DCIT Vs Shapoorji Pallonji And Company Pvt. Ltd (ITAT Mumbai)
ITAT Mumbai held that addition towards unexplained expenditure merely on the basis of suspicion based on information received from another authority without independent enquiry cannot be sustained. Accordingly, appeal of revenue dismissed.
Facts- The case of the assessee was reopened under section 148 of the Income Tax Act for the reason that payments made by the assessee to one of the contractors i.e. Smt. Mayaben Vijay Parmar for manpower / labour services are unexplained and non-genuine. CIT(A) allowed the appeal of the assessee. Being aggrieved, revenue has preferred the present appeal.
Conclusion- It is an undisputed fact that the assessee has discharged the onus of proving that the payments are made towards manpower supply by necessary documentary evidences. During the course of hearing, the ld AR took us through the various documentary evidences submitted before the lower authorities evidencing the fact that the payments towards manpower supply are made through banking channel after deducting TDS. Given this in our view it would not be correct to treat the said payments as unexplained in assessee’s hands for the reason that the purpose of subsequent withdrawals by the payee which is beyond assessee’s control is not properly explained. We also notice that Hon’ble Bombay High Court in assessee’s own case has given a finding that the AO should not have made addition merely on suspicion based on information received from another authority without independent enquiry. In the given case, we notice that the AO has fully relied on the report of the investigation wing without recording any independent finding and therefore in our considered view, the ratio laid down by the Hon’ble High Court would apply to the impugned issue also.
