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2019 (9) TMI 948 - AT - Income TaxBogus expenses/purchase - genuineness of various expenses incurred for the construction - sales turnover of the suppliers are not matching - HELD THAT:- The assessee in order to claim that all the expenses claimed and paid to the above parties are genuine has filed ledger account of construction material for all the three years, copy of invoices of all the parties, bank statement through which the payments has been made and the details about the contractor who carried out the work. In respect of the parties which have shown Tax Identification No.(TIN) in their bills AO called information from the Commercial Tax Department. As far as the identity of the alleged suppliers is concerned their was on assessee favouring report from the Commercial Tax Department but with regard to the sales turnover it was not matching with the sales shown by these suppliers. This was the main reason which created doubts in the mind of the assessing authority. However, the assessee placed all the documentary evidences before the AO along with photographs of the land and the work carried out thereon. As requested during the assessment proceedings by the assessee to the Ld AO to depute inspector for site visit so that the issue relating to genuineness of development expenses can be resolved but the request was declined by the Ld. AO. No summons was issued to the alleged suppliers of the Ld. AO directly and only report of Commercial Tax Department was taken as the basis. AO failed to consider the fact that all the payments were made through account payee cheques. After receiving respective bills issued by the parties as well as a contractor it was incumbent on the AO to carry out the investigation by summoning the suppliers. In the body of the assessment order AO observed that the alleged suppliers are small retail suppliers hardly having the capacity to store the building materials. We find such remarks to be very general and casual with no homework. As far as the claim of the assessee is concerned, apart from placing the copy of invoices, ledger account, bank statement and few photographs, the assessee could not file any confirmation from the alleged suppliers. In the sale deed also there is no mention about the Boundary Wall, land leveling work carried out which could have justify the assessee’s claim. No valuation report was filed. Payments for various expenses made after a period of 12 months also raises doubts. However, merely for the payments being late and the suppliers having retail business, and not produced before the AO cannot be a sound basis to disprove the claim of expenses made by the assessee. Thus sustaining of disallowance @ 15% of the alleged amount will meet the end of justice - Decided partly in favour of assessee.
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