TaxTMI 
TaxTMI 
2024 (11) TMI 429
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....ssessee was also specifically asked to respond through e-proceedings only. In response, the assessee submitted its response vide letter dated 28.08.2018 through RPAD along with list of Contract Expenses incurred along with the copies of bills. Subsequently, the case was transferred to the ACIT, Circle-1, Panvel since the jurisdiction over the case vests with him. Due to change in the incumbent and in order to complete the proceedings, a notice u/s 142(1) of the Act was issued to the assessee on 07.11.2019. 3. During the course of assessment proceedings the Assessing Officer noted that the assessee has shown gross receipts of Rs. 10,97,01,606/- from its contract work on which profit of Rs. 99,88,362/- was declared. The assessee has claimed expenses of Rs. 8,45,92,754/- on account of labour charges and material expenses which is almost 78% of the gross receipts. Since the case was selected to verify the contract expenses, the Assessing Officer asked for the details. The assessee submitted the list of payments made for wall painting charges of Rs. 6,35,81,436/- and payments made for labour charges amounting to Rs. 1,84,25,720/- along with the copies of bills in respect of wall painti....
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....should not be disallowed. Rejecting the various explanations given by the assessee and following the decision of the Hon'ble Apex Court in the case of Vijay Proteins Ltd., the Assessing Officer made addition of Rs. 2,05,45,539/- being 25% of the expenses of Rs. 8,21,82,156/- as bogus expenses. The Assessing Officer accordingly determined the total income of the assessee at Rs. 3,05,33,900/-. 6. Before the CIT(A) / NFAC, the assessee made elaborate submissions. It was submitted that the contract expenses incurred by the assessee are in the nature of sub-contract expenses for wall painting and incidental labour charges. Since the jobs undertaken by the assessee are in remote locations across the country, the parties / sub-contractors hired by the assessee are local labourers who did not submit proper bills and vouchers for the work done. The assessee filed the works undertaken by it in the states of Maharashtra, Madhya Pradesh, Uttar Pradesh, Odisha, Bihar, Tamil Nadu, West Bengal, Karnataka, Andhra Pradesh, etc. It was submitted that the payments were made in the normal course of business through proper banking channel either by account payee cheque or RTGS. Relying on various deci....
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....xpenses incurred by the Appellant are the basic expenses which are required to be incurred for the Appellant to run its business. The nature of work undertaken by the Appellant involves procuring advertising contracts which require the Appellant to undertake wall painting jobs at various locations across the country. Thus, the basic nature of business is contractual in nature. The contract expenses incurred have been duly reflected in the books of accounts of the Appellant. Moreover, all the payments for the said purchases have been made through normal banking channels ie either by way of account payee cheques or through Real Time Gross Settlement RTGS. Thus, the genuineness of the purchases has been proved by corroborated by way of invoices and bank payments. The case laws relied by the appellant are found to be applicable to the facts of the case in hand and supports the appellants case. 8.3 Considering the fact that, the A.O has not brought on record any defect in the books of accounts maintained by the appellant, the books of accounts have not been rejected before estimating the disallowances, the payments in respect of expenses disallowed are made through banking channels, n....
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....Tribunal) Rules, 1963 (hereinafter referred to as "the Rules"): "On the facts and circumstances of the case and in law, the assessment order dated 16 December 2019 is invalid since the Assistant Commissioner of Income-tax Circle Panvel being the Jurisdictional Assessing Officer has not issued the notice under section 143(2) of the Act." 10. Referring to the above ground, Ld. Counsel for the assessee submitted that the assessee is a respondent in the matter against the appeal filed by the Revenue. He submitted that the assessment order dated 16.12.2019 passed by the ACIT, Panvel Circle was the subject matter of challenge before the CIT(A) / NFAC. The CIT(A) / NFAC had allowed the appeal filed by the assessee wherein the disallowance made by the Assessing Officer was deleted. He submitted that the assessee through this legal ground filed as per rule 27 of the Income Tax (Appellate Tribunal) Rules would like to submit that the assessment order passed by the Assessing Officer is not valid since the notice u/s 143(2) of the Act was issued by the ITO, Ward-2, Panvel whereas the said notice u/s 143(2) of the Act should have been issued by the Assessing Officer who has the jurisdiction ....
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....e or two cases due to mistake on the part of the assessee such thing has happened. 13. So far as the allegation of the Assessing Officer that some of the parties to whom payments have been made, have not filed their returns of income is concerned, the Ld. Counsel for the assessee submitted that the assessee has made the payments through proper banking channel, deducted TDS from the said payments and those persons have done the work as per the specifications of the assessee. The assessee has no control over those to whom the payments have been made regarding filing of their tax returns. He submitted that since the CIT(A) / NFAC has passed a detailed order giving the reasons while deleting the disallowance made by the Assessing Officer, the same should be upheld and the grounds raised by the Revenue should be dismissed. 14. The Ld. DR on the other hand strongly challenged the order of the CIT(A) / NFAC as well as the ground raised by the assessee as per Rule 27 of the Rules. He submitted that the assessee filed return with ITO, Ward 2, Panvel though the jurisdiction as per first letter of the assessee's name i.e. "O" was with another officer i.e. ITO, Ward -5, Panvel. As per the mo....
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....d the jurisdiction of the Assessing Officer, therefore, provisions of section 124(3)(a) precludes the assessee from questioning the jurisdiction of the Assessing Officer if he does not do so within 30 days of receipt of notice u/s 142(1). He submitted that in that case also the jurisdiction had changed after the returns were filed but the assessee had participated in the assessment proceedings pursuant to the notice issued u/s 142(1) and not questioned the jurisdiction of the Assessing Officer. Accordingly the Hon'ble Apex Court reversed the view of the High Court and held that the assessee cannot challenge the jurisdiction of the Assessing Officer since he had participated in the assessment proceedings after receipt of notice u/s 142(1) and had not challenged the jurisdiction of the Assessing Officer within 30 days as per the provisions of sub-section (3) of section 124. He submitted that the ratio of the decision of the Hon'ble Supreme Court in the case of DCIT vs. Kalinga Institute of Industrial Technology (supra) squarely applies to the facts of the present case especially when the assessee had participated in the assessment proceedings pursuant to the notice u/s 142(1) of ....
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....ed by the assessee on 07.11.2017 declaring total income of Rs. 99,88,360/-. The case was selected for scrutiny through 'CASS' to verify limited issue of "Contract Expenses". Accordingly, notice u/s. 143(2) of Income-tax Act, 1961 [hereinafter referred to as 'the Act'] was issued to the assessee by the Income Tax Officer, Ward-2, Panvel on 21.09.2019. The said notice was duly served on the assessee through speed post as well as through email. The assessee was specifically asked to respond through e-proceeding only. In response, the assessee submitted its response vide letter dated 28.08.2018 through RPAD (received on 04.10.2018) along with list of Contract Expenses incurred along with the copies of bills. The details submitted were duly examined and taken on record. Later on, the case was received on transferred to this charge as the jurisdiction over the case vests with this charge. Accordingly, due to change in incumbent and in order to complete the proceedings, a notice u/s 142(1) of the Act was issued to the assessee on 07.11.2019." 19. It is also an admitted fact that the assessee never challenged the jurisdiction of the ACIT, Panvel Circle for not issuing noti....
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....High Court and allowed the appeal filed by the Revenue on the ground that the records revealed that the assessee had participated pursuant to the notice issued u/s 142(1) of the Act and had not questioned the jurisdiction of the Assessing Officer and therefore, in such case, the order of the Hon'ble High Court could not be sustained. The relevant order of the Hon'ble Supreme Court reads as under: "1. The impugned order set asides the assessment for AY 2014-2015 on the ground that the jurisdictional officer had not adjudicated upon the returns. The jurisdiction had been changed after the returns were filed. However, the records also reveals that the assessee had participated pursuant to the notice issued under Section 142 (1) and had not questioned the jurisdiction of the assessing officer. Section 124(3)(a) of the Income Tax Act precludes the assessee from questioning the jurisdiction of the assessing officer, if he does not do so within 30 days of receipt of notice under Section 142 (1). 2. In the present case, the facts did not warrant the order made by the High Court. At the same time, this Court notices that the High Court had granted liberty to the concerned authority ....
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....ins Ltd. We find the CIT(A) / NFAC deleted the addition made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. According to the CIT(A) / NFAC, the assessee has submitted the various documents including the bills raised by the various parties, such contract expenses are the basic expenses required to be incurred by the assessee to run its business, the assessee has undertaken wall painting jobs at different locations across the country, contract expenses incurred have been duly reflected in the books of accounts of the assessee, all the payments have been made through normal banking channels, genuineness of the purchases have been corroborated by way of invoices and bank payments, net profit declared by the assessee at 9% is quite reasonable in line of the assessee's business and that there are no self-withdrawals made by the assessee after making such payments which is routed back to the assessee, etc. Although we agree with the order of the CIT(A) / NFAC to some extent that the payments have been made through normal banking channel and the other parties have raised bills and the Assessing Officer has not pointed out any defect....