Deputy Commissioner of Income Tax, New Delhi V. M/s. ASL Insurance Brokers Pvt. Ltd., New Delhi

ITA 3579/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61607 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 26-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHRI
• Keywords: Search and seizure; Accommodation entries; Assessment record
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A NEW DELHI DELHI BENCH : A NEW DELHI DELHI BENCH : A NEW DELHI DELHI BENCH : A NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A NO. 2713 & & 3579/DEL/10 ASSTT. YEAR 2006-07 & 2007-08 DCIT, CENTRAL CIRCLE-9, NEW DELHI. VS. M/S. ASL INSURANCE BROKERS PVT. LTD., 2 ND FLOOR, 3, SCINDIA HOUSE, JANPATH, NEW DELHI PAN AAECA4094M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI A.K. SINGH, SR. DR RESPONDENT BY: SHRI PANKAJ JAIN, ADVOCATE,SHRI B. L.GOEL, CA DATE OF HEARING : 09-04-2012 DATE OF PRONOUNCEMENT : 09-04-2012 ORDER PER K.G. BANSAL, AM: BOTH THESE APPEALS OF THE REVENUE RAISE IDENTICAL G ROUNDS IN RESPECT OF ACCOMMODATION BILLS ISSUED BY M/S. SWEN TELEVISI ON LTD. THE AMOUNT INVOLVED IN ASSTT. YEAR 2006-07 IS 1,12,40,00/- AN D THE AMOUNT INVOLVED IN ASSTT. YEAR 2007-08 IS ` 91,58,784/-. DUE TO COMMON ALITY OF THE ISSUES, THE APPEALS WERE ARGUED IN A CONSOLIDATED MANNER BY THE LD. SENIOR DR AND ITA NO. 2713/DEL/10 ASSTT. YEAR 2006-07 & ITA NO. 3579/DEL/10 ASSTT. YEAR 2007-08 2 THE LD. COUNSEL. THEREFORE, THE CONSOLIDATED ORDER IS PASSED. THE APPEAL FOR ASSTT. YEAR 2006-07 WAS ARGUED IN A DETAILED MA NNER AND THEREAFTER BOTH THE PARTIES RELIED ON THE SAME SUBMISSIONS IN THE APPEAL FOR ASSTT. YEAR 2007-08. IN VIEW THEREOF, THE FACTS AND SUBMIS SIONS FOR ASSTT. YEAR 2006-07 WILL FORM THE BASIS FOR BOTH THE YEARS. 2. THE FACT FOR ASSTT. YEAR 2006-07 AS MENTIONED IN THE ASSTT. ORDER ARE THAT THE ASSESSEE COMPANY FILED ITS RETURN ON 24.11 .2006 DECLARING TOTAL INCOME OF ` 56,91,902/-. SEARCH AND SEIZURE OPERATI ON WAS CONDUCTED AT RESIDENTIAL AND BUSINESS PREMISES OF ONE SHRI S.K. GUPTA ON 12.12.2006. IN THIS OPERATION, VARIOUS OTHER PERSONS AND COMPANIES CONNECTED WITH HIM OR CONTROLLED BY HIM WERE ALSO SEARCHED. THE SEARCH ES REVEALED THAT HIS COMPANIES ISSUED ACCOMMODATION BILLS TO A NUMBER OF PERSONS IN RESPECT OF CONSULTANCY CHARGES, ADVERTISEMENT CHARGES, RET AINERSHIP FEES ETC. SUBSEQUENTLY HIS STATEMENT WAS RECORDED ON 27.12.2 006. ANSWERS TO QUESTION NO. 4, 8 AND 23 HAVE BEEN REPRODUCED IN TH E ASSTT. ORDER ON PAGE 2. IN ANSWER TO QUESTION NO. ,8, IT HAS BEEN D EPOSED THAT THE SWEN TELEVISION HAS PROVIDED AGENCY SERVICES FOR WHICH A GENCY COMMISSION IS CHARGED @ 15% FOR ARRANGING ADVERTISEMENT ON JHANKA R TV. IN ANSWER TO QUESTION NO. 23 IT HAS BEEN DEPOSED THAT AS FAR AS ADVERTISEMENT ON JHANKAR TV IS CONCERNED, THE BILLS ARE GENUINE WHIC H CAN BE CONFIRMED FROM THE TV ITSELF. HOWEVER, BILLS RAISED BY ANOTHE R COMPANY OF HIS, ERA ADVERTISEMENT AND MARKETING PVT. LTD. FOR RETAINERS HIP FEE ARE IN THE NATURE OF ACCOMMODATION BILLS. ITA NO. 2713/DEL/10 ASSTT. YEAR 2006-07 & ITA NO. 3579/DEL/10 ASSTT. YEAR 2007-08 3 2.1 IN VIEW OF THE AFORESAID FACTS, COMING TO THE N OTICE OF THE AO, SURVEY WAS CONDUCTED ON 27.12.2006 U/S 133A AT OFFICE SITU ATED AT 2 ND FLOOR, 3 SCINDIA HOUSE, JANPATH, NEW DELHI. IT WAS FOUND THA T ERA ADVERTISING AND MARKETING LTD., M/S. GUPTA AND RAKESH ASSOCIATES, M /S. B.T. TECHNET LTD., M/S. SWEN TELEVISION LTD. ARE GROUP COMPANIES CONTR OLLED BY SHRI S.K. GUPTA. THESE COMPANIES ISSUED VARIOUS BILLS AGGREGA TING TO ` 1,38,85,200/- TO THE ASSESSEE COMPANY IN THIS YEAR. SIMILARLY VARIOUS BILLS AGGREGATING TO ` 1,43,62,707/- WERE ISSUED IN THE I MMEDIATELY SUCCEEDING YEAR. THE ASSESSEE WAS CONFRONTED WITH THE STATEMEN T AND THE EVIDENCE GATHERED IN SEARCHES AND SURVEY. THEY WERE ALSO INF ORMED THAT IN THE COURSE OF SEARCH NO EVIDENCE WAS FOUND IN RESPECT O F CONSULTANCY SERVICES AND RETAINER-SHIP SERVICES RENDERED BY ANY OF THE C OMPANIES OF SHRI S.K. GUPTA TO THE ASSESSEE COMPANY. WHEN CONFRONTED WITH THESE FACTS, THE ASSESSEE OFFERED A SUM OF 26,67,300/- FOR TAXATION IN THIS YEAR AND ` 26,93,760/- IN THE IMMEDIATE SUCCEEDING YEAR. THE A SSESSEE WAS REQUESTED TO RECONCILE THE DISCLOSURE VIS A VIS AM OUNTS CREDITED TO THE FOUR COMPANIES OF SHRI S.K. GUPTA. IT WAS SUBMITTED THAT EVEN AS PER THE DEPOSITION OF SHRI S.K. GUPTA THE TRANSACTIONS WITH M/S. SWEN TELEVISION LTD, FOR ADVERTISING IN JHANKAR TV ARE GENUINE. HOW EVER OTHER BILLS ARE MERELY IN THE NATURE OF ACCOMMODATION ENTRIES. THER EFORE, THE AMOUNTS SURRENDERED BY THE ASSESSEE DO NOT INCLUDE ADVERTIS EMENT CHARGES PAID TO THE COMPANIES OF SHRI S.K. GUPTA. ITA NO. 2713/DEL/10 ASSTT. YEAR 2006-07 & ITA NO. 3579/DEL/10 ASSTT. YEAR 2007-08 4 2.2 IN THE LIGHT OF AFORESAID SUBMISSIONS, THE ASSE SSEE WAS REQUIRED TO ESTABLISH THE PAYMENT OF ADVERTISEMENT CHARGES BY F ILING (I) DETAILED RATE CARD (II) TRP OF MAJOR PROGRAMMES, (II) SAMPLE AGREEMENTS WITH M/S. SWEN TELEVISION LTD. THE SUBMISSION OF THE ASSESSEE WAS THAT INQUIRES OF THE DEPARTMENT ITSELF SHOW THAT ADVERTISING CHARGES ARE GENUINE. HOWEVER THE AFORESAID DETAILS ARE NOT AVAILABLE WITH THE AS SESSEE. 2.3 IN THE LIGHT OF AFORESAID FACTS, IT HAS BEEN ME NTIONED IN THE ASSTT. ORDER THAT THE ASSESSEE HAS NOT PRODUCED MOST VITAL DOCUMENTS I.E. RATE CARD. THE TRP RATING OF JHANKAR TV IS VERY LOW AND THAT IS WHY THE ASSESSEE HAS NOT PRODUCED THIS INFORMATION. THE EXP ENDITURE IS CLAIMED AS GENUINE ON THE BASIS OF SALE BILLS ISSUED BY M/S. S WEN TELEVISION LTD., GROUP COMPANY OF SHRI S.K. GUPTA, WHICH IS ENGAGED IN PROVIDING ACCOMMODATION ENTRY. THEREFORE, THE EXPENDITURE OF ` 1,12,40,400/- HAS BEEN DISALLOWED. 3. VARIOUS SUBMISSIONS WERE MADE BEFORE THE LD. CIT (A), NEW DELHI. HE ALSO VERIFIED ASSESSMENT RECORDS OF M/S. SWEN TELEV ISION LTD. IT WAS FOUND THAT THIS COMPANY SHOWED RECEIPT OF ` 1,02,00,000/- . 85% OF THIS AMOUNT HAS BEEN DEBITED TOWARDS EXPENDITURE AS PAYMENT TO M/S. HAMARA SAMAY T.V. NEWS NETWORK PRIVATE LTD. (JHANKAR TV). 15% OF THE BILL AMOUNT HAS BEEN OFFERED AS COMMISSION INCOME. IT WAS ALSO FOUN D THAT THE ASSESSEE HAS MADE ALL THE PAYMENTS BY WAY OF AN ACCOUNT PAYE E CHEQUES. OUT OF TOTAL PAYMENT OF ` 1,12,40,400/-, ` 10,40,400/- REP RESENT SERVICES TAX AND ` 1,14,440/- REPRESENT TAX DEDUCTED AT SOURCE. TAX SO DEDUCTED HAS BEEN ITA NO. 2713/DEL/10 ASSTT. YEAR 2006-07 & ITA NO. 3579/DEL/10 ASSTT. YEAR 2007-08 5 DEPOSITED IN THE CREDIT OF CENTRAL GOVT. ON VERIFIC ATION OF ASSESSMENT RECORD, LD. CIT(A) ALSO FOUND THAT M/S. SWEN TELEVI SION LTD. WHILE SUBMITTING THE BILL FOR EVERY MONTH HAS ENCLOSED TH E NUMBER OF RELEASE OF ADVERTISEMENTS ON JHANKAR TV, TWICE A DAY. THE ASSE SSEE HAD ALSO PRODUCED CD CONTAINING TEXT OF THE ADVERTISEMENT ON JHANKAR TV. THEREFORE, IT WAS CONCLUDED THAT M/S. SWEN TELEVISI ON LTD. HAS ACTUALLY RENDERED ADVERTISING SERVICES TO THE ASSESSEE. THER EFORE, DISALLOWANCE HAS BEEN DELETED. 4. BEFORE US, LD. SR. DR REFERRED TO THE PORTION OF STATEMENT OF SHRI S.K. GUPTA EXTRACTED ON PAGE 2 OF THE ASSTT. ORDER. FURT HER HE REFERRED TO THREE DEFICIENCIES MENTIONED BY THE AO IN THE ASSTT. ORD ER REGARDING RATE CARD, LOW TRP RATING AND THE COMPANY BEING ONE OF THE GRO UP COMPANIES OF SHRI S.K. GUPTA, WHO IS ENGAGED IN PROVIDING ACCOMMODATI ON ENTRIES. HE ALSO REFERRED TO THE SUBMISSION OF THE ASSESSEE THAT BEF ORE FINALIZING THE AGREEMENT WITH M/S. SWEN TELEVISION LTD. ON 25.5.20 05, THE ASSESSEE HAD REQUESTED FOR RATE CARD, TRP RATING AND SAMPLE AGRE EMENTS. HOWEVER ON FINALISATION OF THE AGREEMENT THESE DOCUMENTS LOST ANY VALUE. THE ASSESSEE COMPANY WAS ALSO NOT UNDER OBLIGATION TO K EEP A RECORD OF THESE DOCUMENTS. IN ANY CASE THE AO HAD POWER TO SUMMON T HESE DETAILS FROM M/S. SWEN TELEVISION LTD. OR JHANKAR TV. THE AO HAS ALSO NOT BROUGHT ANY ADVERSE MATERIAL ON RECORD. THEREFORE, IT HAD BEEN ARGUED THAT NO DISALLOWANCE CAN BE MADE. ITA NO. 2713/DEL/10 ASSTT. YEAR 2006-07 & ITA NO. 3579/DEL/10 ASSTT. YEAR 2007-08 6 4.1 HE ALSO REFERRED TO THE FINDING OF THE LD. CIT( A) ON PAGE NO. 9, WHEREIN IT IS RECORDED THAT IN ANSWER TO QUESTION N O. 23, SHRI S.K. GUPTA HAS DEPOSED THAT THE BILLS ISSUED TO THE ASSESSEE B Y ERA ADVERTISING & MARKETING PVT. LTD. ARE IN THE NATURE OF ACCOMMODAT ION ENTRIES. THEREFORE, THE BILLS RECEIVED FROM THIS COMPANY ARE NOT GENUIN E. HOWEVER IN RESPECT OF M/S. SWEN TELEVISION LTD., IT HAS BEEN CLEARLY D EPOSED THAT AGENCY SERVICES FOR WHICH IT IS GETTING 15% COMMISSION AS REMUNERATION. THUS THERE IS NOTHING IN THE STATEMENT TO SUGGEST THAT T HE BILLS FROM M/S. SWEN TELEVISION LTD. ARE IN THE NATURE OF ACCOMMODATION ENTRIES. ON THESE FACTS AND THE FINDINGS OF LOWER AUTHORITIES, IT IS ARGUED THAT THE LD. CIT(A) OUGHT TO HAVE CONFIRMED THE DISALLOWANCE MADE BY THE AO. 4.2 IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE REL IED ON THE IMPUGNED ORDER. 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS MADE BEFORE US. IT IS SEEN THAT THE REVENUE COLLECTED IN FORMATION IN THE COURSE OF SEARCH OF SHRI S.K. GUPTA AND HIS COMPANIES THAT THEY WERE CARRYING ON THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. T HEREAFTER HIS STATEMENT WAS RECORDED ON 27.12.2006 WHICH IS MORE SPECIFIC IN RELATION TO THEIR TRANSACTION WITH THE ASSESSEE. IT HAS BEEN DEPOSED THAT THE BILLS ISSUED BY M/S. ERA ADVERTISEMENT AND MARKETING PVT. LTD. ARE IN THE NATURE OF ACCOMMODATION ENTRIES BUT M/S. SWEN TELEVISION L TD. HAS PROVIDED ADVERTISING SERVICES TO THE ASSESSEE COMPANY FOR WH ICH AGENCY COMMISSION @ 15% HAS BEEN CHARGED. THE PAYMENTS MAD E BY THE ITA NO. 2713/DEL/10 ASSTT. YEAR 2006-07 & ITA NO. 3579/DEL/10 ASSTT. YEAR 2007-08 7 ASSESSEE AND RECEIVED BY M/S. SWEN TELEVISION LTD. HAVE BEEN VERIFIED FROM BOTH THE ENDS. THERE IS NO DISCREPANCY FOUND I N THIS MATTER. THE VERIFICATION HAS ALSO LED TO THE FACT THAT THE PAYM ENTS INCLUDE SERVICE TAX AND TAX DEDUCTION AT SOURCE. M/S. SWEN TELEVISION L TD. HAS OFFERED THE RECEIPT FOR TAXATION IN ITS RETURN OF INCOME. IN TH ESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT DISALLOWING THE EXPENDITURE ON GRO UNDS OF LACK OF RATE CARD , TRP RATING AND SAMPLE AGREEMENT OF M/S. SWEN TELEVISION LTD. WITH ITS CLIENT IS NOT JUSTIFIED. THUS, WE ARE IN AGREEM ENT WITH THE LD. CIT(A) THAT THE ASSESSEE WAS ENTITLED TO THE DEDUCTION OF EXPENDITURE INCURRED FOR ADVERTISING ON JHANKAR TV THROUGH ADVERTISEMENT AGENT, M/S. SWEN TELEVISION LTD. 6. THE FACTS OF ASSESSMENT YEAR 2007-08 ARE ADMITTE DLY IDENTICAL TO THE FACTS OF ASSTT. YEAR 2006-07. THEREFORE, THE FI NDINGS GIVEN IN THAT YEAR (SUPRA) ARE MADE APPLICABLE TO THIS YEAR ALSO. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. SD/- SD/- [R.P. TOLANI] [K.G. BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT ITA NO. 2713/DEL/10 ASSTT. YEAR 2006-07 & ITA NO. 3579/DEL/10 ASSTT. YEAR 2007-08 8 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT