D.C.I.T Cir - 53,kolkata., Kolkata V. Smt. Susmita Sahoo., Kolkata

ITA 182/KOL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1766 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 24-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIRJ KUMAR
• Assessee Lawyers: S K TULSIYAN
• Keywords: Business expenditure; Income from undisclosed sources; Opportunity of being heard; Principle of natural justice; Opportunity of cross examination; Additional evidence; Difference of opinion
• Section: 143(3); 133(6); 131

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.182/KOL/2013 ASSESSMENT YEAR:2009-10 DCIT, CIRCLE-53, AAYAKA BHAWAN (DAKSHIN), 2, GARIAHAT ROAD, (SOUTH), 2 ND FLOOR, KOLKATA-68 / V/S . SMT. SUSMITA SAHOO PROP. RAINBOW INDUSTRIAL SOLUTIONS, 1925, CHAK GARIA, FLAT NO.21, A2, PICK TOWER, HILAND PARK, KOLKTA-94 [ PAN NO.BLZPS 5904 C ] /APPELLANT .. /RESPONDENT C.O. NO. 22/KOL/2013 (A/O ITA NO.182/KOL/2013) ASSESSMENT YEAR: 2009-10 SMT. SUSMITA SAHOO PROP. RAINBOW INDUSTRIAL SOLUTIONS, 1925, CHAK GARIA, FLAT NO.21, A2, PICK TOWER, HILAND PARK, KOLKTA-94 / V/S . DCIT, CIRCLE-53, AAYAKA BHAWAN (DAKSHIN), 2, GARIAHAT ROAD, (SOUTH), 2 ND FLOOR, KOLKATA-68 CO-OBJECTOR .. /RESPONDENT /BY ASSESSEE SHRI S.K. TULSIYAN, ADVOCATE ! /BY RESPONDENT SHRI NIRJ KUMAR, CIT-DR $ /DATE OF HEARING 15-06-2017 $ /DATE OF PRONOUNCEMENT 11-08-2017 /O R D E R ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 2 PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL AS WELL AS CROSS OBJECTION (CO) BY THE REVENUE AND THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS)-XXXIII, KOLKATA DATED 27.11.2012. ASSESSMENT WAS FRAMED BY ACIT, CIRCLE-5 3, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 29.11.2011 FOR ASSESSMENT YEAR 2009-10. THE GROUNDS RAISED BY THE REVENUE PER ITS APPEAL ARE AS UNDER:- I) THE LD. CIT(A) ERRED IN DELETING THE ADDITIONS U/S. 69A AMOUNTING TO RS.6,36,70,566/- AND THE ADDITION OF RS.94,14,211/- AND RS.29,49,500/- ADDED FOR NOT EXPEDIENT BUSINESS TO RS.34,14,918/- AND RS.10% OF AMOUNT RESPECTIVELY. II) THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONSIDERING THE ADDITIONAL EVIDENCES SUBMITTED BEFORE HIM BY TH E ASSESSEE WHICH IS IN VIOLATION OF RULE 46 AND THUS BAD IN LAW, WHEREAS THE AO HAS GIV EN ABUNDANT OPPORTUNITY OF BEING HEARD AND FULLY COMPLIED AS PROVIDED SECTION 142(3) OF THE ACT. III) LD. CIT(A) ERRED IN APPLYING RATIO OF A DECISI ON TO THE FACT OF THE CASE WITH DUE CARE. SHRI NIRJ KUMAR, LD. DEPARTMENTAL REPRESENTATIVE RE PRESENTED ON BEHALF OF REVENUE AND SHRI S.K. TULSIYAN, LD. ADVOCATE APPEARED ON BE HALF OF ASSESSEE. 2. AT THE OUTSET, IT WAS OBSERVED THAT ASSESSING OF FICER HAS MADE SEVERAL ADDITIONS WHICH WERE SUBSEQUENTLY DELETED BY LD. CI T(A) EXCEPT ONE. THEREFORE REVENUE HAS FILED AN APPEAL BEFORE US. HOWEVER, ON PERUSAL OF GROUND OF APPEAL, WE FIND THAT ONLY SINGLE GROUND HAS BEEN RAISED IN RES PECT OF ALL THE ADDITIONS MADE BY THE AO. HOWEVER FOR THE SAKE OF SIMPLICITY WE ARE TREAT ING EACH ADDITION AS SINGLE GROUND OF APPEAL AS DETAILED UNDER : I) DELETION OF CONCEALED INCOME FOR RS. 6,36,70,56 6/- II) PARTLY DELETION OF CONSULTANCY CHARGES 3. FIRST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION OF 6,36,70,566/- ON ACCOUNT OF CONCEALED INCOME. 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN IND IVIDUAL AND RUNNING HER PROPRIETY FIRM UNDER THE NAME & STYLE OF RAINBOW INDUSTRIAL S OLUTIONS. THE ASSESSEE IS ENGAGED IN BUSINESS OF PROVIDING MANPOWER WHICH IS USED FOR MAINTENANCE OF TOWERS FOR MOBILE TRANSMISSION. THE ASSESSEE HAS TAKEN UP CONT RACT FROM M/S FRONTLINE BUSINESS ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 3 SOLUTIONS (FBS FOR SHORT) FOR THE MAINTENANCE OF TE LECOM TOWERS MOSTLY SITUATED IN THE DISTRICT OF EAST MIDNAPORE, WEST MIDNAPORE, PURULIA , BANKURA. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS OBSERVED THAT ASSESSEE HAS RECEIVED/RECEIVABLE AMOUNT OF 8,37,27,872/- FROM FBS. HOWEVER, THE ASSESSEE HAS SHOWN A SUM OF 2,00,57,306/- AS SERVICE CHARGES FROM FBS. THEREFOR E A DIFFERENCE OF 6,36,70,566/- WAS OBSERVED BY THE AO. ACCORDINGLY, AO SOUGHT EXPLANATION FROM ASSESSEE FOR THE AFORESAID DIFFERE NCE IN THE INCOME DECLARED IN THE RETURN. THE ASSESSEE IN COMPLIANCE THERETO SUBMITTE D THAT IT HAS RECEIVED THE AMOUNT FROM FBS FOR TWO REASONS AS DETAILED UNDER : (I) SERVICES CHARGE FOR SERVICE RENDERED TO FBS AND (II) REIMBURSEMENT OF PAYMENTS FOR THE LABOUR WHICH WAS INCURRED BY ASSESSEE ON BEHALF OF FBS. THE ASSESSEE FURTHER SUBMITTED THAT THE TWO KINDS O F INVOICE ONE FOR SERVICE CHARGES AND OTHER FOR REIMBURSEMENT OF EXPENSE WERE RAISED TO THE FBS. THEREFORE, THE AMOUNT OF REIMBURSEMENT WAS NOT SHOWN AS INCOME OF THE ASSESSEE. ACCORDINGLY, THE LABOUR EXPENSES WERE NOT CLAIMED BY ASSESSEE IN HER PROFIT AND LOSS ACCOUNT. THE ASSESSEE ALSO SUBMITTED THE LABOUR EXPENSE WHICH WA S REIMBURSED BY THE FBS MUST HAVE BEEN CLAIMED AS AN EXPENSE BY THE FBS. HOWEVER , THE AO DISREGARDED THE CONTENTION OF ASSESSEE AND TREATED THE SUM OF 6,36,70,566/- AS INCOME OF THE ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE REIMBURSEMENT AMOUNT HAS NOT BEEN SHOWN IN HER PROFIT AND LOSS ACCOUNT AND THEREFORE THE CORRE SPONDING EXPENSE AGAINST THE REIMBURSEMENT OF MONEY WAS ALSO NOT CLAIMED IN ITS BOOKS OF ACCOUNT. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- 4.2. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE. THE ADDITION MADE BY THE ASSESSING OFFICER IS ON ACCOUNT OF DIFFERENCE BETWE EN AMOUNT RECEIVED/RECEIVABLE FROM FBS AND THE SERVICE CHARGES CREDITED BY THE APPELLA NT. IT WAS EXPLAINED BY THE APPELLANT THAT THE DIFFERENCE IS DUE TO THE FACT TH AT THE AMOUNT RECEIVED FROM FBS CONSISTED OF TWO COMPONENTS. THE FIRST RELATES TO S ERVICE CHARGES OF THE APPELLANT WHICH HAVE BEEN PAID BY FBS AFTER DEDUCTING, TAX AT SOURCE. THESE HAVE BEEN DULY ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 4 CREDITED BY THE APPELLANT TO HER IN PROFIT AND LOSS ACCOUNT. THE OTHER COMPONENT IS FOR REIMBURSEMENT FOR VARIOUS EXPENSES INCURRED BY THE APPELLANT ON BEHALF OF FBS. IN THE REGULAR COURSE OF BUSINESS, THE APPELLANT USED TO MAKE PAYMENTS TOWARDS VARIOUS EXPENSES INCURRED ON BEHALF OF FBS AND FBS USED TO REIMBURSE THE SAME TO THE APPELLANT ON BASIS OF CLAIM MADE BY THE APPELLANT. THE MAJOR PART OF THESE EXPENSES RELATED TO PAYMENT OF WAGES ETC. TO EMPLOYEES OF FB S. SINCE THIS COMPONENT WAS PURELY IN NATURE OF REIMBURSEMENT OF EXPENDITURE IN CURRED BY THE APPELLANT ON BEHALF OF FBS, NO TAX WAS DEDUCTED BY FBS ON THE SAME. FUR THER, SINCE THE CLAIM FOR REIMBURSEMENT WAS MADE ON THE BASIS OF ACTUAL EXPEN DITURE INCURRED, THERE WAS NO ELEMENT OF INCOME IN THE HANDS OF THE APPELLANT. TH EREFORE, SUCH PAYMENTS AND THEIR REIMBURSEMENT WERE NOT ROUTED THROUGH HER PROFIT AN D LOSS ACCOUNT. HOWEVER, THAT DOES NOT MAKE THE SAME TO BE UNACCOUNTED INCOME OF THE APPELLANT. THOUGH THE SAID RECEIPTS WERE NOT ROUTED THROUGH PROFIT AND LOSS AC COUNT, THE AMOUNTS WERE RECEIVED THROUGH REGULAR BANK ACCOUNT OF THE APPELLANT, THE CLAIM FOR REIMBURSEMENT WAS MADE IN WRITING TO FBS WHO REMITTED THE AMOUNT BY W AY OF CHEQUE. ANY OUTSTANDING IN RESPECT OF THE SAME WAS REFLECTED IN THE BALANCE SHEET. THUS IT IS NOT A CASE WHERE THE TRANSACTIONS HAD NOT BEEN DISCLOSED. THE AMOUNT S UNDER CONSIDERATION WERE FOUND BY TILE ASSESSING OFFICER FROM THE BOOKS AND OTHER DOCUMENTS PRODUCED BY THE APPELLANT ONLY AND NOT BY ANY INDEPENDENT ENQUIRY. IT IS NOT A CASE WHERE INFORMATION HAD BEEN GATHERED FROM A THIRD PARTY REGARDING ANY PAYMENT WHICH HAD NOT BEEN ACCOUNTED FOR BY THE APPELLANT. AT MOST, IT CAN BE CALLED A DIFFERENCE OF OPINION REGARDING ACCOUNTING TREATMENT OF RECEIPTS FROM FBS . THE APPELLANT HAS CHOSEN NOT TO ROUTE THE AFORESAID EXPENDITURE AND REIMBURSEMENT T O HER PROFIT AND LOSS ACCOUNT ON THE GROUND THAT THE SAID EXPENDITURE PERTAINS TO FB S AND NOT AT ALL TO THE APPELLANT. I DO NOT FIND ANY DEFECT IN THIS SYSTEM OF ACCOUNTING ADOPTED BY HER. HOWEVER, EVEN IF FOR SAKE OF ARGUMENT A VIEW IS TAKEN, THAT SUCH REC EIPTS SHOULD HAVE BEEN ROUTED THROUGH PROFIT AND LOSS ACCOUNT, THE SAME WILL HAVE NO IMPLICATION ON THE INCOME. IT GOES WITHOUT SAYING THAT RECEIPT IS NOT SAME AS INC OME AND TO ARRIVE AT INCOME, THE CORRESPONDING EXPENDITURE HAS TO BE REDUCED FROM RE CEIPTS. IN THE APPELLANT'S CASE IF THE RECEIPTS ON ACCOUNT OF REIMBURSEMENT ARE TAKEN ON CREDIT SIDE OF P&L ACCOUNT, THE CORRESPONDING EXPENSES HAVE TO BE DEBITED AS PE R MATCHING PRINCIPLE OF ACCOUNTING. IT HAS BEEN STATED BY THE APPELLANT THA T THE REIMBURSEMENT WAS FOR THE ACTUAL EXPENDITURE INCURRED AND THERE IS NOTHING TO THE CONTRARY ON RECORD. THEREFORE, NET RESULT OF SUCH DEBIT AND CREDIT WOULD BE NIL. T HIS EXPLANATION WAS GIVEN TO THE ASSESSING OFFICER AS WELL AND IT IS NOT CLEAR AS TO WHY HE HAS REJECTED THE SAME. HIS ACTION OF ADDING RECEIPTS TO THE INCOME WITHOUT ALL OWING THE CORRESPONDING EXPENDITURE IS AGAINST THE BASIC PRINCIPLES OF ACCO UNTANCY AND CANNOT BE UPHELD. IT IS ALSO NOTED THAT THE ASSESSING OFFICER HAS ALSO PASS ED A NUMBER OF REMARKS IN HIS ASSESSMENT ORDER PURPORTEDLY TO SUPPORT THIS AS WEL L AS OTHER ADDITIONS MADE. ONE OF THESE RELATES TO GUJARAT HIGH COURT HAVING PASSED S OME ORDER (NO SPECIFIC DETAILS GIVEN IN THE ASSESSMENT ORDER) HOLDING THAT A DEMER GER OF VODAFONE ESSAR GUJARAT AND PLANNED MERGER OF THE RESULTANT COMPANY WITH IN DUS TOWER LTD. WAS TO EVADE TAX. ANOTHER REMARK WAS REGARDING SOME ARTICLE ON INTERN ET IN RESPECT OF SHRI LAXMAN SETH, HUSBAND OF THE APPELLANT. SOME OTHER REMARKS MADE ARE REGARDING LABOUR PROBLEMS RELATING TO APPELLANT'S BUSINESS, CERTAIN SCHEMES PLANNED BY FOUR BUSINESS ASSOCIATES, VARIOUS PROPERTIES HELD BY THE APPELLAN T AND HER EXPENSES INCURRED THROUGH CREDIT CARD ETC. I FIND THAT THESE REMARKS ARE LARGELY IRRELEVANT TO THE ADDITION MADE. ACTUALLY, THEY ARE IN NATURE OF GENERAL ALLEG ATIONS WITHOUT ANY SPECIFIC INFORMATION OR EVIDENCE WHICH COULD SUPPORT THE ADD ITION MADE. IT IS NEEDLESS TO SAY THAT VAGUE AND GENERAL ALLEGATIONS AND INNUENDO CAN NOT BE BASIS FOR MAKING ANY ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 5 ADDITION WHICH IS NOT BACKED BY HARD EVIDENCE. IN F ACT, MOST OF THE ALLEGATIONS ARE OF SUCH VAGUE NATURE THAT THEY HAVE NO MATERIAL BEARIN GS ON THE POINTS ON WHICH ADDITION HAS BEEN MADE. IT IS NOT UNDERSTOOD, AS WH Y SUCH REMARKS FIND PLACE IN THE ASSESSMENT ORDER AT ALL WHEN THEY THROW NO LIGHT WH ATSOEVER ON THE ISSUES RELEVANT TO THE ADDITION. SO FAR AS RECEIPTS OF RS.6,36,70,566/ - ARE CONCERNED, THE APPELLANT HAD DULY EXPLAINED THEIR NATURE AND REASON FOR THEIR NO T FORMING PART OF INCOME. NO MATERIAL EVIDENCE TO THE CONTRARY HAS BEEN BROUGHT ON RECORD. CONSIDERING THIS, THE ADDITION OF RS.6,36,70,566/- IS DELETED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 6. LD. DR BEFORE US RELIED ON THE ORDER OF AO AND H E REQUESTED BEFORE THE BENCH TO CONFIRM THE SAME. ON THE OTHER HAND, LD. AR FOR THE ASSESSEE FILED PA PER BOOK WHICH IS RUNNING PAGES FROM 1 TO 117. HE DREW OUR ATTENTION ON PAGES 84 TO 117 WHERE THE DETAILS OF REIMBURSEMENT OF EXPENSE WERE PLACED. LD. AR RELIED ON THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE BEFORE US R ELATES TO THE REIMBURSEMENT OF EXPENSES OF 6,36,70,066/- WHICH WAS TREATED BY THE AO AS INCOME OF THE ASSESSEE. HOWEVER, LD. CIT(A) DELETED THE ADDITION ON THE GRO UND THAT REIMBURSEMENT OF EXPENSES IS NOT INCOME OF THE ASSESSEE. FROM THE FOREGOING DISCUSSION, WE FIND THAT ASSESSE E HAS RAISED INVOICES/ BILLS TO FBS FOR PROVIDING THE MANPOWER ON BEHALF OF FBS. ALL TH ESE INVOICES ARE PLACED ON RECORD. IN THIS REGARD, LD DR HAS NOT BROUGHT ANYTHING CONT RARY TO THE FINDING OF LD. CIT(A). WE ALSO FIND THAT THE AO HAS NOT TAKEN ANY CONFIRMA TION FROM FBS REGARDING THE ISSUE OF REIMBURSEMENT OF LABOUR EXPENSES BEFORE MAKING T HE ADDITION ON ACCOUNT OF CONCEALED INCOME. THE AO WAS EMPOWERED UNDER SECTIO N 131 AND 133(6) OF THE ACT TO ASCERTAIN THE FACTS OF REIMBURSEMENT OF EXPENSES FROM FBS BUT HE FAILED TO DO SO. THE AO HAS ALSO NOT BROUGHT ANYTHING ON RECORD SUGG ESTING THAT THE ASSESSEE HAS CLAIMED THE LABOUR EXPENSES IN ITS PROFIT & LOSS AC COUNT. THE LD. DR HAS ALSO NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE FINDINGS OF LD. CIT(A). THUS, IN VIEW OF ABOVE IT IS CONCLUDED THAT THE REIMBURSEMENT OF EXP ENSES CLAIMED BY THE ASSESSEE FOR RS. 6,36,70,566/ - IS NOT CONCEALED INCOME IN THE HANDS OF THE ASSES SEE AND THEREFORE NO ADDITION IS WARRANTED. THE LD. AR HAS FILED THE INV OICES RAISED BY THE ASSESSEE FOR THE REIMBURSEMENT OF LABOUR EXPENSES WHICH ARE PLACED O N PAGES 85 TO 117 OF THE PAPER ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 6 BOOK. THE LEARNED AR HAS ALSO FILED ONE CONSOLIDATE D SHEET REFLECTING THE REIMBURSEMENT OF EXPENSES AFTER COMPILING ALL THE I NVOICES RAISED BY THE ASSESSEE TO FBS WHICH IS PLACED ON PAGE 84 OF THE PAPER BOOK. I N VIEW OF ABOVE WE FIND NO REASON TO INTERFERE WITH THE FINDING OF THE LD. CIT (A). UNDER THE CIRCUMSTANCES, THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 8. NEXT ISSUE RAISED BY REVENUE IS AS REGARDS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION OF 94,18,211/- ON ACCOUNT OF CONSULTANCY CHARGES. 9. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS MADE THE PAYMENT OF CONSULTANCY CHARGES TO THE CERTAIN PERSONS AS DETAI LED UNDER:- SL.NO . NAME OF CONSULTANT RS. 1 AMIT SAHA 2004449 2 APARNA SARKAR 3400864 3 SAYANTAN SETH 2004449 4 DIPAK RANJAN MUKHERJEE 2004449 94,14,211 DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE AO THAT ALL THE PERSONS STATED ABOVE ARE CLOSED FRIENDS OF THE ASSE SSEE. THE ASSESSEE HAS MADE ARRANGEMENT WITH HER FRIENDS TO AVOID TAX IN THE GU ISE OF CONSULTANCY CHARGES. THE AO IN HIS ASSESSMENT PROCEEDINGS ALSO RECORDED THE STA TEMENT OF THREE PERSONS ALONG WITH THE HUSBAND OF APARNA SARKAR WHICH IS REPRODUCED BE LOW:- SHREE KUNAL SARKAR HUSBAND OF APARNA SARKAR INITIALLY WE ARE TO MAINTAIN ABOUT 700 TOWERS (AIR TEL), 1000(DISH NET), 250 (TYCO). IN 2008 ADDITION OF INDUS TOWER ABOUT 2800 WHICH INCLUDES 700 TOWERS OF AIR TEL. WE USE TO DEPLOY TWO MAN POWERS FOR EAC H TOWER BY PAYING ABOUT RS.7000/- PER SITE. THERE WAS HUGE LABOUR UNREST IN EAST AND WEST MIDNAPUR DEMANDING FOR EXTRA MAN POWER FROM LOCAL LEADERSHIP . IT WAS IMPOSSIBLE TO MAINTAIN THE TOWER AND INDUS TOWERS ALSO WAS NOT WI LLING TO NEGOTIATE WITH THE LEADERSHIP FOR ADDITIONAL MANPOWER. IN THE CIRCUMST ANCES WE ARE CONSTRAIN TO NEGOTIATE WITH RAINBOW INDUSTRIAL SOLUTION TO HAND OVER THE SERVICES. SIMILARLY, THE STATEMENT APARNA SARKAR, WAS ALSO RE CORDED U/S. 131 OF THE ACT BY AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE RE LEVANT EXTRACT OF THE STATEMENT IS REPRODUCED BELOW:- ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 7 INITIALLY WE ARE TO MAINTAIN ABOUT 700 TOWERS (AIR TEL), 1000 (DISH NET), 250 (TYCO). IN 2008 ADDITION OF INDUS TOWER ABOUT 2800 WHICH INCLUDES 700 TOWARDS OF AIR TEL. WE USE TO DEPLOY TWO MAN POWERS FOR EACH TOWER BY PAYING ABOUT R.7000/- PER SITE. THERE WAS HUGE LABOUR UNRE ST IN EAST AND WEST MIDNAPUR DEMANDING FOR EXTRA MANPOWER FROM LOCAL LE ADERSHIP. IT WAS IMPOSSIBLE TO MAINTAIN THE TOWER AND INDUS TOWERS A LSO WAS NOT WILLING TO NEGOTIATE WITH THE LEADERSHIP FOR ADDITIONAL MANPOW ER. IN THE CIRCUMSTANCES WE WERE CONSTRAIN TO NEGOTIATE WITH RAINBOW INDUSTR IAL SOLUTION TO HAND OVER THE SERVICES. STATEMENT OF SAYANTAN SETH & SUSHMITA SAHOO IS REPR ODUCED BELOW:- 10 WHAT IS YOUR RELATION WITH RAINBOW INDUSTRIAL SOLUTION AND HOW YOU ARE ATTACHED WITH THE CONCERN? TECHNICAL CONSULTANT 11 WHAT IS YOUR NATURE OF JOB WITHIN THE CONCERN I VISIT RESPECTIVE TELECOM TOWER SITE AT PURULIA, EAST MIDNAPURE, WEST MIDNAAPURE, BANAKUR ETC FOR MAINTAINING ALL KIND ELECTRICAL AND ELECTRONICS EQUIPMENTS 12 PLEASE GIVE ME THE SPECIFIC IDENTITY OF SUCH TOWERS READILY I AM NOT ABLE TO GIVE THE SPECIFIC IDENTITY OF THE TOWERS. THESE ARE LOCATED INTERIOR OF DISTRICT VILLAGES. 13 HOW YOU MAINTAIN SUCH WORK? THESE ARE MAINTAINED TH ROUGH TECHNICIANS AND OTHER STAFF OF RAINBOW INDUSTRIAL SOLUTIONS. STATEMENT OF DIPAK RANJAN MUKHERJEE IS REPRODUCED B ELOW:- APARNAS HUSBAND KUNAL WAS SEEKING HIS FULL BUSINE SS OPERATION IN EAST/WEST MIDNAPUR AND SYANTAN AND SUSHMITA HAD THE POTENTIAL OF ASSURING PEACEFUL BUSINESS OPERATION. I KNEW KUNAL THROUGH OUR COMMON FRIEND SINCE 2007. AND THEREFORE, KNOWING INDIVIDUAL REQUIREMENT, I SUGGES TED MEETING OF THE ENTIRE ABOVE PERSON AT A COMMON PLACE FOR MUTUALLY BENEFIC IAL BUSINESS RELATIONSHIP. HE FURTHER STATED- MY SCOPE OF LEGA L CONSULTANCY INCLUDES DEALING WITH LABOUR MATTERS, ARBITRATION BETWEEN PR INCIPLE COMPANY AND VENDORS ASSOCIATES WITH RAINBOW AND FRONT LINE AND CREATION AND SUBMISSION OF STATUTORY RETURNS I.E. PF ESI AND LABOUR WELFARE FU ND IN GENERAL. HOWEVER, NO STATEMENT OF AMIT SAHA WAS RECORDED BY AO U/S 131 OF THE ACT. IT WAS OBSERVED THAT HE WAS HAVING NO ACTIVE ROLE IN THE B USINESS OF ASSESSEE BUT HE WAS PAID A SUM OF 20,04,449/- ONLY FOR SIGNING THE VAGUE DOCUMENTS. ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 8 IN VIEW OF THE ABOVE, THE ENTIRE AMOUNT OF CONSULTA NCY CHARGES WAS DISALLOWED BY AO ON THE GROUND THAT IT IS NOTHING BUT THE ARRANGEMEN T AMONG THE GROUP OF FRIENDS TO AVOID TAX LIABILITY IN THE GUISE OF CONSULTANCY CHA RGES. THUS, AO DISALLOWED THE CONSULTANCY CHARGES FOR 94,40,211 AND ADDED TO THE TOTAL INCOME OF ASSESSEE . 10. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT ALL THE PERSONS AS DISCUSSED ABOVE WERE ACTIVELY PROVIDING SERVICES TO THE ASSESSEE AND THE DISALLOW ANCE HAS BEEN MADE BY THE AO ON HIS SURMISE AND CONJECTURE. THE STATEMENTS RECORDED BY THE AO U/S. 131 OF THE A CT WERE NOT MADE AVAILABLE TO THE ASSESSEE FOR THE CROSS-EXAMINATION. ALL THE PERSONS HAVE JUSTIFIED THEIR SERVICES THAT THEY HAVE RENDERED TO THE ASSESSEE BEFORE THE AO AS WELL AS BY DESCRIBING THEIR ROLE IN THE ORGANIZATION. ALL THE PAYMENTS TO THE CONSULTANTS WERE MADE AFTER THE DEDUCTION OF TDS UNDER THE PROVISIONS OF LAW. THE CONSULTANTS IN THEIR STATEME NTS BEFORE THE AO HAVE ACCEPTED TO HAVE RENDERED THE SERVICES TO THE ASSESSEE. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASS ESSEE HAS MADE CERTAIN OBSERVATIONS AS DETAILED UNDER:- (1) IN CASE OF AMIT SAHA :- DESCRIPTION OF AMIT SAHA WAS APPOINTED AS PRINCIPAL CONSULTANT OPERATION AND HE WAS ASSIGNED THE ADMINISTRATIVE DUTIES IN THE OFFICE, Q UANTITY MANAGEMENT, VENDOR MANAGEMENT AND LIAISON WITH LOCAL AUTHORITIES. THE PAYMENT WAS MADE TO SHRI AMIT SAHA ON MUTUAL AGREEMENT AND ON MONTHLY BASIS. NO S TATEMENT WAS U/S 131 OF THE ACT WAS RECORDED AND THE AO HAS ALLEGED THAT HE WAS ACT ING AS AUTHORIZE SIGNATORY AS ON VAGUE DOCUMENT. HOWEVER, AO HAS NOT BROUGHT ANYTHIN G ON RECORD FOR HIS ALLEGATION. (2) IN CASE OF SAYANATAN SETH :- HE WAS APPOINTED AS PRINCIPAL CONSULTANT TECHNICAL AND HE WAS ASSIGNED THE DUTY FOR THE MAINTENANCE OF GENERATORS, DG BATTERY, BATTERY BANKS, CABLES, EARTH PITS, FIRE ALARM SYSTEM AND O&M ORGANIZATION, PROCEDURE AUDIT, SYSTE M AUDIT, SOFTWARE AND HARDWARE UPDATE ETC. THE PAYMENT WAS MADE AS PER MUTUAL AGRE EMENT WITH THE ASSESSEE. THE CONSULTANT HAS ALSO IN HIS STATEMENT DESCRIBED THE DUTIES WHICH HE WAS PERFORMING FOR ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 9 THE ASSESSEE. THE DUTY PERFORMANCE HAS ALREADY BEEN DISCUSSED IN THE FOREGOING PARAGRAPHS. (3) IN CASE OF APARNA SARKAR :- AS PER THE MOU WITH THE ASSESSEE, APARNA SARKAR WIT H THE ASSISTANT OF HER HUSBAND KUNAL SARKAR AND OTHER COMPETENT PERSON RENDERED AD MINISTRATIVE SERVICES IN RELATION TO BUSINESS DEVELOPMENT. SHE ALSO PROVIDED MANPOWER SERVICES AND ALLIED SERVICES. SHE WAS ENTITLED OF 30% OF THE PROFITS IN THE PROJE CTS AS DISCUSSED ABOVE. SHE WAS ALSO ASSISTING ASSESSEE IN STRATEGIC MATTERS AND IN DOCU MENTATION. APARNA SARKAR IN HER STATEMENT U/S. 131 OF THE ACT HAS ADMITTED THAT SHE WAS NOT PROVIDING ANY ACTIVE ROLE WITH THE BUSINESS OF ASSESSEE. SHE WAS JUST RECEIV ING CHEQUE FROM THE ASSESSEE. HOWEVER, SHE FURTHER STATED THAT HER HUSBAND WAS AC TIVELY ENGAGED IN THE BUSINESS OF PROVIDING MANPOWER TO THE ASSESSEE. (4) IN CASE OF D.R. MUKHERJEE :- D.R. MUKHERJEE WAS ASSIGNED THE DUTIES FOR STATUTOR Y COMPLIANCE, SUPPORT TO CLIENTS, ASSESSMENT OF NON-COMPLIANCE, RISK MANAGEMENT, RECO RD MAINTENANCE ETC. HE IN HIS STATEMENT U/S 131 OF THE ACT HAS DULY ACCEPTED THAT HE WAS PROVIDING LEGAL CONSULTANCY TO THE ASSESSEE. HOWEVER, LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS AND THE AFORESAID FACTS HAS CONFIRMED THE ADDITION FOR THE CONSULTANCY CHARGES PAID TO APARNA SARKAR AND UPHELD THE ORDER OF AO BY OBSERVING AS UNDER:- 5.5 THUS, A MAJOR OBJECTION OF THE APPELLANT AGAINS T THE ADDITION MADE BY THE ASSESSING OFFICER WAS THAT HE HAD RELIED UPON STATE MENT OF SMT. APARNA SARKAR WITHOUT ALLOWING OPPORTUNITY OF CROSS EXAMINATION. THE APPE LLANT HAS CITED SEVERAL CASE LAWS TO ARGUE THAT THIS VITIATES THE ASSESSMENT. NO DOUB T, UTILIZATION OF A STATEMENT WITHOUT OPPORTUNITY TO THE ASSESSEE TO REBUT THE SAME IS A SERIOUS FLAW. HOWEVER, AS HELD IN THE CASE OF INDRA PRASAD GUPTA VS. CIT 185 608 (ALL ), THE APPELLATE AUTHORITY CAN ALSO GRANT SUCH OPPORTUNITY TO THE ASSESSEE. THEREFORE, DURING THE CURSE OF HEARING, THE APPELLANT WAS ASKED AS TO WHETHER SHE WISHED TO CRO SS EXAMINE SMT. APARNA SARKAR. THE SUBSEQUENT SUBMISSION MADE BY THE APPELLANT IS SILENT ON THIS POINT, BUT IT HAS BEEN CONTENDED THAT FAILURE TO FOLLOW THE PRINCIPLE OF NATURAL JUSTICE CANNOT BE MADE GOOD IN APPEAL. IT WAS ORALLY STATED BY THE AUTHORI ZED REPRESENTATIVES OF THE APPELLANT THAT AT PRESENT RELATIONS BETWEEN THE APPELLANT AND SMT. APARNA SARKAR ARE NOT GOOD AND THEREFORE SHE MAY NOT STATE ANY FACT FAVOURABLE TO THE APPELLANT IF CROSS EXAMINATION IS CARRIED OUT. THUS IT APPEARS THAT TH E APPELLANT IS NOT SERIOUSLY INTERESTED IN CROSS EXAMINATION OF SMT. APARNA SARK A. WHILE IT IS TRUE THAT THE PAYMENT TO HER HAS BEEN MADE ON THE BASIS OF AN MOU NARRATING SCOPE OF HER ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 10 SERVICES, BUT THE VITAL FACT IS THAT WHEN THE ASSES SING OFFICER RECORDED HER STATEMENT, SHE HAS CATEGORICALLY DENIED OF HAVING RENDERED ANY SERVICES TO THE APPELLANT. THEREFORE, THE NATURE OF SERVICES MENTIONED IN THE MOU CANNOT BE TAKEN AT FACE VALUE. EVEN IF SMT. APARNA SARKAR WAS HAVING EXPERI ENCE IN THE TELECOM INDUSTRY AND WAS CAPABLE OF RENDERING SUCH SERVICES WITH OR WITH OUT ASSISTANCE OF SHRI KUNAL SARKAR, NO SUCH SERVICES WERE ACTUALLY RENDERED AS PER THE STATEMENT GIVEN BY SMT. APARNA SARKAR HERSELF. THE APPELLANT MIGHT HAVE GIV EN SUBSTANTIAL MONEY TO HER FOR THE REASONS BEST KNOWN TO HER, THE SAME CANNOT BE A LLOWED A DEDUCTION SINCE THE PAYMENT WAS NOT FOR CONSIDERATION OF ANY CONSULTANC Y SERVICES RENDERED BY SMT. APARNA SARKAR AND DEDUCTION CAN BE GRANTED ONLY FOR THE AMOUNT SPENT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. NOW COMING TO THE CONSULTANCY CHARGES PAID TO MR. A MIT SAHA AND DIPAK RANJAN MUKHERJEE AND SAYANTAN SETH. THE LD. CIT(A) AFTER C ONSIDERING THE SUBMISSIONS OF ASSESSEE HAS DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER:- 5.6 HOWEVER, SO FAR AS THE OTHER THREE CONSULTANTS ARE CONCERNED, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL EVID ENCE TO SHOW THAT THE SERVICES WERE NOT GENUINELY RENDERED. MERE ALLEGATION THAT T HE ARRANGEMENT WAS A DEVICE TO REDUCE INCOME OF THE APPELLANT CANNOT BE BASIS FOR DISALLOWANCE IN ABSENCE OF ANY HARD EVIDENCE. THERE IS NO EVIDENCE-DOCUMENTARY OR ORAL, ON RECORD TO INDICATE, MUCH LESS ESTABLISH, THAT CONSULTANCY CHARGES TO SHRI DI PAK RNJAN MUKHERJEE, SHIRI SYANTAN SETH AND SHRI AMIT SAHA WERE FOR ANY NON-BUSINESS P URPOSES. IN FACT, IN THE STATEMENTS RECORDED BY THE ASSESSING OFFICER (EXTRA CTS OF WHICH HAVE BEEN GIVEN IN THE ASSESSMENT ORDER), TWO OF THEM NAMELY SHRI DIPAK RA JAN MUKHERJEE AND SHRI SAYANTN SETH HAD CONFIRMED OF HAVING RENDERED SERVICE TO TH E APPELLANT AND HAVE DESCRIBED THE NATURE OF SERVICES. IN RESPECT OF THE FOURTH CO NSULTANT, SHRI AMIT SAHA, NO STATEMENT IS REFERRED TO BY THE ASSESSING OFFICER, WHO HAS ALSO NOT BROUGHT ON RECORD ANY MATERIAL IN SUPPORT OF HIS OPINION THAT SHRI SA HA MERELY SIGNED ON SOME VAGUE DOCUMENTS WITHOUT ACTUALLY RENDERING SERVICE THIS A LLEGATION CAN, AT BEST, BE CALLED IN NATURE OF DOUBT AND NOT EVIDENCE. AS HELD IN THE DE CISION IN THE CASE OF CIT VS. RAM NRAIN GOEL 224 ITR 180 (P&H) AND VARIOUS OTHER CASE S, SUSPICION, HOWEVER STRONG, CANNOT SUBSTITUTE FOR EVIDENCE FOR MAKING ADDITION. THE ADDITIONS IN RESPECT OF THE CONSULTANCY CHARGES PAID TO SHRI DIPAK RANJAN MUKHE RJEE, SHRI SAYANTAN SETH AND SHRI AMIT SAHA ARE NOT BASED ON ANY SUBSTANTIVE EVI DENCE AND CANNOT BE SUSTAINED. 5.7 IN VIEW OF FOREGOING DISCUSSION THE DISALLOWANC E IS CONFIRMED IN RESPECT OF CONSULTANCY CHARGES TO SMT. APARNA SARKAR AND DELET ED IN RESPECT OF PAYMENT TO SHRI DIPAK RANJAN MUKHERJEE, SHRI SAYANTAN SETH AND SHRI AMAIT SAHA. THE ADDITION IS ACCORDINGLY REDUCED TO RS.34,14,918/- BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) BOTH REVENUE AND ASSESSEE CAME IN APPEAL AND CO. THE CO OF ASSESSEE WAS FOR THE ADDIT ION CONFIRMED FOR THE CONSULTANCY CHARGES PAID TO SMT. APARNA SARKAR OF 34,14,919/- WHEREAS THE REVENUE ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 11 IS IN APPEAL AGAINST THE DELETION MADE BY LD. CIT(A ) IN RESPECT OF CONSULTANCY CHARGES PAID TO SHRI AMIT SAHA AND SHRI DIPAK RANJAN MUKHER JEE. 11. LD. AR FOR THE ASSESSEE BEFORE US SUBMITTED THA T IN CASE OF APARNA SARKAR, HER HUSBAND SHRI KAMAL SARKAR WAS ACTUALLY RENDERING SE RVICES TO THE ASSESSEE. THIS FACT HAS BEEN DULY RECORDED IN THE STATEMENT OF APARNA S ARKAR AS WELL AS KUNAL SARKAR. THE AUTHORITIES BELOW HAS NOT CHALLENGED THE SERVIC E RENDERED BY KUNAL SARKAR ON BEHALF OF APARNA SARKAR. THUS, THERE IS NO DISPUTE ABOUT THE SERVICE RENDERED BY SHRI KUNAL SARKAR ON BEHALF OF HIS WIFE APARNA SARKAR. T HUS, IT IS THAT THE SERVICES WERE NOT ACTUALLY RENDERED BY APARNA SARKAR BUT THE SAME WERE RENDERED THROUGH HIS BUSINESS ASSOCIATES. THIS FACT THAT THE SERVICES RE NDERED BY APARNA SARKAR WITH THE ASSISTANCE OF HER HUSBAND AND OTHER COMPETENT PERSO NS WAS DULY RECORDED IN THE MOU WHICH IS PLACED ON PAGES 61 TO 63 OF THE PAPER BOOK . LD.AR FURTHER PLACED ARGUMENTS FOR OTHER THREE PERS ONS NAMELY, AMIT SAHA, SAYANTAN SETH AND DIPAK RANJAN MUKHERJEEE THAT ALL THE THREE CONSULTANTS WERE ACTIVELY ENGAGED IN PROVIDING SPECIFIC SERVICES TO THE ASSES SEE. THE SERVICES WERE ASSIGNED TO THEM AS PER THE MOU WITH THE ASSESSEE. THE COPIES O F AGREEMENT WITH ALL THE THREE PERSONS ARE PLACED ON PAGES 52 TO 60 OF THE PAPER B OOK. LD. AR ALSO SUBMITTED THE PAYMENTS WERE MADE AGAINST THE INVOICE RAISED BY EA CH CONSULTANT AND AFTER DEDUCTING THE TDS THROUGH BANKING CHANNELS. THE COPIES OF THE BILLS ARE PLACED AT PAGES 72 TO 76 OF THE PAPER BOOK. COPIES OF BANK STATEMENTS ARE AL SO PLACED ON PAGES 77 TO 83 OF THE PAPER BOOK. LD. AR HAS ALSO SUBMITTED THE DETAILS O F THE ACTIVITIES WHICH WERE TAKEN BY ALL 4 BUSINESS CONSULTANT WHICH ARE PLACED ON PA GES 64 TO 71 OF THE PAPER BOOK. ON THE OTHER HAND, LD. DR SUBMITTED THAT APARNA SAR KAR HAS DENIED TO RENDER ANY SERVICE TO THE ASSESSEE DIRECTLY. THUS IT IS CLEAR THAT THE PAYMENT WAS MADE TO APARNA SARKAR WHO HAS NOT RENDERED ANY SERVICES TO ASSESSE E. THEREFORE, SAME CANNOT BE ALLOWED AS DEDUCTION AS BUSINESS EXPENDITURE. LD. D R HAS RELIED ON THE ORDER OF AUTHORITIES BELOW IN CASE OF APARNA SARKAR FOR THE DISALLOWANCE OF THE CONSULTANCY CHARGES. ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 12 THE LD. DR IN CASE OF OTHER THREE BUSINESS CONSULTA NTS HAS RELIED ON THE ORDER OF AO. LD. DR VEHEMENTLY RELIED ON THE ORDER OF AO AND REQ UESTED THE BENCH TO CONFIRM THE SAME. 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT WAS ALLEGED BY THE AO THAT THE CONSULTANCY CHARGES CLAIMED AS EXPENDITURE IS AN ARRANGEMENT TO AVOID T AX LIABILITY. THEREFORE THE DISALLOWANCE WAS MADE BY AO. HOWEVER, LD. CIT(A) HA S GIVEN PARTLY RELIEF TO ASSESSEE. NOW, THE ISSUE BEFORE US ARISES FOR OUR ADJUDICATIO N WHETHER THE CONSULTANCY CHARGES PAID BY THE ASSESSEE ARE ACTUALLY BUSINESS EXPENDIT URE OR IT IS AN ARRANGEMENT WITH THE CONSULTANTS TO AVOID THE TAX LIABILITY. 12.1 WE FIND THAT ALL THE PAYMENTS WERE MADE THROUG H BANKING CHANNEL AND AFTER DEDUCTING TDS, THERE REMAINS NO DOUBT FOR THE GENUI NENESS OF THE PARTIES. THE ALLEGATION OF THE AO IS THAT THE ENTIRE PAYMENT OF CONSULTANCY CHARGES IS AN ARRANGEMENT TO AVOID TAX LIABILITY. HAD IT BEEN SO THEN THE PAYMENT MADE BY THE ASSESSEE SHOULD HAVE COME BACK TO HER IN THE FORM O F CASH. BUT NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD. ON THE CONTRARY, ASSESSEE H AS GIVEN DETAILS OF TDS AND DESCRIBED THE DUTIES PERFORMED BY ALL THE BUSINESS CONSULTANTS WHICH ARE VERY MUCH AVAILABLE ON RECORD. THERE IS NO IOTA OF EVIDENCE S UGGESTING THAT THESE SERVICES WERE NOT RENDERED BY THE CONSULTANT IN CASE OF TWO CON SULTANTS NAMELY, SAYANTANA SETH AND DIPAK RANJAN MUKHERJEE, THEY HAVE DULY ADMITTED IN THEIR STATEMENT U/S 131 OF THE ACT DESCRIBING THE ACTIVITIES THAT THEY HAVE PE RFORMED FOR THE ASSESSEE. THUS, THE ALLEGATION OF AO THAT IT IS AN ARRANGEMENT TO AVOID TAX HAS NO LEG TO STAND. SIMILARLY, IN CASE OF AMIT SAHA THE ALLEGATION OF T HE AO THAT HE IS ACTING AS AUTHORIZED SIGNATORY AND SIGNING VAGUE DOCUMENTS. BUT THE AO H AS NOT BROUGHT ANYTHING ON RECORD SUGGESTING THAT HE IS SIGNING VAGUE DOCUMENT S. ON THE CONTRARY, ASSESSEE HAS GIVEN THE DETAILS OF THE DUTIES PERFORMED BY AMIT S AHA WHICH WAS DULY ACCEPTED BY LD. CIT(A). IN THE ABSENCE OF ANY DOCUMENTARY EVIDE NCE CONTRARY TO THE FINDING OF LD. CIT(A), WE DISAGREE WITH THE ALLEGATION OF AO. SIMILARLY, IN CASE OF APARNA SARKAR, THE UNDISPUTED FACT IS THAT SHE HAS NOT RENDERED ANY SERVICE DIRECTLY TO THE ASSESSEE AS PER THE STA TEMENT RECORDED U/S 131 OF THE ACT. ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 13 BUT THE FACTUAL ASPECT SHOULD NOT BE IGNORED BY THE AUTHORITIES BELOW THAT THE SERVICES WERE RENDERED BY HER HUSBAND. THIS FACT WAS DULY BR OUGHT TO THE NOTICE OF THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS IN THE STATEMENT RECORDED U/S.131 OF THE ACT. BESIDES THE ABOVE, WE FIND THAT AS PER THE UNDERSTA NDING BETWEEN THE ASSESSEE AND APARNA SARKAR, IT WAS AGREED THAT SHE WILL RENDER R EQUISITE SERVICE WITH THE ASSISTANT OF KAMAL SARKAR, HER HUSBAND AS WELL AS OTHER COMPETEN T PERSONS. THERE IS NO DENIAL / ALLEGATION OF THE AO SUGGESTING THAT KAMAL SARKAR / OTHER COMPETENT PERSONS HAVE NOT RENDERED ANY SERVICE ON BEHALF OF APARNA SARKAR. 12.2 AT THIS JUNCTURE, WE WOULD LIKE TO REPRODUCE T HE RELEVANT PORTION OF MOU BETWEEN ASSESSEE AND APARNAK SARKAR WHICH REPRODUCE D BELOW:- 1. SCOPE OF THE MOU . 1.1 GENERALLY. THROUGHOUT THE TERM (AS DEFINED IN SECTI ON 3) OF THIS MOU, THE 2 ND PARTY WITH THE ASSISTANCE OF MR. KUNAL SARKA AND O THER COMPETENT PERSONS SHALL HAVE RESPONSIBILITY FOR THE ADMINISTR ATION OF THE DAY-TO-DAY MANAGEMENT OF THE BUSINESS AND BUSINESS DEVELOPMENT OF RAINBOW IN THE FIELDS OF MANPOWER SERVICES AND ALLIED SERVICES REL ATED THERETO AS DEFINED UNDER THE BUSINESS. 1.2 1.2 THE PARTIES SHALL WORK IN COHESION AND COLLABOR ATE FOR BUSINESS PROCUREMENT. 1.3 THE CONSIDERATION AGAINST BUSINESS INVOLVEMENT FOR THE 2 ND PARTY SHALL BE 30% OF THE NET PROFIT OF THE PROJECTS INITIATE, MAN AGED AND RUN UNDER INVOLVEMENT OF THE PARTIES COMBINED. FROM A PLAIN READING OF THE ABOVE MOU, IT IS CLEAR THAT THE PAYMENT WAS MADE TO APARNA SARKAR BY ASSESSEE IN PURSUANCE TO MOU. AS P ER THE MOU, THE SERVICES WERE RENDERED BY APARNA SARKAR ALONG WITH THE ASSISTANT OF HER HUSBAND AND OTHER COMPETENT PERSONS. THEREFORE IN OUR CONSIDERED VIEW , THE REQUISITE SERVICES HAVE BEEN DISCHARGED BY APARNA SARKAR WITH THE ASSISTANT OF H ER HUSBAND, KAMAL SARKAR AND OTHER COMPETENT STAFF. IN THIS VIEW OF THE MATTER, WE FIND NO REASON TO IN TERFERE IN THE ORDER OF LD. CIT(A) IN RELATION TO DELETION MADE BY LD. CIT(A) OF SHRI AMI T SAHA AND DIPAK RANJAN MUKHERJEE AND SAYANTANA SATH. THUS, THE APPEAL OF R EVENUE IS DISMISSED. SIMILARLY WE ARE INCLINED TO REVERSE THE ORDER OF A UTHORITIES BELOW WHEREIN THE ADDITION WAS CONFIRMED IN CASE OF CONSULTANCY CHARG ES TO APARNA SARKAR. THUS THE ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 14 ADDITION STANDS DELETED. HENCE THE GROUND OF APPEAL RAISED BY REVENUE IS DISMISSED AND THE GROUND OF CO RAISED BY THE ASSESSEE IS ALLO WED. 13. LAST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN RESTRICTING THE ADDITION MADE BY AO FOR 29,49,500/- ON ACCOUNT OF BONUS EXPENSES ON THE BASIS OF ADDITIONAL EVIDENCE. 14. AT THE OUTSET, IT WAS OBSERVED THAT THE AO HAS MADE THE DISALLOWANCE FOR BONUS EXPENSE CLAIMED BY ASSESSEE. THE REASON FOR DISALLO WANCE WAS THAT THERE WAS HARDLY ANY STAFF AVAILABLE WITH THE ASSESSEE AND THEREFORE THERE IS NO POINT FOR MAKING ANY PAYMENT OF BONUS TO THE LABOURERS. HOWEVER, ASSESSE E BEFORE AO SUBMITTED THAT THE BONUS / EX GRATIA WAS PAID TO THE LABOURERS OF THE FBS. HOWEVER, AO DISREGARDED THE CONTENTION OF THE ASSESSEE AND MADE THE DISALLOWANC E OF BONUS EXPENSES ON THE GROUND THAT NO DETAILS OF THE WORKERS WERE PROVIDED . 14.1 HOWEVER, ASSESSEE BEFORE LD. CIT(A) SUBMITTED THE NECESSARY DETAILS IN THE FORM OF REGISTER CONTAINING NAME OF PERSON, AMOUNT, SIGNATURE / THUMB IMPRESSION SUGGESTING THE PAYMENT OF THE BONUS. THE LD. CIT(A ) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE REDUCED THE DISALLOWANC E TO 10% ONLY. LD. DR BEFORE US SUBMITTED THAT RELIEF HAS BEEN GRA NTED TO THE ASSESSEE AFTER ADMITTING THE ADDITIONAL EVIDENCE IN CONTRAVENTION TO THE PRO VISION OF RULE 46A OF INCOME TAX RULES, 1962, LD. DR REQUESTED THE BENCH TO RESTORE THE ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION. TO THE CONTRARY, LD. AR CONCEDE D THE FACT AND RAISED NO OBJECTION IF THE MATTER IS RESTORED BACK TO THE FILE OF AO. 15. AFTER HEARING THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSAL OF RECORDS, WE HOLD THAT LD. CIT(A) HAS CONTRAVENED THE RULE 46 A OF THE IT RULES, 1962. UPON CAREFUL CONSIDERATION WE NOTE THAT INTEREST OF NATU RAL JUSTICE WILL BE SERVED IF THE MATTER IS REMITTED BACK TO THE FILE OF AO. THE AO IS DIREC TED TO CONSIDER THE ISSUE AFRESH. THE AO SHALL TAKE INTO ACCOUNT THE OTHER SUBMISSIONS OF THE ASSESSEE IN THE FORM ADDITIONAL EVIDENCES. ACCORDINGLY, WE REMIT THE ISSUE RAISED B Y REVENUE. NEEDLESS TO SAY THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. HENCE, THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO.182 & CO 22/KOL/2013 A.Y. 2009-10 DCIT CIR-53, KOL. VS. SMST. SUSMITA SAHOO PAGE 15 NOW COMING TO ASSESSEES CO 22/KOL/2013 . 16. THE FIRST ISSUE OF THE CO WITH REGARD TO THE CO NSULTANCY CHARGES TO APARNA SARKAR HAS ALREADY BEEN ALLOWED IN ITA/KOL/182 VIDE PARA 12 OF THIS ORDER. HENCE THE GROUND RAISED IN THE CO IS ALLOWED. 17. FOR THE SECOND ISSUE OF THE ASSESSEES CO, IT I S IMPORTANT TO NOTE THAT THE SAME ISSUE WAS ALSO RAISED BY REVENUE IN ITA/KOL/182 WHI CH HAS ALREADY BEEN REMITTED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION AS PE R LAW. HENCE, THE GROUND RAISED BY ASSESSEE DOES NOT REQUIRE ANY ADJUDICATION AND THER EFORE IT IS LEFT OPEN. 87. IN THE RESULT, FOR STATISTICAL PURPOSE, THE APPEAL OF REVENUE IS PARTLY ALLOWED AND CO OF ASSESSEE IS ALSO PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 11/08/2017 SD/- SD/- ((!) ($!) (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP-SR.PS *+, - 11/08/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-SMT. SUSMITA SAHOO, PROP. RAINBOW INDUSTR IAL SOLUTIONS, 1925, CHAK GARIA , FLAT NO.21,A2, PICK TOWER, HIHALD PARK, KOL-94 2. ! /REVENUE- DCIT CIR, 53, AAYAKAR BHAWAN (D), 2, GARI AHAT ROAD, (S) 2 ND , FLOOR, KOLKATA-68 3. ++- . / CONCERNED CIT 4. . - / CIT (A) 5. /01 ((- , - / DR, ITAT, KOLKATA 6. 123 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO - ,