ITO,Ward-3(1), Kolkata, Kolkata V. M/s. Gurukripa Software Solutions(P)Ltd, Kolkata

ITA 1302/KOL/2012

• Counselvise Citation: 130223514 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 10-09-2012
• Court: TRIBUNAL
• Department Lawyers: S S ALAM JCITLD SR DR
• Assessee Lawyers: MIRAJ D SHAH LD
• Keywords: Business income; Assessment record

Judgement Text

ITA NO. 1302/KOL/12-C-AM M/S. GURUKRIPA SOFTWARE SO LUTIONS P.LTD 1 , IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH: KO LKATA ( ) , , BEFORE HONBLE SRI MAHAVIR SI NGH, JM & HONBLE SRI SHAMIM YAHYA, AM I.T.A NO. 1302KOL/2012 / ASSESSMENT YEAR :2009-10 I.T.O WARD 3(1), KOLKATA VS. M/S. GUR UKRIPA SOFTWARE SOLUTIONS (P) LTD PAN: AADCG 1679H ( $ /APPELLANT ) ( %&$ / RESPONDENT ) $ / FOR THE APPELLANT : / SHRI S.S ALAM, JCIT/LD.SR.DR %&$ / FOR THE RESPONDENT: / SHRI MIRAJ D.SHAH ADVOCATE, LD.AR + , /DATE OF HEARING: 13-10-2014 + , /DATE OF PRONOUNCEMENT: 24/10/2014 / ORDER , SHRI SHAMIM YAHYA, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) DATED 13/06/2012 PERTAINING TO ASSESSMENT YEAR 2009-10. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY DELETING THE SUPPRESSED INCOME OF RS.13,39,330/- BY ACCEPTING TH AT THIS AMOUNT REPRESENT SERVICE TAX. 2. THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY ACCEPTING THAT THE ASSESSEE COMPANY HAS NOT RECEIVED COMMISSI ON FROM PLATINUM HOSPITALITY PVT. LTD & ASTEK INFRACOM LTD AND THEREFORE DELETED THE ADDITION OF RS.92,80,472/-, WHICH REPRE SENTS THE UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. 3. THAT THE LD.CIT(A) HAS ERRED IN LAW BY ADMITTING FRESH EVIDENCE IN VIOLATION OF RULE 46A OF THE INCOME TAX RULE, 1962. ITA NO. 1302/KOL/12-C-AM M/S. GURUKRIPA SOFTWARE SO LUTIONS P.LTD 2 3. APROPOS THE FIRST GROUND PERTAINING TO SUPPRESS ED INCOME OF RS.13,39,330/- ON ACCOUNT OF SERVICE TAX. 4. IN THIS CASE THE AO OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAS SHOWN TO HAVE RECEIVED COMMISSION FROM PALLADIUM CONSTRUCTION PVT. LTD. AS PER ACCOUNTS THE COMMISSION RECEIVED WAS RS.1,08,36 ,000/-. LETTER WAS ISSUED U/S TO PALLADIUM CONSTRUCTION PVT. LTD FOR VERIFICATION. AS PER REPLY RECEIVED FROM PALLADIUM CONSTRUCTION PVT. LTD, IT WAS FOUND THAT THE COMM ISSION PAID BY THIS COMPANY TO THE ASSESSEE COMPANY WAS RS.1,21,75,330/- (RS.1,07,95,865/- PL US 13,79,465/-, TDS) AND THE PAYMENT WAS IN CONNECTION WITH ARRANGING, NEGOTIATING & SYN DICATION OF BANK GUARANTEE FOR 108.36CR. THEREFORE, THE AO ASKED THE ASSESSEE COMPANY TO EX PLAIN THE DIFFERENCE WITH EVIDENCE VIDE THIS OFFICE LETTER NO. ITO/3(1)/KOL/AADCG1679H/11- 12/825 DATED 14/11/2011. NO EXPLANATION HAS BEEN SUBMITTED BY THE ASSESSEE COMP ANY. HENCE, AO HELD THAT THE DIFFERENCE OF RS.1,21,75,330/- AND RS.1,08,36,000/- I.E RS.13, 39,330/- IS ADDED TO THE INCOME OF THE ASSESSEE .. 5. AGAINST THE ABOVE ORDER THE ASSESSEE APPEALED BE FORE THE LD.CIT(A). BEFORE THE LD.CIT(A) ASSESSEES COUNSEL SUBMITTED THAT THE ASSESSEE HAS RAISED INVOICE OF RS.1,08,36,000/- ON PCPL FOR THE SERVICES RENDERED. SINCE THE VALUE OF TAXABLE SERVICE RENDERED, EXCEEDED RS. 10 LACS, THE ASSESSEE HAD O BLIGATION TO PAY SERVICE TAX ON THE INVOICED AMOUNT. DURING THE RELEVANT PERIOD THE APPLICABL E RATE OF SERVICE TAX AND EDUCATION CESS WAS @12.36% AND THEREFORE, THE ASSESSEES SERVICE TAX L IABILITY WAS RS.13,39,330/- BEING 12.36% OF RS.1,08,36,000/-. IN THE INVOICE RAISED ON PCPL, THE ASSESSEE SEPARATELY DISCLOSED THE VALUE OF TAXABLE SERVICE AT RS.1,08,36,000/- AND SERVIC E TAX COMPONENT AT RS.13,39,330/- IN CONFORMITY WITH ACCOUNTING STANDARD ISSUED BY ICAI, SERVICE TAX COMPONENT OF RS.13,39,330/- WAS NOT ROUTED THROUGH ASSESSEES PR OFIT & LOSS ACCOUNT BUT THROUGH SEPARATE SERVICE TAX ACCOUNT. IN SUPPORT OF THIS, A COPY OF SERVICE TAX RETURN AND TAX PAYMENT CHALLAN WAS ALSO FILED BY THE ASSESSEE. ITA NO. 1302/KOL/12-C-AM M/S. GURUKRIPA SOFTWARE SO LUTIONS P.LTD 3 6. CONSIDERING THE ASSESSEES SUBMISSIONS THE LD .CIT(A) HELD AS UNDER:- 24. ON DUE CONSIDERATION OF THE EXPLANATION FURNISH ED, I FIND THAT THE ALLEGED DISCREPANCY OF RS.13,39,330/- AROSE SOLELY BECAUSE OF ACCOUNTING OF SERVICE TAX COMPONENT THROUGH SEPARATE SERVICE TAX ACCOUNT INSTEAD OF ROUTING IT THROUGH ASSESSEES PROFIT & LOSS ACCOUN T. I FIND FORCE IN THE SUBMISSIONS OF A/R THAT AS PER ACCOUNTING STANDARD OF ICAI THE ASSESSEE WAS PERMITTED TO CREDIT INCOME/REVENUE IN ITS PROFI T & LOSS ACCOUNT NET OFF INDIRECT TAXES. WITH COGENT AND RELEVANT DOCUMENTS THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE MANNER IN WHICH THE SERVICE TA X COMPONENT WAS ACCOUNTED IN THE APPELLANTS BOOKS AND THERE IS NO INFIRMITY IN THE ACCOUNTING TREATMENT GIVEN IN ASSESSEES BOOKS TO T HE SERVICE TAX COMPONENT OF RS.13,39,330/-. ON DUE CONSIDERATION OF THE FACT S, THEREFORE, I HOLD THAT THERE WAS NO DISCREPANCY OR INFIRMITY AS ALLEGED AN D THE ADDITION OF RS.13,39,330/- WAS FACTUALLY UNJUSTIFIED. THE AO I S ACCORDINGLY DIRECTED TO DELETED THE ADDITION OF RS.13,39,330/-. 7. AGAINST THE ABOVE ORDER OF THE LD.CIT(A) THE RE VENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE LD. COUNSEL AND PERUSED THE RECORD. UPON CAREFUL CONSIDERATION, WE NOTE THAT THE AO HAS MADE ADDITIO N AS REGARDS THE DIFFERENCE BETWEEN THE SUM CREDITED IN THE P & L ACCOUNT ON ACCOUNT OF CO MMISSION RECEIVED FROM M/S. PCPL AND AS PER CONFIRMATION RECEIVED FROM M/S. PCPL. BEFORE THE LD.CIT(A) THE ASSESSEE HAS SUBMITTED THAT THE DIFFERENCE WAS ON ACCOUNT OF SERVICE TAX . IN THIS REGARD, COPY OF SERVICE TAX RETURN AND TAX PAYMENT CHALLAN WAS ALSO FILED BY THE ASS ESSEE BEFORE THE LD.CIT(A). WE HAVE ALSO SEEN THE CONCERNED BILL IN PROPER PAGE NO.27. THE BILL CLEARLY SHOWS THAT THE AMOUNT OF BILL WAS RS. 1,08,36,000/- AND SERVICE TAX COMPONENT W AS RS. 13,39,330/- AND THE TOTAL OF THE BILL THUS COMES TO RS.1,21,75,330/-. THIS BILL WAS ALS O BEFORE THE AO. HENCE, AO CLEARLY FAILED TO APPRECIATE THE REASON OF THE DIFFERENCE NOTED BY HIM. THAT THE DIFFERENCE WAS ON ACCOUNT OF SERVICE TAX IS ALSO SUPPORTED BY THE SERVICE T AX RETURN AND TAX PAYMENT CHALLAN ACCEPTED BY THE LD.CIT(A). HENCE, WE DO NO FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. HENCE, WE UPHOLD THE SAME. 9. APROPOS THE SECOND ISSUE I.E. DELETION OF ADDITI ON OF RS.92,80,472/- ON ACCOUNT OF UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. ITA NO. 1302/KOL/12-C-AM M/S. GURUKRIPA SOFTWARE SO LUTIONS P.LTD 4 10. AO OBSERVED THAT AS PER ACCOUNTS THE ASSESSEE C OMPANY HAS PAID COMMISSION OF RS.1,01,65,000/-. AO ASKED THE ASSESSEE COMPANY TO SUBMIT THE DETAILS OF COMMISSION PAID. AS PER DETAILS THE COMMISSION PAID BY THE ASSESSEE COMPANY WAS AS BELOW :- SL.NO. NAME OF THE PARTY AMOUNT 1 RELIABLE BARTER PVT. LTD 20,82,000/- 2. QUANTUM AGENCIES PVT. LTD 54,18,000/- 3. PARTH TELECOM PVT. LTD 4,10,000/- 4. QUANTUM AGENCIES PVT. LTD 14,35,000/- 5. DEEPMALA SUPPLIERS PVT. LTD 4,10,000/- 6. JAIDEEP MEHTA (HUF) 4,10,000 TOTAL 1,01,65,000 10.1 FOR VERIFICATION AO ISSUED LETTERS TO THESE P ARTIES. AS PER REPLY RECEIVED FROM RELIABLE BARTER PVT. LTD AND QUANTUM AGENCIES PVT. LTD, THEY HAVE RECEIVED COMMISSION AGAINST ARRANGING NEGOTIATING AND SYNDICATION OF BANK GUARA NTEE AS BELOW:- 10.2 RELIABLE BARTER PVT. LTD : AS PER REPLY RECE IVED FROM THE PARTY, THE PARTY SUBMITTED THAT WE HAVE CHARGED ABOVE CLIENT RS.23 ,39,335.20 FOR ARRANGING, NEGOTIATING AND SYNDICATION OF BANK GUARANTEE FOR RS.41.64 CR FOR PLATINUM HOSPITALITY SERVICE PVT. LTD BUT THE ASSESSEE COMP ANY HAS NOT SHOWN THE RECEIPT OF COMMISSION FROM PLATINUM HOSPITALITY SER VICES PVT. LTD AGAINST WHICH THE COMMISSION HAS BEEN PAID TO THIS PARTY. 10.3 QUANTUM AGENCIES PVT. LTD : AS PER REPLY REC EIVED FROM THE PARTY, THE PARTY SUBMITTED THAT DURING FY 2008-09 WE HAD REC EIVED RS.77,00,030/- FROM GURUKRIPA SOFTWARE SOLUTIONS (P) LTD FOR SYNDICATI NG LOAN OF VARIOUS COMPANIES. AMONG THIS RS.60,87,664.80 FOR ARRANGING NEGOTIATING AND SYNDICATION OF BANK GUARANTEE HAD BEEN RECEIVED OF RS.108.36 CR. FOR PALLADIUM CONSTURCTIONS PVT. LTD AND RS.16,12,366/- HAD BEEN RECEIVED FOR ARRANGING NEGOTIATING AND SYNDICATION OF BANK GUARANTEE OF RS .41.00 CR FOR ASTEK INFRACON LTD. 10.2 THE ASSESSEE COMPANY HAS DISCLOSED ONLY THE COMMISSION RECEIVED FROM PALLADIUM CONSTRUCTION PVT. LTD, THE RECEIPT OF COMMISSION FR OM ASTEEK INFRACON LTD HAS NOT BEEN DISCLOSED BY THE ASSESSEE COMPANY. 11. THE AO NOTED THAT THE ASSESSEE HAS NOT SUBMITTE D ANY EXPLANATION ABOUT THE NON DISCLOSURE OF THE COMMISSION RECEIVED FROM M/S. PLA TINIUM HOSPITALITY SERVICES PVT. LTD [IN ITA NO. 1302/KOL/12-C-AM M/S. GURUKRIPA SOFTWARE SO LUTIONS P.LTD 5 SHORT M/S. PHSL P.LTD] AND M/S. ASTEK INFRACON LTD [IN SHORT M/S. ASL], THE PARTIES FOR WHICH THE ASSESSEE COMPANY HAS PAID COMMISSION OF RS.23, 39,335.20 TO M/S. RELIABLE BARTER PVT. LTD AGAINST NEGOTIATING AND SYNDICATING OF BANK G UARANTEE FOR RS. 41.64 CR (M/S. PLATINIUM HOSPITALITY SERVICES PVT. LTD) AND HAS PAID COMMIS SION OF RS.16,12,366/- TO M/S. QUANTUM AGENCIES PVT. LTD AGAINST NEGOTIATING & SYNDICATIN G OF BANK GUARANTEE FOR RS.41,00 CR (M/S. ASTEK INFRACON LTD) FOR M/S. ASTEK INFRACON LTD. 12. IN THE ASSESSEES SUBMISSION THE ASSESSEE RESPO NDED THAT THEY WERE APPOINTED BY M/S. PALLADIUM CONSTRUCTION PVT. LTD FOR ALL SERVICES TO OBTAIN THEIR BANK FACILITIES AND ALSO FOR THEIR SISTER CONCERN, M/S. PLATINIUM HOSPITALITY SERVICES PVT. LTD FOR WHICH NO SEPARATE CONSIDERATION WAS PAID. IT WAS SUBMITTED THAT TH EY HAD NEGOTIATED A LUMP SUMP AMOUNT OF RS. 1.08 CR. + SERVICE TAX. 13. THE ASSESSEE FURTHER SUBMITTED THAT THE REPLY OF M/S. QUANTIUM AGENCIES PVT. LTD WITH RESPECT TO ARRANGING BANK FACILITIES FOR RS.4 1.00 CR FOR M/S. ASTEK INFRACOM LTD WAS AN ERRONEOUS STATEMENT. THE PARTY CONCERNED WAS NOT M/ S. ASTEEK INFRACOM LTD, BUT M/S. PLATINIUM HOSPITALITY SERVICES PVT. LTD. THE ASSES SEE ALSO SUBMITTED FURTHER REPLY FROM M/S. RELIABLE BARTER PVT. LTD THAT THEY WERE APPOIN TED TO DO ALL WORKS FOR APPROVAL OF BANK FACILITIES FOR M/S. PALLLADIUM CONSTRUCTION PVT. L TD [IN SHORT M/S. PCPL] AND M/S. PLATINIUM HOSPITALITY SERVICES PVT. LTD [IN SHORT M/S. PHSPL] AND MENTIONING OF M/S. ASTEEK INFRACON LTD WAS A MISTAKE ON THE PART OF THE TYPIST. 14. THE AO WAS NOT SATISFIED WITH THE ABOVE SUBMISS IONS OF THE ASSSESSEE. HE CONCLUDED AS UNDER:- 6. IN VIEW OF THE DISCUSSION MADE IN PARA AND SUBP ARAS OF 4 AND 5 ABOVE, IT IS CONCLUDED THAT THE ASSESSEE COMPANY H AS NOT DISCLOSED THE COMMISSION AMOUNT RECEIVED FROM PLATINIUM HOSPITA LITY SERVICES PVT. LTD AND FROM ASTEK INFRACON LTD FOR WHOM THE ASSESS EE COMPANY HAS ALSO ARRANGED BANK GUARANTEE OF RS.41.64 CR AND RS.41 C R RESPECTIVELY. THUS THE ASSESSEE COMPANY HAS NOT DISCLOSED THE COMMISS ION RECEIVED ON AMOUNT FOR NEGOTIATING & SYNDICATING OF BANK GUAR ANTEE OF RS.82.64 CR. SINCE THE ASSESSEE COMPANY HAS CHARGED COMMISSION O F RS.1,21,75,330/- @1.123% FROM PALLADIUM CONSTRUCTION PVT. LTD FOR A RRANGING BANK ITA NO. 1302/KOL/12-C-AM M/S. GURUKRIPA SOFTWARE SO LUTIONS P.LTD 6 GUARANTEE OF RS.108.36CR. THEREFORE, THE UNDISCLO SED COMMISSION ON RS.82.64 CR IS ALSO TAKEN @ 1.123% AND WHICH COMES TO RS.92,80,472/-. THEREFORE, RS.92,80,472/- IS ADDED TO THE INCOME O F THE ASSESSSEE AS UNDISCLOSED INCOME. 15. AS REGARDS COMMISSION FROM M/S. PLATINIUM HOSPI TALITY SERVICES PVT. LTD THE LD.CIT(A) NOTED THAT EVEN THOUGH THE ASSESSEE HAS RENDERED SERVICES TO TWO COMPANIES BELONGING TO A GROUP COMPANY THE ASSESSEE HAS RAIS ED INVOICE ONLY ON ONE, M/S. PCPL AND NO INVOICE WHATSOEVER WAS RAISED ON M/S. PHSPL. THE L D. CIT(A) OBSERVED THAT FROM THE AOS PERSPECTIVE, THEREFORE, IT MAY BE A CASE WHERE THE ASSESSEE RENDERED GRATIS SERVICES TO M/S. PHSPL. HOWEVER, JUST BECAUSE THE ASSESSEE CHOSE TO RAISE INVOICE FOR THE SERVICES RENDERED ONLY ON ONE COMPANY. SUCH FACT DID NOT AUTHORIZE T HE AO TO HOLD AND CONCLUDE THAT THE ASSESSEE SHOULD HAVE EARNED OR LEGALIZE FEES AT TH E SAME RATE FROM M/S. PHSPL AS WELL. IN THIS REGARD, THE LD.CIT(A) ALSO REFERRED TO A LETTE R DATED 27-12-2011 ISSUED BY M/S. PHSPL TO THE ASSESSEE. IN THE SAID LETTER M/S. PHSPL HAS CON FIRMED AS FOLLOWS:- TO WHOM IT MAY CONCERN THIS IS WITH REFERENCE TO YOUR LETTER OF EVEN DATE FOR CONFIRMATION OF PAYMENT IF ANY, MADE BY US TO YOURS THE SAME IS REQUIRED BY YOU FOR YOUR ASSESSMENT. WE HEREBY CONFIRM THAT WE HAVE NOT MADE ANY PAYMENT TO GURUKRIPA SOFTWARE SOLUTIONS PVT. LTD FROM 1 ST APRIL 2008 TILL DAY. FURTHER WE CONFIRM WHAT WE A RE NOT HAVING ANY AMOUNT PAYABLE TO GURUKRIPA SOFTWARE SOLUTIONS PVT. LTD AS ON DATE. 16. FROM THE ABOVE LETTER OF M/S. PHSPL, THE LD.CIT (A) HAS OBSERVED AS UNDER:- THESE FACTS THEREFORE SHOWED THAT EVEN THOUGH THE ASSESSEE RENDERED SERVICES ENABLING PHSPL TO AVAIL TERM LOAN OF RS.4 1.64 CRORES FROM CENTRAL BANK OF INDIA, YET THE ASSESSEE DID NOT RAISE ANY C LAIM OF COMMISSION ON PHSPL AND PHSPL ALSO CONFIRMED THAT DID NOT PAY ANY SUM T O THE ASSESSEE FOR THE SAID SERVICES. FROM AOS VIEWPOINT SUCH AN ACT ON THE AS SESSEES PART MIGHT BE AN IMPRUDENT ONE BUT THE QUESTION IS WHETHER THE AO WA S EMPOWERED IN LAW TO ASSESS BUSINESS INCOME OF RS.46.30 LACS ON MERE PRE SUMPTION THAT ASSESSEE SHOULD HAVE CHARGED ITS COMMISSION FOR SERVICES REN DERED ON PHSPL AS WELL. ITA NO. 1302/KOL/12-C-AM M/S. GURUKRIPA SOFTWARE SO LUTIONS P.LTD 7 17. THE LD. CIT(A) ALSO OBSERVED THAT : IF THE CONTRACT BETWEEN THE PARTIES DOES NOT PROVID E FOR CHARGING OF ANY FEES, COMMISSION ETC THEN THE MERE FACT THAT ONE OF THE PARTY TO THE CONTRACT RENDERED SERVICES TO OTHER, WILL NOT GIVE AUTHORIT Y OR POWER TO THE AO TO BRING TO TAX A HYPOTHETICAL OR NOTIONAL INCOME BY WAY OF FEES, COMMISSION ETC PARTICULARLY WHEN THE PARTIES DID NOT BARGAIN FOR P AYMENT OF FEES FOR THE SERVICES RENDERED. 18. THE LD. CIT(A) FURTHER OBSERVED THAT : IF THE AGREED TERMS BETWEEN THE ASSESSEE AND THE T WO GROUP COMPANIES ENVISAGED PAYMENT OF COMMISSION ONLY BY ONE COMPANY I.E. PCPL BUT REQUIRING RENDERING OF SERVICES BY THE ASSESSEE TO BOTH OF T HEM, THEN SUCH AN ARRAIGNMENT COULD NOT BE FAULTED WITH BY THE AO. 19. THE LD. CIT(A) OBSERVED AS UNDER:- APART FROM THESE FACTS AND DOCUMENTS ON RECORD NO OTHER MATERIAL OR EVIDENCE WAS BROUGHT ON RECORD BY THE AO WHICH IN ANY MANNER ESTABLISHED THAT THERE EXISTED ANY AGREEMENT OR CONTRACT BETWEE N THE ASSESSEE ON ONE HAND AND PCPL AND PHSPL ON THE OTHER UNDER WHICH THE AS SESSEE HAD RIGHT TO DEMAND COMMISSION FROM BOTH THE COMPANIES AT THE SA ME RATE OF @1.123% OF THE LOAN AMOUNT SANCTIONED. IN ABSENCE OF ANY DOCU MENTARY EVIDENCE OR AGREEMENT BETWEEN THE PARTIES; ENTITLING THE ASSESS EE TO CLAIM FEES FROM BOTH THE PARTIES, THE AO SUO MOTO COULD NOT PRESUME TH AT THE ASSESSEE WAS ENTITLED TO RECEIVE COMMISSION FROM BOTH THE PARTIES AT THE SAME RATE FOR THE SERVICES WERE RENDERED. 20. THE LD.CIT(A) HELD AS UNDER:- IN MY OPINION THE PROVISIONS OF THE I.T ACT AS THE Y NOW SUBSIST DID NOT PERMIT THE AO TO PRESUME ACCRUAL OF INCOME IN EVER Y CASE WHERE AN ASSESSEE RENDERED SERVICES TO ANOTHER. FOR THE PURPOSE OF AS SESSING REAL INCOME IT WAS NECESSARY FOR THE AO TO ASCERTAIN TRUE FACTS AND BR ING ON RECORD THE AGREED TERMS BETWEEN THE PARTIES. IF THE PARTIES TO THE T RANSACTION DID NOT BARGAIN FOR MAKING ANY PAYMENT OF COMMISSION IN EVERY CASE THEN THE AO HAD NO LEGAL SANCTION TO PRESUME ACCRUAL OF INCOME AND BRING TO TAX NOTIONAL OR HYPOTHETICAL INCOME. 21. FINALLY THE LD.CIT(A) DELETED THE ADDITION MAD E BY THE AO BY OBSERVING/HOLDING AS UNDER:- ITA NO. 1302/KOL/12-C-AM M/S. GURUKRIPA SOFTWARE SO LUTIONS P.LTD 8 ALTHOUGH THE PRACTICE ADOPTED BY THE PARTIES IN TH E PRESENT CASE APPEARED TO BE UNCONVENTIONAL; YET ON THAT GROUND A LONE THE AO COULD NOT REJECT THE ASSESSEES EXPLANATION WHEN NO SPECIFIC INFIRM ITY WAS POINTED OUT THEREIN. THE AO ALSO DID NOT BRING ON RECORD ANY AFFIRMATIV E MATERIAL WHICH IN ANY MANNER PROVED THAT THE ASSESSEE IN FACT HAD LEGAL RIGHT TO RECEIVE FEES FROM EACH OF THE COMPANY OR THAT PHSPL IN FACT PAID FEES FOR THE SERVICES RENDERED AND WHICH THE ASSESSEE OMITTED TO DISCLOSE IN ITS RETU RN FOR THE A.Y 2009-10. HAVING REGARD TO THESE FACTS THEREFORE, I AM UNABLE TO UPH OLD THE ADDITION OF RS.46,76,172/- BEING UNDISCLOSED COMMISSION RELATAB LE TO SANCTIONED LOAN AMOUNT OF RS.41.64 CRORES. 22. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPE AL BEFORE US . 23. WE HAVE HEARD BOTH THE LD. COUNSEL AND PERUSED THE RECORD. UPON CAREFUL CONSIDERATION WE NOTE THAT IT IS AN ADMITTED FACT T HAT THE ASSESSEE HAS PROVIDED THE SERVICES FOR ARRANGING BANK FACILITIES/BANK GUARANTEE TO M/S. P LATINIUM HOSPITALITY SERVICES PVT. LTD. (M/S. PHSPL). THE ASSESSEE HAS ALSO PROVIDED SIMILA R SERVICES TO ANOTHER GROUP COMPANY, M/S. PALLADIUM CONSTRUCTION PVT. LTD (M/S. PCPL). H OWEVER THE ASSESSEE HAS CHARGED COMMISSION FOR RENDERING SUCH SERVICES ONLY FROM M /S.PCPL. THE ASSESSEE HAS ALSO PAID COMMISSION TO THE PARTIES IN CONNECTION WITH MAKIN G AVAILABLE OF ABOVE SERVICES. THE PARTIES HAD ALSO RESPONDED THAT THEY HAD BEEN PAID COMMISS ION FOR THE SERVICES OF ARRANGING AND NEGOTIATING BANK FACILITIES/BANK GUARANTEE TO M/S. PHSPL. HOWEVER, THE ASSESSEE HAS CHOSEN NOT TO RAISE ANY BILL FROM M/S. PHSPL, BUT IT HAS R AISED ONLY ONE BILL ON M/S. PCPL. IT HAS BEEN CLAIMED THAT IT WAS ON MUTUAL UNDERSTANDING TH AT ONLY ONE BILL WILL BE RAISED ON M/S. PCPL. NOW THE ABOVE SUBMISSION OF THE ASSESSEE HAS BEEN ACCEPTED BY THE LD.CIT(A). IT MAY BE NOTED HERE THAT THERE IS NOTHING ON RECORD TO SU BSTANTIATE THE ASSESSEES SUBMISSION THAT THERE WAS AN UNDERSTANDING/AGREEMENT FOR PAYMENT OF SUCH COMMISSION, ACCORDING TO WHICH THE ASSESSEE WILL NOT RAISE ANY BILL ON M/S.PHSPL A ND ONLY ONE BILL WILL BE RAISED ON M/S.PCPL FOR RENDERING OF SUCH SERVICES. THE LD. C IT(A) HAS REFERRED TO THE FACT THAT THE PRACTICE ADOPTED BY THE PARTIES IN THE PRESENT CASE APPEARED TO BE UNCONVENTIONAL, BUT HE HAS ACCEPTED THE ASSESSEES SUBMISSION ON ACCOUNT OF T HE SUBMISSION THAT THERE WAS AN UNDERSTANDING/AGREEMENT IN THIS REGARD. AS NOTED A BOVE BY US THERE IS NO EVIDENCE WHATSOEVER FOR SUCH UNDERSTANDING/AGREEMENT TO PAY SUCH COMMISSION. WE FIND THAT THE AO HAS MADE INQUIRIES IN REGARD TO COMMISSION PAYMENT TO M/S. RELIABLE BARTER PVT. LTD AND ITA NO. 1302/KOL/12-C-AM M/S. GURUKRIPA SOFTWARE SO LUTIONS P.LTD 9 M/S. QUANTUM AGENCIES PVT. LTD IN CONNECTION WITH RENDERING OF ABOVE SERVICES TO M/S. PHSPL. M/S. RELIABLE BARTER PVT. LTD HAD CONFIRM ED THAT THEY HAD RECEIVED RS.23.39 LAKH FOR ARRANGING AND NEGOTIATING BANK GUARANTEE FOR M /S. PHSPL. SIMILARLY M/S. QUANTUM AGENCIES PVT. LTD HAS STATED THAT THEY HAVE RECEIVE D RS. 16.12 LAKHS FOR NEGOTIATING AND SYNDICATING OF BANK GUARANTEE FOR M/S. PHSPL. NOW T HE ASSESSEES EXPLANATION IS THAT THE ABOVE COMMISSION WAS PAID IN CONNECTION WITH COMB INED SERVICES PROVIDED TO M/S. PCPL & M/S. PHSPL. WE FIND THAT THE ASSESSEE HAS ALSO PA ID SEPARATE COMMISSION FOR RENDERING OF SUCH SERVICES IN RESPECT OF M/S. PCPL. WHEN THE S ERVICES WERE RENDERED WITHOUT ANY DOUBT AND THE ASSESSEE HAS CHOSEN NOT TO RAISE ANY BILL F OR RENDERING SUCH SERVICES, WHETHER THE SAME NEEDS TO BE CONSIDERED FROM THE POINT OF VIEW OF RE AL INCOME OR WHETHER THE SAME IS AN APPLICATION OF INCOME HAS NOT BEEN EXAMINED BY TH E LD.CIT. HENCE, WE NOTE THAT FROM THE LD. CIT(A)S ORDER THAT AO HAS NOT MADE PROPER ENQU IRIES, HENCE THE ADDITION SHOULD BE DELETED IS NOT SUSTAINABLE. IF THE LD.CIT(A) WAS O F THE OPINION THAT SOME MORE ENQUIRY WAS NEEDED, , LD. CIT(A) SHOULD HAVE EMBARKED UPON IT H IMSELF AS HE HAS CO-TERMINUS POWER WITH THAT OF AO. IN THIS REGARD, WE WOULD LIKE TO REFER TO THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF KAPURCHAND SHRIMAL VS. CIT REPORTED IN 1981) 131 ITR 451 THAT IT IS THE DUTY OF THE APPELLATE AUTHORITY TO CORRECT THE LACUNA IN THE ORDERS OF THE AUTHORITIES BELOW AND REMIT THE ISSUE, IF REQUIRED. ACCORDINGLY, IN TH E BACK GROUND OF ABOVE DISCUSSION AND PRECEDENCE, WE REMIT THIS ISSUE TO THE FILE OF THE AO. THE AO SHALL EXAMINE THIS ISSUE AFRESH REGARDING THE RECEIPT OF COMMISSION FROM M/S. PHSPL THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 24. AS REGARD THE ADDITION OF THE REMAINING SUM O F RS. 46,04,300/- PERTAINING TO M/S. ASTEK INFRACOM LTD ( M/S.AIL), THE LD.CIT(A) OBSER VED THAT THIS ADDITION WAS BASED SOLELY ON THE BASIS OF INITIAL CONFIRMATION ISSUED BY M/S . QUANTIUM AGENCIES LTD. HE FURTHER OBSERVED THAT BEFORE THE ADDITION, IT WAS NECESSA RY FOR THE AO TO ASCERTAIN THE TRUE AND CORRECT FACTS AND THEN BRING ON RECORD SUFFICIEN T MATERIAL AND EVIDENCE WHICH IN SOME MANNER PROVED THAT THE ASSESSEE HAD IN FACT PROVIDE D SERVICES TO M/S. AIL. IN FACT, THERE WAS NO MATERIAL AVAILABLE IN ASSESSMENT RECORD REGARDI NG THE EXISTENCE OF M/S. AIL . THE LD. CIT(A) OBSERVED THAT NO SCRUTINY/ENQUIRY WAS DONE BY THE AO TO LOCATE THE EXISTENCE OF ITA NO. 1302/KOL/12-C-AM M/S. GURUKRIPA SOFTWARE SO LUTIONS P.LTD 10 ALLEGED RECIPIENT OF THE SERVICE I.E. M/S. AIL . T HE LD.CIT(A) PROCEEDED TO HOLD THAT THE AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE/AGREEMENT O R UNDERSTANDING BETWEEN THE ASSESSEE AND M/S. AIL UNDER WHICH THE ASSESSEE EITHER RENDE RED SERVICES OR IN FACT ARRANGED LOAN FROM ANY BANK OR M/S.ASTEK INFRACOM LTD (M/S. AIL) ACTUALLY MADE ANY PAYMENT TO THE ASSESSEE. HENCE, THE LD.CIT(A) DELETED THE ADDI TION MADE BY THE AO IN THIS REGARD. 25. AGAINST THE ABOVE ORDER NOW THE REVENUE IS IN A PPEAL BEFORE US. 26. WE HAVE HEARD BOTH THE LD. COUNSEL AND PERUSE D THE RECORD. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. REGARDING THE COMMISSI ON PAYMENT TO M/S. AIL, WE NOTE THAT THE ADDITION WAS SOLELY ON THE BASIS OF INITIAL CONFI RMATION ISSUED BY M/S. QUANTIUM AGENCIES LTD. WE FIND THAT THE LD.CIT(A) OBSERVED THAT BEFO RE THE ADDITION, IT WAS NECESSARY FOR THE AO TO ASCERTAIN THE TRUE AND CORRECT FACTS. THE LD.CIT (A) HAS NOTED THAT THERE WAS NO MATERIAL AVAILABLE IN ASSESSMENT RECORD REGARDING THE EXIS TENCE OF M/S.ASTEK INFRACOM LTD (M/S. AIL). THE INITIAL CONFIRMATION OF M/S. QUANTIUM AG ENCIES LTD WAS LATER ON EXPLAINED BY THEM AS A CLERICAL MISTAKE AS SERVICES WERE RENDERE D IN CONNECTION WITH M/S. PHSPL. IN THESE CIRCUMSTANCES, WE AGREE WITH THE LD.CIT(A) THAT TH ERE IS NO EVIDENCE ON RECORD THAT THE ASSESSEE HAS RENDERED SERVICES IN CONNECTION WITH ARRANGING OF BANK LOAN TO M/S. AIL. HENCE, WE UPHOLD THE ORDER OF THE LD.CIT(A) IN DELETING TH E ADDITION MADE BY THE AO ON THIS ISSUE. 27. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE AS STATED ABOVE. . , ORDER PRONOUNCED IN THE OPEN COURT ON 24/10/2014 SD/- SD/- [ , ] [ , ] [ MAHAVIR SINGH, JUDICIAL MEMBER ] [ SHAMIM YAHYA, ACCOUNTANT MEMBER ( , ) DATED :24 /10/2014 ITA NO. 1302/KOL/12-C-AM M/S. GURUKRIPA SOFTWARE SO LUTIONS P.LTD 11 ** PRADIP SPS + %1 21 / COPY OF THE ORDER FORWARDED TO: 1. . $ / THE APPELLANT : I.T.O WARD 3(1), DWARLI HOUSE, GR. FL., 8/2 ESPLANADE EAST, GR. FL., KOL-69.. 2 %&$ / THE RESPONDENT- M/S. GURUKRIPA SOFTWARE SOLUTIO NS PVT. LTD 61 BENTINCK ST, 1 ST FL., KOL-69.. 3. 5. / THE CIT, 4. ( )/ THE CIT(A) % / DR, KOLKATA BENCH 6.GUARD FILE . &1 % / TRUE COPY, / BY ORDER, / ASSTT REGIST RAR