TMI Blog2012 (12) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... more time to make the verification. The DRP, however, directed the AO to verify the evidence and if the AO were satisfied, he was to restrict the disallowance, if any, which, in any case, as per the DRP, could not exceed Rs. 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. - ITA NOs. 5161 & 5162(Del)2011 - - - Dated:- 31-1-2012 - SHRI G.D. AGRAWAL AND SHRI A.D. JAIN, JJ. 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 assessee s appeal for assessment year 2006-07 against the order of the Asstt.Commissioner of Income Tax, Circle 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:- 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) read with section 144C of the Income-tax Act, 1961 ( Act ) after consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 limited 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 holding that the appellant has furnished inaccurate particulars and has concealed the particulars of its income and has also erred in initiating the penalty proceedings u/s 271(1)(c) of the Act. 12. That the ld. AO, in law and facts, has erred in charging interest u/s 234B of the Act. 13. That the Hon ble Dispute Resolution Panel has erred in confirming the additions proposed by the ld. AO and in rejecting the objections filed against the draft assessment order. 14. That the Hon ble Dispute Resolution Panel has erred in not giving adequate opportunity of being heard to the appellant. 15. That the evidences placed and the material available on record has not been properly and judiciously considered and the additions have been made ignoring the material on record and are against the principles of natural justice. 2. As per ground Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event, in this case, on the remittance of sums payable, should 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., Department has filed SLP, which is pending in the court. That during year the assessee company has claimed expenses of Rs. 12126632/- in schedule 13 annexed with the return of income under the head Data Usage Charges. These expenses are incurred by the assessee for various research purposes, development projects, etc. Since all these expenses are providing enduring benefit to the assessee hence the same should be treated as of capital nature. As per the form No. 3CEB filed along with the return the assessee during the year had international transactions with associated enterprises/concerns. Hence determination of Arm s Length Price in relation to international transactions is also required. 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 case for issue of notice u/s 148 of I.T. Act, 1961. (Dr. Prashant Khambra) Asstt. Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on assuming jurisdiction under section 147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe on the basis on which he assumed jurisdiction. For every new issue coming before Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under Section 148. 19. In the present case, as is noted above, the Assessing Officer was satisfied with the justifications given by the assessee regarding the items viz., club fees, gifts and presents and provision for leave encashment, but, however, during the assessment proceedings, 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 80HH and 80-I and accordingly reduced the claim on these accounts. 20. The very basis of initiation of proceedings for which reasons to believe were recorded were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the said reasons to believe recorded by the AO, in keeping in Ranbaxy Laboratories Ltd. v. CIT (supra) and Ayudink Niryat Ltd. (supra), reopening of the completed assessment in the present case is bad in law. There is, as such, no merit in the stand taken by the Department that once the completed assessment stood 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 proceedings including the reassessment order are cancelled. 11. Due to the cancellation of the reassessment order, as above, nothing else survives and the remaining grounds taken by the assessee need not be gone into and we are not doing so. 12. Consequently, the appeal of the assessee is allowed. ITA NO. 5162(Del)2011: 13. This is assessee s appeal for assessment year 2007-08 against the order of the Asstt.Commissioner of Income Tax, Circle 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 and in law in holding the diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee 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 DRP s order dated 2.8.11, wherein, dealing with ground No.2 raised by the assessee before the DRO, i.e., against the addition of Rs. 92,00,04,163/- on account of deemed income, the DRP has observed as follows:- DRP s 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 certificates. The assessee stated that the AO did not understand the method of accounting used by Cheil India. The AO did not accept 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 the 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 confirmations. As the DRP proceedings have time limitations, and it would take time f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 treated as deemed income of the assessee as per sec. 199. Accordingly the assessee company vide note sheet 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 dated 15/12/2010 and 12/11/2010 submitted as under: - The company recognizes the commission income in its books of accounts. The advance received from the parties and given to the vendors is recognized as asset/liability in the books of accounts. The reconciliation of the amount received from the parties is enclosed. The submission of the assessee has been considered carefully and found not acceptable since the assessee not filed any copy of account of the vendor to whom the payment has been made nor any confirmation/identification number such as PAN number and addresses of the vendor has been filed. In the absence of the same the claim of the assessee is unverifia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. Sakal Papers Limited Rs. 9807848/- 28. Shark Design Studio Rs. 40425044/- 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) have 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. Gin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 confirm that we have not entered any transaction with M/s Cheil India Private Limited during the Financial Year 2006-07 .- Copy of this letter is annexed with the assessment order. In respect of balance 25(42-10-7) parties to whom notices u/s 133(6) were issued no response has been received. Apart from the above in the remand proceedings in order to cross verify the claim of the assessee notices u/s 133(6) on random basis issued to the following parties with the request 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 4908169/- 4. M/s.Black Magic Motion Picture Limited 5296780/- 5. M/s. Craftpac Containers Pvt. Limited 6957148/- 6. M/s Interactive Television Pvt. Limited 3248878/- 7. M/s. Magnum Interiors Pvt. Limited 16281243/- 8. M/s. Nomad Films 10902780/- The notices u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the evidence. However, the AO went on to make the addition of Rs. 89,39,92,188/-, on account of the alleged short receipts declared in the profit and loss account. Now, this is entirely in violation of the natural justice principles of audi alterem partem. Nobody can be condemned in hearing. Addition herein 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 afresh in accordance with law, on providing due and adequate opportunity to the assessee to rebut the evidence collected by the AO at the back of the assessee. 22. In this regard, a perusal of the relevant portion of the DRP s order, as reproduced herein above, shows that the assessee has produced confirmations from 45 vendors before the DRP, and the DRP had forwarded the same to the AO for verification. The AO had requested f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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