ACIT Vs Asahi Infrastructure & Project Ltd (ITAT Mumbai)
The main point of contention in the case is the inappropriate application of sections 44AD and 44AF to Asahi Infrastructure & Project Ltd by the AO (Assessing Officer). This miscalculation resulted in an inflated assessment of the company’s income at Rs.40,81,308. The company’s total turnover stands at Rs.20,40,65,412, audited under the provisions of the Companies Act, 1956, and section 44AB of the Income Tax Act. Notably, sections 44AD and 44AF pertain only to businesses with a turnover of Rs.40.00 lacs or less, which does not apply to Asahi Infrastructure. Consequently, the CIT(A) correctly removed this undue addition.
Additionally, the CIT(A) deletion of the addition of Rs.1,56,67,294 based on fresh evidence was challenged by the Revenue, arguing that the AO was not provided with adequate opportunities to present their case, a contravention of Rule 46A of the Income Tax Rules, 1962. Despite several reminders, the AO did not respond, leading to the confirmation of CIT(A)’s action based on the ample evidential support presented by the assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by Revenue is arising out of order of CIT(A) – Mumbai in Appeal No.CIT(A)-14/IT.402/Rg.6(1)/09-10 dated 29/06/2012. Assessment was framed by ITO, Ward 6(1)(2) for the assessment year 2007-08 vide his order dated 31/12/2009 under section 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘ the Act’).
2. The first issue, in this appeal of the Revenue is against the order of CIT(A) deleting the addition made by the AO by disallowing the expenses, which are not supported by evidences. For this, Revenue has raised ground regarding not allowing sufficient opportunity by the CIT(A) to the AO and admitting additional evidences in contravention of Rule 46A of the Income Tax Rules, 1962 (in short ‘the Rules). For this the Revenue has raised following two Grounds:-
1. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions of RS.1,56,67,294/ – based on fresh evidence without appreciating the fact that the A.O. was not given sufficient opportunity; CIT(A) forwarded to the A.O. the submissions of assessee only without forwarding supporting evidences which were relied upon by the CIT(A) to rebut the same in the last week of December 2011, and passed the order in the month of March, 2012 “.
2. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ) erred in deleting the additions of Rs.l,56,67,294/- based on fresh evidence without giving opportunity to A.O. to refute the same, in contravention of Rule 46A of the LT. Act, 1961”.
3. Briefly stated, the facts are that the assessee is engaged in the business of reseller of iron and steel and also construction work. The AO, during the course of assessment proceedings noticed from the P&L account of the assessee that the assessee has credited an amount of Rs.16,52,93,228/- and Rs.3,81,28,000/- being sales and service, contract and labour job works respectively and also debited sum of Rs.17,82,72,672/-being cost of sales and a sum of Rs.2,05,43,030/- being cost of labour charges. The assessee furnished party wise details and AO made enquiries by issuing notices under section 133(6) of the Act with respect to labour charges paid to various parties. The AO noted that receipt of contract from the
