By TIOL News Service

CHANDIGARH, NOV 10, 2015: THE issue is - Whether when assessee is caught suppressing contract receipts, it can escape penalty on ground that it did not receive TDS certificate on said receipts. NO is the answer.

Facts of the case

The assessee is a firm engaged in the business as Civil Contractor based at Ludhiana and filed its return of income for the AY 2006-07 declaring taxable income at Rs. 57,49,202/-. The assessee also filed revised return where the returned income remained unchanged. The assessee claimed the credit of TDS at Rs. 2,66,292/- whereas the TDS certificates annexed with the return of income showed total receipts of Rs. 1,18,87,936/-. The AO called for the information from the Executive Engineer, PWD, Sirhind and as per the information received, the total contract receipts were Rs. 1,40,42,320/- against which TDS of Rs. 3,14,551/- was deducted. The assessee was, thus, found to had suppressed the contract receipts to the extent of Rs. 21,54,387/-. Accordingly, the assessee was issued show cause notice to explain the difference. The assessee filed reply by pleading that the difference of Rs. 20,52,268/- be added to the gross receipts on which GP rate be applied. The plea of the assessee before the AO was that the said mistake had taken place due to non-receipt of Form No.16-A. Thereafter, the assessee vide a letter surrendered a sum of Rs. 2,15,439/- as income on gross receipts of Rs. 21,54,387/-. Another communication was submitted by the assessee that due to bonafide mistake, Rs. 10 lacs was credited to the security account while for the balance amount, profit @ 5.36% was offered for taxation. The case of the assessee was referred u/s 142(2A) for special audit by the AO and made an addition of Rs. 21,54,387/- on account of suppression of receipts from PWD, Sirhind vide assessment order dated 28.5.2009. Another addition was made by the AO by rejecting the books of account and income of the assessee was estimated @ 12% on total turnover of Rs. 9,59,16,586/-. The addition made on account of suppression of receipts was telescoped with the total addition made while estimating the net profit @ 12%. The penalty proceedings were also initiated and penalty of Rs. 17,32,335/- was imposed upon the assessee on the total assessed income. On appeal, CIT(A) deleted the penalty on account of addition made on estimate basis but confirmed the addition made on account of suppression of receipts to the extent of Rs. 21,54,387/-. Before Tribunal, the revenue filed appeal against the deletion of penalty by the CIT(A) which was on account of concealed income in pursuance to estimation of profits whereas the assessee filed the appeal against penalty sustained by the CIT(A) on suppression of receipts to the tune of Rs. 21,54,387/-. The Tribunal had dismissed both the appeals.

Held that,

++ the assessee is a contractor carrying on contracts of various government bodies. The assessee had short declared contract receipts from the civil work undertaken by it by Rs. 21,54,387/-. Some part of the said amount was declared in the security amount by the assessee but not as part of the taxable receipts from PWD, Sirhind. Thus, the assessee had suppressed its contract receipts on which tax was also deducted at source by the said concern. The AO, the CIT(A) and the Tribunal maintained levy of penalty under Section 271(1)(c) on that account. The Tribunal had recorded that the assessee having under declared its receipt is exigible to levy of penalty u/s 271(1)(c). The Tribunal observed that the other addition on which penalty under Section 271(1)(c) was levied, was under declaration of the receipts by the assessee. The assessee is a Contractor and during the year under consideration, had undertaken contracts of various government bodies. The assessee had declared contract receipts from the civil work undertaken by the assessee. However, receipts totalling Rs.21,54,387/- were not declared and some part was declared in the security account by the assessee but were not declared as part of the receipts from PWD, Sirhind. When information was called from the PWD, Sirhind, the Assessing Officer found the assessee to have suppressed its contract receipts on which tax was also deducted at source by the said concern. The case of the assessee, however was that it had not received the said TDS certificates from the said department and, hence the confusion and underdeclaration of the receipts by the assessee. We find no merit in the stand of the assessee in this regard and it is a fit case of levy of penalty for furnishing in accurate particulars of income. The assessee having under declared its receipts is exigible to levy of penalty under section 271(1)(c). Accordingly, we uphold the order of the CIT(Appeals) in this regard and confirm the levy of penalty on suppressed receipts to the extent of Rs.21,54,387/-. Upholding the order of CIT(Appeals), we dismiss the ground of appeal raised by the assessee. Adverting to the judgments in Reliance Petro Prodcuts Pvt. Ltd. and Ms. Sania Mirza's cases relied upon by the counsel for the appellant, it may be noticed that the principle of law enunciated therein, is well recognized, but in view of the concurrent findings of concealment of income recorded by the Assessing Officer, the CIT(A) and the Tribunal as noticed hereinbefore, no benefit can be derived by the assessee from the aforesaid pronouncements. In view of the above, no question of law muchless a substantial question of law arises in this appeal. Accordingly, finding no merit in the appeal, the same is hereby dismissed.

(See 2015-TIOL-2574-HC-P&H-IT)