Smt. R.Indira Devi, Visakhapatnam V. The Addl. CIT, Range-1, Visakhapatnam, Visakhapatnam

ITA 371/VIZ/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3730 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 10-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Assessee Lawyers: K J D SRINIVAS

Judgement Text

ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.371/VIZAG/2012 ( / ASSESSMENT YEAR: 2006-07) MRS. R. INDIRA DEVI, VISAKHAPATNAM VS. ADDL. CIT, RANGE - 1, VISAKHAPATNAM [PAN: ADSPG 3014F ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI K.J.D. SRINIVAS, AR / RESPONDENT BY : SHRI M.K. SETHI, DR / DATE OF HEARING : 28.04.2016 / DATE OF PRONOUNCEMENT : 17.06.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 31.7.2012 AND IT PERTAI NS TO THE ASSESSMENT YEAR 2006-07. ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND PROPRIETOR OF M/S. RG. CON SERVICES, WHICH IS E NGAGED IN THE BUSINESS OF ENGINEERING CONSULTANT AND CONTRACTORS. THE ASSESSEE HAS FILED HER RETURN OF INCOME DECLARING TOTAL INCOME O F ` 69,86,630/-. THE CASE HAS BEEN TAKEN UP FOR SCRUTINY AND ACCORDINGLY NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'TH E ACT') WAS ISSUED. IN RESPONSE TO NOTICE, THE A.R. OF THE ASSESSEE APP EARED FROM TIME TO TIME AND FURNISHED THE BOOKS OF ACCOUNTS AND OTHER DETAILS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED CONSULTANCY CHARGES OF ` 35 LAKHS IN THE NAME OF M/S. SMV PROJECTS LTD. AND ALSO MATERIAL HANDLING CHARGES OF ` 26 LAKHS IN THE NAME OF M/S. MALLESHWAR ENTERPRISES. THEREFORE, IS SUED A NOTICE AND ASKED TO EXPLAIN THE NATURE OF PAYMENTS MADE TO THE SE COMPANIES. THE ASSESSEE IN RESPONSE TO SHOW CAUSE NOTICE SUBMITTED THAT SHE HAD TAKEN UP TURNKEY PROJECT CONTRACT FOR M/S. RAWMET FERROS INDUSTRIES PVT. LTD. FOR DESIGN AND SUPPLY OF EQUIPMENTS/COMPONENTS FOR 2X16.5 MW SUB- MERGED ARC FURNACES TO PRODUCE BULK FERRO ALLOYS. THE ASSESSEE FURTHER SUBMITTED THAT SHE HAD PAID CONSULTANCY CHARGES OF ` 35 LAKHS TO M/S. SMV PROJECTS LTD. FOR DESIGN, CONSULTANCY AND DETAI LED ENGINEERING WORK FOR THE SUB-MERGED ARC FURNACE TO BE SUPPLIED TO M/ S. RAWMET FERROS INDUSTRIES PVT. LTD. THE ASSESSEE FURTHER SUBMITTE D THAT SHE HAD ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 3 ENTERED INTO AN AGREEMENT WITH THE CONTRACTOR FOR P ROVIDING DESIGN AND CONSULTANCY SERVICES, ISSUED WORK ORDER AND ALSO PA ID THE AMOUNT BY WAY OF ACCOUNT PAYEE CHEQUE AFTER DEDUCTING APPLICA BLE TDS. SIMILARLY, SHE HAD PAID A SUM OF ` 26 LAKHS TO M/S. MALLESHWAR ENTERPRISES TOWARDS MATERIAL HANDLING CHARGES. THE ASSESSEE FU RTHER SUBMITTED THAT THE PAYMENT HAS BEEN MADE BY CHEQUES, THE CONTRACTO R HAS ISSUED BILLS AND ALSO FILED CONFIRMATION LETTERS FOR HAVING DONE THE JOB. THE A.O. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE H ELD THAT THE ASSESSEE HAS UNDERTAKEN WORKS CONTRACT OF DRAWING, DESIGN AN D SUPPLY OF FURNACE MATERIALS. HOWEVER, THE EXPENDITURE INCURRED IN RE SPECT OF DESIGN AND CONSULTANCY CHARGES IS NOT HAVING ANY NEXUS WITH TH E WORK EXECUTED BY THE ASSESSEE. THE A.O. FURTHER HELD THAT M/S. SMV PROJECTS LTD. AND SRI MALLESHWAR ENTERPRISES WERE NOT IN A POSITION TO PR OVIDE THE KIND OF SERVICES REQUIRED BY THE ASSESSEE. THE WORK ORDERS ISSUED BY THE ASSESSEE ACTUALLY SHOWS THAT THE WORK DONE IS THAT OF SUPPLY AND FABRICATION INCLUDING DESIGNING. HOWEVER, THE ASSE SSEE HAS PAID TOWARDS DESIGN AND CONSULTANCY CHARGES. THE A.O. F URTHER OBSERVED THAT THE ASSESSEE HAS MADE A PROVISION IN THE BOOKS OF ACCOUNTS WITHOUT ANY PAYMENT DURING THE RELEVANT FINANCIAL YEAR AND ALSO THE CONTRACTORS ARE NOT HAVING REQUISITE EXPERIENCE IN PROVIDING TH IS KIND OF SERVICE, THEREFORE OPINED THAT THE ASSESSEE HAS INFLATED THE EXPENDITURE BY ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 4 CREATING FICTITIOUS ENTRIES IN THE BOOKS OF ACCOUNT S. THE A.O. FURTHER OBSERVED THAT ON VERIFICATION OF THE FINANCIAL STAT EMENT OF THE CONTRACTORS, IT WAS NOTICED THAT THE CONTRACTORS M/ S. SMV PROJECTS LTD. AND M/S. MALLESHWAR ENTERPRISES HAVE NOT PROVIDED A NY SERVICES TO THE ASSESSEE. THE PROFIT & LOSS ACCOUNT OF M/S. SMV PR OJECTS LTD. SHOWS EXPENDITURE UNDER THE HEAD LIKE BRICKS, CEMENT AND MATERIAL PURCHASES, WHEREAS THE RECEIPTS IS SHOWN UNDER THE HEAD CONSUL TANCY CHARGES. THERE IS NO RELATIONSHIP BETWEEN THE INCOME EARNED AND THE EXPENDITURE INCURRED BY THE CONTRACTOR. SIMILARLY, IN THE CASE OF SRI MALLESHWAR ENTERPRISES, THE ASSESSEE CLAIMS TO HAVE INCURRED T HE EXPENDITURE TOWARDS MATERIAL HANDLING CHARGES. ON VERIFICATION OF THE CREDENTIALS OF THE CONTRACTOR, IT WAS NOTICED THAT M/S. MALLESHWAR ENTERPRISES DOES NOT HAVE THE CAPABILITIES TO HANDLE SUCH EQUIPMENT OR T RANSPORT THEM, WITH THESE OBSERVATIONS, HELD THAT THE ASSESSEE HAS INFL ATED THE EXPENDITURE BY PASSING FICTITIOUS JOURNAL ENTRIES IN THE BOOKS OF ACCOUNTS WITHOUT THERE BEING ANY SERVICES FROM THE CONTRACTOR, THERE FORE, DISALLOWED THE EXPENDITURE AND ADDED BACK TO THE TOTAL INCOME OF T HE ASSESSEE. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE ASSESSEE FURTHER SUB MITTED THAT SHE HAD ENTERED INTO A CONTRACT WITH M/S. SMV PROJECT LTD. ACCORDING TO WHICH ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 5 THE CONTRACTOR RENDERED SERVICES/EXECUTED WORKS AND PROVIDED SERVICES FOR DESIGN AND CONSULTANCY FOR EXECUTION OF SUBMERG ED ARC FURNACE TO BE PROVIDED TO THE PRINCIPALS. THE ASSESSEE FURTHER S UBMITTED THAT SHE HAD TAKEN UP THE WORK ON TURNKEY BASIS AND INCURRED THE EXPENDITURE TOWARDS PREPARATION OF PLAN, DESIGN, THE MATERIAL A ND ALSO CONSULTANCY FOR MANUFACTURE AND SUPPLY OF THE MATERIAL. IT WAS FURTHER SUBMITTED THAT THE A.O. HAS NOT DOUBTED THE GENUINENESS OF TH E PAYMENTS, HOWEVER, DISALLOWED THE EXPENDITURE FOR THE SIMPLE REASON THAT THE CONTRACTOR DOES NOT HAVE REQUISITE EXPERIENCE AND R ESOURCES TO EXECUTE THE WORK. THE ASSESSEE FURTHER SUBMITTED THAT THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS RECORDED STATEMENT FROM THE MANAGING DIRECTOR AND PARTNER OF THE COMPANY AND PA RTNERSHIP FIRM. WHEREIN, THE MANAGING DIRECTOR HAS STATED THAT THEY HAVE EXECUTED THE WORK FOR THE ASSESSEE AND ALSO RECEIVED THE PAYMENT . THE ASSESSEE FURTHER SUBMITTED THAT SHE HAD ENTERED INTO AGREEME NT WITH THE CONTRACTOR, ISSUED WORK ORDER AND THE PAYMENT HAS B EEN MADE SUBSEQUENTLY BY WAY OF CHEQUES AFTER COMPLYING WITH THE TDS PROVISIONS. THEREFORE, THE A.O. WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE EXPENDITURE INCURRED IS BOGUS. TO THIS EFFECT, FURNISHED COPIES OF MEMORANDUM OF ASSOCIATION AND A RTICLES OF ASSOCIATION OF M/S. SMV PROJECTS LTD. AND ALSO PART NERSHIP DEED COPIES ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 6 OF M/S. MALLESHWAR ENTERPRISES ALONG WITH INCOME TA X RETURN COPIES OF M/S. SMV PROJECTS LTD. AND M/S. MALLESHWAR ENTERPRI SES, WHEREIN BOTH THE PARTIES HAVE DECLARED THE CONTRACT RECEIPTS REC EIVED FROM THE ASSESSEE IN THEIR INCOME TAX RETURNS. THE CIT(A) A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT ON PERUSAL OF THE WORK ORDERS ISSUED BY THE ASSESSEE, IT IS SEEN THAT THE WORK AS SIGNED TO M/S. SMV PROJECTS LTD. IS DESIGN, CONSULTANCY AND DETAILED E NGINEERING OF THE SUBMERGED ARC FURNACES WHICH PRODUCE FERRO ALLOYS. M/S. SMV PROJECTS LTD. IS A COMPANY WHICH RUNS FROM A SMALL RENTED PR EMISES ALONG WITH MANY OTHER CONCERNS. THE COMPANY NEITHER HAS ANY F ACTORY NOR THE WORK PLACE TO DO THE KIND OF JOB IT WAS SUPPOSED TO DO. IT NEITHER HAS A TECHNICAL MANPOWER NOR THE MACHINERY SUPPORT TO EIT HER DESIGN OR ENGINEER SUBMERGED FURNACE FROM THE DETAILS OF LOCA TION AND THE FINANCIAL STATEMENTS OF M/S. SMV PROJECTS LTD., DOE S NOT SEEM TO BE HAVING ANY CAPABILITY IN ANY OF THE REQUIRED FIELDS . THE CIT FURTHER OBSERVED THAT THOUGH THE ASSESSEE HAS FURNISHED THE DETAILS OF M/S. SMV PROJECTS LTD. AND ITS FINANCIAL STATEMENTS WHERE TH E CONTRACTOR HAS EXECUTED THE WORKS OR NOT CANNOT BE ASCERTAINED FRO M THE MERE EXISTENCE OF THE CONTRACTOR. IT HAS TO BE LOOKED I NTO WHETHER THE PERSON ENTRUSTED WITH THE WORK IS HAVING CAPACITY TO DO TH E WORK. M/S. SMV PROJECTS LTD. IS NOT HAVING ANY REQUISITE EXPERIENC E AND RESOURCES TO ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 7 EXECUTE THESE KIND OF WORKS, THEREFORE, THE ASSESSE E HAS SIMPLY CREATED FICTITIOUS ENTRIES IN THE BOOKS OF ACCOUNTS TO INFL ATE THE EXPENDITURE. SIMILARLY, IN THE CASE OF M/S. MALLESHWAR ENTERPRIS ES, THE CONTRACTOR DOES NOT HAVE THE CAPACITY OR THE CAPABILITY TO SUPPLY A NY MATERIAL TO THE ASSESSEE. ON PERUSAL OF THE CONTRACT ACCOUNTS IT I S SEEN THAT THE CONTRACTOR DOES NOT HAVE REQUISITE EXPERIENCE OR RE SOURCES IN HANDLING THESE KIND OF MATERIALS. EVEN DURING APPELLATE PRO CEEDINGS, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE AS TO WHAT IS SUPPLIED BY M/S. MALLESHWAR ENTERPRISES AND HOW THE SAME IS TRANSPOR TED. WITH THESE OBSERVATIONS, CONFIRMED THE ADDITIONS MADE BY THE A SSESSING OFFICER. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE IS IN A PPEAL BEFORE US. 4. THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) WAS ERRED IN HOLDING THAT EXPENDITURE INCURRED BY THE ASSESSE E IS BOGUS AND NOT SUBSTANTIATED WITH NECESSARY EVIDENCES. THE A.R. F URTHER SUBMITTE4D THAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WIT H THE CONTRACTORS AND ISSUED DETAILED WORK ORDER FOR SUPPLY, CONSULTA NCY AND DETAILED ENGINEERING SUPPORT FOR THE TURNKEY CONTRACT ENTERE D WITH M/S. RAWMET FERROS INDUSTRIES PVT. LTD. THE A.R. FURTHER SUBMI TTED THAT THE ASSESSEE HAS FURNISHED DETAILS OF IDENTITY OF THE CONTRACTOR S, THEIR INCOME TAX ASSESSMENT PARTICULARS AND ALSO CONFIRMATION LETTER S FROM THE CONTRACTORS ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 8 WHEREIN THE CONTRACTORS HAVE CONFIRMED THAT THEY HA VE RENDERED SERVICES TO THE ASSESSEE. THE A.R. FURTHER SUBMITT ED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS EXAM INED THE MANAGING DIRECTOR OF THE COMPANY AND ALSO MANAGING PARTNER O F THE FIRM WHEREIN THEY HAVE CATEGORICALLY STATED THAT THEY HAVE PROVI DED OR SUPPLYING REQUISITE SERVICES TO THE ASSESSEE COMPANY. THE A. R. FURTHER SUBMITTED THAT THE A.O. NEVER DOUBTED THE GENUINENESS OF THE TRANSACTIONS, HOWEVER, WAS OF THE OPINION THAT THE CONTRACTORS DO ES NOT HAVE REQUISITE EXPERIENCE AND RESOURCES TO EXECUTE THE SERVICES TO THE ASSESSEE. WHETHER THE CONTRACTOR HAVE THE REQUISITE EXPERIENCE OR RESOURCES TO DO THE WORK IS NOT A CRITERIA FOR DISALLOWING THE EXPE NDITURE AS THE CONTRACTOR ITSELF CAN DO THE WORK OR GET THE WORK D ONE THROUGH OTHERS. THE A.O. SIMPLY DISALLOWED THE EXPENDITURE BY HOLDI NG THAT THE ASSESSEE HAS INFLATED THE EXPENDITURE BY FICTITIOUS JOURNAL ENTRIES. THE A.R. FURTHER SUBMITTED THAT THE EXPENDITURE CLAIMED BY T HE ASSESSEE IS GENUINE, WHICH WAS SUPPORTED BY PROPER BILLS & VOUC HERS. THE PAYMENT HAS BEEN MADE THROUGH BANK ACCOUNT AFTER DEDUCTING APPLICABLE TDS AS PER THE ACT. THEREFORE, THE A.O. WAS NOT CORRECT I N DISALLOWING THE EXPENDITURE SIMPLY STATED THAT THE EXPENDITURE CLAI MED BY THE ASSESSEE IS BOGUS. ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 9 5. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORT ED THE ORDER OF THE CIT(A). THE D.R. FURTHER ARGUED THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS CONDUCTED DETA ILED ENQUIRY OF THE CONTRACTORS AND POINTED OUT THAT THE CONTRACTORS DO ES NOT HAVE REQUISITE EXPERIENCE AND RESOURCES TO EXECUTE THESE KIND OF C ONTRACTS. ON VERIFICATION OF THE FINANCIAL STATEMENTS OF THE TWO ENTITIES, IT WAS NOTICED THAT THEY HAVE INCURRED EXPENDITURE IN RELATION TO THEIR BUSINESSES WHICH IS NOT HAVING ANY NEXUS BETWEEN THE RECEIPTS RECEIV ED FROM THE ASSESSEE TOWARDS EXECUTION OF THE WORK. FROM THIS THE A.O. COME TO THE CONCLUSION THAT THE ASSESSEE HAS CREATED FICTIT IOUS ENTRIES IN THE BOOKS OF ACCOUNTS WITHOUT THERE BEING ANY ACTUAL PA YMENTS TO INFLATE THE EXPENDITURE. THEREFORE, HIS ORDER SHOULD BE UP HELD. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE FACTUAL MATRIX OF THE CASE IS THAT THE ASSESSEE HAD UNDERTAKEN A TURNKEY PROJECT CONTRACTOR FOR M/S. RAWMET FERROS INDUSTRIE S PVT. LTD. FOR A CONSIDERATION OF ` 15,96,68,752/-. THE NATURE OF TURNKEY WORKS CONTR ACT INCLUDES DESIGN AND SUPPLY OF EQUIPMENTS/COMPONENTS FOR 2X16.5MW SUBMERGED ARC FURNACES TO PRODUCE BULK FERRO ALLOYS . THE WORK INVOLVES DESIGN AND SUPPLY OF MATERIALS. IN THE PROCESS, TH E ASSESSEE HAS ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 10 INCURRED CERTAIN EXPENDITURE UNDER THE HEAD PROFES SIONAL AND CONSULTANCY CHARGES TOWARDS DESIGN, CONSULTANCY AN D DETAILED ENGINEERING CONSULTANCY FOR THE PROJECT. THE A.O. WAS OF THE OPINION THAT THERE IS NO NEXUS BETWEEN THE WORKS CONTRACT E XECUTED BY THE ASSESSEE AND EXPENDITURE INCURRED IN RELATION TO CO NSULTANCY CHARGES. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS I NFLATED THE EXPENDITURE BY CREATING FICTITIOUS ENTRIES IN THE B OOKS OF ACCOUNTS. THE A.O. HAS GIVEN ELABORATE REASONS FOR COMING TO THE CONCLUSION THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE IS BOGUS, THERE FORE, DISALLOWED THE EXPENDITURE AND ADDED BACK TO THE TOTAL INCOME OF T HE ASSESSEE. IT IS THE CONTENTION OF THE ASSESSEE THAT IT HAS INCURRED THE EXPENDITURE AND THE EXPENDITURE WAS SUPPORTED BY PROPER BILLS & VOU CHERS. THE ASSESSEE FURTHER CONTENDED THAT THE PAYMENT HAS BEE N THROUGH BANK AFTER COMPLYING WITH THE TDS PROVISIONS. THE CONTR ACTORS HAVE ISSUED BILLS AND ALSO CONFIRMED THE TRANSACTION BY FILING NECESSARY CONFIRMATION LETTERS. THE ASSESSEE FURTHER SUBMITTED THAT THE C ONTRACTORS HAVE INCLUDED THE RECEIPTS IN THEIR FINANCIAL STATEMENTS AND FILED THE INCOME TAX RETURNS. THEREFORE, THE A.O. WAS NOT CORRECT I N COMING TO THE CONCLUSION THAT THE EXPENDITURE INCURRED BY THE ASS ESSEE IS BOGUS. ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 11 7. THE A.O. DISALLOWED THE AMOUNT FOR THE SOLE REAS ON THAT THE CONTRACTOR DOES NOT HAVE REQUISITE EXPERIENCE AND R ESOURCES FOR EXECUTING THESE KIND OF WORKS. THE A.O. NEVER DOUB TED THE GENUINENESS OF THE TRANSACTIONS. HOWEVER, WAS OF THE OPINION T HAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS BOGUS IN NATURE, THEREF ORE, DISALLOWED THE EXPENDITURE. THE ASSESSEE HAS FILED A PAPER BOOK C ONTAINING DETAILS OF AGREEMENTS AND WORK ORDERS ISSUED TO THE CONTRACTOR S. ON PERUSAL OF THE PAPER BOOK FILED BY THE ASSESSEE, WE NOTICED TH AT THE ASSESSEE HAS ENTERED INTO AGREEMENT WITH THE CONTRACTORS, ISSUED DETAILED WORK ORDERS. THE CONTRACTORS HAVE ISSUED PROPER BILLS A ND ALSO CONFIRMED THE TRANSACTIONS WITH THE ASSESSEE. WE ALSO NOTICED THA T THE ASSESSEE HAS MADE THE PAYMENT BY CHEQUE. THE ASSESSEE ALSO DEDU CTED TDS ON SUCH PAYMENTS AND THE CONTRACTORS HAVE INCLUDED THE RECEIPTS FROM THE ASSESSEE IN THEIR BOOKS OF ACCOUNTS AND FILED THE I NCOME TAX RETURNS. THE A.O. SIMPLY DISBELIEVED THE EVIDENCES FILED BY THE ASSESSEE AND MADE ADDITIONS BY HOLDING THAT THE EXPENDITURE INCU RRED BY THE ASSESSEE IS BOGUS. ONCE THE ASSESSEE HAS PROVED WITH NECESS ARY EVIDENCES THAT THE EXPENDITURE INCURRED IS GENUINE, THE A.O. CANNO T DISALLOW THE EXPENDITURE SIMPLY ON ASSUMPTION OR SURMISES BASIS BY HOLDING THAT THE CONTRACTOR DOES NOT HAVE REQUISITE EXPERIENCE IN HA NDLING THIS KIND OF CONTRACTS. WHETHER THE CONTRACTOR ITSELF DO THE WOR K OR GET THE WORK ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 12 DONE BY OTHERS WAS NOT A MATTER OF SUBJECT WITH THE ASSESSEE AS LONG AS THERE WAS NO INTERRUPTION WITH THE WORK. THE ASSES SEE IS CONCERNED WHETHER THE CONTRACTOR HAS EXECUTED THE WORK OR NOT ? IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS NECESSAR Y TO PROVE THE EXPENDITURE CLAIMED IS GENUINE. THERE IS NO REASON FOR THE A.O. TO DISBELIEVE THE EVIDENCES FILED BY THE ASSESSEE. TH E A.O. SIMPLY HARPING UPON THE FACT THAT THE CONTRACTORS DOES NOT HAVE EX PERIENCE, THEREFORE, OPINED THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE IS BOGUS AND CANNOT BE ALLOWED. BUT THE ASSESSEE HAS CATEGORICA LLY PROVED THAT THE EXPENDITURE CLAIMED IS GENUINE IN NATURE AND ALSO F URNISHED NECESSARY EVIDENCES BEFORE THE A.O. TO PROVE HIS CASE. ANOTH ER IMPORTANT POINT TO BE NOTED HERE IS THAT THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS RECORDED STATEMENT FROM THE MANAGING DI RECTOR OF THE COMPANY AND ALSO MANAGING PARTNER OF THE FIRM WHERE IN BOTH THE PARTIES HAVE CONFIRMED THAT THEY HAVE SUPPLIED OR RENDERED THE SERVICES TO THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT THE A .O. WITHOUT ANY REASONS SIMPLY DISBELIEVED THE EVIDENCES FILED BY T HE ASSESSEE AND DISALLOWED THE EXPENDITURE. THE CIT(A) WITHOUT APP RECIATING THE FACTS CONFIRMED THE ADDITIONS MADE BY THE A.O. HENCE, WE SET ASIDE THE ITA NO.371/VIZAG/2012 MRS. R. INDIRA DEVI, VISAKHAPATNAM 13 ORDER PASSED BY THE CIT(A) AND DIRECT THE A.O. TO A LLOW THE EXPENDITURE CLAIMED BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 17 TH JUN16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 17.06.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT MRS. R. INDIRA DEVI, PROP: RG CO N SERVICES, D.NO. 49-15-6, SHOP NO.6, RATNA ARCADE, DWARAKANAGAR, VIS AKHAPATNAM. 2. / THE RESPONDENT ADDL. CIT, RANGE-1, VISAKHAPATN AM 3. ) / THE CIT, VISAKHAPATNAM 4. ) ( ) / THE CIT(A), VISAKHAPATNAM 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM