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TMI Blog2020 (1) TMI 1304X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and installation job including civil works through various sub-contractors. The Assessing Officer required the assessee to produce the list of major expenses including sub-contract expenses and the list of sub-contractors. From the list of sub-contractors, namely; one M/s. Makeway Consultancy Pvt. Ltd., the AO found that the assessee has claimed expenditure of Rs. 4,12,30,153/- on account of sub-contract charges payable to M/s, Makeway Consultancy (P) Ltd. The Assessing Officer observed that the entire amount debited in the name of the above company was shown payable in the accounts of the assessee and not a single penny was paid to the above company during the relevant previous year. The AO further found that the sub-contractor M/s. Makeway Consultancy (P) Ltd. had not filed any return of income for the AY 2011-12 voluntarily and in the return for that year filed in response to notice u/s. 148, M/s. Makeway Consultancy (P) Ltd. had-shown contract receipts of Rs. 5.16 crore in the P&L account and the entire amount had been shown as receivable in the balance sheet. It was also found by the AO that almost the entire purchases reflected in the P&L account of this company had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961, this sub-contractor filed its return of income. It was further noted as well as the same was show caused to the assessee that whereas this alleged sub-contractor has purported to have received contract receipt of Rs. 5.16 Crore for the F.Y. 2009-10 relevant to A.Y. 2010-11, the assessee has shown purchase as expenditure and has shown almost entire purchase as sundry creditors and the other expenses claimed in the P&L account are of nominal in nature. Also the entire contract receipt is shown as receivable under the head sundry debtor. In the event of non-incurrence of any actual expenditure, it is highly improbable that this alleged sub-contractor has in fact done any work for the assessee company. Therefore the sub-contract works done by this alleged sub-contractor was treated to be bogus and the AO went on to make addition of this amount to the total income of the assessee company while framing order u/s. 143(3) of the I.T. Act, 1961. During the course of remand proceeding, the A/R of the assessee company submitted a large number of invoices to support the claim that sub-contract work is done by the sub-contractor. Careful perusal of these invoices reveals that these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). He submitted that during Appellate proceeding, the Assessee Company submitted written submission along with paper Book containing copies of invoice raised by the sub contractor, copies of work order, copies of certificates showing supply of materials by the sub contractor at various sites, description of the work awarded by the assessee to the sub-contractor and other related documents. It was also submitted that, the said sub contractor was to undertake civil works mainly involving sands, chips, steel and cement etc in the project site named Sterelite Energy Limited Project at Jharsuguda at CPP and IPP under "CONTRUCTION OF LILO 444 KV DC LINE FROM PGCIL TO STERELITE ENERGY LTD". Further, the Assessee Company also submitted ledger copies of the sub-contractor for the relevant year as well as the subsequent years along with bank statements in proof of payment made to the said sub-contractors against the works. The CIT(A) called for remand report from the learned A.O. During remand proceeding, the learned A.O. examined tit by bit each evidence adduced by the Assessee. There after submitted remand report and in the remand report, the AO has admitted that, these evidences were prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the FY 2010-11 and bogus bills were raised in the name of the assessee by M/s. Makeway Consultancy (P) Ltd. Moreover, the observation of the AO in the remand report that the invoices submitted by the assessee carry truck numbers and meant for supply of construction materials such as sand and chips cannot be an evidence in support of the conclusion the AO since they are MRNs (certificate of materials supplied by the subcontractor) on the site with description of materials, quantity, truck numbers, date of supply and signature of the staff delivering the materials for the sub/contractor along wit, countersignature of the staff of the assessee company. It is also seen that M/s. Makeway Consultancy (P) Ltd. was given sub-contract mainly for civil work; which require building materials such as sand, chips, steel, cement etc. From the materials on record, it is seen that M/s, Makeway Consultancy (P) Ltd., has filed return of income for the AY 2011-12 in response to notice u/s. 148 issued by the AO and scrutiny assessment in the case of that company has been completed by the same AO on 29.9.2015 accepting the receipts disclosed by that company at Rs. 4,23,00,063/- which include the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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