TMI Blog2018 (3) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... d assets to prove the existence of necessary infrastructure for rendering such technical services. From the aforesaid facts, it is made very clear that these parties had merely acted as a conduit to reduce the profits of the assessee company and show meager income in their returns and claim refund of TDS. We are satisfied in the instant case, that these companies are merely paper companies, having complied with proper paper work, but not possessing necessary expertise to render technical services to the assessee - Decided against assessee. - I.T.A No. 531/Kol/2016 - - - Dated:- 19-2-2018 - Shri Aby. T. Varkey, JM And Shri M.Balaganesh, AM For The Appellant : Shri A.K. Tibrewal, FCA For The Respondent : Shri Sallong Yaden, Addl. CIT ORDER Per M . Balaganesh, AM 1. This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax(Appeals)-2, Kolkata [in short the ld CIT(A)] in Appeal No.1783/CIT(A)- 2/14-15 dated 22.01.2016 against the order passed by the DCIT, Circle-5, Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 30.03.2014 for the Assessment Year 2011-12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness activity of the assessee was carried out in Shillong, but the payments were made to aforesaid six parties which are based in Kolkata. The ld. AO downloaded the data base of registrar of companies (ROC in short) and found that all these companies were incorporated in July, 2010 and that they were in the business of trading in shares and investment in various unquoted companies. The only contract job done by most of them were only with the assessee. The ld. AO from the balance sheet downloaded from the ROC observed that, these companies are not in the business of doing these kind of services i.e. foundation services nor does have the infrastructure to render those services. He further observed that all these companies are declaring negligible income in their returns and the tax deducted by the assessee company is claimed as refund by the respective companies. The ld. AO observed that these companies have no means to render any kind of alleged foundation services that could be rendered to the assessee. Accordingly, he observed that even though the payments were made to those parties by the assessee by way of account payee cheques and even though they had disclosed the contracto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the decision relied upon by the assessee was distinguishable on facts as there was no doubt about existence and expertise of recipient party. He observed that the assessee had merely inflated the expenses of fabrication work by taking entries from paper companies. The Ld. CIT(A) further observed that the assessee could not explain as to how the this six companies stationed at Kolkata are doing business in shillong and especially when they had no expertise in infrastructure in the specialized job of steel fabrication etc. and as to how they had been helping the assessee in doing foundation jobs in Shillong. He further observed that why the companies and the directors could not be traced in given addresses and as to why the assessee could not produce any document before the ld. AO, were not explained by the assessee. Accordingly, he upheld the action of the ld. AO by treating the subject mentioned payments as bogus and confirmed the disallowance thereon. Aggrieved the assessee is in appeal before us on the following grounds: 1 . That on the facts and in the circumstances of the case, the ld . Commissioner of Income Tax ( Appeals ) erred in confirming th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheques with due deduction of tax at source and all the parties have duly disclosed the subject mentioned contract amount as income in their returns but the assessee could not produce any of the parties before the ld. AO and had not proved that those parties possess necessary infrastructure to render the specialized job of foundation services to the assessee, that too in Shillong, when they are stationed in Kolkata. Accordingly, he placed heavy reliance on the orders of the lower authorities and prayed for non-interference of the same in the facts and circumstances of the case. 7. We have heard the rival submissions and perused the materials available on record. It is not in dispute that the payments to sub-contractors were indeed made by the assessee through account payee cheques after deduction of tax at source. It is not in dispute that those recipients have duly disclosed the same in their respective IT returns and had also filed their returns of income showing meager figure. The tax deducted by the assessee predominantly forms part of claim of refund made by these parties in their return of income. Even though the existence of these companies are proved beyond doubt, with p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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