ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 2, VADODARA, VADODARA vs. NATIONAL BUILDERS INFRASTRUCTURE PRIVATE LIMITED, VADODARA

It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that the order of the AO may be restored to the above extent.

The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made on the facts and in the circumstances of the case and in law, the Ld. CIT (A)-4, Surat ought to have upheld the order of the Assessing Officer.

It is, therefore, prayed that the order of the Ld. CIT (A) may be set aside and that the AO may be restored to the above extent.”

Facts taken from the record of the ld. CIT(A) and the submissions of the assessee are that a search was conducted at the business premises of M/s Deepak Fertilizers & Petrochemicals Corporation Ltd (“DPFCL” for short) and key persons associated with the management of the company on 15.11.2018. The assessee had received a contract for civil and structural work for Nitric Acid project at Dahej from DFPCL for Rs.30.50 crores as per LOI dated 11.05.2017. During the course of search proceedings incriminating material in the form of Whatsapp conversations between Mr. Pandurang Langde, President of Projects of Deepak Group and Mr. Shailesh Mehta, CMD of Deepak Group was accessed by the Department. This referred to money received in cash from various parties from whom assets were procured or project contracts were given. This was detailed by Shri Langde in his statement u/s 132(4) of the Act wherein he revealed the modus operandi of the “Deepak group” in generating cash income by - 3– inflating the asset purchase/procured invoices and contractual payments and receiving a percentage of the same back in cash. Based on the Whatsapp messages, the AO made addition of Rs.50 lakhs to the income of the assessee u/s 69C being the 10% of the contract value paid by the assessee back to DFPCL on the amount of contracts received from DFPCL and added the same u/s 69C of the IT Act.

Aggrieved, the assessee filed appeal before the ld. CIT(A) who deleted the addition made by the Assessing Officer.

Aggrieved, the Revenue is in appeal before the Tribunal

Heard the arguments of both the parties and perused the record before us.

1 The Whatsapp message pertaining the receipt of the amount as alleged by the Revenue is as under: - “Date – 9th June – NBIPL – 50 Depending on invoicing.” There were other details with regard to receipt of monies onshore and from one Mr. Ray, confirmed with Nareshbhai etc.

2 During the statement recorded u/s 132(4), the MD of the company DFPCL categorically submitted that he has received amounts from M/s. Ray Construction but with regards to the payments from the assessee, it was submitted that the payments were “to the collected…… but he was not aware whether the same has been collected or not.”

3 Based on these messages, the ld. DR argued that the assessee is in the habit of receiving the kickbacks in cash to the tune of 5-10% on the cost of - 4– the projects allotted to contractors and the DFPCL has also received Rs.50 lakhs which was deemed to have been paid by the assessee and collected by the CMD of DFPCL. The ld. DR argued that the Whatsapp message clearly proves that the CMD/DFPCL has been receiving cash and hence there is no reason to believe that CMD/DFPCL has not received the money from the assessee.

4 Based on the same Whatsapp message, the ld. Counsel argued that CMD and the Project Director were not sure as to whether the transactions with the company had actually happened or not and there is no evidence that the assessee has paid any amount to the CMD/DFPCL.

5 The facts reveal that as on date of search out of the total billing amount of Rs.30,50,21,697/- an amount of Rs.14,61,20,726/- was already made. The AO has considered a blanket margin of 10% on the sales value which is beyond facts. The 2 persons who received the monies have never said that the amounts have been received from each and every party. By the time the search is conducted, the assessee has completed works to the tune of Rs.14.61 crores only and received the bills against which if the allegation of the Revenue is taken as correct, an amount of Rs.1.46 crores must have been paid by the assessee or at least Rs.75 lakhs if the amount of kickback is treated as 5% of the contract value. However, the Whatsapp message reads contrary to the allegation and methodology adopted by the Revenue. On going through the record before us, we are in agreement with the decision of the ld. CIT(A) that the AO had also given credence to the statement of Shri Shailesh Mehta and Shri Pandumg Langde recorded u/s 132(4) of the Act regarding the modus operandi of cash generation by DFPCL Group by over invoicing and pay back in cash. The same was sought - 5– to be corroborated by the Whatsapp chat between the two persons. The Whatsapp chat confirmed the modus operandi as cash was claimed to be received from two parties. But in the case of the appellant, the message was “NBIPL: 50 Depending on Invoice”. This only proves that the contractor DFPCL was contemplating earning cash of Rs 50 lakh from NBIPL at that time it was not even sure what wall be the invoice raised by NBIPL on DFPCL. Clearly there was no conclusive evidence that the money was transacted as contemplated. In fact, from the message language one cannot conclusively conclude as to what was the actual amount of money in cash to be taken from NBIPL. The entire evidence in the case of NBIPL is in the realm of conjectures and surmises. The Revenue’s contention that cash was generated by DFPCL from all the contractors is also not proven from the statements of the key-persons mentioned above. Hence, we decline to interfere with the order of the ld. CIT(A).

In the result, the appeal of the Revenue is dismissed.

Since the appeal of the Revenue is dismissed on the merits of the case, the Cross Objection thereof filed by the assessee is dismissed as infructuous. The order is pronounced in the open Court on 22.11.2024 (SUCHITRA KAMBLE) VICE-PRESIDENT Ahmedabad; Dated 22/11/2024 btk - 6–

""थ" / The Respondent. 3. संबंिधत आयकर आयु" / Concerned CIT 4. आयकर आयु"(अपील) / The CIT(A)- 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER,उप/सहायक पंजीकार (Dy./Asstt.