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2018 (3) TMI 2006 - ITAT RAIPURBogus work payment expenses - bogus excavation charges - During the course of the survey u/s. 133A statement of Shri Rajesh Agrawal was recorded who offered an amount on account of bogus trade creditors as his undisclosed income for the year under consideration - HELD THAT:- The work contract payments made to 8 persons are duly supported by respective bills furnished by them and so also excavation work done by Saumya Mining Company. The recipients of the work contract have shown their income in their respective return filed on presumptive taxation basis u/s. 44AD of the Act. The contention of the A.O. that the recipients are not maintaining any details is ill-founded because of the immunity granted u/s. 44AD of the Act. The recipients are not obliged to maintain any books of accounts if they return their profit u/s. 44AD of the Act. Further, the income of Saumya Mining Ltd. has been accepted as such in its assessment framed u/s. 143(3) of the Act. In our considered opinion, when the contract receipts of the assessee has been accepted in toto. We fail to understand if the assessee has not incurred these expenditures then how could it execute the contract work allotted to it. Also as the books of accounts of the assessee are audited and the A.O. has not pointed out any defect in the books of accounts of the assessee. More importantly, the allegation that the assessee’s gross profit and net profit have substantially reduced during the year is also not correct. Assuming, yet not accepting, these expenditures are bogus then the profit of the assessee would be higher by Rs. 10 crores which would make the gross profit around 25% which is not conceivable in this line of business. Decided against revenue.
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