TMI Blog2017 (5) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be a reason to disallow expenditure incurred unless a finding has been given that the bills submitted in the present case are suspicious. Again adverse inference has been drawn that notices u/s 133(6) have returned unserved. This again cannot be a reason to reject the assessee’s claim without further verification. The inference drawn by the AO and the learned CIT(Appeals) is merely based upon suspicion and surmises. It is settled law that any addition based on suspicion and surmises is not sustainable - Decided in favour of assessee. Addition being 10% of administrative expenses - addition has been made solely on the ground that the expenses are paid in cash and self made vouchers were produced - Held that:- No specific details of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken for which payment has been made ignoring the MOU which elaborately explained the nature and scope of work making the addition bad in law and liable to be deleted. 3. The Hon ble CIT(A) further erred in sustaining the addition on account of job work charges relying on the fact that the name of one of the entity to whom job work charges have been paid was appearing in the List of Suspicious Dealers published by the Sales Tax Department without appreciating the fact that the so called List was for dealers engaged in purchase and sale of goods and not job Work and as such is not relevant to the facts of the case. Under any case the list merely states a suspicion and does not in any way conclude the parties mentioned therein as bog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under the name and style of M/s S.R.S. Engineers. The appellant during the year has claimed the job work charges of ₹ 29.14 Lakhs out of which the job work charges to the tune of ₹ 20,29,338/- are claimed to have been paid to four entities as under : (i) M/s R J Metal Industries ₹ 4,85,859/- (ii) M/s Reliable Metal Works ₹ 5,46,788/- (iii) M/s Rajlakshmi Corporation ₹ 4,97,701/- (iv) M/s Resham Steel Alloys ₹ 4,98,990/- Rs.20,29,338/- From the above the AO observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduced any bills nor any confirmation from the said party, M/s R J Metals. The assessee, however, submitted a copy of Bank Certificate giving details of payments made to the said four concerns along with the MOU signed with Shri Ashwin Kumar Dikole, 108, Adeshwar Dadi Street, Girgaum, Mumbai. The MOU is regarding providing trained man-power along with qualified engineers for technical support for Power Stations in Chattisgarh, West Bengal, Orissa, Sarni Birsinghpur. The AO, thus, noticed that no other evidence or correspondence regarding the work done or technical support provided by Shri Ashwin Kumar Dikole was filed. Thus, according to the AO, no details or evidences as regards the services claimed to have been rendered by the said fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal before us. 7. We have heard both the counsel and perused the records. We find that adverse inference in this case has been drawn by the authorities below on the ground that letters issued u/s 133(6) to the concerned parties have returned unserved. That same person was carrying on the work in the name of four different firms. One firm and the propitiator were appearing in the list of suspicious dealers of the Sales Tax Department. The evidence submitted regarding the work done has been rejected by the AO holding that the same was a simple letter and also that the assessee failed to present Shri Ashwin Kumar Dikole or submit his confirmation or bills raised by him. 8. Upon careful consideration we find that it is not in dispute th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appear to be wholly and exclusively for the purpose of business. Hence the addition is fully based upon surmises and conjecture. Hence we set aside the orders of authorities below and delete the addition. 9. Addition of ₹ 2,24,398/- being 10% of administrative expenses: On this issue the AO made the addition by observing that during the year the assessee has claimed administrative expenses of ₹ 22,43,983/- for the three offices located at Bhopal, Jabalpur Korba. It is seen that majority of these expenses are in cash and the assessee could only produce self made vouchers. Looking into facts and circumstances of the case, 10% of the above expenses are disallowed which comes to ₹ 2,24,398/- and added back to the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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