proper reasoning, justification, and supporting materials in making additions and adjudicating disputes.

Final Judgment

The final judgment of the tribunal was as follows:

This appeal by Assessee is filed against the order of Learned Commissioner of Income Tax (Appeals)-38, New Delhi, dated 19.03.2019 for Assessment Year 2015-16.

None appeared on behalf of the assessee at the time of Virtual hearing before us. The learned counsel for the assessee, vide his letter dated 14.01.2021 received through email, has requested for withdrawal of the appeal and stated that the assessee has opted to settle the dispute relating to the tax arrears for the assessment year under consideration under the ‘Vivad Se Vishwas Scheme, 2020’. A certificate to this effect under Section 5(1) of The Direct Tax Vivad Se Vishwas Act, 2020 has also been filed.

Learned Senior DR has no objection.

In view of the above, we accept the request of the assessee for withdrawal of the appeal.

In the result, the appeal of the assessee is dismissed as withdrawn.

Above decision was announced on conclusion of Virtual Hearing on 28th May, 2021.”

Lamba Construction Co. vs. ITO, Ward-62(4), New Delhi: Dispute Over Cash Deposits and Contractual Receipts