9911796707
TMI Blog2022 (6) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s action of making the estimated addition of Rs. 22.34.11.367/- on account of alleged bogus purchases. 3. On the facts and the circumstances of the appellant's case and in law the Ld. CIT(A) erred in confirming the AO's action of making the estimation of alleged bogus purchases of Rs. 22,34,11,367/- despite the fact that no incriminating material relating to these bogus purchases were found during the course of search and no assessment or reassessment was pending as on the date of search." 02. The brief facts of the case shows that assessee is a company incorporated in joint collaboration with the German Principal Enercon GmbH holding 56% of shares and Mehra family holding 44% share. Earlier it was known as Enercon India limited Group and is engaged in the business of manufacturing of Wind Mill accessories, parts and also in maintenance of Wind Mill. For the year of consideration, assessee filed return of income on 28th September, 2008 declaring a loss of Rs.2,61,57,710/-. The return of income was picked up for scrutiny. The assessment under Section 143(3) read with section 92CA (3) of the Act was completed on 22 December 2010 determining the total income at Rs.120,72,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s paid speed money also. The learned Assessing Officer reached at a conclusion that the books of accounts are fabricated creating dummy quotes without actual purchases and delivery of goods. Therefore, he tabulated the year-wise books purchased from A.Ys. 2007-08 to 2013-14 totaling in all to Rs.362,25,04,658/-. The Assessing Officer held that assessee has failed to show the genuineness of purchases and therefore, he disallowed Rs.22,90,37,426/- and passed an assessment order under Section 153A of the Act. He further made an addition of unaccounted cash expenses of Rs.31,32,458/-. Assessment order under Section 144 read with section 153A of the Act was passed on 28th June, 2017, determining the total income of the assessee at Rs.143,22,42,624/- against the total income assessed originally under Section 143(3) of the Act order dated 22nd December, 2010 of Rs.120,72,740/-. 05. The assessee preferred an appeal before the learned CIT (A) challenging the order passed by the learned Assessing Officer and the validity of the assessment order passed under Section 144 of the Act, which was dismissed. The assessee also challenged the error in taking the original assessed income, which was w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO of Rs. 28,46,859/- related to hawala /bogus purchases identified by the Sales Tax Department, (ii) the addition made of Rs. 27,79,200/ related to purchases from certain bogus suppliers identified during the search action and (i) the addition of the estimated amount of Rs. 22,34,11,367/- out of the total purchases by applying the average ratio of the bogus purchases to the turnover for the years relevant to AYs 2010-11 to 2012-13. Since all the said 5 grounds relate to the issue of additions made by the AO on account of bogus purchases, they are being taken up together for the sake of convenience. 7.1 It is noted that in course of the assessment proceedings, the AO observed that for the relevant year, the assessee has claimed purchases from alleged hawala/ bogus suppliers identified by the Sales Tax Department viz. M/s Pooja Enterprises (Rs 9,72,399/-), M/s RJ Corporation (Rs 7,22,637/-) and M/s Siddhivinayak Trading Company (Rs 11,51,823/-) totally aggregating to Rs 28,46,859/-. The AO proceeded to disallow the entire amount of purchases of Rs. 28,46,859/- related to the hawala/ bogus suppliers. 7.2 Further, in course of the search action, an exhaustive exercise was carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rores made initially. Thus it can be observed that for the 3 years relevant to A.Y.s 2007 08 to 2009-10 for which books of accounts were not available, Shri Yogesh Mehra offered a further amount of around Rs. 41 crores. The AO also proceeded to make a further disallowance out of purchases of Rs. 22,34,11,367/- being the amount of bogus purchases estimated @ 1.04% of the turnover for the relevant year. 7.4 It is noted that in course of the search action, it was observed that the Books of accounts of the assessee are maintained on SAP accounting system and the regular purchases/expenses are booked by the relevant Heads of the Departments as per the Standard Operating Procedure (SOP) followed by the assessee company. The detailed SOP and documentation followed by the assessee company for the purchases of material as well as for booking of expenses was explained by Mr. Biju Thomas, Accounts Manager, and Shri Sajji Vellanikkran, Accounts head in course of the statements of oath recorded at the time of the search action on 15.03.2013. It was explained that the assessee has 4 procurement cells which procures the various material required for manufacture/assembly of windmill machines and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-14 was of Rs. 266.54 crores and the amount related to one of the said 41 suppliers from the relevant year was of Rs 27,79,200/-. It was admitted by Shri Biju Thomas. Accounts Manager, in his statement on oath recorded at the time of the search action that as per the direct instructions of the used dummy codes for booking the bogus management he had purchases/expenses in the SAP in respect of the said 41 parties. 7.7 Further, at the time of the search action, parallel exercise and investigations were carried out to find out the actual consumption of the major raw materials of cement and steel as per the standard norms vis-a-vis the consumption shown in the regular books of accounts. This analysis revealed that for the years relevant to A.Ys. 2010-11 to 2012-13, the excess consumption of cement is in the range of 24.35% to 57.31% and the excess consumption of steel is in the range of 17.98% to 42.76%. Also, at the time of the search action, incriminating documents were found which showed that the assessee has incurred substantial expenditure by way of speed money. These facts about excess consumption and incurring of speed money expenses corroborated the findings in respect of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on before the Hon'ble Settlement Commission for an additional income of Rs 82.79 crores for the years relevant to AYS 2007- 08 to 2014-15 which included an offer of additional income of Rs. 12.9 crores in respect of the bogus purchases of Rs. 129.06 crores admitted at the time of the search action for the said various years. However, after duly considering the various discrepancies noted at the time of the search action, the incriminating statements on oath recorded of the employees of the Accounts Department as well as the admission of bogus purchases by Shri Yogesh Mehra, Managing Director, this offer for additional income of Rs. 12.9 crores for the said various years on account of bogus purchases was held to be a non-true and full disclosure by the Hon'ble Settlement Commission and consequently rejected. 7.11 In course of the proceedings before the Hon'ble Settlement Commission, to support its claim of purchases in respect of the said 41 parties, the assessee had submitted purchase invoices, delivery challans, lorry receipts, confirmations etc. However, a number of discrepancies were noted by the Hon'ble Settlement Commission in these evidences submitted which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from the said 41 parties in A.Ys. 2007-08 to 2013-14 for an aggregate amount of Rs. 266.53 crores is bogus. The amount of bogus purchases in respect of one of the said 41 parties for the relevant was of Rs. 27,79,299/- which was added by the AO to the total income of the assessee for the relevant year. 7.13 As noted above, during the relevant year, the assessee had also made purchases of Rs. 28,46,859/- from hawala/bogus parties identified by the Sales Tax Department, the entire amount of which was disallowed by the AO. Moreover, again as noted above, since the books of account for the years relevant to AYS 2007-08 to 2009-10 were not available, the bogus purchases for the said 3 year period was estimated at Rs 60.76 crores by applying the average ratio of the bogus purchases to the turnover of 1.04% of the years relevant to AYS 2007- 08 to 2009-10. The amount estimated for the relevant year was of Rs 22,34,11,367/- which was also added by the AO to the total income of the assessee. 7.14 In course of the appellate proceedings, the assessee submitted that in course of the search action Shri Yogesh Mehra, Managing Director, had identified 32 parties wherein the purchases were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 645), no additions could have been made. The Hon'ble Supreme Court in the case of P.R. Metrani v. CIT [2006] 287 ITR 209/157 Taxman 325 (SC) has explained the scope of section 132. It has been explained by the Hon'ble Supreme Court that the books of accounts, documents, money, bullion, jewellery or other valuable article or thing and any statements recorded of the persons searched may be used as evidence for any proceedings under the Act. Also, the statement on oath recorded in course of the search action u/s 132(4) has been held to be of evidentiary value by the Hon'ble Delhi High Court in the case of Dhingra Metal Works (328 ITR 384) and the Hon'ble Kerala High Court in the case of Paul Mathews (263 ITR 101) as against statement on oath recorded u/s 133A. It is not always that a person is incriminated for possession of evidence since a person can also be incriminated for not being in possession of the requisite basic documents. For example, a person can be incriminated for not being in possession of the requisite ticket while travelling in a train. In the instant case, it is observed that incriminating statements on oath were recorded of Shri Yogesh Mehra, Manag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial years apparently being made by the same person on a single date, (d) absence of delivery challans, insurance documents, weighment slips, quality certification etc., (e) improbably lesser time period shown for loading huge quantities of cement bags, (f) the same persons handwriting being found on the lorry receipts of various transporters who are based at different locations, (g) the same telephone nos. being found on the transport bills of different transporters, etc. were also noted at the time of the search action as well during the proceedings before the Hon'ble Settlement Commission. (iv) The actual consumption of major raw materials as per the Standard Norms vi-a-vis the consumption shown by the assessee in the regular books was found to be at major variance in the examination carried out during the search action. The excess consumption of cement for the years relevant to AYS 2010-11 to 2012 13 was found to be in the range of 24.35% to 57.31% and the excess consumption of steel was found to be in the range of 17.98% to 42.76%. (v) In course of the search action, it was observed that the assessee was incurring substantial expenditure by way of speed money and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee that the action of the AO of considering the purchases of all the 41 parties as bogus, is rejected. 7.19 The assessee contends that the payments have been made by cheque and therefore, the purchases claimed by it cannot be doubted. On this contention, it is noted that the Hon'ble Supreme Court in the case of Kanchawala Gems (2007) 288 ITR 10 (SC) has held that the mere fact that the payments have been made through cheques alone cannot prove the genuineness of the purchases claimed. 7.20 The assessee submitted that 80% of the cement & steel is utilised in installation of Wind Mills and the balance 20% is utilised for the other activities like construction of culverts, small bridges, roads, pathways, etc at its various sites. Accordingly, the assessee contended that the excess consumption worked out at the time of the search action is not correct. This contention of the assessee is rejected because at the time of the search action, the assessee could not identify the sites wherein the steel, cement, etc purchased from the said 41 parties had been consumed. Even in the assessment proceedings or the appellate proceedings, the assessee has been able to demonstrate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to A.Ys, 2007-08 to 2009-10 for which the books of account were not available with the assessee. Thus the action of the AO of making the said estimated addition of Rs 22.34.11.367/- cannot be faulted. However, after having estimated the quantum of bogus purchases by applying the said average ratio of 1.04%, it was not correct on the part of the AO of making the said separate addition of Rs 28,46,859/- on account of purchase from hawala/bogus suppliers identified by the Sales Tax Department and the said separate addition of Rs 27.79.299/-being the amount related to one of the said 41 bogus parties identified in course of the search action. Accordingly, grounds Nos. 3 to 7 of the appeal are partly allowed. 8. In ground No 8 of the appeal, the assessee has disputed the addition made by the AO of Rs 31,32,458/- on account of alleged unaccounted cash expenses in the form of "speed money" and in ground No 9 of the appeal, the assessee has disputed the action of the AO of not allowing telescoping of the said unaccounted cash expenses against the income determined by the AO on account of the addition of bogus purchases and bogus expenses. It is observed that the AO has quantified the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliable for the reason that it was recorded on the spot and possibility of after-thought or to concoct an explanation and fabricate the evidence is minimum. In the instant case, Shri Yogesh Mehra, Managing Director, in course of his statement on oath recorded at the time of search action while replying to query no 135, had explained that the source of "speed money" is out of the unaccounted funds generated by claiming bogus purchases/ expenses from parties which were identified by him. The relevant portion of the statement on oath recorded of Shri Yogesh Mehra is reproduced as under: "Q. No 135 Please explain what is the source from with this speed money is paid? Ans. Sir, I have identified certain purchases which are not verifiable in reply to Q No 69. The money is generated from these purchases and diverted for utilising the same in payment of speed money in the interest of the company." 8.4 From the aforesaid, it can be observed that Shri Yogesh Mehra has duly explained the source of "speed money" to be out of the unaccounted funds generated by claiming bogus purchases. In view of such a factual position, making a separate addition on account of speed money along with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal is dismissed. 015. In the result, appeal filed by the assessee in ITA number 1465/M/2019 for assessment year 2007 - 08 is dismissed. Assessment year 2010 - 11 Appeal number 1466/M/2019 (by assessee) Appeal number 1352/M/2019 (by AO) 016. For assessment year 2010 - 11, both the parties are in appeal before us against the order passed by the Commissioner of income tax appeals - 51, Mumbai dated 26/12/2018. 017. Grounds in ITA No. 1352/Mum/2019 for A.Y. 10-11 in Revenue's appeal:- "1. Whether on the facts and circumstances of the case the Ld CIT(A) was justified in law in deleting the addition of Rs. 2,01,96,432/- made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases without appreciating that the assessee has contested the additions made on account of bogus purchases ? 2. Whether on the facts and circumstances of the case the Ld CIT(A) was justified in law in deleting the addition off Rs. 2,01,96,432/- made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts and circumstances of the appellant's case and in law the learned CIT (A) erred in confirming the AO's action of making an addition of Rs. 36,845,487/- on account of alleged bogus purchases made from 6 parties is tabulated on page 153 of the assessment order on the ground that the names of these parties are appearing on the website of Maharashtra sales tax Department as the suspicious hawala dealers. 019. For this year assessee filed its original return of income on 30/9/2010 declaring a total income of Rs. 802,834,440/-. Subsequently search took place on 14/3/2013, which revealed that the assessee has made purchases from bogus parties of steel and cement, claimed bogus transportation expenditure, incurred unaccounted cash expenses on account of speed money and made payment for purchase of development rights to the related party, which is highly excessive. Consequently, notice u/s 153A was issued on 28/1/2014. Assessee approached the settlement commission, which was subsequently rejected on account of non-true and full disclosure. Therefore, the assessment u/s 153A was made. The learned assessing officer made following additions:- 1. The assessee has claimed purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and orders of the lower authorities, we find that the learned CIT - A has confirmed the addition of Rs. 506,455,959 on account of bogus purchases from 41 parties identified at the time of search action and assessee has not been a in a position to provide the requisite documents especially related to transportation and the consumption of the above material. The learned CIT - A has given the similar findings as has been given by him for assessment year 2007 - 08. We have already upheld the addition for that assessment year. Therefore, following our own order in assessee's case for assessment year 2007 - 08 we do not find any infirmity in the order of the learned CIT - A in confirmation of the addition of Rs. 506,455,949/- as assessee has failed to show that the material has been purchased with respect to the details of transportation as well as consumption of the material purchased. Accordingly, ground number 2 of the appeal is dismissed. 023. Ground number 3 is with respect to the addition of bogus purchases to the extent of Rs. 36,845,487/- from 6 different parties being suspicious suppliers, the facts relating to this are also identical to ground number 2 of the appeal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct from 1 April 2022 the Finance act, 2022 has introduced an explanation, which makes it very clear that the provisions of Section 14A with respect to the disallowance will apply and shall be deemed to have always been applied in case where the assessee has not earned any exempt income. Therefore, in view of the amendment made we set-aside these grounds back to the file of the learned assessing officer to grant an opportunity of the hearing to the assessee and decide the issue afresh. Accordingly, these grounds are allowed with above directions. 027. Ground number 6 is with respect to the disallowance of interest expenditure of Rs. 20,317,621/- made by the learned assessing officer out of interest expenditure under the tax that assessee has advanced interest free loans and advances to its subsidiaries. The learned CIT - A has deleted the above disallowance holding that assessee has interest free funds available with it in the form of share capital and reserve of Rs. 539.75 crores whereas the advances given to subsidiaries and related concerns were of only Rs. 159.69 crores and therefore relying on the decision of the honourable Bombay High Court in case of reliance utilities and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case the learned CIT (A) was justified in law in deleting the addition of Rs. 33,912,150/- made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases without appreciating that the assessee has contested the additions made on account of bogus purchases 2. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the addition of Rs. 33,912,150/- made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases without appreciating that the assessee has failed to substantiate that the case generated from debit of bogus purchases has been utilized for making unaccounted cash expenses in form of speed money. 3. Whether on the facts and the circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of Rs. 121,013,188/- made u/s 14 A on the ground that no exempt income has been earned during the assessment year Under consideration 4. whether on the facts and circumstances of the case the learned CIT (A) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect from Vish wind infrastructure LLP. During the course of search, it revealed that the above party did not have any technical knowhow, the technical manpower, or the sophisticated infrastructure in respect of acquisition of the site development rights. On the other hand, all these expertise were available with the assessee. It was also admitted by the managing director that knowhow, manpower, and infrastructure has been provided by the assessee to the above party for the acquisition of site development rights. Assessee has not received any amount for the said services rendered. Even the proceedings before the settlement commission also showed that site development rights payments made by the assessee to above company is of Rs. 783 crores at the rate of Rs. 14.5 lakhs per megawatt for the years relevant to assessment year 2011 - 12 to 2013 - 14 and that company has booked expenses of only Rs. 35,872,554/-. Therefore several doubts were raised with respect to the genuineness of the above transaction of purchase of development rights by the assessee from that company and hence the learned assessing officer disallowed the entire expenditure claimed by the assessee of Rs. 291 crores r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect to the deletion of the interest disallowance amounting to Rs. 34,358,442/-. This is identical to the ground number 7 of the appeal of the learned assessing officer for assessment year 2011 - 12 wherein we have upheld the action of the learned CIT - A in deleting the above disallowance in view of the specific finding that assessee has sufficient interest free funds available more than the amount invested in subsidiary companies without charging interest. Therefore, in absence of any change in the facts and circumstances of the case, we confirm the action of the learned CIT - A in deleting the same. Accordingly, ground number 7 of the appeal is dismissed. 038. Accordingly, appeal of the learned assessing officer is partly allowed. 039. Now we come to the ground of appeal of appeal filed by the assessee. Ground number 1 is with respect to the assessment-framed u/s 144 of the act. This is identical to ground number 1 of the appeal of the assessee for assessment year 2011 - 12 wherein we have confirmed the action of the learned assessing officer. Accordingly, we do not find any merit in the ground number 1 of the appeal and hence dismissed. 040. Ground number 3 is with respect t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores respectively. During the course of search proceedings the entire process of acquisition of development right was examined and it was found that the same constitute the complex activities which require highly technical knowhow, technical manpower and sophisticated infrastructure with latest technology. The LLP did not have any such expertise or infrastructure. It was further found that the site development approvals et cetera taken by the LLP were solely using the name of the assessee. It was also found that there is hardly any expenditure booked by the assessee and the such expenditure was financed by obtaining loan from the assessee. Further, the expenditure incurred by the LLP on acquisition of such rights, its books of account did not show any such entries. These facts were also accepted by the managing director in his statement recorded at the time of search. Further the valuation report furnished by the assessee by one consulting company, enquiry proved that that company did not have any prior experience or did not carry out any site visit et cetera or independent verification prior to submitting such report. Such report was also found to be backdated. Before the settl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing grounds of appeal:- 1. on the facts in the circumstances of the appellant's case and in law the learned CIT (A) erred in confirming the AO's action of passing the assessment order by invoking the provisions of Section 144 despite the fact that all the relevant details were filed by the appellant during the course of assessment proceedings. 2. On the facts in the circumstances of the appellant's case and in law the learned CIT (A) erred in confirming the AO's action of making the addition of Rs. 803,285,982/- on account of alleged bogus purchases 3. on the facts and circumstances of the appellant's case and in law the learned CIT (A) erred in confirming the AO's action of disallowing a sum of Rs. 390 crores on account of purchase of development rights of fully developed wind power sites acquired from Messer's Vish wind infrastructure LLP by invoking the provisions of Section 40 A (2) (b)/37 (1). 047. In ITA number 1354/M/2019, the learned AO has raised the following grounds of appeal:- 1. whether on the facts in the circumstances of the case the learned CIT (A) was justified in law in deleting the addition of Rs 1, 30,76,850/- made on account of unaccounted cash expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the honourable Supreme Court in the case of Avon cycles Ltd (civil appeal number 1423 of 2015) wherein the proportionate disallowance of interest in case of mixed use of fund was upheld. 048. The learned departmental representative submitted that above all grounds in the appeal of the assessee as well as of the learned AO are covered by appeal of the assessee and AO for assessment year 2011 - 12. 049. We first deal with the appeal of the assessee. We find that the ground number one of the appeal is identical to ground number one of the appeal of assessment year 2011 - 12. We have already dismissed that ground of appeal for assessment year 2011 - 12 hence, on the similar reasons, we also dismiss ground number one. 050. Ground number 2 of the appeal is with respect to the confirmation of the addition of bogus purchase of Rs. 803,285,982/-. This ground is similar to ground number three of the appeal of the assessee for assessment year 2011 - 12. While deciding that appeal, we have already confirmed the action of the learned CIT - A. Therefore, for the similar reasons we also confirmed the action of the learned CIT appeal in confirming the disallowance of the above sum on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal is with respect to the disallowance deleted by the learned CIT - A of Rs. 6,9451,510 u/s 43B of the act. We find that this issue has been set-aside by the learned CIT - A to the file of the learned AO with a direction to examine the nature of the expenditure whether it falls within the ambit of the provisions of Section 43B of the act or not and whether the actual payment of the above sum has been made during the relevant year before allowing the claim of the assessee. We find that the learned CIT - A has given a direction to the AO and there should not be any grievance to the assessing officer against the direction. The learned and CIT - A has not allowed the deduction. In view of this, we do not find any merit in the ground number 3 of the appeal, hence dismissed. 057. In the result ITA number 1354/M/2019 filed by the learned assessing officer for assessment year 2012 - 13 is partly allowed. AY 2013-14 ITA number 1355/M/2019 (by AO) ITA number 1469/M/2019 (by assessee) 058. ITA number 1355/M/2019 is filed by the learned assessing officer for assessment year 2013-14 against the order passed by the learned CIT - A dated 26/12/2018. 059. As per ground number 1 - 2 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Coming to appeal of the assessee wherein the first ground is against the action of the learned assessing officer confirmed by the learned CIT - A in passing the assessment order u/s 144 of the income tax act. This ground is identical to the grounds of appeal raised by the assessee for assessment year 2011 - 12. We have dismissed this ground of appeal in that appeal. Therefore, for the similar reasons we also dismiss this ground. Accordingly, ground number one is dismissed. 065. Ground number 2 is with respect to the disallowance of deduction u/s 80 IA of Rs. 160,761,237/-. This ground is identical to ground number two of the appeal of the assessee for assessment year 2011 - 12. This ground of appeal has been decided by us confirming the action of the learned CIT - A in disallowing the above deduction as assessee has failed to show that any report in form number 10 CCB is filed. In view of this, for similar reasons we also dismiss ground number 2 of the appeal. 066. Ground number three is with respect to the confirmation of disallowance of Rs. 473,502,577/- on account of alleged bogus purchases. This ground is identical to ground number 3 of the appeal of the assessee for assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case the learned CIT (A) was justified in law in deleting the disallowance of Rs. 541,007,860/- on the basis of the decision of the honourable Supreme Court in case of Chittanand logistics private limited (95 taxmann.com 221) as the aforesaid decision is a nonspeaking order and no reason has been given for the decision and therefore not a binding precedent Under article 141 of the Constitution 4. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of Rs. 541,007,860/- ignoring the CBDT circular number 5/2014 issued in exercise of powers conferred u/s 119 of the income tax act which provides disallowance even when no exempt income is earned 5. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting Rs. 153,943,689/- on account of unaccounted cash expenses in the form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases and bogus transport expenses without appreciating that assessee has contested the addition made on account of bogus purchases and bogus transport expenses 6. whether on the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in confirming the AO's action of disallowing bad debts written off amounting to Rs. 2,007,599/- 6. on the facts in the circumstances of the appellant's case and in law the learned CIT (A) erred in confirming the AO's action of disallowing liquidated damages amounting to Rs. 53,075,465/- 7. on the facts in the circumstances of the appellant's case and in law the learned CIT (A) erred in confirming the AO's action of disallowing a sum of Rs. 97,934,695/- claimed u/s 37 (1) on estimated basis 8. on the facts in the circumstances of the appellant's case and in law the learned CIT (A) erred in confirming the AO action of making addition of Rs. 132,141,405/- on account of alleged bogus purchases on estimated basis. 072. We first deal with the appeal of the learned assessing officer. Ground number 2 - 4 of the appeal is with respect to the disallowance deleted by the learned CIT - A u/s 14 A of the act amounting to Rs. 541,007,860/- as the assessee has not earned any exempt income during the year. The identical issue has been dealt with by us in the appeal of the assessee for earlier years where the assessing officer has challenged the action of the learned CIT - A. We have set-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the learned CIT - A who dealt with this issue in paragraph number 10 of his order. Before the assessing officer, it was submitted that assessee has entered into a memorandum of understanding on 26/2/2013 with one party for supply and commissioning of 20 MW wind power project in Rajasthan for a total contract amount of Rs. 1,037,300,000. As per the agreement, the project was to be commissioned on or before 31/3/2013, however it could not be commissioned within the stipulated time. For this project, that party has availed loan is and paid interest for an aggregate amount of Rs. 53,075,465, which was paid by the assessee. As per the MOU that party raised debit note of Rs. 31,119,000/- being 3% of the contract value towards liquidated damages for the delay in commissioning of the project. Therefore, assessee claimed deduction of the above sum amounting in all to Rs. 84,194,465 on account of liquidated damages. Assessee contended that it is not in the nature of the provision. The learned CIT appeal after obtaining the remand report of the learned AO held that as per clause 3 of the agreement dated 26/2/2013 the assessee was liable to pay the above amount of Rs. 31,119,000 as liqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the bills and invoices. In rejoinder assessee submitted that its registered office, factory is situated at a different place and records are lying under lockout and no employees are there to take care of. Therefore, it was stated that it is practically impossible to comply with the requirement of the AO. Assessee also stated that regular assessment u/s 143 (3) of assessment year 2008 - 09 has taken in place and no disallowance has been made and in that the head of these expenditure assessee also submitted a comparative chart of expenses to state that there is no abnormal increase in the expenditure claimed by the assessee for this year. Based on this the learned CIT - A noted that as assessee has failed to submit the complete details of such expenditure certain disallowance deserves to be confirmed. He examined each of those expenditure. With respect to the employee benefit expenditure he held that if the disallowances restricted to the 5% of the expenditure on which no tax has been deducted it would meet the criteria of reasonableness. With respect to legal and professional fees and security charges, he applied the same logic and restricted the disallowance to the extent of 5%. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not allowing set of brought forward losses of Rs. 336,508,609. This amount is and unabsorbed depreciation and not carry forward of losses. The learned CIT appeal did not allow the same because of the reason that there is no unabsorbed depreciation available to the assessee as per the assessment records of the earlier year. Therefore, there is no infirmity in the order of the learned CIT - A in confirming the above disallowance. Ground number 3 is dismissed. 083. Ground number 4 is with respect to the disallowance of deduction u/s 80 IA amounting to Rs. 146,249,255/-we find that identical issue arose in the case of the assessee in earlier assessment year where the assessee has not furnished form number 10CCB. On this identical ground, we have already confirmed disallowance of deduction u/s 80 IA in earlier years. There is no change in the facts and circumstances of the case and therefore we confirm the action of the learned CIT - A - ground number 4 of the appeal. 084. Ground number 5 of the appeal is against the disallowance of the bad debts amounting to Rs. 2,007,599/- this disallowance was confirmed by the learned CIT - A for the reason that before the assessing officer, in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
