Appeal Details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 0592 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 11 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
01-06-2017
Appeal Filed By
Assessee
Bench Allotted
B
Next Hearing Date
03-05-2017
Assessment Year
2007-2008
Appeal Filed On
19-06-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4237/MUM./2012 (ASSESSMENT YEAR: 2006 - 07) NUEVO CONSULTANCY SERVICES LTD. (FORMERLY KNOWN AS FORBES INFOTAINMENT LTD). 41/44, SHAPOORJI PALLONJI CENTRE MINOO DESAI MARG, COLABA, MUMBAI 400005 PAN AABCD7314A . APPELLANT V/S DCIT 3(1) MUMBAI 400020 . RESPONDENT ASSESSEE BY : SHRI. NONE REVENUE BY : SHRI. KAILASH KANOJIYA DATE OF HEARING 03.05.2017 DATE OF ORDER - 01 .0 6 .2017 O R D E R PER: SHAMIM YAHYA THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LD. CIT - A DATED 19.06.2012 AND PERTAINS TO ASSESSMENT YEAR 2006 - 07. 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ['CIT(A)'] ERRED IN MAKING AN ADDITION OF RS. 1,04,76,814 UNDER SECTION 69C OF THE INCOME TAX ACT ('THE ACT') BY TREATING NUEVO CONSULTANCY SERVICES LTD ITA NO.4237/MUM./2012 2 PURCHASES AS BOGUS PURCHASES ON ACCOUNT OF (I) DIFFERENCE IN BALANCES OF CRE DITORS AMOUNTING TO RS. 11,28,265 (II) NON RECEIPT OF REPLY FROM CREDITOR PARTIES AMOUNTING TO RS. 93,48,549. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT HAS NEITHER FURNISHED ANY INACCURATE PARTICULARS NOR CONCEALED ANY PARTICULARS OF INCOME. 3. THE LEARNED CIT(A) ERRED IN COMPLETING THE ASSESSMENT ON THE BASIS OF CONJECTURE, MERE SUSPICION AND SUMMARIZING WITHOUT ANY MATERIAL OR BASIS AND BY IGNORING THE RELEVANT MATERIALS PLACED ON RECORDS BY THE APPELLANT IN SUPPORT OF ITS SUBMISSION S AND THEREFORE, THE AP PELLANT PRAYS THAT ADDITION OF RS. 1,04,76,814 MAY BE DELETED. 4. THE LEARNED DCIT ERRED IN MAKING APPELLANT RESPONSIBLE FOR PRODUCING THE CREDITOR PARTIES WITHOUT ISSUING SUMMONS UNDER SECTION 131 OF THE ACT FROM HIS END. 5. THE LEAR NED CIT( A) ERRED IN MAKING ADDITION OF RS. 11,28,265 BY IGNORING EXPLANATIONS AND EVIDENCES SUBMITTED TO HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THEREFORE, THE APPELL ANT PRAYS THAT ADDITION OF RS. 11,28,265 MAY BE DELETED. 6. THE LEARNED CIT(A) F AILED TO UNDERSTAND THAT THE APPELLANT DOES NOT HAVE ANY DIRECT CONTROL OVER THE CREDITORS FOR NOT GIVING REPLY TO NOTICE UNDER SECTION 133(6) OF THE ACT. THEREFORE, THE APPELL ANT PRAYS THAT ADDITION OF RS. 93,48,549 MADE ON ACCOUNT OF NON - SUBMISSION OF REP LY TO SUCH NOTICE MAY BE DELETED. NUEVO CONSULTANCY SERVICES LTD ITA NO.4237/MUM./2012 3 7. TH E LEARNED CIT(A) OUGHT TO CONSIDER ALL EVIDENCES AND MATERIALS REGARDING PURCHASES AN D COMMISSIONS PRODUCED BY THE APPELLANT AND THEREFORE, ADDITIONS OF RS. 1,04,76,814 M ADE BY HIM IS ARBITRARY AND WITHOUT ANY BASIS AND THE SAME SHOULD BE DELETED. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PROVISIONS OF SECTION 69C OF THE ACT ARE NOT APPLICABLE AND THEREFORE, THE APPELLANT PRAYS THAT ADDIT ION OF RS. 1,04,76,814 MAY BE DELETED. 9. THE APPELLANT PRAYS THAT: I) A DDITION OF RS 1,04,76,814 MAY BE DELETED; II) AN OPPORTUNITY TO BE HEARD MAY BE GRANTED; III) ANY OTHER RELIEF YOUR HONOURS MAY DEEM FIT. 10. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3 . THE A.O IN THIS CASE MADE THE IMPUGNED ADDITION BY OBSERVING AS UNDER: - DURING THE COURSE OF HEARING, THE ASSESSEE COMPANY WAS ASKED TO PRODUCE CONFIRMATIONS IN RESPECT OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH NUMBER OF PARTIES. AFTER PERUSAL OF THE CONFIRMATIONS SUBMITTED AND THE DETAILS OF PURCHASES AND OTHER TRANSACTIONS NUEVO CONSULTANCY SERVICES LTD ITA NO.4237/MUM./2012 4 MADE, IT IS FO UND THAT THE ASSESSEE COMPANY FAILED TO SUBMIT THE CONFIRMATIONS IN RESPECT OF FOLLOWING PARTIES : - S.NO NAME OF THE PARTY NATURE OF TRANSACTION AMOUNTS (RS.) 1. ONLINE INFOTAINMENT DISTRIBUTORS COMMISSION & EXPENSES 24,00,339/ - 2. MEGA INFOTAINMENT DISTRIBUTORS COMMISSION 34,76,407/ - 3. NET MAGIC SOLUTIONS PVT. LTD. PROFESSIONAL FEES PAID 33,27,803/ - 4. PAN INDIA NETWORK INFRAVEST PVT. LTD PURCHASE OF LOTTERIES 70,92,698/ - 5. MICROTEK INTERNATIONAL P.LTD. PURCHASE OF COMPUTERS 2,40,000 6. CMC LTD. PURCHASE OF COMPUTERS 30,81,148/ - TOTAL 1,96,18,395/ - THE ASSESSEE WAS GIVEN SUFFICIENT TIME TO GET THE CONFIRMATIONS. HOWEVER, IN RESPECT OF ABOVE MENTIONED PARTIES, THE ASSESSEE DI D NOT SUBMIT ANY CONFIRMATION TILL THE FAG - END OF THE ASSESSMENT PROCEEDINGS. WITH A VIEW TO EXAMINE THE GENUINENESS OF ABOVE SAID TRANSACTIONS ENTERED INTO WITH SUCH PARTIES, NOTICES WERE ISSUED U/S.133(6) OF THE I. T. ACT TO THE ABOVE PARTIES. THE REPLY TO NOTICE WAS REQUIRED TO BE PROVID ED TO THIS OFFICE BY 30/12/2009. HOWEVER, ONLY ONE REPLY FROM M/S. P A N INDIA NETWORK INFRAVEST PVT. LTD. WAS RECEIVED TILL DATE, WHERE DISCREPANCY HAS BEEN FOUND BETWEEN THE AMOUNT OF SALE OF LOTTERIES AND PURCHASE AMOUNT AS PER THE ASSESSEE. FURTHER, NO R EPLY WAS RECEIV ED FROM THE REMAINING 8 NUEVO CONSULTANCY SERVICES LTD ITA NO.4237/MUM./2012 5 PARTIES MENTIONED ABOVE. THE PROPOSED ADDITION IS COMPUTED AS FOLLOWS: SL.NO NAME OF THE PARTY NATURE OF TRANSACTIONS AMT.(IN RS.) SHOWN BY THE ASSESSEE AMOUNT (IN RS.) SHOWN BY THE PARTY DIFFERENCE PROPOSED ADDITION 1. ONLINE INFOTAINMENT DISTRIBUTORS COMMISSION & EXPENSES 24,00,339/ - NO REPLY RECEIVED 24,00,339/ - 24,00,339 2. MEGA INFOTAINMENT DISTRIBUTORS COMMISSION 34,76,407 NO REPLY RECEIVED 34,76,407 34,76,407 3. NET MAGIC SOLUTION PVT. LTD. PROFESSIONAL FEES PAID 33,27,803 NO REPLY RECEIVED 33,27,803 33,27,803 4. PAN INDIA INFRAVEST PVT. LTD. PURCHASE OF LOTTERIES 70,92,698 59,64,433 11,28,265 11,28,265 5. MICROTEK INTERNNATIONL P. LTD. PURCHASE OF COMPUTERS 2,40,000 NO REPLY RECEIVED 2,40,000 1,44,000 (ON ACCOUNT OF DEPRECIATION). 6. CMC LTD. PURCHASE OF COMPUTERS 30,81,148 NO REPLY RECEIVED. 30,81,148 18,48,689(ON ACCOUNT OF DEPRECIATION). PRO POSED ADDITION 1,01,65,203/ - THE ASSESSEE WAS INTIMATED ABOUT THE SAME AND WAS ASKED TO SUBSTANTIATE THAT THE TRANSACTION ENTERED INTO WITH THE ABOVE PARTIES WERE GENUINE. THE ASSESSEE WAS FURTHER ASKED TO RECONCILE THE DISCREPANCY IN THE CASE OF PURCHASE OF LOTTERIES FROM M/S. PAN IN DIA NETWORK INFRAVEST PVT. LTD. IN RESPONSE TO THE SAME, THE ASSESSEE STATED THAT IT IS UNABLE TO PRODUCE THE CONFIRMATIONS FROM THE ABOVE PARTIES. HOWEVER, THE ASSESSEE COMPANY SUBMITTED COPY OF LEDGER ACCOUNT IN THEIR BOOKS, BILLS, CREDIT NOTES AND TDS C ERTIFICATES ISSUED TO THEM. THE CONTENTIONS OF THE ASSESSEE HAVE BEEN CAREF ULLY CONSIDERED. THE ASSESSEE HAS ONLY SUBMITTED THE COPY OF LEDGER ACCOUNT IN THEIR NUEVO CONSULTANCY SERVICES LTD ITA NO.4237/MUM./2012 6 BOOKS OF THE ABOVE MENTIONED PARTIES, BILLS, CREDIT NOTES AND TDS CERTIFICATES ISSUED TO - MELT! . HOWEVER, HERE, THE MAJOR ISSUE IS ABOUT THE GENUINENESS OF THE CLAIM OF THE ASSESSEE THAT THE PAYMENTS SHOWN TOWARDS TRANSACTIONS ENTERED INTO WITH THE ABOVE MENTIONED PARTIES HAD BEEN INCURRED FOR THE PURPOSE OF BUSINESS. THE ASSESSEE WAS GIVEN SUFFICIE NT OPPORTUNITY AS EVIDENT FROM THE DISCUSSION MADE ABOVE AND IT HAS FAILED TO SUBMIT ANY CONFIRMATION FROM BOTH THE PARTIES, RAISING QUESTIONS ABOUT THE GENUINENESS OF THE CLAIM OF THE ASSESSEE. THIS OFFICE ALSO ISSUED NOTICES U/S.133(6) TO BOTH THE PARTIE S, BUT NONE OF THE PARTIES CONFIRMED THE TRANSACTIONS MADE WITH THE ASSESSEE. THE ONUS TO PROVE GENUINENESS OF VA RIOUS EXPENSES DEBITED TO P&L A/C LIES UPON THE ASSESSEE AND THE ASSESSEE FAILED TO DISCHARGE SUCH ONUS CAST UPON IT. THE PRODUCTION OF LEDGER ACCOUNT, BILLS AND CREDIT NOTES DO NOT ITSELF SUBSTANTIATE THE GENUINENESS OF THE EXPENDITURE. FURTHER, IT IS ALSO IMPORTANT TO NOTE THAT THE ASSESSEE HAS NOT BEEN ABLE TO BRING ANYTHING ON THE RECORD, WHICH MAY HAVE PROVED THAT THE CONFIRMATIONS WERE NOT PROVIDED BY ABOVE PARTIES DUE TO ANY SPECIFIC REASON, SUCH AS DISPUTE, LITIGATION, ETC., THE AMOUNT INVOLVED IN THE ABOVE SAID TRANSACTIONS ENTERED INTO WITH THE ABOVE PARTIES IS NOT A SMALL AMOUNT. THE ASSESSEE HAS NO PLAUSIBLE REASON NUEVO CONSULTANCY SERVICES LTD ITA NO.4237/MUM./2012 7 FOR NOT SUBSTANTIATI NG THE GENUINENESS OF THE ABOVE MENTIONED TRANSACTIONS BY WAY OF CONFIRMATIONS. IN VIEW OF THE SAME, THE CLAIM OF EXPENSES AND DEPRECIATION ON THE PURCHASE OF COMPUTERS PURCHASED FROM ABOVE - MENTIONED PARTIES IS NOT FOUND TO BE GENUINE. THEREFORE, IT IS TRE ATED AS EXPENDITURE NOT LAID OUT OR EXPENDED WHOLLY & EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND ACCORDINGLY, THE SAME IS DISALLOWED U/S.37(1) OF THE I. T. ACT. PENALTY PRO CEEDINGS U/S.271(1)(C) OF THE I.T . ACT ARE INITIATED SEPARATELY FOR FURNISHING INACC URATE PARTICULARS OF INCOME, THEREBY CONCEALMENT OF INCOME CHARGEABLE TO TAX . 4. UPON ASSESSEES APPEAL LD. CIT - A HELD AS UNDER: - THE FIVE GROUND OF APPEAL PERTAINS TO ADDITION OF RS.1,01,65,203/ - ON ACCOUNT OF NON GENUINE EXPENSES. THE AO ISSUED NOTI CES U/S.133(6) TO VARIOUS PARTIES AND NO REPLIES WERE RECEIVED WITH RESPECT TO SIX PARTIES MENTIONED AT PAGE 4 OF THE ASSESSMENT ORDER AND THERE WAS DISCREPANCY IN THE ACCOUNT OF THE APPELLANT AND OF PAN INDIA INFRAVEST PVT. LTD. THE AO GAVE OPPORTUNI TY FOR RECONCILIATION AND ASKED THE APPELLANT COMPANY TO PRODUCE THE PARTIES TO PROVE THE GENUINENESS OF TRANSACTION BUT NEITHER RECONCILIATION WERE SUBMITTED NOR PARTIES WERE PRODUCED. THE AO, THEREFORE, MADE ADDITIONS TOTALLING RS.1,01,65,203/ - . NUEVO CONSULTANCY SERVICES LTD ITA NO.4237/MUM./2012 8 THE APP ELLANT FILED ADDITIONAL EVIDENCES WHICH WAS FORWARDED TO AO VIDE CIT(A) - 7 LETTER DATED 12.08.2010. THE AO FURNISHED HIS REPORT VIDE LETTER DATED 04.11.2011. THE APPELLANT FILED COMMENTS ON THE REMAND REPORT ON 28.11.2011 AND EXPLAINED THE CASE IN COURS E OF HEARING ON 30.04.2012. PARTY WISE ADDITIONS ARE DISCUSSED HEREUNDER: (I) ONLINE INFOTAINMENT, (II) MEGA INFOTAINMENT, (III) NETMAGIC SALUTATIONS PVT. LTD. & (IV) M/S. MICROTECH INTERNATIONAL (P). LTD. DESPITE LAPSE OF MORE THAN 5 YEARS FROM THE END OF PREVIOUS YEAR, THE APPELLANT HAS FAILED TO FURNISH CONFIRMATION FROM THESE FOUR PARTIES AND THE AOS NOTICES ISSUED TO THESE PARTIES COULD NOT BE SERVED. THUS THE TRANSACTION WITH THESE FOUR PARTIES H AS CORRECTLY BEEN HELD TO BE NOT GENUINE AND THE DISALLOWANCE OF CLAIM OF EXPENSES IN THESE FOUR PARTIES AMOUNTING TO RS.24,00,339/ - RS.34,76,407/ - , RS.33,27,803/ - , RS.1,44,000/ - RESPECTIVELY ARE CONFIRMED. M/S PAN INDIA NETWORK INFRAVEST PVT. LTD. T HE APPELLANT HAS FAILED TO FURNISH RECONCILIATION OF RS.11,28,265/ - AND HAS FAILED TO FURNISH ANY EVIDENCE THAT THE AMOUNT PERTAIN TO TDS CERTIFICATION, HENCE, ADDITION OF RS.11,28,265/ - IS CONFIRMED. M/S CMC LTD. THE AO IN THE REMAND REPORT HAS STATE D THAT THE CONFIRMATION OF THE PARTY SIGNED ON 2010 SUPPORTED BY COPIES OF TAX INVOICE HAVE BEEN FILED THEREFORE THE ASSESSEES CLAIM REGARDING NUEVO CONSULTANCY SERVICES LTD ITA NO.4237/MUM./2012 9 GENUINENESS OF TRANSACTION APPEARS TO BE ACCEPTABLE. IN VIEW OF AOS REPORT THE ADDITION OF RS.18,48,689/ - I S DELETED. 5. AGAINST ABOVE ORDER IS IN APPEAL BEFORE US. NONE APPEARED ON BEHALF OF THE ASSESSEE. 6. WE FIND THAT THIS CASE IS PENDING FOR THE PAST FIVE YEARS. IN THE RECENT PAST DESPITE SEVERAL NOTICES NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. HENCE WE PROCEED TO ADJUDICATE THE ISSUE BY HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RE CORDS. WE FIND THAT IN THIS CASE THE ASSESSING OFFICER HAS MADE THE ADDITION DUE TO THE REASON THAT THE PERSONS TO WHOM THE PAYMENT FOR THE EXPENDITURE WERE CLAIMED TO BE MADE COULD NOT BE LOCATED. DESPITE SEVERAL OPPORTUNITIES THE ASSESSEE HAS FAILED TO S UBSTANTIATE THE CLAIM. UPON ASSESSEE'S APPEAL LEARNED CIT - A HAS OBTAINED A REPORT FROM THE ASSESSING OFFICER. AFTER DETAILED FINDING FROM THE ASSESSING OFFICER REGARDING THE ADDITIONAL EVIDENCES LEARNED CIT - A HAS DELETED THE PART OF THE ADDITION AND SUSTAI NED THE REST AS THE ASSESSEE COULD NOT SUBSTANTIATE THE REST OF THE CLAIM. IN OUR CONSIDERED OPINION THERE IS NO INFIRMITY IN THE ORDER OF LEARNED CIT - A. IT IS BASED UPON CORRECT APPRECIATION OF THE FACTS AND THE EVIDENCES BROUGHT BY THE ASSESSING OFFICER ON RECORD. HENCE WE UPHOLD THE ORDER OF LEARNED CIT - A. NUEVO CONSULTANCY SERVICES LTD ITA NO.4237/MUM./2012 10 7. IN THE RESULT THIS APPEAL BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 1 .0 6 .2017 S D / - S D / - PAWAN SINGH SHAMIM YAHYA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 0 1 .0 6 .2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE. BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI
Mehul