DCIT, Central Circle-1, Jodhpur V. M/s. Varaha Infra Limited, Jodhpur

ITA 122/JODH/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4354 (ITAT-JODHPUR)
• Duration Of Justice: 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 04-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C BADHOK
• Keywords: Bogus purchase; Transfer pricing; Corroborative evidences; TDS
• Section: 153A; 133(6); 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI N.K.SAINI, VICE PRESIDENT AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO.25/JODH/2019 (ASSESSMENT YEAR-2014-15) VARAHA INFRA LIMITED PLOT NO. 6, JALAN VILAS SCHEME, JODHPUR, RAJASTHAN-342001. (PAN:AACCV7972K) VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 1, JODHPUR (APPELLANT) (RESPONDENT) & ITA NO.122/JODH/2019 (ASSESSMENT YEAR-2014-15) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, JODHPUR VS VARAHA INFRA LIMITED (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI AMIT KOTHARI, CA REVENUE BY SH. K. C. BADHOK, CIT DR DATE OF HEARING 09.05.2019 DATE OF PRONOUNCEMENT 10.05.2019 2 ITA NO.25/JODH/2019 & ITA NO.122/JODH/2019 VARAHA INFRA LTD, AY 2014-15 O R D E R PER A. T. VARKEY, J.M. THESE ARE CROSS APPEALS PREFERRED BY THE ASSESSEE A ND THE REVENUE RESPECTIVELY AGAINST THE ORDER OF THE LD. CIT(A)-2, UDAIPUR DATED 26.12.2018 FOR AY 2014-15. 2. GROUND NO. 1 OF ASSESSEE HAS NOT BEEN PRESSED AN D THE LD. AR HAS AFFIXED HIS SIGNATURE WITH ENDORSEMENT THAT HE IS N OT PRESSING THIS GROUND NO. 1 WHICH WE NOT IS A LEGAL ISSUE, SINCE T HE SAME IS NOT PRESSED IT STANDS DISMISSED. 3. GROUND NO 2 OF THE ASSESSEES APPEAL AND GROUND NO. 1 OF THE REVENUES APPEAL ARE FOR THE SAME ISSUE WHEREIN THE LD. CIT(A) HAS GIVEN PARTIAL RELIEF TO THE ASSESSE. HENCE, THE AS SESSEE AS WELL AS THE REVENUE BOTH IS AGGRIEVED AGAINST THE ORDER OF THE LD. CIT(A) AND IS IN APPEAL BEFORE US. 4. THE GROUND NO. 2 OF APPEAL OF THE ASSESSEE IS AS UNDER: 2. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDI TION OF RS.34,46,84,368/- IN RELATION TO PURCHASE MADE FROM SUNDHA ROAD DEVELOPERS PRIVATE LIMITED AND FROM KHUSH INFRATECH PRIVATE LIMITED, THE ADDITION SO CONFIRMED IS BAD IN LAW AND HAD ON FACTS. THE APPELLANT SUBMITTED FEW COPIES OF BILLS ON A SAMPLE BASIS, AN D NOT ALLOWING THE OTHER PURCHASES WAS UNJUSTIFIED, PARTICULARLY WHEN THE SAID PURCHASES MADE ARE DULY CONFIRMED BY THE RESPECTIVE PARTIES. THE GROUND NO. 1 OF THE REVENUES APPEAL IS AS UND ER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE CIT(A) WAS RIGHT IN DELETING THE ADDITION MADE BY THE AO O N ACCOUNT OF BOGUS PURCHASES SHOWN FROM M/S. SUNDHA ROAD DEVELOPERS PV T. LTD. AND M/S. 3 ITA NO.25/JODH/2019 & ITA NO.122/JODH/2019 VARAHA INFRA LTD, AY 2014-15 KHUSH INFRATECH PVT. LTD. OF RS.6,66,210/- AND RS.3 ,73,690/- RESPECTIVELY. 5. BRIEF FACTS OF THE CASE ARE THAT THE ORIGINAL RE TURN OF INCOME WAS SUBMITTED BY THE ASSESSEE ON 24.11.2014. LATER A S EARCH PROCEEDINGS U/S. 132 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER R EFERRED TO AS THE ACT) WAS CARRIED OUT AGAINST THE ASSESSEE ON 21.0 1.2015. PURSUANT TO WHICH NOTICE U/S. 153A OF THE ACT WAS ISSUED ON 29. 01.2016 AND THE ASSESSEE FILED FRESH RETURN OF INCOME ONCE AGAIN ON 22.02.2016. THE AO NOTED THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 11.04.2008 AND IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION, SUB- CONTRACTOR AND ROAD CONTRACTOR AND THE ASSESSEE HAS DECLARED TOTAL INCO ME OF RS.22,89,70,040/-. THE AO NOTED THAT THE ASSESSEE HAS MADE HUGE PAYMENTS TO M/S. SUNDHA ROAD DEVELOPERS LTD. (HEREI NAFTER REFERRED TO AS SRDL) TO THE TUNE OF RS.18,18,34,000/- AND M/S . KHUSH INFRATECH PRIVATE LIMITED (HEREINAFTER REFERRED TO AS THE KI PL) TO THE TUNE OF RS.18,10,85,268/- AND M/S. HARI LAXMI INFRA PROJECT PVT. LTD. (HEREINAFTER REFERRED TO AS THE HLIPPL) TO THE TU NE OF RS.4,42,00,000/- DURING THE RELEVANT ASSESSMENT YEAR. IT IS NOTED T HAT NO ADVERSE VIEW HAS BEEN TAKEN AGAINST THE PURCHASES MADE FROM M/S. HLIPPL WHICH THE AO REFERRED TO TPO U/S.92CA OF THE ACT TO COMPUTE A RMS LENGTH PRICE IN RELATION TO THE SPECIFIED DOMESTIC TRANSACTION AGGR EGATING TO RS.6,12,90,000/-; WHEREAS THE TPO VIDE ORDER DATED 28.08.2007 WAS OF THE OPINION THAT NO ADVERSE INFERENCE NEED TO BE DR AWN IN RESPECT OF THE ARMS LENGTH PRICE OF THE DOMESTIC TRANSACTION CONDU CTED BY M/S. HLIPPL AND THE AO HAS NOT MADE ANY ADVERSE VIEW AGAINST TH E SAID COMPANY. COMING TO THE ADVERSE VIEW TAKEN BY THE AO AGAINST M/S. SRDL AND M/S. KIPL, WE NOTE THAT THE AO IN ORDER TO EXAMINE THE GENUINENESS OF THE EXPENDITURE CLAIMED BY THE ASSESSEE, ISSUED NOT ICE U/S. 133(6) OF THE 4 ITA NO.25/JODH/2019 & ITA NO.122/JODH/2019 VARAHA INFRA LTD, AY 2014-15 ACT TO THESE COMPANIES WITH THE DIRECTION TO PROVID E THE FOLLOWING DETAILS: I) COPY OF ITR, COMPUTATION OF INCOME ALONG WITH AL L ANNEXURE FOR AY 2014-15. II) CONFIRMED COPY OF ACCOUNTS W.R.T. M/S. VARAHA I NFRA LTD. FOR THE PERIOD RELEVANT TO AY 2014-15. III) COMPLETE DETAILS OF NATURE OF TRANSACTION WITH M/S. VARAHA INFRA LIMITED ALONG WITH SUPPORTING EVIDENCE. IV) COPY OF ANY AGREEMENT EXECUTED WITH M/S. VARAHA INFRA LTD., IF ANY, RELEVANT FOR AY 2014-15. V) THEY WERE REQUIRED TO PRODUCE ORIGINAL BILLS, VO UCHERS ETC. ALONG WITH THEIR BOOKS OF ACCOUNTS FOR VERIFICATION OF TR ANSACTION MADE WITH M/S. VARAHA INFRA LTD. DURING AY 2014-15. 6. ACCORDING TO THE AO, M/S. KIPL SUBMITTED LEDGER ACCOUNT OF ASSESSEE, ACKNOWLEDGMENT OF ITS INCOME TAX RETURN W ITH COMPUTATION AND FURTHER THE CONFIRMED THAT IT HAD SUPPLIED MATE RIAL TO THE ASSESSEE COMPANY. THE AO ACKNOWLEDGES THAT SIMILAR REPLIES W ERE SUBMITTED BY M/S. SRDL ALSO. THE AO NOTES THAT THE REPLIES WERE EXACTLY SIMILAR AND IDENTICAL AND WITHOUT FURNISHING THE COMPLETE DETAI LS AS REQUIRED VIDE HIS SUMMON U/S. 131 OF THE ACT. ACCORDING TO THE A O, DESPITE SEVERAL REMINDERS BOTH THE COMPANIES REPLY WAS EXACTLY THE SAME AND REQUESTED FOR GRANT OF TIME TO SUBMIT THE DETAILS AND DOCUMEN TS. ACCORDING TO AO, THEREAFTER HE ISSUED NOTICE TO THE ASSESSEE AS TO W HY PURCHASES MADE BY IT FROM THE SAID PARTIES SHOULD NOT BE TREATED AS B OGUS. TAKING NOTE THAT NO SPECIFIC REPLY WAS RECEIVED FROM THE ASSESSEE FO R NOT PRODUCING THE DIRECTORS OF THE OTHER TWO COMPANIES IE, M/S. SRVL AND M/S. KIPL ACCORDING TO AO THE GENUINENESS OF THE HUGE EXPENSE S PAID BY ASSESSEE TO THE SAID COMPANIES REMAINED UNVERIFIED AND AFTER REFERRING TO FEW JUDGMENTS WAS PLEASED TO HOLD THAT THE ASSESSEE FAI LED TO ESTABLISH THE GENUINENESS OF THE EXPENSES CLAIMED TO HAVE BEEN IN CURRED FOR ALLEGED 5 ITA NO.25/JODH/2019 & ITA NO.122/JODH/2019 VARAHA INFRA LTD, AY 2014-15 SUPPLY OF MATERIALS BY M/S. SRDL TO THE TUNE OF RS. 18,18,34,000/- AND M/S. KIPL TO THE TUNE OF RS.18,10,85,268/- TOTALING RS.36,29,19,268/- WAS DISALLOWED AS BOGUS EXPENSES AND ADDED TO THE I NCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APP EAL BEFORE THE LD. CIT(A), WHO GAVE PARTIAL RELIEF TO THE ASSESSEE BY DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES SHOWN FROM M/S. SRDL TO THE TUNE OF RS.6,66,210/- AND IN RESPECT OF M/S. KIPL TO THE TUNE OF RS.3,73,690/-. AT THIS JUNCTURE, WE NOTE THAT AN A MOUNT OF RS.1,71,95,000/- CREDITED ON ACCOUNT OF CHEQUE RECE IVED BY THE ASSESSEE FROM M/S. SRVL SINCE WAS BORNE OUT FROM THE RECORDS , THE LD. CIT(A) HAS DELETED THE SAME ON WHICH THE REVENUE IS NOT IN APPEAL. AGGRIEVED, BY THE ACTION OF LD CIT(A), BOTH PARTIES ARE IN APP EAL BEFORE US, RAISING THE GROUNDS SUPRA. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESS EE COMPANY WAS INCORPORATED ON 11.04.2008 AND IS ENGAGED IN THE BU SINESS OF CIVIL CONSTRUCTION, SUB-CONTRACTOR AND ROAD CONTRACTOR AN D CLAIMED TO HAVE PURCHASED MATERIALS FOR ITS CONSTRUCTION/ROAD CONTR ACTS FROM M/S. SRDL M/S. KIPL AND M/S. HLIPPL, WHICH THE ASSESSEEHAD CL AIMED AS ITS EXPENDITURE. THE AO IN ORDER TO ASCERTAIN THE VERAC ITY OF THE CLAIM OF EXPENDITURE HAD ISSUED NOTICE TO THE PARTIES INVOLV ED DIRECTLY U/S. 133(6) OF THE ACT FOR NECESSARY VERIFICATION OF THE PURCHA SES MADE FROM THESE PARTIES. FROM THE PERUSAL OF THE ASSESSMENT ORDER IT IS REVEALED THAT IN RESPONSE TO THE NOTICE U/S. 133(6) ISSUED ALL THE P ARTIES HAVE DULY REPLIED AND HAD CONFIRMED THE PURCHASES MADE BY THE ASSESSE E. SINCE IN THIS APPEAL ONLY THE PURCHASES IN RESPECT OF M/S. SRDL A ND M/S. KIPL ARE IN DISPUTE AND SINCE THERE IS NO DISPUTE IN RESPECT OF TRANSACTION WITH M/S. HLIPPL THE FACTS INVOLVED IN RESPECT OF M/S. HLIPPL IS NOT NARRATED. THE AO HAS ACKNOWLEDGED THAT BOTH THE [M/S. SRDL AN D M/S. KIPL] 6 ITA NO.25/JODH/2019 & ITA NO.122/JODH/2019 VARAHA INFRA LTD, AY 2014-15 COMPANIES HAVE REPLIED AS WELL AS SUBMITTED COPIES OF THE RESPECTIVE INCOME TAX RETURNS AND AUDITED BALANCE SHEET FOR TH E YEAR UNDER CONSIDERATION WE NOTE THAT THE ASSESSEE IS A CONTRA CTOR ENGAGED IN THE BUSINESS OF CIVIL, SUB-CONTRACTOR AND ROAD CONTRACT OR ETC. THE ASSESSEE HAS HUGE TURNOVER IN THIS YEAR WHICH IS TO THE TUNE OF RS.606.49 CR. WHICH HAS BEEN ACCEPTED BY THE AO AND THE ASSESSEE HAS SHOWN GP OF RS 119.31 CR. [GPPERCENTAGE IS 19.67%] WHEN COMPARE D WITH THE PREVIOUS TWO ASSESSMENT YEARS THE GP PERCENTAGE IS THE HIGHEST. WE NOTE THAT THE BOOKS OF THE ASSESSEES ARE STATUTORIL Y AUDITED AND ACCOUNTS MAINTAINED BY THE COMPANIES ARE REQUIRED TO BE AUDI TED UNDER THE COMPANIES ACT, 1956. WE NOTE THAT THE AUDITORS HAV E CERTIFIED THE CORRECTNESS OF THE FINANCIALS FILED BY THE ASSESSEE . THE AO HAS TO ACCEPT THE TAX AUDIT REPORT UNLESS IT TURNS OUT TO BE PATE NTLY A FALSE CERTIFICATE. WE NOTE THAT THE AO HAS NOT BROUGHT ON RECORD ANY D EFECTS/FAULTS IN THE AUDITED FINANCIALS FILED BY THE ASSESSEE AND THE AO HAVE NOT REJECTED THE BOOKS MAINTAINED BY THE ASSESSEE IN THE REGULAR COU RSE OF BUSINESS. MOREOVER, WE NOTE THAT THE AO IN ORDER TO VERIFY TH E VERACITY OF THE PURCHASES MADE BY THE ASSESSEE FROM ITS TWO COMPANI ES M/S. SRDL AND M/S. KIPL HAS ASKED FOR VARIOUS DETAILS WHICH HAVE BEEN REPLIED TO BY BOTH THE COMPANIES ALONG WITH THE FOLLOWING DETAILS : I) IN RESPECT OF M/S. SRVL FOLLOWING DOCUMENTS WER E FILED: II) INCOME TAX RETURN FILED AT PAGE 68 OF THE PAPER BOOK, III) ACCOUNT STATEMENT OF THE SAID PARTY FROM THE B OOKS OF ACCOUNT OF THE ASSESSEE AVAILABLE AT PAGES 38 & 39 OF THE PAPER BOOK, IV) THE ACCOUNT CONFIRMATION AND THE ACCOUNT STATEM ENT FROM THE BOOKS OF M/S. SRVL CONFIRMING THE TRANSACTION WITH THE ASSESSEE AVAILABLE AT PAPER BOOK PAGES 40 TO 46, V) COPY OF COMPUTATION OF TOTAL INCOME AND AUDITED BALANCE SHEET OF M/S. SRVL SUBMITTED DIRECTLY TO THE AO IN RESPONSE TO 7 ITA NO.25/JODH/2019 & ITA NO.122/JODH/2019 VARAHA INFRA LTD, AY 2014-15 NOTICE U/S. 133(6) AVAILABLE AT PAPER BOOK PAGES 12 4 TO 131 AND 132 TO 134. VI) COPIES OF SPECIMEN BILLS OF PURCHASE MADE AVAIL ABLE AT PAPER BOOK PAGES 47 TO 84, VII) PAYMENTS MADE BY ACCOUNT PAYEE CHEQUES FOR PUR CHASING THE MATERIAL FOR THE ROAD CONSTRUCTION. IN RESPECT OF M/S. KIPL THE FOLLOWING DOCUMENTS WER E FILED: I) THE ACCOUNT STATEMENT OF THE SAID PARTY FROM THE BO OKS OF ACCOUNT OF THE ASSESSEE AVAILABLE AT PAPER BOOK PAG ES 5 TO 86, II) THE ACCOUNT CONFIRMATION AND THE ACCOUNT STATEMENT FROM THE BOOKS OF M/S. KIPL CONFIRMING THE TRANSACTION WITH THE ASSESSEE AVAILABLE AT PAGES 87 TO 90 OF THE PAPER BOOK, III) COPY OF COMPUTATION OF TOTAL INCOME AND AUDITED BAL ANCE SHEET OF M/S. KIPL WHICH WAS DIRECTLY SUBMITTED TO THE AO IN RESPONSE TO THE NOTICE U/S. 133(6) AVAILABLE AT PAP ER BOOK PAGES 135 TO 143 AND 144 TO 147. IV) COPIES OF SPECIMEN BILLS OF PURCHASE MADE BY THE AS SESSEE, PAYMENTS MADE BY ACCOUHNT PAYEE CHEQUES AND PURCHAS ES ARE FOR CONSTRUCTION MATERIAL USED FOR THE ROAD CONSTRUCTIO N, V) INCOME TAX RETURN AVAILABLE AT PAGE 180 TO 182 OF T HE PAPER BOOK. 8. WE NOTE THAT BY FILING THE AFORESAID DOCUMENTS T HE IDENTITY OF THE SELLER OF GOODS/PURCHASES CANNOT BE DOUBTED FOR THE SIMPLE REASON THAT THEY ARE INCOME TAX ASSESSEE AND THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES TO THEM, WHICH HAS NOT BEEN DISPUTED. THE ASSESSEES TURNOVER FROM ITS BUSINESS OF CONSTRUCTION OF ROADS HAS BEEN ACCEPTED BY AO, WHEREAS THE MATERIALS USED FOR THE VERY SAME C ONSTRUCTION/ROAD ON 8 ITA NO.25/JODH/2019 & ITA NO.122/JODH/2019 VARAHA INFRA LTD, AY 2014-15 WHICH THE ASSESSEE RECEIVED THE PAYMENTS ON COMPLET ION OF PROJECTS OR AS PER CONTRACT HAVE NOT BEEN ACCEPTED BY THE AO WH EN THE FACTS REMAINED THAT BOTH M/S. SRDL AS WELL AS M/S. KIPL H AD CONFIRMED/REPLIED PURSUANT TO THE 133(6) NOTICE OF AO AND HAVE FILED THEIR INCOME TAX RETURNS ALONG WITH CONFIRMATION RE GARDING SALE OF MATERIALS TO ASSESSEE. WE NOTE THAT THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE ONLY FOR THE BILLS WHICH HAVE BEEN PRO DUCED BEFORE HIM. IT WAS BROUGHT TO OUR NOTICE THAT THE BILLS PRODUCED W ERE ONLY SPECIMEN BILLS OF BOTH THESE PARTIES, SO WHEN THE LD. CIT(A) HAS GIVEN PARTIAL RELIEF IT MEANS THAT THE LD. CIT(A) AGREED TO THE E XISTENCE OF M/S. SRDL AS WELL AS M/S. KIPL AND HAS ACCEPTED THE ASSESSEE S CONTENTION THAT MATERIALS WERE PURCHASED FOR THE BILLS PRODUCED BY THE ASSESSEE. AS WE STATED EARLIER THAT WITHOUT PURCHASING THE CONSTRUC TION MATERIALS, THE ASSESSEE COULD NOT HAVE CONSTRUCTED THE ROADS ETC. AND SINCE THE ASSESSEES TURNOVER HAS BEEN ACCEPTED IN TOTO AND W HEN THE PARTIES M/S. SRDL AS WELL AS M/S. KIPL HAS GIVEN THE CONFIRMATIO N ALONG WITH THE FACT THAT PAYMENTS WERE THROUGH BANKING CHANNEL AND OTHER DOCUMENTS AS AFORESAID, QUESTION OF DISALLOWANCE OF THE EXPEN SES CLAIMED BY THE ASSESSEE DOES NOT ARISE. IT GOES WITHOUT SAYING TH AT ENTIRE CONTRACT RECEIPT CAN NEVER BE THE INCOME AND ONLY THE NET IN COME AFTER DEDUCTING CORRESPONDING EXPENSES CAN BE TAXED. THE DISALLOWA NCES HAVE BEEN MADE ONLY ON SUSPICION; AND SUSPICION HOWSOEVER STR ONG CANNOT TAKE THEPLACE OF THE PROOF. THE LD. CIT(A) BY GIVING PA RTIAL RELIEF TO THE ASSESSEE HAS RECOGNIZED THE GENUNITY OF PURCHASES O N THE BILLS SUBMITTED, WHICH GOES AGAINST THE THEORY OF BOGUS P URCHASES AS HELD BY THE AO AND CANNOT BE SUSTAINED AND, THEREFORE, WE A RE INCLINED TO ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE AND CONFIRM T HE ACTION OF THE LD. CIT(A) TO THE PARTIAL RELIEF GRANTED BY HIM AND DIR ECT THE AO TO ALLOW CLAIM OF EXPENDITURE OF THE ASSESSEE INCURRED FOR P URCHASES FROM M/S. 9 ITA NO.25/JODH/2019 & ITA NO.122/JODH/2019 VARAHA INFRA LTD, AY 2014-15 SRDL AND M/S. KIPL. THUS, THE ASSESSEE SUCCEEDS AN D THE REVENUE FAILS IN THIS GROUND. 9. THE NEXT GROUND OF APPEAL OF THE REVENUE WHEREIN THE LD. CIT(A) ORDERED DELETION OF ADDITION OF RS.35,42,12,560/- W HICH WAS ADDED BY THE AO FOR PAYMENT MADE TO M/S SREI INFRASTRUCTURE FINANCE LTD. (IN SHORT M/S SREI). THE AO DURING ASSESSMENT PROCEEDI NGS NOTED THAT THE ASSESSEE HAS CLAIMED ADVISORY SERVICE EXPENSES WHIC H WAS PAID TO M/S. SREI OF RS.35,42,12,560/-. IN ORDER TO VERIFY ITS VERACITY OF THE CLAIM, THE AO ISSUED NOTICE U/S. 133(6) OF THE ACT DATED 1 3.10.2017 WHICH AO AGREES THAT M/S. SREI REPLIED VIDE LETTER DATED 22. 12.2016 WHICH ACCORDING TO AO WAS NOT COMPLETE, SO HE AGAIN ISSUE D NOTICE AND ASKED M/S. SREI TO FURNISH COPY OF THE INCOME TAX RETURN, COMPLETE DETAILS OF PROJECTS FOR WHICH IT HAS PROVIDED/RENDERED ADVISOR Y SERVICES TO THE ASSESSEE, THE ADVISORY FEE RECEIVED IN RESPECT OF R ELEVANT ASSESSMENT YEAR, PARTY WISE COMPLETE DETAILS OF SUCH ADVISORY SERVICES PROVIDED BY IT DURING THE ASSESSMENT YEAR ETC. ACCORDING TO AO , REPLY WAS RECEIVED FROM M/S. SREI ON 15.11.2017. HOWEVER, ACCORDING T O AO AGAIN THERE WERE NO COMPLETE DETAILS. AGAIN THE AO ASKED M/S. SREI TO PROVIDE MORE DETAILS WHICH ACCORDING TO AO, NO RESPONSE WAS THERE. THEREFORE, HE EXAMINED THE VERACITY OF THE TRANSACTION WITH TH E MATERIALS FILED WITH HIM. THE AO ACKNOWLEDGES THAT THE ASSESSEE HAS SUB MITTED COPIES OF LEDGER ACCOUNT, BILLS AND AGREEMENT WITH M/S. SREI AND AFTER REPRODUCING THE AGREEMENT FROM PAGE NOS. 17 TO 25 O F THE ASSESSMENT ORDER, THE AO FOUND CERTAIN MISMATCH IN THE RECEIPT CLAIMED BY M/S. SREI AND FURNISHED BY THE ASSESSEE. THUS, THE AO W AS OF THE OPINION THAT IN THE LIGHT OF THE INCONSISTENCIES AND CONTRA DICTIONS WITH RESPECT TO THE WORTH OF EPC/BOT PROJECTS FOR WHICH ADVISORY SE RVICES HAVE BEEN PROVIDED BY M/S. SREI ;AND SINCE THE ASSESSEE FAILE D TO ADDUCE PROPER DETAILS OF THE PROJECT ADVISORY SERVICES EXPENDITUR E OF RS.35,42,12,560/- 10 ITA NO.25/JODH/2019 & ITA NO.122/JODH/2019 VARAHA INFRA LTD, AY 2014-15 THE AO TREATED THE SAME AS BOGUS EXPENSES. AGGRIEV ED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO DELETE THE SAME. AGGRIEVED, THE REVENUE IS BEFORE US. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE AO DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS TAKING NOTE THAT THE ASSESSE E HAD MADE PAYMENT OF RS.35,42,12,562/- TO M/S. SREI, ASKED FOR VARIO US DETAILS FROM THEM WHICH WAS ACKNOWLEDGED BY THE AO TO HAVE BEEN RECEI VED BY HIM. THE ONLY FAULT WHICH THE AO HAS RAISED IS THAT COMPLETE DETAILS WERE NOT FURNISHED BY M/S. SREI, HOWEVER WE NOTE THAT AO HAS NOT SPELLED OUT AS TO WHICH ALL DETAILS WERE NOT FURNISHED BEFORE HIM WHICH IS RELEVANT TO ADJUDICATE THIS ISSUE. IT WAS BROUGHT TO OUR NOTIC E BY THE LD. AR THAT THE TURNOVER OF M/S. SREI WAS MORE THAN RS.3260 CR. AND TOOK US TO PAGE 76 OF THE PAPER BOOK WHERE THE BALANCE SHEET O F M/S. SREI IS FOUND PLACED AND PAGE 77 WHICH IS P&L ACCOUNT FROM WHICH INCOME FROM OPERATIONS OF M/S. SREI IS FOUND TO BE RS.3260 CR. AND THE AMOUNT DISBURSED BY THE ASSESSEE TO M/S. SREI IS ONLY RS.3 5 CR. IT WAS BROUGHT TO OUR NOTICE THAT M/S. SREI IS A REPUTED COMPANY A ND ACTED AS ADVISORY AND CONSULTANT AND ITS CLIENTELE INCLUDES VARIOUS G OVERNMENT AGENCIES LIKE MINISTRY OF RURAL DEVELOPMENT, GOVT. OF INDIA, ASIAN DEVELOPMENT BANK, MINISTRY OF COMMERCE & INDUSTRIES, DEPARTMENT OF COMMERCE (SEZ), BANGALORE METRO RAILWAY CORPORATION, DELHI M ETRO DEVELOPMENT CORPORATION, GREATER VISHAKAPATNAM MUNICIPAL CORPOR ATION ETC. IT WAS BROUGHT TO OUR NOTICE THAT M/S. SREI WAS INSTRUMENT AL IN GETTING VARIOUS GOVERNMENT CONTRACTS TO ASSESSEE COMPANY AND HELPED IN FILING THE TENDER, MAKING DETAILED EVALUATION OF THE COST AND REQUIREMENTS ETC. IT WAS ALSO BROUGHT TO OUR NOTICE THAT M/S. SREI PROVI DES COMPLETE TECHNICAL SUPPORT WHILE COMPLETING THE PROJECTS AWA RDED TO IT. IN ORDER TO COUNTER THE ALLEGATION OF AO THAT IT WAS A BOGUS TRANSACTION, OUR 11 ITA NO.25/JODH/2019 & ITA NO.122/JODH/2019 VARAHA INFRA LTD, AY 2014-15 ATTENTION WAS DRAWN TO ACCOUNT STATEMENT OF M/S. SR EI PLACED AT PAGE 22 OF THE PAPER BOOK, COPY OF INVOICE RAISED BY M/S . SREI TOWARDS ADVISORY SERVICES WHICH ARE FOUND PLACED AT PAGES 2 3 AND 24, COPY OF TDS CERTIFICATE ISSUED TO M/S. SREI FOR PAYMENT OF TDS ON THE PAYMENTS MADE IS FOUND PLACED AT PAGES 25 TO 26, CO PY OF THE AGREEMENT EXECUTED WITH M/S. SREI IS FOUND PLACED AT PAGES 27 TO 31 OF THE PAPER BOOK. M/S. SREIS AUDITED BALANCE SHEET FOR THE YE AR ENDING 31.03.2014 AND 31.03.2015 ARE FOUND PLACED AT PAGES 32 TO 37, COPIES OF REPORT ISSUED BY M/S. SREI TO THE AO ARE ALSO ENCLOSED. W E NOTE THAT M/S. SREI IS REGULARLY FILING ITS RETURNS WITH THE REGI STRAR OF COMPANIES AND THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE TO M/S. SREI BY ACCOUNT PAYEE CHEQUES OR THROUGH RTGS. TAKING NOTE OF ALL THESE FACTS AND TAKING NOTE OF THE FACT THAT THE INCONSISTENCY/MISM ATCH HIGHLIGHTED BY THE AO HAS BEEN ALSO RIGHTLY ADDRESSED BY THE LD. C IT(A) IN THE FORM OF A CHART PLACED AT PAGE 26 OF HIS ORDER AND THE LD A R, PAIN STAKINGLY TOOK US THROUGH THE PAPER-BOOK AND EXPLAINED TO US AND R ECONCILED THE FIGURES BEFORE US. WE NOTE THAT THE LD. CIT(A) HAS GIVEN R ELIEF TO THE ASSESSEE BY OBSERVING AS UNDER: 6.3. I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE. 6.3.1 I FIND THAT M/S. SREI HAVE CONFIRMED THAT THE Y HAVE ASSISTED THE ASSESSEE IN ALL TECHNICAL AND FINANCIA L MATTERS FOR APPLYING FOR THE CONTRACTS AND FOR EXECUTION OF THE CONTRACTS AWARDED. FURTHER, THE PAYMENT OF ADVISORY SERVICES FEE OF RS.36,06,31,780/- (FEES RS.32,09,61,000/- PLUS SERV ICE TAX OF RS.3,96,70,780/-) IS DULY SUPPORTED BY BILLS RAISED BY SREI INFRASTRUCTURE FINANCE LIMITED. THE PAYMENT HAS BE EN MADE BY ACCOUNT PAYEE CHEQUES OR THROUGH RTGS. TDS CERTIFI CATE IN FORM 16A ISSUED TO SREI BY THE ASSESSEE COMPANY, REFLECT S PAYMENT OF FEES OF RS.32,09,61,100/- (RS.36,06,31,780/- LESS S ERVICE TAX RS.3,96,70,780/- AND DEDUCTION OF TDS OF RS.64,19,2 20/- THEREON. FURTHER M/S. SREI, BY THEIR REPLY DT. 15.11.2017, H AVE FURNISHED BEFORE THE AO COMPLETE DETAILS OF CONTRACTS OF RS.3 288.14 CRORES, WHICH INCLUDE CONTRACTS OF RS.991.34 CRORES, WHERE THE ASSESSEE HAS BEEN AWARDED THE CONTRACTS (PLACED AS ANNEXURE B TO THIS ORDER); THUS THE OBSERVATION OF THE AO THAT M/S. S REI FURNISHED DETAILS OF CONTRACTS OF ONLY RS.1045.11 CRORE, IS F ACTUALLY INCORRECT. THE FEES OF RS.32,09,61,000/- (RS.36,06,31,780/- LE SS SERVICE TAX 12 ITA NO.25/JODH/2019 & ITA NO.122/JODH/2019 VARAHA INFRA LTD, AY 2014-15 RS.3,96,70,780/-) IS CORRELATED WITH THE DETAILS OF VALUE OF TOTAL CONTRACTS AND VALUE OF SUCCESSFUL CONTRACTS AS UNDE R: RS.36,06,31,780/- TO THE ASSESSEE. IN THIS REGARD THE ASSESSEE HAS EXPLAINED THAT THE DIFFERENCE OF RS.64,19,220/- IS ON ACCOUNT OF TDS. I FIND THAT THE AO HAS FAILED TO APPRECIATE T HE DEBIT OF RS.64,19,220/- ON ACCOUNT OF TDS, IN THE LEDGER ACC OUNT OF THE ASSESSEE SUBMITTED BY SREI (PLACED AS ANNEXURE C TO THIS ORDER). FURTHER, THIS CONTENTION OF THE ASSESSEE IS BRONE O UT FROM FORM 16A, AS PER WHICH TDS OF RS.64,19,220/- HAS BEEN DEDUCTE D FROM FEES PAID TO SREI. THEREFORE THE DISCREPANCY POINTED OUT BY THE AO IS FOUND TO BE FULLY EXPLAINED. 6.3.4. IN VIEW OF THE DISCUSSION IN PARA 6.3.1 TO 6 .3.3 ABOVE, THE DISALLOWANCE OF RS.35,42,12,560/- MADE BY THE AO IS HEREBY DELETED. THIS GROUND OF APPEAL IS THUS ALLOWED. 11. SINCE WE FULLY AGREE WITH THE VIEW EXPRESSED BY THE LD. CIT(A) AND NO INFIRMITY COULD BE DETECTED BY US IN THE IMP UGNED ORDER AFTER HEARING THE LD. DR, AND FOR THE REASONS STATED BY U S AT PARA 10 SUPRA, WE 13 ITA NO.25/JODH/2019 & ITA NO.122/JODH/2019 VARAHA INFRA LTD, AY 2014-15 ARE INCLINED TO CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUND OF APPEAL OF REVENUE. 12. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED AN D THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10TH MAY, 2 019 SD/- SD/- (N.K. SAINI) (A. T. VARKEY) VICE PRESIDENT JUDICIAL MEMBER DATED : 10.05.2019 J.D. SR. PS. / COPY OF THE ORDER FORWARDED TO : / THE APPELLANT / THE RESPONDENT / CIT ( )/ THE CIT(A) , , DR, ITAT, JODHPUR # / GUARD FILE / BY ORDER / ASSISTANT REGISTRAR