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2019 (5) TMI 1307 - AT - Income TaxBogus purchases - purchased materials for its construction/road contracts - huge turnover of assessee to the tune of ₹ 606.49 cr. which has been accepted by the AO - notice u/s. 133(6) issued all the parties have duly replied and had confirmed the purchases made by the assessee - HELD 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. Disallowances have been made only on suspicion; and suspicion howsoever strong cannot take the place of the proof. 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 CIT(A) to the partial relief granted by him and direct the AO to allow claim of expenditure of the assessee incurred for purchases from M/s. SRDL and M/s. KIPL. Thus, the assessee succeeds and the revenue fails in this ground. Addition for payment made to M/s SREI Infrastructure Finance Ltd. - HELD THAT:- We note that M/s. SREI is regularly filing its returns with the Registrar of Companies and the payments have been made by the assessee to M/s. SREI by account payee cheques or through RTGS. Taking note of all these facts and taking note of the fact that the inconsistency/mismatch highlighted by the AO has been also rightly addressed by the Ld. CIT(A) in the form of a chart placed at page 26 of his order and the Ld AR, pain stakingly took us through the Paper-book and explained to us and reconciled the figures before us. - Decided against revenue
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