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TMI Blog2019 (1) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... f M/s West Bengal Power Development Corporation Ltd / Kolaghat and Durgapur Projects Ltd. The assessee furnished the return of income for the Asst Year 2011-12 declaring total income of Rs. 38,34,845/-. The assessee during the year sub-contracted its work of excavation and evacuation of dry fly ash to various sub-contractors including M/s Elecon Engg. Company , M/s Novel Engg. And M/s Novel Construction. The assesee paid an amount of Rs. 4,49,72,243/ -to 16 sub-contractors for civil construction work including excavation and evacuation of dry fly ash during the year. The ld AO sought to verify the same by issuance of notice u/s 133(6) of the Act to various sub-contractors with regard to the work undertaken by them as sub-contractor of the assessee. These parties responded directly before the ld AO which were examined by the ld AO. On examination, the ld AO found that these parties confirmed having executed the work as sub-contractor for the assessee and that the payments for the same were received in cash after due deduction of tax at source. All the payments were received by them in cash below Rs. 20,000/- on each occasion on a single day. However, the ld AO disregarded the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are different. At the time of assessment proceedings the AO issued the notice ii/ s. 133(6) of the IT. Act, 1961 to M/s. Novel Engineering, M/s. Elecon Engineering Co and M/s. M. Construction asking the ledger copy, Balance Sheet, Acknowledgement of Return filling, Work Orders etc. The A.O received the reply from the above mentioned sub-contractors in response to the notice u/ s. 133(6) of the IT with complete information such as Ledger account, Balance Sheet, copy of ITR Acknowledgement, Work order etc as per the details as under: a) On 23rd December, 2013 from M/s. Novel Engineering. b) On 16th December, 2013 from M/s. M. Construction. c) On 13th December, 2013 from M/s. Elecon Engineering Co. The assessee obtained the certified copies of reply received by the AO and submitted copies of the same before me. The assessee's A.R further stated that after receipt of reply from the subcontractors, the AO did not ask any question or did not make any enquiry with the appellant or the sub-contractors in that respect. He placed before me copy of the order sheet obtained from the A.O. The Assessing Officer himself accepted the Return of Income of all three sub-contractor namely (a) M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. The assessing officer has cross verified the information u/s 133(6) of IT the Act, and all the subcontractors have confirmed the transaction and furnished the necessary information / details to the A.O. The assessee stated that the above sub contractors are executing the works to the appellant for few years prior to the A.Y.2011-12 and in subsequent years also. The assessee was making the payments and all the years the returns of the assessee as well as the sub contractors were accepted. In the circumstances there is no case for doubting the genuineness of the transaction with the subcontractors. The Assessing officer simply analysed the information and even without confronting the same with assessee concluded that the transaction was not genuine which was nothing but his assumption. Assessments cannot be made on assumptions and presumptions. It is seen from the assessment order and from the copy of the order sheet that the Assessing officer after the receipt of the information has not made any enquiry or did not ask any clarification question from the assessee or the sub-contractor. In the case of M.M. Construction though the Assessing Officer stated that it was a related conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh the ledger extracts of the sub- contractors and the account copies of the assessee in the books of sub- contractors and I find that the assessee has not made any payment in excess of Rs. 20,000/- in a day. As per the provisions of section 40A(3) "the expenditure in respect of which a payment or aggregate payment made to a person in day otherwise then by an account payee cheque drawn on a bank or account payee bank draft exceeds Rs. 20,000/- no deduction shall be allowed in respect of such expenditure." Since the assessee had not made any payment in excess Rs. 20,000/- on any particular day no disallowance can be made under section 40A(3) and the Assessing Officer has wrongly invoked the provisions of section 40A(3) of the Income-tax Act, 1961. Therefore, the addition made by the A.D. by disallowing the payments made to the sub-contractors as per the details given below is hereby deleted. (i) M/s Novel Engineering: Rs. 46,27,977/- (ii) M/s Elcon Engineering: Rs. 36,52,565/- (iii) M/s M Construction : Rs. 51,87,265/- This ground of appeal is allowed." 6. Aggrieved, the revenue is in appeal before us. 7. We have heard the rival submissions. We find that all the three sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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