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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Ms. Suchitra Kamble
आदेश/ORDER
This is an appeal filed against the order dated 27-02-2025 passed by National Faceless Appeal Centre(NFAC), Delhi for assessment year 2011-12.
The grounds of appeal
are as under:- “1. The Ld. A.O. has erred in assuming jurisdiction u/s 147 of the IT Act, 1961 under the given set of facts of the case that during search conducted on DRA Group, it was revealed that payments made by M/s. Dineshchandra R. Agrawal Infracon Pvt. Ltd. (DRA Group) to the sub-contractors including appellant are found to be non-genuine and bogus in nature.
2. The Ld. A.O. has erred in assuming jurisdiction u/s. 147 of the Act despite the fact that no income has been escaped in the hands of appellant.
3. The Ld. A. 0. is not justified in disallowing the expenses of Rs. 25,71,047/- which were not claimed by the appellant and Ld. C1T(A) has further erred in Jitendrakumar Dahyalal Parmar, A.Y. 2011-12 confirming the same without considering the fact that the appellant has offered income u/s 44AD of the IT Act, 1961 and not claimed any expenses. The said addition is therefore unwarranted and not sustainable in the eyes of law as the profit from the execution of works contract @ 8% had already been offered to tax under section 44 AD of the Income-tax Act, 1961.
4. The Ld. C1T(A) has also erred in fact in confirming the addition of Rs. 25,71,047/- which resulted into a double taxation.
5. The Ld. A. O. has grievously erred in law and or on facts in not allowing the coy of the relevant sized material, statement etc. in respect of search action in case of DRA group heavily relied upon by him, for further rebuttal, before making the impugned addition. Thus, the addition made on the basis of the material gathered at the back of the appellant, without confronting the same for rebuttal, is bad in law.
6. The appellant craves leave to add, alter or delete any ground either before or in the course of hearing of the appeal.”
As per the information received from JCIT(OSD), Ahmedabad, a search operation u/s. 132 was conducted on DRA Group of Ahmedabad. Shri Dinresh Chandra R. Agrawal of DRA group runs business in the name of M/s. Dinesh Chandra R. Agrawal Infracon Pvt. Ltd. which is an Infra firm based in Ahmedabad providing engineering procurement construction (EPC) Services in different sector across Gujarat. During the pre-search and post-search inquiry, it was found that the said M/s. Dinesh Chandra R. Agrawal Infracon Pvt. Ltd. has booked bogus purchases expenses for materials through bogus sub- contractor expenses shown in the name of various dummy entities. The name of the assessee was reflected at the list of bogus sub-contractors. The Assessing Officer has reopened the assessee’s case u/s. 147 of the Act after obtaining prior approval and recording reasons. Notice u/s. 148 of the Act was issued on 29-03-2018 from the service of notice i.e. 148 of the Act. The assessee already filed return of income on 26-01-2012 declaring total income of Rs. 2,07,760/-. However, in response to the notice u/s. 148 of the Act, the assessee has filed return of 2 Jitendrakumar Dahyalal Parmar, A.Y. 2011-12 income on 17-05-2018 declaring total income of Rs. 2,07,760/-. Statutory notices were issued and after taking cognizance of the assessee’s reply, the Assessing Officer held that the assessee booked bogus purchase expenses for materials through bogus sub-contractors expenses to the tune of Rs. 25,71,047/- in the name of various dummy entities and assessee’s name is appearing in the dummy evidences which was booked for sub- contractors to the tune of Rs. 25,71,047/-. Thus, the Assessing Officer made addition of Rs. 25,71,047/- as bogus expense.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee
The ld. A.R. submitted that the reasons recorded identical to that of assessee’s sister concern and also pointed out page 59 to 60 wherein the figures are also identical to that of assessee’s recorded reasons by the Assessing Officer. The A.R. submitted that the assessee in fact has filed the return u/s. 44AD and therefore he was required to place the books of accounts on record. The ld. A.R. further submitted that the observations of the CIT(A) no demand for contract execution were made by cheque only and cash withdrawals were seen in bank statement. The ld. A.R. relied upon the Tribunal’s decision in case of Alpespsinh K. Jadeja v. ITO (ITA No. 129/Ahd/2021 order dated 01-12-20220.
The ld. D.R. submitted that there is a bogus purchase and the Assessing Officer has rightly made addition as the assessee has claimed the bogus expenses without making any payment as Jitendrakumar Dahyalal Parmar, A.Y. 2011-12 such. The ld. D.R. further submitted that the reasons recorded are independent and are not identical to that of other cases.
Heard both the parties and perused all the material available on record. The ld. A.R. also placed reliance on the decision of ACIT vs. Dineschandra R Agrawal Infracon Pvt. (IT(SS)A Nos. 409 to 413/Ahd/2019 order dated 11-01-2022) wherein the search party and its reasons for reopening appears to be identical along with the decision in case of Alpeshsinh K. Jadeja (supra) and in case of Alpeshsinh K. Jadeja that the wording for reopening are exactly identical except changing the figures of the demand and the name of the assessee. Thus, the Assessing Officer has not given an independent reason for reopening and in fact the reasons are identical to that of sister concerns. Besides that, the searched person has also confirmed the expenditure and the Department’s appeal filed before the Tribunal were dismissed and thus the claim of the Department that there was a bogus purchase does not stand on its footing. Thus, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.