9911796707
TMI Blog2025 (3) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... imed bogus purchase of materials, the AO had disallowed the entire purchases, which was reduced to 25% by the Ld. CIT(A). On further appeal, the Co-ordinate Bench of this Tribunal has restricted the disallowance to 12.5% of the bogus purchases. The same basis was followed to restrict the disallowance in respect of bogus sub-contract expenses in A.Ys. 2012-13 to 2018-19.
Thus, we restrict the disallowance in the current year to 12.5% of the subcontract amount as awarded by the assessee to AIL & KNRCL. Accordingly, the assessee gets part relief in the matter. X X X X Extracts X X X X X X X X Extracts X X X X ..... the work but only provided accommodation entries by charging commission @ 0.15%. However, as the work awarded to the assessee by NHAI was executed and completion of work was certified by NHAI, the AO held that the sub-contract transactions through AIL and KNRCL was done to save tax and reduce cost and to make more profit than the usual course of transaction. The AO had, therefore, estimated the gross profit in respect of sub-contract work of AIL and KNRCL @25% and accordingly made addition of Rs.3,78,99,863/-. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was decided by the Ld. CIT(A) who had reduced the profit of 25% as estimated by the AO to 16% of the sub-contract am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the AO is not empowered to reject books of account u/s 145A of the Act which relates to the methodology of accounting in certain cases. 3.2 The Learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts in upholding the AO's action for rejection of books of accounts who neither pin-pointed any alleged defect in the books of accounts of the Assessee nor issued specific show cause notice for the same. The Id. Commissioner of Income Tax (Appeals) overlooked the fact that the books of account were maintained in strict adherence to the Compliance of the Companies Act and Income Tax Act. The same set of books of account was duly approved by the AO while passing the original assessment order u/s 143(3) of the Act. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitrarily holding that Safeco Projects Pvt. Ltd. had not executed the sub contract stated to have been given to them. In fact the AO blindly placed reliance on the statements of Shree Bablu Shah and Shree Aditya Chirmar who had allegedly admitted that no work was performed by their company. 4.6 The Learned Commissioner of Income Tax (Appeals) while confirming the AO's action grossly erred in law and on facts ignoring that the AO while making the impugned assessment utilized the material collected behind at the back of the assessee without providing a copy thereof or providing an opportunity to the appellant to cross examine such persons in total disregard of the principles of Natural justice. 4.7 It is therefore prayed that the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Ld. CIT(A). He submitted that the addition sustained by him @16% was comparable with the GP of 15.49% as disclosed by the assessee. He further submitted that since all the expenses were already booked by the assessee in his account, the addition was rightly made on the basis of the GP as disclosed by the assessee. 8. We have considered the rival submissions. The fact regarding sub-contract of Rs.22.65 Crores awarded by the assessee to AIL and of Rs.10,20,56,400/- to KNRCL is not under dispute. These two sub-contracts were given on back to back basis to another companies of M/s. Safeco, who had admitted that it was only providing accommodation entries. At the same time, NHAI had certified the completion of work to which these s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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