DCIT Vs Das Offshore Limited (ITAT Mumbai)
Consultancy Expense Addition Quashed Because Draft and Final Agreements Were Mistakenly Treated as Same; ITAT Rejects Disallowance Based Solely on Insight Portal and Survey Information; Suspicion Cannot Replace Proof in Consultancy Payment Dispute; ITAT Upholds Consultancy Expenditure Because Services Were Supported by Banking and TDS Records.
The Income Tax Appellate Tribunal (ITAT), Mumbai, dismissed the Revenue’s appeal challenging deletion of an addition of ₹3,75,00,000 made on account of consultancy fees paid by the assessee to M/s. AGV Consultants and also dismissed the assessee’s cross objection as infructuous. The assessee company was engaged in specialised offshore and infrastructure-related business activities, including fabrication, assembly and maintenance of offshore structures and execution of civil infrastructure projects. During the relevant year, the assessee secured an offshore contract from M/s. L&T Hydrocarbon Engineering Limited on behalf of ONGC Ltd. and entered into a consultancy arrangement with M/s. AGV Consultants on 13.08.2018 for providing marine spread, marine crew and related technical services.
M/s. AGV Consultants raised four invoices aggregating to ₹3,75,00,000 plus taxes. The assessee made payments through banking channels after deducting tax at source and furnished copies of consultancy agreements, invoices, ledger extracts, bank statements and Form 16A during assessment proceedings. The Assessing Officer, however, relied on information available on the Insight Portal and survey proceedings under Section 133A alleging that M/s. AGV Consultants was a “high-risk” entity providing accommodation entries. The Assessing Officer also observed inconsistencies between agreements furnished by the assessee and by M/s. AGV Consultants in response to notice under Section 133(6), and consequently treated the consultancy expenditure as non-genuine and disallowed the entire amount.
