Talent Infoway Ltd., Mumbai V. The Income tax Officer,Ward-8(1), Ahmedabad

ITA 805/AHD/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9436 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-02-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 15-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: U S BHATI
• Keywords: Accommodation entries
• Section: 143(3); 131

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER AN D SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA NO. 805/AHD/2010 / ASSESSMENT YEAR: 2002-03 M/S. TALENT INFOWAY LTD, BLOCK-H, SHRI SADASHIV CO-OP. HOUSING SOCIETY LTD, 6 TH ROAD, GROUND FLOOR, SANTACRUZ-EAST, MUMBAI -400 055 .. APPELLANT PAN : AAACL 3305 J VS ACIT (OSD-1), CENTRAL CIRCLE-7, MUMBAI .. RESPONDENT ASSESSEE(S) BY : SHRI U.S. BHATI, AR REVENUE BY : SHRI DINESH SINGH, SR -DR / DATE OF HEARING 11/02/2016 /DATE OF PRONOUNCEMENT 19/02/2016 / O R D E R PER SHAILENDRA K. YADAV, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XIV, AHMEDABAD , DATED 09.02.2006, FOR ASSESSMENT YEAR 2002-03, ON THE FOL LOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW CIT(A) ERRED IN ESTIMATING THE INCOME @ 2% ON ALLEG ED ACCOMMODATION BILLS FOR SALES/PURCHASES WHICH SEEMS TO BE EXORBITANTLY HIGH. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT(APPEALS) ERRED IN DISALLOWING EXPENSES OF RS.2, 62,074/- RELATING TO INCOME. ITA NO. 805/AHD/2010 TALENT INFOWAY LTD VS. ACIT AY : 2002-03 2 2. AT THE OUTSET, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THIS APPEAL HAS BEEN FILED BY THE ASSESSEE LATE BY APPROXIMATELY 3 YEARS 11 MONTHS 20 DAYS. FOR THIS, THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY, WHIC H IS SUPPORTED BY THE AFFIDAVIT OF ONE SHRI VASANT PATEL, PARTNER IN M/S. DJNV & CO., CHARTERED ACCOUNTANTS, 58, WHITE HOUSE, PANCHVATI, ELLISBRIDGE, AHMEDABAD, INTER ALIA , STATING THAT HE WAS LOOKING AFTER THE INCOME TAX RETURN FILING AND ASSESSMENT RELATED WORK IN HIS FI RM. SHRI VASANT L. PATEL DEPOSED ON OATH THAT SHRI ALPESH PATEL, DIREC TOR OF M/S. TALENT INFOWAY LIMITED HAS ASKED HIM TO REPRESENT THE ASSE SSEE BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS FOR THE AY 2002-03. SHRI VASANT PATEL ATTENDED THE HEARING ALONGWITH SHRI ALPESH PATEL BEFORE THE ASSESSING OFFICER AND THE A SSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AT THE TOTAL INCOME OF RS.16,85,972/- AS AGAINST THE RETURNED LOSS OF RS.3,49,547/-. AS PER THE INSTRUCTIONS OF MANAGEMENT OF ASSESSEE-COMPANY, AN APPEAL WAS FILED BEFORE THE CIT(A) AND ON BEHALF OF THE COMPANY, THE MATTER WAS ASSIGNED TO SHRI SAMIR DIVETIA, ADVOCATE FOR PRESENTATION. HE FURTH ER DEPOSED THAT SOME TIME IN THE LAST WEEK OF FEBRUARY 2006, SHRI A LPESHBHAI PATEL HANDED OVER HIM THE APPELLATE ORDER, DISMISSING THE APPEAL OF THE COMPANY, PASSED BY THE CIT(A) WITH INSTRUCTIONS TO FILE APPEAL BEFORE THE TRIBUNAL. HE HAD CALLED FOR THE RELEVANT DOCUM ENTS AND ASSURED TO ARRANGE TO FILE THE APPEAL WITHIN THE STIPULATED TI ME WITH THE HELP OF A COUNSEL. THAT DUE TO PRESSURE OF INCOME TAX RETURN FILING WORKING DURING THE MONTH OF MARCH, 2006, SHRI VASANT L. PAT EL, HAD FORGOTTEN TO ARRANGE FOR FILING THE APPEAL AND EVEN THE RELEV ANT PAPERS WERE MISPLACED WITH OTHER PAPERS. THAT WHEN SHRI VASANT PATEL RECEIVED A ITA NO. 805/AHD/2010 TALENT INFOWAY LTD VS. ACIT AY : 2002-03 3 CALL IN THE FIRST WEEK OF JANUARY 2010 FROM SHRI ALP ESHBHAI PATEL REGARDING THE OUTCOME OF THE APPEAL, IT WAS REALIZE D BY SHRI ALPESHBHAI PATEL THAT THE APPEAL COULD NOT BE FILED IN THIS CASE. IT IS STATED THAT EVEN COPY OF THE APPELLATE ORDER AND AS SESSMENT ORDER WERE NOT TRACEABLE IN HIS OFFICE. IN THIS BACKGROU ND, IT WAS PRAYED THAT THE ASSESSEE SHOULD NOT SUFFER FOR THE LAPSE ON THE PART OF HIS AUTHORIZED REPRESENTATIVE. AN AFFIDAVIT FILED BY S HRI MUKESH M. CHOKSHI, S/O. SHRI MANEKLAL CHOKSHI ONE OF THE DI RECTORS OF TALENT INFOWAY LIMITED IS ALSO PLACED ON RECORD IN THIS RE GARD. ON DUE CONSIDERATION OF THE EXPLANATION OF THE ASSESSEE AN D THE AFORESAID AFFIDAVITS ON RECORD, WE ARE SATISFIED THAT THERE I S NO DELIBERATE ATTEMPT AT THE END OF THE ASSESSEE TO MAKE ITS APPEAL TIME BARRED. THEREFORE, WE CONDONE THE DELAY AND PROCEED TO DECIDE THE APPE AL ON MERIT. 3. ON MERIT, THE FIRST ISSUE IS WITH REGARD TO THE ESTIMATION OF INCOME @ 2% ON THE ALLEGED ACCOMMODATION BILLS FOR SALES/PURCHASES. THE ASSESSEE CLAIMED TO BE DEALING IN TRADING OF SO FTWARE AND IT WAS CLAIMED THE PURCHASES OF RS.9,20,85,600/- FROM KHYA TI MULTI MEDIA ENTERTAINMENT LTD AND SHOWN SALES TO SUNSTAR MEDIA SALES, MASS INFOWAVES SALES AND SUNSTAR MEDIA SALES TOTALING TO RS.9,20,53,475/-. TO VERIFY THE PURCHASE AND SALES, SUMMONS U/S 131 W ERE ISSUED, BUT THE SUMMONS COULD NOT BE SERVED UPON TWO PARTIES TO WHOM THE SALES OF SOFTWARE HAD BEEN SHOWN, I.E., MASS INFOWAVES AN D SUNSTAR MEDIA. IT WAS ALSO REVEALED THAT THERE WERE NO SUCH PARTIE S AT THE ADDRESS GIVEN AND THEREFORE, THE SUMMONS COULD NOT BE SERVE D. IT WAS ALSO NOTICE BY THE ASSESSING OFFICER THAT THERE WAS NO P AYMENT OF MONEY AND ALSO NO EVIDENCE OF MOVEMENT OF FUNDS WHICH WAS DISCUSSED IN ITA NO. 805/AHD/2010 TALENT INFOWAY LTD VS. ACIT AY : 2002-03 4 DETAIL BY THE ASSESSING OFFICER IN THE ASSESSMENT O RDER. HENCE, THE SALES AND PURCHASES WERE NOT VERIFIABLE AND NOT EST ABLISHED. THE PARTIES WERE NEITHER PRODUCED FOR VERIFICATION BEFO RE THE ASSESSING OFFICER NOR THE ASSESSEE HAS GIVEN THE CORRECT ADDR ESSES OF THE PARTIES. HENCE, THE ASSESSING OFFICER HELD THAT TRANSACTIONS WERE FICTITIOUS PURCHASES AND SALES AND IN FACT ONLY ACCOMMODATION ENTRIES WERE GIVEN. HE ACCORDINGLY ESTIMATED THE PROFIT FOR GIV ING ACCOMMODATION ENTRIES @ 2% OF RS.18,41,070/-, BEING 2% OF THE TOT AL BILL ISSUED. 3.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF THE AS SESSEE AND HAVING CONSIDERED THE SAME, CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. BEFORE US, THE ORDER OF CIT(A) HAS BEEN O PPOSED BY THE ASSESSEE, INTER ALIA , SUBMITTING THAT THE CIT(A) HAS ERRED IN ESTIMATIN G THE INCOME @ 2% ON ALLEGED ACCOMMODATION BILLS FOR SALES/PURCHASES. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 3.2 WE FIND THAT THE UNDISPUTED FACT IN THIS CASE I S THAT THE PURCHASES AND SALES ARE NOT VERIFIABLE. THE PARTIES TO WHOM S ALES WERE MADE WERE NOT TRACEABLE AND THE SUMMONS COULD NOT BE SER VED AS THERE WERE NO CORRECT ADDRESSES OF THE PARTIES GIVEN BY THE AS SESSEE. THEREFORE, THE CIT(A) CORRECTLY HELD THAT THE ASSESSING OFFICER WA S JUSTIFIED IN TREATING THE TRANSACTION AS BOGUS. THE CIT(A) ALSO OBSERVED THAT EVEN IF THE PLEA OF THE ASSESSEE WAS ACCEPTED THAT THE S ALES AND PURCHASES COULD NOT BE TREATED AS BOGUS, THE FACT REMAINED TH AT THE SALES AND PURCHASES WERE NOT VERIFIABLE AND BOOK RESULTS WERE NOT TO BE ACCEPTED AS CORRECT. HENCE, THE CIT(A) RIGHTLY HELD THAT TH E ASSESSING OFFICER ITA NO. 805/AHD/2010 TALENT INFOWAY LTD VS. ACIT AY : 2002-03 5 WAS CORRECT IN ESTIMATING THE PROFIT, WHICH HE HAS DONE @ 2% OF THE TOTAL BILLS RAISED BY THE ASSESSEE. THESE REASONED FINDINGS OF THE CIT(A) DO NOT REQUIRE ANY INTERFERENCE FROM OUR SIDE; WE U PHOLD THE SAME. 4. NEXT ISSUE IS WITH REGARD TO THE DISALLOWANCE OF EXPENDITURE OUT OF TOTAL EXPENSES CLAIMED AT RS.4,17,172/-. THE FA CTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED THE EXPENSES OF RS.4,17,172, B UT THE ASSESSING OFFICER DISALLOWED ONLY TO THE EXTENT OF RS.1,55,09 8/-, WHICH ARE IN RESPECT OF AUDIT FEES, BANK CHARGES, COURIER CHARGE S ETC, WHICH WERE CONSIDERED AS EXPENSES ESSENTIAL FOR RUNNING OF THE COMPANY. THE OTHER EXPENSES WERE DISALLOWED ON THE BASIS THAT TH E ASSESSEE HAD ONLY ISSUED ACCOMMODATION BILLS AND HENCE THE OTHER EXPE NSES WERE NOT JUSTIFIED. IN APPEAL, THE CIT(A) CONFIRMED THE SAM E BY RIGHTLY OBSERVING THAT THE ASSESSING OFFICER WAS JUSTIFIED IN APPLYING 2% PROFIT RATE ON THE BILLS RAISED AND HENCE, THERE WA S NO JUSTIFICATION IN ALLOWING ANY OTHER EXPENSES. THE CIT(A) WAS ALSO JU STIFIED IN HOLDING THAT THE EXPENSES LIKE AUDIT FEES, BANK CHARGES ETC . HAVE ALREADY BEEN ALLOWED BY THE ASSESSING OFFICER AND THUS, CORRECTL Y HELD THAT THE ACTION OF THE ASSESSING OFFICER WAS QUITE JUSTIFIAB LE. UNDER THESE FACTS AND CIRCUMSTANCES, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) WHICH IS JUST FAIR AND REASONABLE AND WE UPHOLD THE SAME. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 19TH FEBRUARY 2016 AT AHMEDABAD. SD/- SD/- N.K. BILLAIYA SHAILENDRA K. YADAV (ACCOUNTANT MEMBER) (JUDICI AL MEMBER) AHMEDABAD; DATED 19/02/2016 BIJU T., PS ITA NO. 805/AHD/2010 TALENT INFOWAY LTD VS. ACIT AY : 2002-03 6 !' #'$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' ' # / CONCERNED CIT 4. ' ' # ( ) / THE CIT(A) 5. &'( ! , ' ! , / DR, ITAT, AHMEDABAD 6. (- . / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD