TaxTMI 
TaxTMI 
2026 (5) TMI 1124
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....ements are either not filed by the deductor or show a substantially lower figure of tax deduction (Selection of case of deductor) * Non-compliance to Indian Accounting Standards Rules, 2015 (Ind-AS) * High labilities as compared to low Income/receipts * High ratio of refund to TDS * Taxable receipts from Other Sources shown in Schedule TDS2 is higher than the receipts shown in ITR 3. Accordingly statutory notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') was issued and served on the assessee. Thereafter, the Assessing Officer issued notice u/s 142(1) along with a questionnaire in response to which the assessee filed the requisite details from time to time. 4. During the course of assessment proceedings the Assessing Officer noted that the assessee has shown other current financial liabilities totaling to Rs. 1,51,47,76,837/- which includes 'Deposit from Contractor' totaling to Rs. 42,54,79,035/-, however, no such expenses to the contractors have been found debited to the profit and loss account as well as no details of TDS made by the assessee on the contract payments and in Form 3CD. He, therefore, was of....
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....rtain the veracity of the same. As against the assertion of the assessee that "there is an addition of Ra. 44,57, 248/- (42,54,79,035/- (-) 42,10,21,787/-). It is thus, clear that the deposits from contractors of Rs. 42,54,79,035/- do not represent the deposits collected during the year", it is noticed that during the year, the assessee received the alleged new advance totaling to Rs. 22,61,51,802]- from the contractors. The details furnished by the assessee can be summarized as under: Op. Amount as on 01.04.2021 Dr. Cr. CI. Amount as on 31.03.2022 421,021,787.28 221,694,554.54 226,151,802.66 425,479,035.40 4.4.12. It is pertinent to mention here that no other supporting documents have been filed by the assessee in order to prove the genuineness of the transactions. It is concluded from the reply, supporting details/extract of the ledgers appended with the reply, as well as the surrounding circumstances that the assessee has received Rs. 22,61,51,802/- from these person as unsecured loans, some of which also carry interest ranging from merely @2% to @10%. The details of the total interest paid/payable on these advances has not been filed. 4....
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....inding and Decision of the Appellate Authority: 4.3 I have considered the assessment order, submission of the appellant and the facts of the case. Facts in brief are the appellant is a Pvt. Ltd. Company and is registered as Class 'I-A', contractor and engaged mainly into business of civil construction of bitumen or concrete roads, storm roads drainage, building primarily for government agencies. The appellant filed its return of income on 31.10.2022, declaring total income at Rs. 76,24,330/- (book profit under MAT Rs. 2,73,23,231/-). During the course of assessment proceedings, a notice u/s 142(1) dated 20.11.2023 along with its enclosures was issued, fixing for 28.11.2023. In addition, the appellant was asked to respond to the following specific queries, directly relating to the reasons. In response to the same, the appellant filed a written submission on 28.11.2023, which was incomplete. Further, in view of observation in para 4.4.2 to 4.4.4 of assessment order, a show cause notice proposing variation was issued to the appellant on 11.03.2024, fixing date of compliance on 14.03.2024. In response to show cause notice, the appellant filed a written submission on 14....
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....bmissions, and oral explanations made by the appellant, several important findings emerge in support of the appellant's case. To begin with, the nature of the transactions in question, amounting to Rs.22,61,51,802/-, has been satisfactorily clarified by the appellant. Contrary to the AO's characterization of these credits as unexplained cash receipts or unsecured loans, the appellant has convincingly demonstrated that these are in fact security deposits deducted from contractual payments made to subcontractors and vendors. These deposits were not new infusions of funds or external credits but were appropriations made under standard industry practice to ensure performance and compliance with contractual obligations, particularly in relation to the quality of civil construction work. 4.7 Furthermore, the appellant has furnished detailed documentary evidence to substantiate the genuineness of these transactions. The records include comprehensive ledger accounts, summaries of credits and debits, and the opening and closing balances of each category of security deposit, including deposits deducted at 5% and 6% rates, and those related to GST vendor compliance. The trans....
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....1,802/- made u/s 68 and taxed u/s 115BBE of the Act is hereby deleted. Grounds No. 1 to 5 are allowed. 7. Aggrieved with such order of the Ld. CIT(A) the Revenue is in appeal before the Tribunal by raising the following grounds: 1) Whether on the facts and circumstances of the case and in law, the CIT(A) was right in holding that the credits of Rs. 22,61,51,802/- were genuine trade-related liabilities and not unexplained cash credits without appreciating the fact that the assessee neither before the AO nor before the CIT(A) gave complete details of the creditors. 2) Without prejudice to the above, whether on the facts and circumstances of the case, the CIT(A) was right in holding that the credits were genuine trade-related liabilities and not unexplained cash credits on basis of additional evidence without giving opportunity to the Assessing Officer as mandated by Rule 46A of Income-tax Rules, 1962. 3) The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal at the time of hearing 8. The Ld. DR strongly challenged the order of the Ld. CIT(A) in deleting the addition of Rs. 22,61,51,802/- made by the Assessing Offi....
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....,79,035/- seems to be non-genuineness, therefore, the same is proposed to be added to the income of the assessee, during the year. * Note number 15 in the Assessment Year 2022-23 audited balance sheet shows Rs. 42,54,79,035 to "Deposit from Contractor". This amount is kept as deposit by the contractor against the work. In the previous Assessment Year 2021-22, the deposit amount was same of Rs. 42,10,21,787/-, which is increased in the Assessment Year 2022-23 Rs. 42,54,79,035/- Therefore in this Assessment year 2022-23 "deposit from contractor" It is Rs. 42,54,79,035/-. 10. Referring to page 110 of the paper book, the Ld. Counsel for the assessee again drew the attention of the Bench to the reply given by the assessee before the Assessing Officer which reads as under: In this respect, we have to clarify that the issue in question has not been appreciated in right perspective. We have duly submitted all the schedules to the P&L A/c and Balance Sheet. It can be seen from Schedule 15 that the outstanding deposits from contractors are Rs. 42,54,79,035/- as on 31.03.2022. In this schedule, a comparative figure of the position as on 31.03.2021 is given, which....
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....s kept in reserve commonly known as security deposits and is usually paid after finalization of the contract with the relevant Govt. Department so that if there are any defects in work done by the said sub-contractor, he could be made responsible for removing the said defects. 12. Referring to page 149 of the paper book, he drew the attention of the Bench to the detailed submission made before the Ld. CIT(A). He submitted that no new evidences or details were filed before the Ld. CIT(A) and all the details were already filed before the Assessing Officer. 13. The Ld. Counsel for the assessee submitted that the security deposit / retention money deducted from running bills of sub-contractors in the ordinary course of business cannot be treated as unexplained cash credits u/s 68 of the Act. He submitted that all these deposits were appropriations from contractual payments and are not fresh credits. The parties were identified sub-contractors and vendors, the transactions were routed through regular books of account. There was continuous debit / credit movement including the release of deposits and no interest was paid or payable. He submitted that the Assessing Officer has broug....
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....ayment confirmation and the contract performance. However, the approach of the Assessing Officer effectively seeks to tax a running business liability which is impermissible. He submitted that these deposits are refundable and in fact during the year also certain amounts were released which were the opening balances accepted in earlier years. 16. So far as the ground raised by the Revenue that there was violation of Rule 46A of IT Rules, 1962 is concerned, he submitted that no additional evidence within meaning of Rule 46A has been filed before the Ld. CIT(A). Whatever documents filed before the Ld. CIT(A) were in the nature of ledger extracts, summaries and explanations which were already part of assessment proceedings or were only compilations / explanations of existing records and there is no new third party evidence, confirmations or documents produced for the first time. He submitted that the Assessing Officer himself has relied on the same ledgers since the assessment order itself reproduces the opening balance, credits during the year, debits during the year, closing balance etc. Therefore, once the Assessing Officer relied on the same material, Rule 46A does not get trig....
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....ding 31.03.2021 Rs. 42,10,21,787/- 19. Similarly, the assessee has given bifurcation of various details as to how the assessee was deducting the security deposits from the payments made to the contractors, GST to the vendors etc, the details of which are as under: Sr. No. Head of the account Credit during the year Debits during the year 1 Security deposits @6% 4,58,77,684.00/- 35,01,865.00/- 2 Security deposits @5% 88,44,546.00/- 1,63,693.00/- 3 Security deposits GST vendors 13,83,87,445.66/- 17,30,40,669.54/- 4 Security deposits 3,30,42,127.00/- 4,49,88,327.00/- Total credits 22,61,51,802.66/- 22,16,94,554.00/- 20. We find the assessee while explaining the security deposits @ 6% deducted from various persons has filed the following details: Sr. No. Parties Amounts 1 Deevee Projects Ltd (33,41,283 + 19,76,195 + 27,38,348 + 14,17,675) 94,73,501/- 2 Survamangala Infra build (P) Ltd. (33,41,283 +19,75,195 + 27,36,348 + 14,17,675 +25,31,984 + 38,34,931 + 14,41,298) 1,72,78,714/- 3 Sunny Constructions (50,06,196 +56,02,698 + 9,30,912) 1,15,39,806/- 4 ....