Hindustan Construction Company Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai Quashes Reopening Beyond Four Years as Change of Opinion; Deletes ₹14.03 Crore Bogus Sub-Contract Disallowance
The Mumbai Bench of the ITAT allowed the assessee’s appeal for AY 2012-13, holding that the reassessment initiated u/s 147 after four years was invalid and that the addition of ₹14.03 crore towards alleged bogus sub-contract expenses was unsustainable on merits.
On jurisdiction, the Tribunal noted that the original assessment was completed u/s 143(3) and the reopening was based solely on Form 26AS entries of the sub-contractor and assessment records of earlier years, all of which were already available at the time of original assessment. There was no fresh tangible material to justify reopening, nor any failure on the part of the assessee to fully and truly disclose material facts, as the sub-contract expenses were duly disclosed in the audited financial statements and notes. Applying the law laid down in Kelvinator of India Ltd. (SC), the Tribunal held that the reopening amounted to a mere change of opinion and was therefore bad in law.
On merits, the ITAT further held that even otherwise the disallowance of sub-contract expenses could not survive. The assessee had furnished work orders, invoices, ledger accounts, and bank payment details, establishing that M/s Kumar Enterprises was a genuine sub-contractor which had executed work at multiple project sites. The CIT(A) erred in ignoring this documentary evidence and sustaining the addition on a general allegation of accommodation entries. The Tribunal held that genuineness of expenditure cannot be rejected without disproving the evidence on record, and suspicion cannot replace proof.
Accordingly, the ITAT quashed the reassessment proceedings and deleted the entire disallowance, allowing the appeal in full.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
