Principal Commissioner of Income Tax Dehradun vs United Concept & Solution Pvt. Ltd

SHARAD KUMAR SHARMA, J.

K.M. JOSEPH, C.J. (Oral)

In this Appeal filed under Section 260A of the Income Tax Act, the Revenue calls in question the order of the Tribunal, by which the Tribunal has

affirmed the order passed by the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals), in turn, has deleted addition

of Rs. 75,16,013/-. The Assessee, it appears, filed the return on the total income of Rs. 1,81,18,370/-. The Assessing Officer took the view that the

turnover of the Assessee had gone up from Rs. 22,84,22,128/- in the previous year to Rs. 26,01,09,470/- in the year in question, but the net profit had

come down from Rs. 2,52,05,645/-. Two items, namely, the Profit Monitoring Expenses and the Erection and Commissioning Charges, according to

the Assessing Officer, had actually gone up during the year in question, and hence it was that the net profit had suffered a diminution. The Assessee

gave the explanation, when he was called upon to explain the alleged abnormal increase in the two expenses, that most of the projects, in the year in

question, were carried on different locations. The Assessing Officer took the view that no prudent man would increase his business so as to get less

profit and, therefore, the explanation of the Assessee was rejected and addition was made in a sum of Rs. 75,16,013/-. It is this addition, which has

been deleted by the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals), in fact, noted that the Assessing Officer

has not brought on record a single instance of expenses not being vouched properly; any instance of any of these expenses being artificially inflated

or being of a bogus nature.He also noted that there is no allegation that the expenditure has occurred out of any other activity, nor any instance of the

expenditure being used for purposes other than business was brought on record. Nosuspicion can be the basis of a sustainable addition further

reasoned the Commissioner of Income Tax (Appeals). The Tribunal has also adverted to case law in this regard and sustained the order of the

Commissioner of Income Tax (Appeals).

The substantial questions of law, which have been projected in the appeal memorandum, are as follows:

“1. Whether the Hon’ble ITAT, Delhi has erred in law and on the facts in deleting the disallowance of Rs. 75,16,013/- made by the A.O. out of

“Project Monitoring Expenses†and “Erection and Commissioning Charges†ignoring the fact that the assessee failed to specify the reason of

less profit before the A.O. in the year under consideration although turnover went up substantially as compared to previous year?

Whether the Hon’ble ITAT, Delhi has erred in law and on the facts by deleting the disallowance of RS. 75,16,013/- made by the A.O. out of

“Project Monitoring Expenses†and “Erection and Commissioning Charges†despite the assessee failing to furnish satisfactory explanation

regarding these expenses?

We heard Mr. Hari Mohan Bhatia, learned counsel on behalf of the appellant.

Having heard learned counsel on behalf of the appellant, we do not see any substantial question of law, as arising out from the order, as projected.

Consequently, the appeal fails and is dismissed without any order as to cost.