TaxTMI 
TaxTMI 
2019 (5) TMI 1307
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....ground no. 2 of appeal of the assessee is as under: "2. The Ld. CIT(A) has erred in sustaining the addition of Rs. 34,46,84,368/- in relation to purchase made from Sundha Road Developers Private Limited and from Khush Infratech Private Limited, The addition so confirmed is bad in law and had on facts. The appellant submitted few copies of bills on a sample basis, and not allowing the other purchases was unjustified, particularly when the said purchases made are duly confirmed by the respective parties." The ground no. 1 of the revenue's appeal is as under: "1. Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition made by the AO on account of bogus purchases shown from M/s. Sundha Road Developers Pvt. Ltd. and M/s. Khush Infratech Pvt. Ltd. of Rs. 6,66,210/- and Rs. 3,73,690/- respectively." 5. Brief facts of the case are that the original return of income was submitted by the assessee on 24.11.2014. Later a search proceedings u/s. 132 of the Income-tax Act, 1961 (hereinafter referred to as the "Act") was carried out against the assessee on 21.01.2015. Pursuant to which notice u/s. 153A of the A....
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....dges that similar replies were submitted by M/s. SRDL also. The AO notes that the replies were exactly similar and identical and without furnishing the complete details as required vide his summon u/s. 131 of the Act. According to the AO, despite several reminders both the companies reply was exactly the same and requested for grant of time to submit the details and documents. According to AO, thereafter he issued notice to the assessee as to why purchases made by it from the said parties should not be treated as bogus. Taking note that no specific reply was received from the assessee for not producing the directors of the other two companies ie, M/s. SRVL and M/s. KIPL according to AO the genuineness of the huge expenses paid by assessee to the said companies remained unverified and after referring to few judgments was pleased to hold that the assessee failed to establish the genuineness of the expenses claimed to have been incurred for alleged supply of materials by M/s. SRDL to the tune of Rs. 18,18,34,000/- and M/s. KIPL to the tune of Rs. 18,10,85,268/- totaling Rs. 36,29,19,268/- was disallowed as bogus expenses and added to the income of the assessee. Aggrieved, the assessee....
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....ited under the Companies Act, 1956. We note that the auditors have certified the correctness of the financials filed by the assessee. The AO has to accept the tax audit report unless it turns out to be patently a false certificate. We note that the AO has not brought on record any defects/faults in the audited financials filed by the assessee and the AO have not rejected the books maintained by the assessee in the regular course of business. Moreover, we note that the AO in order to verify the veracity of the purchases made by the assessee from its two companies M/s. SRDL and M/s. KIPL has asked for various details which have been replied to by both the companies along with the following details: i) In respect of M/s. SRVL following documents were filed: ii) Income Tax Return filed at page 68 of the paper book, iii) Account statement of the said party from the books of account of the assessee available at pages 38 & 39 of the paper book, iv) The account confirmation and the account statement from the books of M/s. SRVL confirming the transaction with the assessee available at paper book pages 40 to 46, v) Copy of computation of tot....
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....tion that materials were purchased for the bills produced by the assessee. As we stated earlier that without purchasing the construction materials, the assessee could not have constructed the roads etc. and since the assessee's turnover has been accepted in toto and when the parties M/s. SRDL as well as M/s. KIPL has given the confirmation along with the fact that payments were through banking channel and other documents as aforesaid, question of disallowance of the expenses claimed by the assessee does not arise. It goes without saying that entire contract receipt can never be the income and only the net income after deducting corresponding expenses can be taxed. The disallowances have been made only on suspicion; and suspicion howsoever strong cannot take theplace of the proof. The Ld. CIT(A) by giving partial relief to the assessee has recognized the genunity of purchases on the bills submitted, which goes against the theory of bogus purchases as held by the AO and cannot be sustained and, therefore, we are inclined to allow this ground of appeal of the assessee and confirm the action of the Ld. CIT(A) to the partial relief granted by him and direct the AO to allow claim of expe....
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....ade payment of Rs. 35,42,12,562/- to M/s. SREI, asked for various details from them which was acknowledged by the AO to have been received by him. The only fault which the AO has raised is that complete details were not furnished by M/s. SREI, however we note that AO has not spelled out as to which all details were not furnished before him which is relevant to adjudicate this issue. It was brought to our notice by the Ld. AR that the turnover of M/s. SREI was more than Rs. 3260 cr. and took us to page 76 of the paper book where the Balance Sheet of M/s. SREI is found placed and page 77 which is P&L Account from which income from operations of M/s. SREI is found to be Rs. 3260 cr. and the amount disbursed by the assessee to M/s. SREI is only Rs. 35 cr. It was brought to our notice that M/s. SREI is a reputed company and acted as advisory and consultant and its clientele includes various Government agencies like Ministry of Rural Development, Govt. of India, Asian Development Bank, Ministry of Commerce & Industries, Department of Commerce (SEZ), Bangalore Metro Railway Corporation, Delhi Metro Development Corporation, Greater Vishakapatnam Municipal Corporation etc. It was brought to....
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.... Further M/s. SREI, by their reply dt. 15.11.2017, have furnished before the AO complete details of contracts of Rs. 3288.14 crores, which include contracts of Rs. 991.34 crores, where the assessee has been awarded the contracts (placed as Annexure B to this order); thus the observation of the AO that M/s. SREI furnished details of contracts of only Rs. 1045.11 crore, is factually incorrect. The fees of Rs. 32,09,61,000/- (Rs. 36,06,31,780/- less service tax Rs. 3,96,70,780/-) is correlated with the details of value of total contracts and value of successful contracts as under: Rs. 36,06,31,780/- to the assessee. In this regard the assessee has explained that the difference of Rs. 64,19,220/- is on account of TDS. I find that the AO has failed to appreciate the debit of Rs. 64,19,220/- on account of TDS, in the ledger account of the assessee submitted by SREI (placed as Annexure C to this order). Further, this contention of the assessee is brone out from Form 16A, as per which TDS of Rs. 64,19,220/- has been deducted from fees paid to SREI. Therefore the discrepancy pointed out by the AO is found to be fully explained. 6.3.4. In view of the discussi....