Cheil Communications India Pvt. Ltd., Gurgaon V. ACIT, New Delhi

ITA 5161/DEL/2011

• Counselvise Citation: 516120114 RSA 2011
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-01-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 18-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIS GILL
• Keywords: Gift; Transfer pricing; Opportunity of being heard; Principle of natural justice; International transaction; Deemed to accrue or arise in india; Question of law; Assessment record; Onus to prove; Reason to believe; Reassessment proceedings
• Section: 92C; 143(3); 234B; 133(6); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C DELHI) BEFORE SHRI G.D. AGRAWAL, HONBLE VICE PRESIDENT AN D SHRI A.D. JAIN, JUDICIAL MEMBER ITA NOS. 5161 & 5162(DEL)2011 ASSESSMENT YEARS: 2006-07 & 2007-08 CHEIL INDIA PRIVATE LIMITED, ASSTT.COMM ISSIONER OF INCOME TAX, (FORMERLY KNOWN AS CHEIL V. CIRCLE 3(1) , NEW DELHI. COMMUNICATIONS INDIA PRIVATE LIMITED), VIPUL TECH SQUARE, SEC. 43, GOLF COURSE ROAD, GURGAON. (APPELLANT) (RESPON DENT) APPELLANT BY: SHRI SALIL KAPOOR, ADVOCATE RESPONDENT BY: SHRI R.I. S. GILL, CIT/DR ORDER PER A.D. JAIN, J.M . ITA NO. 5161(DEL)2011: THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2006- 07 AGAINST THE ORDER OF THE ASSTT.COMMISSIONER OF INCOME TAX, CIRC LE 3(1), NEW DELHI, PASSED U/S 143(3) READ WITH SECTION 144 C OF THE I. T. ACT. THE FOLLOWING EFFECTIVE GROUNDS HAVE BEEN TAKEN:- ITA NOS. 5161&5162(DEL)2011 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 3(1), NEW DELHI (LD. AO) HAS ERRED IN PASSING THE ASSESSMENT ORDER U/S 143(3) RE AD WITH SECTION 144C OF THE INCOME-TAX ACT, 1961 (ACT) AFTER CONS IDERING THE FOLLOWING: EACH OF THE GROUND IS REFERRED TO SEPARATELY, WHICH MAY KINDLY BE CONSIDERED INDEPENDENT OF EACH OTHER: 1. THAT THE LD. AO HAS GROSSLY ERRED IN INITIATING THE REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT WHICH IS BAD IN LAW AND ACCORDINGLY, THE REASSESSMENT ORDER ISSUED U/S 143(3) READ WITH SECTION 144C OF THE ACT IS INVALID AND BE LIABLE TO BE QUASHED. 2. THAT THE NOTICE ISSUED U/S 148 AND THE REASSESSMENT ORDER PASSED ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 3. THAT IN THE ABSENCE OF ANY ADDITION OF THE ALLEGED ESCAPED INCOME, ON THE BASIS OF WHICH NOTICE U/S 148 WAS ISSUED, THE A DDITIONS MADE AND THE REASSESSMENT ORDER PASSED ARE ILLEGAL, BAD IN L AW AND WITHOUT JURISDICTION. 4. THAT THE LD. AO HAS GROSSLY ERRED BOTH ON FACTS AND IN LAW IN HOLDING THE DIFFERENCE BETWEEN THE RECEIPTS IN THE PROFIT A ND LOSS ACCOUNT AND THE AMOUNT OF INCOME SHOWN IN THE TDS CERTIFICATE I SSUED BY THE PAYER ITA NOS. 5161&5162(DEL)2011 3 OF THE INCOME AS THE DEEMED INCOME OF THE APPELLANT WITHOUT APPRECIATING THE METHOD OF ACCOUNTING USED BY THE A PPELLANT. 5. THAT THE MATERIAL COLLECTED BY THE LD. AO WITHOUT A NY KNOWLEDGE OF THE APPELLANT AND USED AGAINST THE APPELLANT WAS NE VER CONFRONTED AND NO OPPORTUNITY WAS GIVEN TO REBUT THE SAME. HE NCE, THE ADDITION/DISALLOWANCE MADE ARE UNLAWFUL, UNJUST AND ARE AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND ARE ALSO HIGHLY E XCESSIVE. 6. THAT THE LD. TRANSFER PRICING OFFICER (TPO)/AO HAS ERRED IN MAKING AN ADJUSTMENT U/S 92CA OF THE ACT WITHOUT RETURNING A FINDING ABOUT EXISTENCE OF THE CIRCUMSTANCES SPECIFIED IN CLAUSES (A) TO (D) OF SUB- SECTION (3) OF SEC. 92C CASE OF THE APPELLANT. 7. THAT THE LD. TPO/AO HAS ERRED IN REJECTING THE COMB INED TRANSACTION APPROACH UNDERTAKEN BY THE APPELLANT AND IN THE PRO CESS WRONGLY SEGREGATED THE INTERNATIONAL TRANSACTION PERTAINING TO THE AVAILING OF INTRA-GROUP SERVICES FROM THE INTERNATIONAL TRANSAC TION PERTAINING TO PROVISION OF ADVERTISING SERVICES. 8. THAT THE LD. TPO/AO HAS ERRED, IN LAW AND IN FACT, IN DETERMINING THE COMPARABLE UNCONTROLLED PRICE (CUP) METHOD AS THE MOST APPROPRIATE METHOD TO BENCHMARK THE INTERNATIONAL T RANSACTION PERTAINING TO AVAILING OF INTRA-GROUP SERVICES AND REIMBURSEMENT OF EXPENSES. ITA NOS. 5161&5162(DEL)2011 4 9. THAT THE LD. TPO/AO HAS ERRED BY ASSUMING THAT NO BENEFIT HAS BEEN CONFERRED ON THE APPELLANT FROM AVAILING OF INTRA-G ROUP SERVICES FROM ITS AE AND THESE SERVICES ARE DUPLICATIVE IN NATURE . 10. THAT THE LD. TPO/AO HAS ERRED, IN LAW AND FACTS, BY NOT CONSIDERING THAT THE ADJUSTMENT TO THE ALP, IF ANY, SHOULD BE L IMITED TO THE LOWER END OF THE 5% RANGE AS THE APPELLANT HAS THE RIGHT TO EXERCISE THIS OPTION UNDER THE PROVISO TO SECTION 92C OF THE ACT. 11. THAT THE LD. AO HAS ERRED, IN LAW AND FACTS, IN HOL DING THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS AND HAS CONCEALED THE PARTICULARS OF ITS INCOME AND HAS ALSO ERRED IN INI TIATING THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 12. THAT THE LD. AO, IN LAW AND FACTS, HAS ERRED IN CHA RGING INTEREST U/S 234B OF THE ACT. 13. THAT THE HONBLE DISPUTE RESOLUTION PANEL HAS ERRED IN CONFIRMING THE ADDITIONS PROPOSED BY THE LD. AO AND IN REJECTI NG THE OBJECTIONS FILED AGAINST THE DRAFT ASSESSMENT ORDER. 14. THAT THE HONBLE DISPUTE RESOLUTION PANEL HAS ERRED IN NOT GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE APPELLAN T. 15. THAT THE EVIDENCES PLACED AND THE MATERIAL AVAILABL E ON RECORD HAS NOT BEEN PROPERLY AND JUDICIOUSLY CONSIDERED AND TH E ADDITIONS HAVE ITA NOS. 5161&5162(DEL)2011 5 BEEN MADE IGNORING THE MATERIAL ON RECORD AND ARE A GAINST THE PRINCIPLES OF NATURAL JUSTICE. 2. AS PER GROUND NOS. 1 TO 3, THE AO HAS ERRED IN I NITIATING REASSESSMENT PROCEEDINGS, DUE TO WHICH, THE REASSESSMENT ORDER I S INVALID, AS THE NOTICE U/S 148 WAS ISSUED ON ALLEGED ESCAPED INCOME, NO AD DITION WHEREOF WAS MADE. 3. IN THIS REGARD, THE LEARNED COUNSEL FOR THE ASSE SSEE HAS DRAWN OUR ATTENTION TO PAGE 178 OF THE ASSESSEES PAPER BOOK (APB FOR SHORT)-VOL-I WHICH CONTAINS THE REASONS RECORDED BY THE AO FOR R EOPENING OF THE COMPLETED ASSESSMENT. 4. THE ISSUES INVOLVED THEREIN ARE FOREIGN EXCHANGE FLUCTUATIONS AND DATA USAGE CHARGES. THE LEARNED COUNSEL FOR THE ASSESS EE HAS SUBMITTED THAT IN THE PROPOSED ORDER OF THE AO, NO ADDITION WAS MADE ON FOREIGN EXCHANGE FLUCTUATIONS, WHEREAS APROPOS THE DATA USAGE CHARGE S OF 25% AMOUNTING TO ` 30,00,000/- WAS DISALLOWED AND OTHER ADDITIONS WERE ALSO MADE. IT HAS BEEN CONTENDED THAT THE DRP HAS DIRECTED DELETION OF THE ADDITION OF DATA USAGE CHARGES OF ` 30,00,000/- ALSO, AND SO, ULTIMATELY, NO ADDITION H AS BEEN MADE. IT IS THE ASSERTION OF THE LEARNED COUNSEL T HAT FOR REOPENING COMPLETED ASSESSMENT, THE ADDITION ORIGINALLY MADE HAS TO BE THERE AND THERE MAY BE OTHER ADDITIONS ALSO. RELIANCE IN THIS REGARD HAS BEEN PLACED ON THE DECISION ITA NOS. 5161&5162(DEL)2011 6 OF HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LTD. V. CIT, 336 ITR 136. 5. THE LD. DR, ON THE OTHER HAND, SUPPORTING THE AO S AS WELL AS DRPS ORDER DATED 2.8.11, HAS CONTENDED THAT EVEN IF NO A DDITION HAS BEEN MADE ON THE BASIS OF THE REOPENING, ONCE A COMPLETED ASSESS MENT IS REOPENED, THE ENTIRE MATTER IS OPEN AND THE AO IS COMPETENT TO MA KE THE ADDITIONS. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PER USED THE MATERIAL ON RECORD. THE REASONS RECORDED FOR THE COMPLETED A SSESSMENT ARE AS FOLLOWS:- M/S CHEIL COMMUNICATIONS INDIA PRIVATE LIMITED A.Y. 2006-07 REASONS FOR REOPENING THE CASE U/S 147/148 OF THE I .T. ACT, 1961 RETURN OF INCOME IN THIS CASE WAS FILED ON 4/12/20 06 DECLARING INCOME OF RS. 31611079/-. THE RETURN WAS PROCESSED U/S 14 3(1) ON 11/3/2008 AT THE RETURN INCOME. ON PERUSAL OF THE ASSESSMENT RECORD OF THE ASSESSE E FOLLOWING DISCREPANCIES HAVE COME TO THE NOTICE; THAT DURING THE YEAR THE ASSESSEE COMPANY HAS CLAI MED THE AMOUNT OF RS. 1182857/- AS FOREIGN EXCHANGE FLUCTUATION LOSS. FOR THE PURPOSE OF COMPUTATION OF TAXABLE INCOME, THE PROVISIONS OF IN COME-TAX ACT ARE TO BE FOLLOWED. LIABILITY WHICH WILL ARISE ONLY ON TH E HAPPENING OF AN EVENT, IN THIS CASE, ON THE REMITTANCE OF SUMS PAYABLE, SH OULD BE ALLOWED ONLY AT THE TIME OF REMITTANCE AND NOT BEFORE ON A NOTIONAL BASIS. ON THIS ISSUE, IN THE CASE OF CIT VS. WOODWARD GOVERNOR (INDIA) (P ) LTD. (2007) 162 TAXMAN 60, DEPARTMENT HAS FILED SLP, WHICH IS PENDI NG IN THE COURT . ITA NOS. 5161&5162(DEL)2011 7 THAT DURING YEAR THE ASSESSEE COMPANY HAS CLAIMED EXPENSES OF RS. 12126632/- IN SCHEDULE 13 ANNEXED WITH THE RETURN O F INCOME UNDER THE HEAD DATA USAGE CHARGES. THESE EXPENSES ARE INCURR ED BY THE ASSESSEE FOR VARIOUS RESEARCH PURPOSES, DEVELOPMENT PROJECTS , ETC. SINCE ALL THESE EXPENSES ARE PROVIDING ENDURING BENEFIT TO THE ASSE SSEE HENCE THE SAME SHOULD BE TREATED AS OF CAPITAL NATURE. AS PER THE FORM NO. 3CEB FILED ALONG WITH THE RETU RN THE ASSESSEE DURING THE YEAR HAD INTERNATIONAL TRANSACTIONS WITH ASSOCIATED ENTERPRISES/CONCERNS. HENCE DETERMINATION OF ARMS LENGTH PRICE IN RELATION TO INTERNATIONAL TRANSACTIONS IS ALSO REQU IRED. IN VIEW OF THE FACTS NARRATED ABOVE, I HAVE REASON TO BELIEVE THAT INCOME OF RS. 13309489/- HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2006-07 AND I AM SATISFIED THAT IT IS A FIT CA SE FOR ISSUE OF NOTICE U/S 148 OF I.T. ACT, 1961. (DR. PRASHANT KHAMBRA) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 3(1), NEW DELHI. 7. IT IS EVIDENT FROM THE PERUSAL OF THE ABOVE REAS ONS FOR REOPENING THE COMPLETED ASSESSMENT, THAT THE AO HAD REASON TO BEL IEVE THAT INCOME OF ` 1,33,09,489/- HAD ESCAPED ASSESSMENT; THAT THIS INC OME COMPRISED OF ` 11,82,857/- CLAIMED BY THE ASSESSEE COMPANY AS FORE IGN EXCHANGE FLUCTUATIONS LOSS AND ` 1,21,26,632/-, CLAIMED BY THE ASSESSEE AS EXPENSES UNDER THE HEAD DATA USAGE CHARGES. IN THE PROPO SED ORDER OF THE AO, IT IS ITA NOS. 5161&5162(DEL)2011 8 SEEN, AS RIGHTLY CONTENDED ON BEHALF OF THE ASSESSE E, NO ADDITION WAS MADE ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION LOSS. WITH REGARD TO THE DATA USAGE CHARGES, HOWEVER, 25%, AMOUNTING TO ` 30,00,000/- WAS DISALLOWED. THE DRP, HOWEVER, HAS DELETED THIS ADDITION ALSO. THEREFORE, IT HAS CORRECTLY BEEN CONTENDED ON BEHALF OF THE ASSESSEE THAT NO ADDITION ON THE BASIS OF THE REASONS RECORDED FOR REOPENING THE CO MPLETED ASSESSMENT SURVIVES. 8. IN RANBAXY LABORATORIES LTD. V. CIT(SUPRA), I T HAS BEEN OBSERVED, INTER ALIA, AS FOLLOWS:- 18. WE ARE IN COMPLETE AGREEMENT WITH THE REASONING OF THE DIVISION OF BOMBAY HIGH COURT IN THE CASE OF JAGANMOHAN RAO (SUPRA). WE MAY ALSO NOTE THAT THE HEADING OF SECTION 147 IS I NCOME ESCAPING ASSESSMENT AND THAT OF SECTION 148 ISSUE OF NOTIC E WHERE INCOME ESCAPED ASSESSMENT. SECTIONS 148 IS SUPPLEMENTARY AND COMPLIMENTARY TO SECTION 148 IS SUPPLEMENTARY AND COMPLIMENTARY TO SECTION 147. SUB-SECTION (2) OF SE CTION 148 MANDATES REASONS FOR ISSUANCE OF NOTICE BY THE ASSE SSING OFFICER AND SUB-SECTION (1) THEREOF MANDATES SERVICE OF NOT ICE TO THE ASSESSEE BEFORE THE ASSESSING OFFICER PROCEEDS TO A SSESS, REASSESS OR RECOMPUTED ESCAPED INCOME. SECTION 147 MANDATES RECORDING OF REASONS TO BELIEVE BY THE ASSESSING OFFICER THAT TH E INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. ALL THESE CONDITIONS ARE REQUIRED TO BE FULFILLED TO ASSESS OR REASSESS THE ESCAPED INCOME CHARGEABLE TO TAX. AS PER EXPLANATION (3) IF DURING THE COURSE OF THESE PROCEEDINGS THE ASSESSING OFFICER COMES TO CO NCLUSION THAT SOME ITEMS HAVE ESCAPED ASSESSMENT, THEN NOTWITHSTA NDING THAT THOSE ITEMS WERE NOT INCLUDED IN THE REASONS TO BEL IEVE AS RECORDED FOR INITIATION OF THE PROCEEDINGS AND THE NOTICE, H E WOULD BE COMPETENT TO MAKE ASSESSMENT OF THOSE ITEMS. HOWEVE R, THE ITA NOS. 5161&5162(DEL)2011 9 LEGISLATURE COULD NOT BE PRESUMED TO HAVE INTENDED TO GIVE BLANKET POWERS TO THE ASSESSING OFFICER THAT ON ASSUMING JU RISDICTION UNDER SECTION 147 REGARDING ASSESSMENT OR REASSESS MENT OF ESCAPED INCOME, HE WOULD KEEP ON MAKING ROVING INQU IRY AND THEREBY INCLUDING DIFFERENT ITEMS OF INCOME NOT CON NECTED OR RELATED WITH THE REASONS TO BELIEVE ON THE BASIS ON WHICH HE ASSUMED JURISDICTION. FOR EVERY NEW ISSUE COMING BE FORE ASSESSING OFFICER DURING THE COURSE OF PROCEEDINGS OF ASSESSM ENT OR REASSESSMENT OF ESCAPED INCOME, AND WHICH HE INTEND S TO TAKE INTO ACCOUNT, HE WOULD BE REQUIRED TO ISSUE A FRESH NOTI CE UNDER SECTION 148. 19. IN THE PRESENT CASE, AS IS NOTED ABOVE, THE ASSESSI NG OFFICER WAS SATISFIED WITH THE JUSTIFICATIONS GIVEN BY THE ASSE SSEE REGARDING THE ITEMS VIZ., CLUB FEES, GIFTS AND PRESENTS AND PROVI SION FOR LEAVE ENCASHMENT, BUT, HOWEVER, DURING THE ASSESSMENT PRO CEEDINGS, HE FOUND THE DEDUCTION UNDER SECTION 80HH AND 80-I AS CLAIMED BY THE ASSESSEE TO BE NOT ADMISSIBLE. HE CONSEQUENTLY WHILE NOT MAKING ADDITIONS ON THOSE ITEMS OF CLUB FEES, GIFTS AND PRESENTS, ETC. PROCEEDED TO MAKE DEDUCTIONS UNDER SECTION 80H H AND 80-I AND ACCORDINGLY REDUCED THE CLAIM ON THESE ACCOUNTS . 20. THE VERY BASIS OF INITIATION OF PROCEEDINGS FOR WHI CH REASONS TO BELIEVE WERE RECORDED WERE INCOME ESCAPING ASSESSME NT IN RESPECT OF ITEMS OF CLUB FEES, GIFTS AND PRESENTS, ETC. BUT THE SAME HAVING NOT BEEN DONE, THE ASSESSING OFFICER PROCEEDED TO R EDUCE THE CLAIM OF DEDUCTION UNDER SECTION 80 HH AND 80-I WHICH AS PER OUR DISCUSSION WAS NOT PERMISSIBLE. HAD THE ASSESSING O FFICER PROCEEDED NOT TO MAKE DISALLOWANCE IN RESPECT OF TH E ITEMS OF CLUB FEES, GIFTS AND PRESENTS, ETC. THEN IN VIEW OF OUR DISCUSSION AS ABOVE, HE WOULD HAVE BEEN JUSTIFIED AS PER EXPLANAT ION 3 TO REDUCE THE CLAIM OF DEDUCTION UNDER SECTION 80HH AND 8-I A S WELL. 21. IN VIEW OF OUR DISCUSSIONS, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE ASSESSING OFFICER HAD THE JURISDICTION TO REASS ESS ISSUE OTHER THAN THE ISSUES IN RESPECT OF WHICH PROCEEDINGS ARE INITIATED BUT HE WAS NOT SO JUSTIFIED WHEN THE REASON FOR THE INITIA TION OF THOSE PROCEEDINGS CEASED TO SURVIVE. CONSEQUENTLY, WE ANS WER THE FIRST ITA NOS. 5161&5162(DEL)2011 10 PART OF QUESTION IN AFFIRMATIVE IN FAVOUR OF REVENU E AND THE SECOND PART OF THE QUESTION AGAINST THE REVENUE. 22. THE PRESENT APPEAL IS ACCORDINGLY ALLOWED. 9. THEN RANBAXY LABORATORIES LTD. V. CIT(SUPRA), HAS BEEN FOLLOWED, WHILE ALSO FOLLOWING CIT V. M/S. JET AIRWAYS (I)PV T. LTD., RENDERED BY THE HONBLE BOMBAY HIGH COURT ON 12.4.2010 IN ITA NOS. 1714/2009 AND 1526/2008, THE HONBLE DELHI HIGH COURT, VIDE ITS ORDER DATED 28.7.2011 (COPY FILED ON RECORD, AT PAGES 17 TO 19 OF THE CAS E LAWS PAPER BOOK FILED BY THE ASSESSEE), THE HONBLE DELHI HIGH COURT, IN THE CASE OF AYUDINK NIRYAT LTD., HAS HELD, AS FOLLOWS:- SINCE THE GROUNDS FOR REOPENING THE REASSESSMENT D O NOT EXIST ANY LONGER AND NO ADDITIONS WERE ULTIMATELY MADE ON THA T ACCOUNT, THE ADDITIONS IN RESPECT OF OTHER ITEMS WHICH WERE NOT PART OF REASONS TO BELIEVE CANNOT BE MADE. THIS ISSUE HAS BEEN DECIDE D BY THE HIGH COURT OF JUDICATURE AT BOMBAY IN COMMISSIONER OF IN COME TAX V M/S JET AIRWAYS (I) PVT. LTD. VIDE JUDGMENT DATED 12 TH APRIL, 2010 IN ITA NOS. 1714/2009 AND 1526/2008. RECENTLY, THIS BENCH HAS ALSO DELIVERED THE JUDGMENT IN CASE OF CIT V RANBAXY DEC IDED ON 3 RD JUNE, 2011 AGREEING WITH THE AFORESAID VIEW TAKEN BY HIGH COURT OF JUDICATURE AT BOMBAY. WE THUS FIND THAT NO SUBSTANT IAL QUESTION OF LAW ARISES IN THIS APPEAL. DISMISSED. 10. IT IS THUS SEEN THAT NO ADDITION HAVING BEEN MA DE ON THE BASIS OF THE REASONS RECORDED BY THE AO FOR REOPENING THE COMPLE TED ASSESSMENT AND THE REMAINING ADDITIONS BEING NOT PART OF THE SAID REAS ONS TO BELIEVE RECORDED BY THE AO, IN KEEPING IN RANBAXY LABORATORIES LTD. V. CIT(SUPRA) AND ITA NOS. 5161&5162(DEL)2011 11 AYUDINK NIRYAT LTD.(SUPRA), REOPENING OF THE COMP LETED ASSESSMENT IN THE PRESENT CASE IS BAD IN LAW. THERE IS, AS SUCH, N O MERIT IN THE STAND TAKEN BY THE DEPARTMENT THAT ONCE THE COMPLETED ASSESSMENT S TOOD REOPENED, THE ENTIRE MATTER WAS OPEN BEFORE THE AO AND THE AO WAS COMPETENT TO MAKE THE ADDITIONS. IN VIEW OF THE ABOVE, GROUND NOS. 1 TO 3 RAISED BY THE ASSESSEE ARE ACCEPTED AND THE REASSESSMENT PROCEEDI NGS INCLUDING THE REASSESSMENT ORDER ARE CANCELLED. 11. DUE TO THE CANCELLATION OF THE REASSESSMENT ORD ER, AS ABOVE, NOTHING ELSE SURVIVES AND THE REMAINING GROUNDS TAKEN BY T HE ASSESSEE NEED NOT BE GONE INTO AND WE ARE NOT DOING SO. 12. CONSEQUENTLY, THE APPEAL OF THE ASSESSEE IS ALL OWED. ITA NO. 5162(DEL)2011: 13. THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2 007-08 AGAINST THE ORDER OF THE ASSTT.COMMISSIONER OF INCOME TAX, CIRC LE 3(1), NEW DELHI, PASSED U/S 143(3) READ WITH SECTION 144 C OF THE I. T. ACT. 14. THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS:- 1. THAT THE LD. AO HAS GROSSLY ERRED BOTH ON FACTS AN D IN LAW IN HOLDING THE DIFFERENCE BETWEEN THE RECEIPTS IN THE PROFIT AND LOSS ACCOUNT AND AMOUNT OF INCOME SHOWN IN THE TDS CERTI FICATES ISSUED BY THE PAYER OF THE INCOME AS THE DEEMED INC OME OF THE ITA NOS. 5161&5162(DEL)2011 12 APPELLANT WITHOUT APPRECIATING THE METHOD OF ACCOUN TING USED BY THE APPELLANT. 2. THAT THE MATERIAL COLLECTED BY THE LD. AO WITHOUT A NY KNOWLEDGE OF THE APPELLANT AND USED AGAINST THE APPELLANT WAS NEVER CONFRONTED AND NO OPPORTUNITY WAS GIVEN TO REBUT TH E SAME. HENCE, THE ADDITION / DISALLOWANCE MADE ARE UNLAWFUL, UNJU ST AND ARE AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND ARE A LSO HIGHLY EXCESSIVE. 3. THAT THE LD. TRANSFER PRICING OFFICER (TPO) AO HA S ERRED IN MAKING AN ADJUSTMENT UNDER SECTION 92CA OF THE ACT WITHOUT RETURNING A FINDING ABOUT EXISTENCE OF THE CIRCUMST ANCES SPECIFIED IN CLAUSES (A) TO (D) OF SUB-SECTION (3) OF SECTION 92C CASE OF THE APPELLANT. 4. THAT THE LD. TPO/AO HAS ERRED, IN LAW AND IN FACT, IN DETERMINING THE COMPARABLY UNCONTROLLED PRICE (CUP) METHOD AS THE MOST APPROPRIATE METHOD TO BENCHMARK THE INTERNATIONAL T RANSACTION PERTAINING TO AVAILING OF INFRA-GROUP SERVICES AND REIMBURSEMENT OF EXPENSES. 5. THAT THE LD. TPO /AO HAS ERRED BY ASSUMING THAT NO BENEFIT HAS BEEN CONFERRED ON THE APPELLANT FROM AVAILING OF IN FRA-GROUP SERVICES FROM ITS AE AND THESE SERVICES ARE DUPLICA TIVE IN NATURE. 6. THAT THE LD. TPO/AO HAS ERRED, IN LAW AND FACTS, B Y NOT CONSIDERING THAT THE ADJUSTMENT TO THE ALP, IF ANY, SHOULD BE LIMITED TO THE LOWER END OF THE 5 PERCENT RANGE AS THE APPELLANT HAS THE RIGHT TO EXERCISE THIS OPTION UNDER THE PROVISO TO SECTION 92C OF THE ACT. 7. THAT THE LD. AO HAS ERRED, IN LAW AND FACTS, IN HO LDING THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS AND HAS CONCEALED THE PARTICULARS OF ITS INCOME AND HAS ALSO ERRED IN INITIATING THE PENALTY PROCEEDINGS UNDER SECTION 271(1) (C) OF THE ACT. 8. THAT THE LD. AO IN LAW AND FACTS, HAS ERRED IN CHAR GING INTEREST UNDER SECTION 234B OF THE ACT. ITA NOS. 5161&5162(DEL)2011 13 9. THAT THE HONBLE DISPUTE RESOLUTION PANEL HAS ERRED IN CONFIRMING THE ADDITIONS PROPOSED BY THE LD. AO AND IN REJECTING THE OBJECTIONS FILED AGAINST THE DRAFT ASSESSMENT O RDER. 10. THAT THE HONBLE DISPUTE RESOLUTION PANEL HAS ERRED IN NOT GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE APPELLAN T. 15. AS PER GROUND NO.2, THE AO HAS ERRED IN COLLECT ING MATERIAL AT THE BACK OF THE ASSESSEE AND IN NOT CONFRONTING THE SAM E TO THE ASSESSEE OR GIVING ANY OPPORTUNITY TO THE ASSESSEE TO REBUT THE SAME AND SO, THE ADDITIONS/DISALLOWANCE MADE ARE UNSUSTAINABLE. 16. THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO PAGE 6 OF THE DRPS ORDER DATED 2.8.11, WHEREIN, DEALING W ITH GROUND NO.2 RAISED BY THE ASSESSEE BEFORE THE DRO, I.E., AGAINST THE A DDITION OF ` 92,00,04,163/- ON ACCOUNT OF DEEMED INCOME, THE DRP HAS OBSERVED A S FOLLOWS:- DRPS OBSERVATION THE ASSESSEE HAS OBJECTED TO THE PROCESSED ADDITION OF RS. 92,00,04,163/- ON ACCOUNT OF DIFFERENCE BETWEEN THE RECEIPTS DISCLOSED IN THE AMOUNTS AND THE GROSS RECEIPTS AS PER TDS CE RTIFICATES. THE ASSESSEE STATED THAT THE AO DID NOT UNDERSTAND THE METHOD OF ACCOUNTING USED BY CHEIL INDIA. THE AO DID NOT ACCE PT THAT ASSESSEE HAD PAID RS. 89.34 CRORES TO THIRD PARTIES AS THE PAN/ADDRESSES/CONFIRMATION WERE NOT PROVIDED. DURING THE DRP PROCEEDINGS, THE ASSESSEE PRODUCED T HE CONFIRMATION FROM 45 VENDORS REPRESENTING 66% OF THE TOTAL VALUE OF AMOUNT PAID TO THIRD PARTIES. THE SAME WAS FORWARDED TO THE AO FOR HIS VERIFICATION BUT HE REQUESTED MORE TIME TO VERIFY THE CONFIRMATI ONS. AS THE DRP PROCEEDINGS HAVE TIME LIMITATIONS, AND IT WOULD TAK E TIME FOR THE AO ITA NOS. 5161&5162(DEL)2011 14 TO VERIFY ALL THE DETAILS, THE DRP DIRECTS THE AO T O VERIFY THE EVIDENCE (CONFIRMATION) FURNISHED AND IF SATISFIED WILL REST RICT DISALLOWANCE. IF ANY, TO PAYMENTS TO THIRD PARTIES NOT VERIFIABLE. T HUS, DISALLOWANCE IN ANY CASE CANNOT EXCEED RS. 89,39,92,188/- (THE TOTA L PAID TO THIRD PARTIES) EVEN IF ALL THIRD PARTIES PAYMENTS ARE NOT ACCEPTED AS GENUINE. 17. THE LEARNED COUNSEL FOR THE ASSESSEE HAS THEN D RAWN OUR ATTENTION TO PAGES 113 TO 118 UNDER ITEM 5 OF APB VOL-I, WHEREIN , THE AO HAS OBSERVED AS FOLLOWS:- DEEMED INCOME ON ACCOUNT OF SHORT RECEIPTS DECLARED IN P/L ACCOUNT :- DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE CO MPANY SHOWN RECEIPT OF RS. 13,89,27,647/-. HOWEVER AS PER THE T DS RECONCILIATION CHART FILED BY THE ASSESSEE THE TOTAL RECEIPT IS R S. 1,05,89,31,810/-. THUS THE ASSESSEE HAS SHOWN LESS RECEIPT OF RS. 92, 00,04,163/- (RS. 1,05,89,31,810/- - 13,89,27,647/-) AND IT MUST BE T REATED AS DEEMED INCOME OF THE ASSESSEE AS PER SECTION 199. ACCORDIN GLY THE ASSESSEE COMPANY VIDE NOTESHEET ENTRY DATED 25.11.2010 WAS REQUESTED TO RECONCILE THE RECEIPTS SHOWN IN P & L ACCOUNT WITH THE TDS CERTIFICATES. THE ASSESSEE COMPANY VIDE LETTER DATE D 15/12/2010 AND 12/11/2010 SUBMITTED AS UNDER :- THE COMPANY RECOGNIZES THE COMMISSION INCOME IN IT S BOOKS OF ACCOUNT. THE ADVANCE RECEIVED FROM THE PARTIES AND GIVEN TO THE VENDORS IS RECOGNIZED AS ASSET/LIABILITY IN THE BOO KS OF ACCOUNTS. THE RECONCILIATION OF THE AMOUNT RECEIVED FROM THE PART IES IS ENCLOSED THE SUBMISSION OF THE ASSESSEE HAS BEEN CONSIDERED CAREFULLY AND FOUND NOT ACCEPTABLE SINCE THE ASSESSEE NOT FILED A NY COPY OF ACCOUNT OF THE VENDOR TO WHOM THE PAYMENT HAS BEEN MADE NOR ANY CONFIRMATION / IDENTIFICATION NUMBER SUCH AS PAN NU MBER AND ADDRESS OF THE VENDOR HAS BEEN FILED. IN THE ABSENC E OF THE SAME THE CLAIM OF THE ASSESSEE IS UNVERIFIABLE. HENCE THE SH ORT RECEIPT SHOWN BY ITA NOS. 5161&5162(DEL)2011 15 THE ASSESSEE AMOUNTING TO RS. 92,00,04,163/- IS TR EATED THE INCOME OF THE ASSESSEE. (ADDITION :- RS. 92,00,04,163/-) 18. THE LEARNED COUNSEL HAS, THEN, DRAWN OUR ATTE NTION TO THE COPY OF FINAL ASSESSMENT ORDER DATED 17.10.11 (APB 1, PAGES 6 TO 18, UNDER ITEM 2), WHEREIN, IT HAS BEEN OBSERVED AT PAGES 9 TO 13 AT INTERNAL PAGES, WITH REGARD TO THIS ISSUE AS FOLLOWS:- DEEMED INCOME ON ACCOUNT OF SHORT RECEIPTS DECLARED IN P/L ACCOUNT : DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE CO MPANY SHOWN RECEIPT OF RS. 13,89,27,647/-. HOWEVER, AS PER THE TDS RECONCILIATION CHART FILED BY THE ASSESSEE THE TOTAL RECEIPT IS RS . 1,05,89,31,810/-. THUS, THE ASSESSEE HAS SHOWN LESS RECEIPT OF RS. 92 ,00,04,163/- (RS. 1,05,89,31,810/- - 13,89,27,647/-) AND IT MUST BE T REATED AS DEEMED INCOME OF THE ASSESSEE AS PER SEC. 199. ACCORDINGL Y THE ASSESSEE COMPANY VIDE NOTE SHEET ENTRY DATED 25.11.2010 WAS REQUESTED TO RECONCILE THE RECEIPTS SHOWN IN P&L ACCOUNT WITH TH E TDS CERTIFICATES. THE ASSESSEE COMPANY VIDE LETTER DAT ED 15/12/2010 AND 12/11/2010 SUBMITTED AS UNDER: - THE COMPANY RECOGNIZES THE COMMISSION INCOME IN IT S BOOKS OF ACCOUNTS. THE ADVANCE RECEIVED FROM THE PARTIES AN D GIVEN TO THE VENDORS IS RECOGNIZED AS ASSET/LIABILITY IN THE BOO KS OF ACCOUNTS. THE RECONCILIATION OF THE AMOUNT RECEIVED FROM THE PART IES IS ENCLOSED. ITA NOS. 5161&5162(DEL)2011 16 THE SUBMISSION OF THE ASSESSEE HAS BEEN CONSIDERED CAREFULLY AND FOUND NOT ACCEPTABLE SINCE THE ASSESSEE NOT FILED A NY COPY OF ACCOUNT OF THE VENDOR TO WHOM THE PAYMENT HAS BEEN MADE NOR ANY CONFIRMATION/IDENTIFICATION NUMBER SUCH AS PAN NUMB ER AND ADDRESSES OF THE VENDOR HAS BEEN FILED. IN THE ABS ENCE OF THE SAME THE CLAIM OF THE ASSESSEE IS UNVERIFIABLE. HENCE THE S HORT RECEIPT SHOWN BY THE ASSESSEE AMOUNTING TO RS. 92,00,04,163/- IS TREATED THE INCOME OF THE ASSESSEE. DURING THE DRP PROCEEDINGS, THE ASSESSEE PRODUCED THE CONFIRMATION FROM 45 VENDORS REPRESENTING 66% OF TH E TOTAL VALUE OF AMOUNT PAID TO THIRD PARTIES. THE SAME WAS FORWARD ED TO THE AO FOR HIS VERIFICATION BUT HE REQUESTED MORE TIME TO VERI FY THE CONFIRMATIONS. AS THE DRP PROCEEDINGS HAVE TIME LIMITATIONS, AND I T WOULD TAKE TIME FOR THE AO TO VERIFY ALL THE DETAILS, THE DRP DIREC TS THE AO TO VERIFY THE EVIDENCE (CONFIRMATION) FURNISHED AND IF SATISF IED WILL RESTRICT DISALLOWANCE, IF ANY, TO PAYMENTS TO THIRD PARTIES NOT VERIFIABLE. THUS, DISALLOWANCE IN ANY CASE CANNOT EXCEED RS. 89399218 8/- EVEN IF THIRD PARTIES PAYMENTS ARE NOT ACCEPTED AS GENUINE. AS PER THE DIRECTION OF THE DRP NOTICES U/S 133(6) DATED 28.9.2011 WERE ISSUED TO THE FOLLOWING PARTIES ON THE ADDRESS PROVIDED BY THE ASESSEE TO SUBMIT THE CONFIRMATION BY 10.10.2011: - 1. ABV PVT. LIMITED RS. 28191207/- 2. AUTUMN DESIGN CONSULTANTS P. LTD. RS. 5109707/- 3. BENETT, COLEMAN & CO. LIMITED RS. 56202376/- 4. BREAKTHROUGH COMMUNCIATIONS RS. 4610662/- ITA NOS. 5161&5162(DEL)2011 17 5. CITYNEON DAG (INDIA) P. LTD. RS. 20180419/- 6. DAINIK BHASKAR PUBLICATIONS RS. 15522931/- 7. DINA THANTI PUBLICATIONS, MADRAS RS. 2278049/- 8. DIVYA BHASKAR RS. 2089363/- 9. ENTERTAINMENT NETWORK (INDIA) LTD. RS. 1786390/- 10. GINGERWATER FILMS RS. 138728/- 11. GLOBAL BORADCAST NEWS LTD. RS. 4587323/- 12. HT MEDIA LIMITED RS. 26901063/- 13. JAGRAN PRAKASHAN (P) LTD., KANPUR RS. 13073750/- 14. JAYA TV RS. 130050/- 15. KASTURI & SONS LIMITED RS. 34097391/- 16. LIVING MEDIA (INDIA) LIMITED RS. 22485156/- 17. LOK PRAKASH LIMITED RS. 10683869/- 18. LOKMAT NEWSPAPERS P. LTD., NAGPUR RS. 5325505/- 19. LUSTRA PRINT PROCESS P. LIMITED RS. 24858341/- 20. MATHRUBHUMI PRINTING & PUBL. CO. LTD. RS. 1257106/- 21. NDTV MEDIA LIMITED RS. 93713/- 22. NEW COLOUR SCREENS P. LTD. RS. 11091054/- 23. NEW DELHI TELEVISION LIMITED RS. 11719721/- 24. OUTLOOK PUBLISHING (INDIA) P. LTD. RS. 2708100/- 25. PORTLAND INDIA OUTLOOK ADVERTISING P. LIMITED. RS. 41572900/- 26. POSTERSCOPE INDIA PRIVATE LIMITED RS. 86549343/- 27. SAKAL PAPERS LIMITED RS. 9807848/- 28. SHARK DESIGN STUDIO RS. 40425044/- ITA NOS. 5161&5162(DEL)2011 18 29. STAR INDIA PRIVATE LIMITED RS. 1427301/- 30. STAR INDIA PRIVATE LTD.- STAR NEWS HINDI RS.6076933/- 31. STAR INDIA PRIVATE LTD- STAR GOLD RS. 5024478/- 32. STAR INDIA PRIVATE LTD- STAR MOVIES RS. 12502336/- 33. STAR INDIA PRIVATE LTD- STAR ONE RS. 15593611/- 34. STAR INDIA PRIVATE LTD- STAR PLUS RS. 8543690/- 35. STAR INDIA PRIVATE LTD- STAR VIJAY RS. 1399759/- 36. STAR INDIA PRIVATE LTD- STAR WORLD RS. 1050383/- 37. TDI INTERNATIONAL INDIA LIMITED RS. 11959810/- 38. THE BIG PICTURE COMPANY RS. 6000000/- 39. THE MALAYALA MANORAMA CO. LTD. RS. 7733290/- 40. TIMES INNOVATIVE MEDIA PVT. LTD. RS. 17822077/- 41. VIJAYANAND PRINTERS LTD. RS. 1411340/- 42. ZEE TELEFILMS LTD. RS. 13905686/- OUT OF THE ABOVE 42 PARTIES NOTICES U/S 133 (6) HAV E BEEN RECEIVED BACK IN THE FOLLOWING CASES :- 1. M/S. ZEE TELEFILM LIMITED RS. 13905686/- 2. M/S. BREAKTHROUGH COMMUNICATIONS RS.4610662/- 3. M/S. SHARK DESIGN STUDIO RS. 40425044/- 4. M/S. GINGERWATER FILMS RS. 138728/- 5. M/S POSTERSCOPE INDIA PRIVATE LIMITED RS. 86549 343/- 6. M/S. DAINIK BHASKAR PUBLICATIONS RS. 15522931/ - 7. M/S. PORTLAND INDIA OUTLOOK ADVERTISING RS. 41572900/- PVT. LTD. ITA NOS. 5161&5162(DEL)2011 19 8. M/S. TIMES INNOVATIVE MEDIA PRIVATE RS. 1782 2077/- PVT. LTD. 9. M/S. STARINDIA PRIVATE LTD. STAR NEWS HINDI RS 6076933/- 10. M/S JAYA TV RS. 130050/- THE CONFIRMATION HAS BEEN RECEIVED ONLY FROM THE FO LLOWING PARTIES THE CRUX OF CONFIRMATION RECEIVED IS AS UNDER :- (I)THE MALAYALA MANORAMA CO. LIMITED M/S. C HEIL COMMUNICATIONS PRIVATE LIMITED SHOWN PAYMENT TO THIS COMPANY AMOUN TING TO RS. 7733290/- HOWEVER THE CONFIRMATION HAS BEEN RECEIVE D FOR RS. 7134840/-. THUS THE PAYMENT SHOWN BY THE ASSESSEE C OMPANY IS NOT MACHING WITH THE CONFIRMATION RECEIVED. (II)THE BIG PICTURE COMPANY LIMITED M/S CHEIL COMMUNICATIONS PRIVATE LIMITED SHOWN PAYMENT TO THIS COMPANY AMOUN TING TO RS. 6000000/- HOWEVER THE CONFIRMATION HAS BEEN RECEIVE D FOR RS. 10153062/-. THUS THE PAYMENT SHOWN BY THE ASSESSEE COMPANY IS NOT MATCHING WITH THE CONFIRMATION RECEIVED. (III) THE LIVING MEDIA(INDIA)LIMITED M/S. CHEIL COMMUNICATIONS PRIVATE LIMITED SHOWN PAYMENT TO THIS COMPANY AMOUN TING TO RS. 22485156/- HOWEVER THE CONFIRMATION HAS BEEN RECEIV ED FOR RS. 22009157/-. THUS THE PAYMENT SHOWN BY THE ASSESSEE COMPANY IS NOT MATCHING WITH THE CONFIRMATION RECEIVED. (IV)THE NEW DELHI TELEVISION LIMITED (NDTV) M/S CHEIL COMMUNICATIONS PRIVATE LIMITED SHOWN PAYMENT TO THI S COMPANY AMOUNTING TO RS. 11719721/- HOWEVER THE CONFIRMATIO N HAS BEEN RECEIVED FOR RS. 46450911/-. THUS THE PAYMENT SHOWN BY THE ASSESSEE COMPANY IS NOT MATCHING WITH THE CONFIRMATION RECEI VED (V)THE NDTV MEDIA LIMITED M/S. CHEIL COMMUNICATIONS PRIVATE LIMITED SHOWN PAYMENT TO THIS COMPANY AMOUNTING TO RS. 93713/- HOWEVER THE CONFIRMATION HAS BEEN RECEIVED FOR RS. 245688/-. THUS THE PAYMENT SHOWN BY THE ASSESSEE COMPANY IS NOT MA TCHING WITH THE CONFIRMATION RECEIVED.. ITA NOS. 5161&5162(DEL)2011 20 (VI)THE MATHRUBHUMI PRINTING & PUB CO. LIMITED M/S CHEIL COMMUNICATIONS PRIVATE LIMITED SHOWN PAYMENT TO THI S COMPANY AMOUNTING TO RS. 1257106/- HOWEVER THE CONFIRMATION HAS BEEN RECEIVED FOR RS. 1955604/-. THUS THE PAYMENT SHOWN BY THE ASSESSEE COMPANY IS NOT MATCHING WITH THE CONFIRMATION RECEI VED. (VII)THE HT MEDIA LIMITED M/S. CHEIL COMMUNICATIONS PRIVATE LIMITED SHOWN PAYMENT TO THIS COMPANY AMOUNTING TO RS. 26901063/- HOWEVER HT MEDIA LIMITED IN RESPONSE TO NOTICE 133( 6) SUBMITTED AS UNDER :- REFERENCE TO THE ABOVE SAID LETTER, WE HEREBY CONF IRM THAT WE HAVE NOT ENTERED ANY TRANSACTION WITH M/S CHEIL INDIA PR IVATE LIMITED DURING THE FINANCIAL YEAR 2006-07.- COPY OF THIS L ETTER IS ANNEXED WITH THE ASSESSMENT ORDER. IN RESPECT OF BALANCE 25(42-10-7) PARTIES TO WHOM N OTICES U/S 133(6) WERE ISSUED NO RESPONSE HAS BEEN RECEIVED. APART FROM THE ABOVE IN THE REMAND PROCEEDINGS IN O RDER TO CROSS VERIFY THE CLAIM OF THE ASSESSEE NOTICES U/S 133(6) ON RANDOM BASIS ISSUED TO THE FOLLOWING PARTIES WITH THE REQU EST TO SUBMIT THE REQUISITE INFORMATION BY 7.9.2011 :- RS. 1. M/S ANUPAM GRAPHICS INDIA PVT. LTD. 3613335/- 2. M/S. ASIANET COMMINICATION LIMITED 2345457/- 3. M/S BELLSET ENTERTAINMENT PRIVATE LIMITED 49081 69/- 4. M/S.BLACK MAGIC MOTION PICTURE LIMITED 5296780 /- 5. M/S. CRAFTPAC CONTAINERS PVT. LIMITED 6957148 /- 6. M/S INTERACTIVE TELEVISION PVT. LIMITED 324887 8/- 7. M/S. MAGNUM INTERIORS PVT. LIMITED 16281243/- 8. M/S. NOMAD FILMS 10902780/- THE NOTICES U/S 133 (6) WERE ISSUED TO THE ABOVE PA RTIES AS PER THE LIST PROVIDED BY THE ASSESSEE. THE NOTICES IN RESPECT OF FOLLOWING PARTIES AS RECEIVED BACK UNSERVED WITH THE REMARKS UNCLAIME D. COPIES OF ENVELOPS ARE ENCLOSED:- RS. 1. M/S CRAFTPAC CONTAINERS PRIVATE LIMITED 6957 148/- ITA NOS. 5161&5162(DEL)2011 21 2. M/S. INTERACTIVE TELEVISION PRIVATE LIMITED 3 248878/- 3. M/S. BLACK MAGIC MOTION PICTURE LIMITED 52967 80/- IN RESPECT OF OTHER PARTIES NO RESPONSE RECEIVED B Y THE STIPULATED TIME I.E. 7.9.2011. IN THE ABSENCE OF CROSS VERIFICATION THE CLAIM OF THE ASSESSEE IS UNVERIFIABLE. IT IS A SETTLED PRINCIPAL THAT IT IS ONE WHO WANTS BENEFITS OR CLAIMS SOMETHING UNDER THE ACT HAS TO PROVE. FOR INSTANCE, IF THE ASSESSEE WANTS CLAIM OF CERTAIN RECEIPTS, IT IS THE ASSESSEE S DUTY TO PROVE THE SAME. THUS, THE SIMPLE PRINCIPAL IS THAT BURDEN OF PROOF IS ON THAT PERSON WHO CLAIMS BENEFIT FROM THE PROVISIONS OR WA NTS PROVISIONS TO WORK IN HIS FAVOUR. THIS IS ALSO BECAUSE OF THE FAC T THAT ASSESSEE IS IN A BETTER POSITION THEN THE TAX AUTHORITIES WHO HAVE N O FACTS OR EVIDENCE IN THEIR POSITION. AS PER THE DIRECTION OF THE DRP NOTICES U/S 133(6) WERE ISSUED BUT NO RESPONSE HAS BEEN RECEIVED FROM 25 PARTIES IN 10 CA SES THE NOTICES RECEIVED UNSERVED IN RESPECT OF PARTIES WHO CONFIRM ED THE TRANSACTION THE AMOUNT IS NOT MATCHING WITH THE PAYMENT SHOWN B Y THE ASSESSEE COMPANY. FURTHER IN ONE CASE THE PARTY TO WHOM NOTI CE U/S 133 (6) WAS ISSUED HAS INFORMED THAT IT HAD NOT ENTERED ANY TRANSACTIONS WITH THE ASSESSEE COMPANY TO WHOM THE ASSESSEE COMPANY H AS SHOWN PAYMENT OF RS. 26901063/-. THUS THE PAYMENT TO THIR D PARTIES IS NOT VERIFIABLE AS PER THE DIRECTION OF THE DRP. HENCE T HE SHORT RECEIPT SHOWN BY THE ASSESSEE COMPANY AMOUNTING TO RS. 8939 92188/- (AS RESTRICTED BY DRP) IS ADDED BACK TO THE INCOME OF T HE ASSESSEE COMPANY. (ADDITION :- RS. 893992188/-) 19. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTEN DED THAT THE AO COLLECTED EVIDENCE AT THE BACK OF THE ASSESSEE AND MADE THE ADDITION WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSEE TO REBUT SUCH EVIDENCE; AND THAT THEREFORE, THE MATTER NEEDS TO BE REMITTED TO THE FILE OF THE AO TO BE DECIDED ITA NOS. 5161&5162(DEL)2011 22 AFRESH IN ACCORDANCE WITH LAW ON AFFORDING OPPORTUN ITY TO THE ASSESSEE TO REBUT THE EVIDENCE COLLECTED BY THE AO. 20. THE LD. DR, ON THE OTHER HAND, HAS STRONGLY REL IED ON THE AOS ORDER. 21. IN THIS REGARD, IT IS SEEN THAT INDEED, THE AO COLLECTED EVIDENCE AT THE BACK OF THE ASSESSEE AND NEVER CONFRONTED THE SAME TO THE ASSESSEE. THE ASSESSEE WAS NOT ALLOWED ANY OPPORTUNITY TO REBUT T HE EVIDENCE. HOWEVER, THE AO WENT ON TO MAKE THE ADDITION OF ` 89,39,92,188/-, ON ACCOUNT OF THE ALLEGED SHORT RECEIPTS DECLARED IN THE PROFIT AND L OSS ACCOUNT. NOW, THIS IS ENTIRELY IN VIOLATION OF THE NATURAL JUSTICE PRINCI PLES OF AUDI ALTEREM PARTEM. NOBODY CAN BE CONDEMNED IN HEARING. ADDITION HERE IN HAVING BEEN MADE AT THE BACK OF THE ASSESSEE WITHOUT CONFRONTING THE SAME TO THE ASSESSEE MUCH LESS ALLOWING THE ASSESSEE ANY OPPORTUNITY TO REBUT IT, THIS ADDITION, AS IT STANDS, IS NOT SUSTAINABLE IN THE EYE OF LAW. ACCORDINGLY, THIS ISSUE IS REMITTED TO THE FILE OF THE AO, TO BE DECIDED AFRES H IN ACCORDANCE WITH LAW, ON PROVIDING DUE AND ADEQUATE OPPORTUNITY TO THE AS SESSEE TO REBUT THE EVIDENCE COLLECTED BY THE AO AT THE BACK OF THE ASS ESSEE. 22. IN THIS REGARD, A PERUSAL OF THE RELEVANT PORTI ON OF THE DRPS ORDER, AS REPRODUCED HEREIN ABOVE, SHOWS THAT THE ASSESSEE HA S PRODUCED CONFIRMATIONS FROM 45 VENDORS BEFORE THE DRP, AND T HE DRP HAD FORWARDED THE SAME TO THE AO FOR VERIFICATION. THE AO HAD R EQUESTED FOR MORE TIME TO ITA NOS. 5161&5162(DEL)2011 23 MAKE THE VERIFICATION. THE DRP, HOWEVER, DIRECTED THE AO TO VERIFY THE EVIDENCE AND IF THE AO WERE SATISFIED, HE WAS TO RE STRICT THE DISALLOWANCE, IF ANY, WHICH, IN ANY CASE, AS PER THE DRP, COULD NOT EXCEED ` 89,39,92,188/-, THE PAYMENTS MADE TO THIRD PARTIES NOT VERIFIABLE. SINCE THE MATTER IS NOW BEING REMITTED TO THE FILE OF THE AO, AS ABOVE, THE ASSESSEE WOULD GET AMPLE OPPORTUNITY TO PROVE ITS CASE. 23. THE ENTIRE MATTER IS, ACCORDINGLY, REMITTED TO THE FILE OF THE AO TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW ON AFFORDING ADEQUATE, DUE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE BY CONFRONTI NG THE ENTIRE EVIDENCE COLLECTED TO THE ASSESSEE. 24. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL OF THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.01.2012. SD/- SD/- (G.D. AGRAWAL) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: 31.01.2012 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT ITA NOS. 5161&5162(DEL)2011 24 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER ASSISTANT REGISTRAR