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2022 (10) TMI 123
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....ized revealed undisclosed income to the tune of Rs.38.90 crores. The impugned undisclosed income were in the nature of bogus purchases, unaccounted cash found, etc. emanating from the discrepancies in the books of account of the assessee company. Statement of Shri Viren Ahuja, one of the directors of the assessee company corroborated the said transaction, which statement was subsequently retracted by an affidavit dated 24/11/2009. The Assessing Officer issued notice under section 153A of the Act dated 12/04/2010 for assessment years 2007-08 to 2010-11. The assessee had filed the regular returns of income and returns in response to notice under section 153A of the Act for assessment years 2007-08 to 2010-11, the details of which are given below:- A.Y. Date of filing of original return Returned income, as per Regular return Dat of filing of return u/s 153A of the Act Returned income as per 153A return 2007-08 30/10/2007 68,32,301/- 17/09/2010 67,32,300/- 2008-09 01/09/2008 81,18,230/- 17/09/2010 81,18,230/- 2009-10 N.A. N.A. 17/09/2010 NIL 2010-11 15/10/2010 9,58,50,020/- N.A. N.A. 3. The Assessing Officer ....
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....ble jurisdictional Bombay High Court. 8. The Ld.DR contended that the assessee has failed to prove that there was business activity carried out by the assessee company and that the assessee has only furnished copies of the agreement and not produced the parties before the Assessing Officer. The Ld.DR relied on the statement of the director, who has admitted that the transactions are bogus. The Ld.DR further stated that the Ld.CIT(A) has erred in relying on the decision of ITAT in Shri Rattan Singh Rathod vs JCIT 25(2), Mumbai (supra). The Ld.DR contended that section 44AD would not be applicable to assessee's case as there was no business activity at all carried out by the assessee company. The Ld.DR relied on the decision of the Ld. Assessing Officer. 9. The Ld.AR for the assessee, on the other hand, contended that the assessee has subsequently furnished all details of the parties alongwith confirmation letters before the Ld.CIT(A), who remanded the same to the Assessing Officer for verification. The Ld.AR stated that the assessee has discharged its primary onus as to the identity, creditworthiness of parties and genuineness of the transactions. The Ld.AR further stated that....
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.... Assessing Officer. The assessee had contended that the said purchases were made on account of construction materials and electrical items with respect to the development of a property located at New Mumbai. It was also stated by the assessee that purchases in Bermaco Energy Systems Ltd were made on account of sub contract charges with respect to various project services rendered by the assessee company for its clients. The Assessing Officer alleged that there was no business activity carried out in the factory premises of the assessee company as per the findings of the Investigation Wing and held that the said expenses incurred by the assessee are in the nature of bogus expenses. The assessee replied for the said allegation of the Assessing Officer that the assessee was into the business of providing consultancy and other services in relation to setting up of power projects at various sites to various major players in the field of power industry. After getting the contract, the company, in turn, sub contracts the works to various sub contractors. The activity for which the expenses are claimed are carried out on respective site where the power project has been undertaken as these ....
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....that no work was undertaken in respect of Koyna Dam project in A.Y. 2010-11 and the same is evidenced from the P&L Account of the assessee company for the year ended 31/03/2010. It is further stated that no contract receipts from Koyna Dam project was obtained and that no expenses on account of the said project was claimed in A.Y. 2010- 11, the impugned amount of Rs.3,23,21,000/- was not shown in the P&L Account for A.Y. 2010-11 and that on this ground, the disallowance made by the Assessing Officer for A.Y. 2010-11 for the impugned amount was deleted by the Ld.CIT(A). 12. The Ld.CIT(A) has also observed that the impugned bogus purchase was pertaining to the Koyna Dam project and that the assessee company has earned substantial revenue from the said project in the earlier years, the details of which are given below:- S.No. Assessment year Revenue from Koyna Dam Project offered for taxation 1 AY 2006-07 INR 7.50 crores 2 AY 2007-08 INR 6.31 crores 3 AY 2008-09 INR 8.14 crores 4 AY 2009-10 INR 8.56 crores 5 AY 2010-11 Nil TOTAL INR 30.52 crores The Ld.CIT(A) has also specified that the Assessing Officer has n....
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....his remand report. 17. The addition made under section 68 of the I.T. Act for A.Ys. 2007-08 to 2010-11 is on the share warrant money, advance receipt, ICD, share application money, refundable interest free security deposit, etc. taken by the assessee company in all the impugned years. The details of the addition under section 68 of the Act for the impugned years are tabulated as below:- Assessment year Amount in INR Remarks 2007-08 218,35,00,000 Share warrant Money received from Sonata Investment Ltd 2008-09 10,18,50,000 Share Warrant Money received from Sonata Investment Ltd - Rs.10,12,50,000 Advance money from M/s SRM Energy Ltd - Rs.6,00,000 2009-10 54,00,00,000 (Ld.AO erroneously considered the addition at Rs.54 crores instead of Rs.51 crores ICD from Utility Energy Tech and Engineers Pvt Ltd - Rs.48,00,00,000 Advance money from M/s SRM Energy Ltd - Rs.3,00,00,000 2010-11 23,37,50,000 Share Application money from Utility Energy Tech and Engineers Pvt Ltd -Rs. 3,87,50,000 Refundable interest free security deposit from ILFS Transportation Network Ltd - Rs.9,50,00,0....
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....ders through which loan / ICD money was paid was also filed. Copies of the lender companies, copies of I.T. returns in some cases, Board Resolutions, agreements in relation to the money advanced, were also filed. Upon receiving the notices under section 133(6) of the Act, the Assessing Officer had also received responses from those parties and the submitted details substantiating the impugned transactions. The Assessing Officer has also mentioned the same in his order. The Ld.CIT(A) has also relied on the decision of Hon'ble Gujarat High Court in the case of Murlidhar Lahorimal vs CIT 280 ITR 512 (Guj) which held that when the assessee has discharged the primary onus, the source of the source cannot be questioned. The Ld.CIT(A) has also relied on the following judgements:- 1. Labh Chand Bohra vs ITO 219 CTR 57 (Raj) 2. CIT vs Dwakadish Investment Pvt Ltd - 330 ITR 298 (Del) 3. Sarogi Credit Corporation vs CIT - 103 ITR 344 (Pat) 4. DCIT vs Rohini Builders - 256 ITR 360 (Guj) 5. Aravali Trading Co vs ITO - 220 CTR 622 (Raj) 6. Nemi Chad Kothari vs CIT (2004) 264 ITR 254 (Gauh) 19. The Ld.CIT(A) has also relied on the decision ....
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....n 14A r.w.r. 8D cannot exceed the exempt income declared by the assessee company and relied on various judicial precedents to that extent. 24. Having heard both the rival submissions and perused the materials on record it is observed that the assessee company has furnished the details pertaining to the exempt income for assessment year 2008-09, 2009-10 & 2010-11, which are tabulated below:- AY 2008-09 Rs. 80,160 Dividend AY 2009-10 Rs.11,55,121 Dividend AY 2010-11 Rs.11,36,000 Dividend of Rs.5,36,000 and long term capital gain of Rs.6,00,000 25. It is pertinent to point out that the assessee has stated that it had not made any disallowance under section 14A in the return of income for the reason that no expenses are incurred for earning the exempt income. The assessee has relied on the decision of Hon'ble Delhi High Court in the case of Joint Investment Pvt Ltd vs CIT (2015) 372 ITR 694 (Del) which has held that the disallowance under section 14A is restricted only to the disallowance of expenses incurred by the assessee in relation to exempt income. The assessee has also relied on various other decisions, which are as follows:- (1)M/s John....
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.... 28. Upon perusal of the assessee's submission and the decisions cited by the Ld.AR, we are of the considered view that there is no fallacy in the decision of the Ld.CIT(A) in restricting the disallowance only to the extent of exempt income earned by the assessee. In this context, this ground of appeal filed by the Revenue is dismissed. ITAs No.2852/Mum/2018, 2853/Mum/2018 & 2854/Mum/2018 (Assessee's appeal) 29. These appeals filed by the assessee pertain to solitary issue of confirming the addition by estimating 8% of alleged unsupported project expenses by treating the same as bogus expenditure. As the issues in all these appeals are the same except for the quantum of addition, we pass a consolidated order on this issue in all the appeals filed by the assessee. 30. We would like to place our reliance on the decision rendered by us in the Revenue's appeals in grounds 1 & 1b wherein the Ld.CIT(A) has restricted the estimated addition @8% on alleged unsupported project expenses to be of bogus expenditure. As we have already given a detailed order in the above mentioned appeals of the Revenue on this ground by confirming the said addition on the basis of 8% estimation relyin....
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....e case, the accounts of the assessee in relation to contract charges and purchases can not be taken as reliable and these had been rightly rejected by the authorities below. However, it is also an established fact that the assessee had done the contract work and had shown total contract receipts of Rs. 21,14,72,874/-. The business cannot be done without purchases and other expenses, and therefore, the entire claim cannot be disallowed. We agree with CIT(A) that after rejecting the accounts, net profit has to be determined on estimate. The assessee had declared net profit rate of 6.5% . The net profit rate after considering the ''disallowances of expenses and subcontract charges by AO comes to 4.43% which is highly abnormal cannot be considered as reasonable. The assessee had given comparative cases of net profit varying from 2.93% to 9.96% as per details in para 5.8 earlier. The Id. AR for the assessee has argued that 6.65% net profit rate declared by the assessee is reasonable and net profit rate of 8% adopted by the AO is not correct as rate of 8% is to be taken under section 44AD which is applicable only in case of assessees having turnover of less than 40.00 lacs. We ar....