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2023 (1) TMI 129 - AT - Income TaxRevision u/s 263 - As per CIT, AO did not make disallowance of consultancy fees paid to Shri Deepak Kochar - consultancy fees paid to Shri Deepak Kochhar was only accommodation entries - HELD THAT:- A careful perusal of the notice issued by Ld PCIT would show that the Ld PCIT has relied upon the report given by DDIT (Inv.) and has observed that the DDIT (Inv.) has “conclusively” established the fact of provision of accommodation entries. The Ld PCIT also expressed the view that the AO has also reached such a conclusion. A reading of assessment order would show that the AO has observed that there are no supporting evidences for the providing/receipt of service; Shri Deepak Kochhar has not met clients; he has not given any written reports with regard to the consultancy given. Even though the assessees have furnished the agreement entered between it and Shri Kochhar, the AO was reluctant to accept the same, as Shri Gaurang Gandhi had stated in the statement that there was no agreement. The AO has further stated that the consultancy fees paid was different in respect of different clients and it ranged from 24.23% to 71.09% of the fees received by the assessees herein and hence there is no scientific basis for computing the fees payable to Shri Deepak Kochhar. Accordingly, the AO has expressed the view that the payments made to Shri Deepak Kochhar were not explained. However, the AO did not specifically say that the consultancy fee payments are bogus. Hence, it appears that the AO did not make disallowance. With regard to the transfer of funds from Deepak Kochhar to M/s Aarem Management and from Aarem Management to the assessee, the AO has taken the view that Shri Deepak Kochhar has used the accounts of the assessees herein to get the unaccounted funds converted, i.e., there is circular movement of undisclosed fund through Pioneer group of companies. The AO has further held that the funds transferred to Shri Deepak Kochhar are also proved to be not genuine. All these observations of the AO are related to his comments upon transfer of funds. Since there was circular movement of funds, he chose to estimate commission income. Hence, we are of the view that it is not clear from the assessment order that the AO has come to definite conclusion that the consultancy fees paid to Shri Deepak Kochhar was only accommodation entries, as presumed by Ld PCIT. Whether impugned revision orders can be sustained ? - A perusal of the assessment orders would show that the AO has made complete enquiry on this issue. On the contrary, the Ld PCIT did not make any enquiry or verification in order to show that the finding reached by the AO is erroneous. While the AO has taken the view not to disallow the consultancy fees paid, the Ld PCIT has taken the view that the AO should have disallowed it. Thus, the AO has taken a possible view of the matter on the basis of his examination and merely because, PCIT has got different view, he cannot initiate revision proceedings. PCIT on the issue of examination of loans u/s 68 we have noticed that the Ld PCIT did not mention this issue in the notice issued by him for initiation of revision proceedings - A.R submitted that the assessees have made submissions on the issue of consultancy fee paid and submitted that no query was asked about sec.68 - At the time of hearing, it was not shown to us that the Ld PCIT has given opportunity to the assessee on the issue of examination of loans u/s 68 of the Act. Accordingly, we are of the view that the Ld PCIT could not have discussed this new issue in the impugned revision orders. We are of the view that the impugned revision orders passed by Ld PCIT in the hands of both the assessees herein are not sustainable in law. Accordingly we quash the impugned revision orders passed by Ld PCIT. Appeals filed by the assessee are allowed.
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