TMI Blog2021 (6) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... e view and cannot be termed perverse. It is trite law that only the net income can be brought to tax. For that expenditure incurred by the assessee has to be allowed to determine the net income of the assessee. In this case, the AO has found that assessee has executed the contract through some one. For execution of the work contract, the assessee received payment from the contractor and the assessee s expenditure incurred need to be allowed. For doing that AO has found that though bogus billing has been made through M/s. simplex, work contract has been executed through some one. So, he was of the opinion that procuring the bills through M/s. Simplex was for inflation of expenses and to plug the revenue loss on account of that he applied the presumptive tax rate u/s. 44AD. Therefore, the action of AO on the facts and circumstances as discussed is a plausible action and cannot at any rate by termed as unsustainable in law . Therefore, the action of Ld. PCIT to invoke the revisional jurisdiction is absent and therefore, the impugned action of Ld. PCIT is held to be bad in law and so quashed. - Decided in favour of assessee. - I.T.A. No. 129/Kol/2021 - - - Dated:- 18-6-2021 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO in framing the reassessment order dated 24.12.2018 has been found by him to be erroneous as well as prejudicial to the interest of the revenue he proposed to interfere with the order invoking section 263 of the Act. Pursuant to the show cause notice, the assessee filed written submission which has been reproduced by the Ld. PCIT wherein the assessee contended that it is a genuine contract and that it is engaged in the business of carrying out contractual works for various prestigious entities such as M/s. BHEL, Larson Toubro ltd., Usha Martin Ltd. etc. According to the assessee, it had sub-contracted certain works procured from M/s. Usha Martin Ltd. in the remote areas situated in the iron ore mines at Barajamba, Jharkhand, Oxygen Plant, Jharkhand and other remote areas where the assessee was not having adequate infrastructure for execution of contract. Therefore, the assessee sub-contracted the work from M/s. Usha Martin Ltd. through another entity M/s. Simplex Infra Project Pvt. Ltd. and in order to prove that the works were executed on ground/field submitted photographs and other evidences in support of the execution of works at various sites. According to the assessee, si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Ld. PCIT, the assessee is before us. 4. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the assessee had filed return declaring income of ₹ 80,47,179/- by filing it on 27.09.2011. Thereafter the assessment was completed u/s. 143(3) of the Act on 28.02.2014 determining the assessed income at ₹ 82,30,050/-. Thereafter, the assessee s case was reopened on an information received from the DCIT, Circle-14, Kolkata on 10.08.2017 wherein an information was received that during a survey conducted on Akash Agarwal Group on 10.02.2015 by the Investigation Wing, Kolkata a statement of Shri Akash Agarwl and Shri Navin Kr. Sharma was recorded and as per their statement they had accepted that they were providing bogus entry through their companies. Further it was stated that they had provided accommodation entry in the form of bogus billing for contractual receipt and sub-contractual payments through their jamakharchi companies to several beneficiaries. Based on this information the AO noted that the assessee company M/s. Prism Logistics Pvt. Ltd. has availed accommodation entry for bogus billing in the form of sub-co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was carried out in remote areas where it did not have any regular network of contractors or readily available infrastructure. It had to rely on recommendations of local project incharge and other contractors associated with the nearby projects. In support the assessee had submitted full profile of its company and some photographs related to work carried out on behalf of M/s. Usha Martin Ltd. 4. Conclusion; The assessee submission was analyzed in detail, and it was seen that actual contractual work was carried out by the assessee. The credentials of the sub-contractee M/s Simplex Infra Project ltd. could not be verified as its not traceable. However, there is no doubt that the actual work was carried out by some other entity and the billii1gs were made in the name of M/s Simplex Infra Project Ltd. for reasons best known to the assessee. As some contractual work seems to have been carried out, the only ostensible purpose of the assessee seems to be inflation of expenses. In view of the above as work seems to have been carried out and the creditability of the expenses related to work of M/s Usha Martin Ltd. cannot be verified in totality beyond doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer s order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer s order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him;[ because AO has to discharge dual role of an investigator as well as that of an adjudicator ]then in aforesaid any event the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y were invoked in providing bogus accommodation entry through their jama kharchi companies to their beneficiaries. And it was found that assessee had availed accommodation entry from M/s. Simplex Infra Project in the form of bogus billing as sub-contractual payment to the tune of ₹ 2,75,40,000/-. 10. Based on the aforesaid information, the AO reopened the assessment and after calling for relevant details/material/evidences (supra) has concluded by making a finding of fact that assessee had carried out actual contractual work by observing that there is no doubt that the actual work was carried out by some other entity and the billing were made in the name of M/s. Simplex Infra project Ltd .. and in the light of the aforesaid fact that since actual contractual work (construction of new road (11 km.), leveling, formation of village road etc. as given in the table supra) has been found to have been executed by some other persons in the remote areas of mines situated at Barajamda, Jharkhand, the AO presumed that the purpose of availing the billing from M/s. Simplex must be for inflation of expenses and thereafter adopted the presumptive tax rate as envisaged u/s. 44AD of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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