TMI Blog2013 (8) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... action between the appellant company and M/s. T & G Quality Management Consultants Pvt. Ltd - CIT(A) has passed a well reasoned and elaborate order for both the years considering each and every aspect of the matters in detail and the basis and reasoning as given by Ld. CIT(A) are found to be just and appropriate. In the absence of any contrary material having been placed on record, there is no reason to interfere with order's of CIT - Decided against Revenue. - ITA No. 968 & 2248/ Del/ 2011 - - - Dated:- 2-8-2013 - Shri U. B. S. Bedi And Shri B. C. Meena,JJ. For the Petitioner : Shri K. Sampath, Adv. For the Respondent : Ms. Shumona Sen, Sr. DR ORDER Per U. B. S. Bedi, Judicial Member:- These two appeals of the department are directed against two separate orders of Ld. CIT(A) II, Delhi passed on 15.10.2010 and 28.02.2011 for the assessment years 2006-07 2005-06 respectively. 2. Since these appeals involve some common issues and were heard together, the same are being disposed of by a single order for the sake of convenience. As in the order for assessment year 2005-06, the order for the assessment year 2006-07 has been followed, therefore, we first tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to M/s T G Quality Management Consultants Pvt. Ltd. and payment of commission of M/s Krishna Infomedia Ltd. on account of assessee's disclosure of RS.50.00 Lakhs without any jurisdiction. 2. On the facts and in circumstances of the case, the Ld.CIT(A) has erred in not fully appreciating the facts that the above mentioned three companies were the companies controlled and managed by an admitted entry provider Sh. S.K. Gupta. 3. On the facts and in circumstances of the case Ld. CIT(A) has erred in not fully appreciating the fact that disclosure of RS.50.00 lakhs was made by the assessee company during the survey operation on account of accommodation entries obtained by the assessee from the companies controlled and managed by an admitted entry provider Sh. S.K. Gupta. 4. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. 3. The written submissions of the department filed before the Bench for both the years are as under: "The main case is that for A.Y. 2006-07 the facts and circumstances as well as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O :-, (a) The burden of proof was on the assessee to produce evidence in support of its contentions and claim that consultancy charges as well as software development charges which were paid by it were actually in lieu of services having been rendered to the assessee. This has been held in a plethora of judgements, a few of which are listed below. (i) 86 ITR 439 (SC) Lachminarayan Madan Lal v. Commissioner of Income Tax (ii) 164 TAXMAN 67 (DELHI) Precision Electronics Ltd. v. Dy. Commissioner of Income Tax (iii) 188 TAXMAN 27 (DELHI) Saga Departmental Stores Ltd. v. Commissioner of Income Tax (iv) 15 Taxmann.com 112(Delhi) Comissioner of Income Tax v. Modi Stone Ltd. (v) 19 ITR 240(ALL.) Nihori Lal Prabhudayal v. Commissioner of Income Tax (vi) 19 Taxmann.com 70 (Guj.) Gujarat Insecticides Ltd.v. Assisstant Commissioner of Income Tax (vii) 20 Taxmann.com630(Punj. Har.) Commissioner of Income Tax(Central) Ludhiana v. Punjab Breweries Ltd. (viii) 128 ITD 12(Delhi). Assistant Commissioner of Income Tax, Circle 19(1)v. Punjab Stainless Steel Industries. (b) Various courts have held that pursuant to survey, burden lay on assessee to establish that admission made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head renovation expenses as the same were found to be incurred in the residence of the Director of the Company and therefore could not have been allowed as a business expense. The Id CIT(A) failed to appreciate the above facts of the case. Further, the additions were wrongly deleted, as A.O had correctly made the above mentioned additions and he was also well within his rights to call for the evidences sought by him and which the assessee failed to produce. The Courts have held in various cases including in 59 ITR 562 (SC) in Chatrasinhji Kesarishji Thakore v. Commissioner of Income Tax and in 12 Taxman 185 (Mad.) V. Datohinamurthy Vs. Natrajan v. Asstt. Director of Inspection, that it is entirely for Income Tax authorities to determine what evidence they considered relevant for purposes of their enquiry and to contend what certain piece of evidence which they considered to be relevant was not relevant at all to matter at issue, would be in a way to encroach upon their domain." 5. The Ld. A.R. of the assessee submitted that the department has merely reiterated the findings in the assessment order as submissions to the grounds No.1-3 taken in the memo of appeal. Ld. D.R. did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut on 12.12.2006 at the business and residential premises of Shri S.K. Gupta and his various concerns in which he has interest, under section 132 of the Act. The statement of Shri S K Gupta was recorded on 12.12.2006 under section 132 (4) of the Act. Later, on 27/12/07 Statement of Shri S K Gupta was again recorded by the Directorate of Investigation under section 131 of the Act. Shri S K Gupta in the aforesaid statements stated that his concerns raised bills for services only to provide accommodation entries to the assessee and other companies. It was stated that none of the concerns rendered any service to the assessee or other companies on whom bills were raised. In this appeal we are concerned with payments made by the assessee to two concerns of Shri S K Gupta viz ; T G Quality Management Consultants (P) Ltd who were paid Rs 1,00,00,000/- as consultancy fee for AY 2006-07. M/S High Tech Computect (p) Ltd who was paid Rs 5,25,000/- for AMC and for upgradation of MIS software. Based on the said statement recorded on 12/12/06, survey operations were carried out in the premises of the assessee under section 133A of the Act. During the survey one of the Directors of the, asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri S.K. Gupta recorded on 13.12.2006 and 27.12.2006 (pages 11 to 34 of the PB) were not provided to the appellant during the course of assessment proceedings and were given to the appellant only as per the directions of the Ld. CIT(A) during the course of appellate proceedings after repeated requests were made in writing (Pages 35t039 of PB). As regards other statements only extracts were provided that to on the directions of the CIT(A). All statements have been taken at the back of the assessee. There was no opportunity provided for cross examinati0n of Shri S.K. Gupta in spite of requests made in writing by the assessee (pages 40- 41 of PB). Therefore the statements have no evidentiary value and hence to be ignored. Reliance is placed on the decision of jurisdictional High Court decision in the case of Sona Electric Co. Vs. CIT 152 ITR 507, the apex court in the cases of Kishandchand Chellaram v. CIT 125 ITR 713 and Katra Glue Factory V sn 167 ITR 498. (b) Shri S.K. Gupta has in a certificate retracted from the statement recorded during the search and he had denied everything stated in relation to the accommodation entries being provided to the assessee (page 42-45 of PB). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icular computer which contained the details of the technical services. That by itself could not be held adverse to the Assessee. (d) The Assessing Officer looked for evidence regarding rendering of the technical services at the wrong places. The Services were rendered by the staff of Shri S.K. Gupta at the premises of Mis LMZ Energy India Limited. Shri Gupta's staff was engaged full time working at the premises of Mis LMZ Energy India Limited. So all proof with regard to the rendering of service was available at the premises Mis LMZ Energy India Limited who had utilized the technical services. The Assessing Officer erroneously looked to the premises of the assessee and that of Shri S.K. Gupta for such evidence. (e) Shri S.K. Gupta's Company were having technical experts who had actually helped in the discharge of the technical services. Out of the gross receipts of RS.113 lacs Shri S.K. Gupta had spent around RS.98.88 lacs by way of outgoing on account of Software expenses and remuneration to the technical staff was RS.9.83 lacs. It was, therefore, wrong on the part of the Assessing Officer to doubt Shri S.K. Gupta's capacity and potential for rendering software services. iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These professionals were paid salary for the services rendered by them (h) Similarly evidences were also filed proving the services rendered by M/s Strategic Components Pvt. Ltd. it is submitted that the appellant company entered into consultancy agreement dated 30.08.2004 with M/s LMZ Energy (India) Ltd. for Barh Super Thermal Power Project (3 x 660 MW) for which the appellant company was to receive total consultancy fee of Rs. 8,65,00,000/-. The appellant company for discharge of its consultancy services to M/s LMZ Energy (India) Ltd. availed the services of M/s T G Quality Management Consultants Pvt. Ltd. to fulfill various deliverables of the consultancy agreement because of non-availability of specialized skills with the appellant company M/s T G Quality Management Consultants Pvt. Ltd. -Information about local suppliers and service vendors and vet the quotations given by them; -To negotiate as and when necessary with various vendors from time to time on need basis; -To assist in identification of local Engineering and machine facilities in and round Barh in particular and state of Bihar etc. as may be necessary; -To give various types of information as desir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution of all orders received by the customer till final payment (h) To inform the customer about activities of his competitors and the concerned firms/groups in the region of the site." (ii) Copy of Invoice dated 2.4.2005 for Rs. 1,00,00,000/- issued by M/s T G Quality Management Consultants Pvt. Ltd. placed at Page 81 for technical consultancy charges for the power project. (iii) Confirmed copy of account of the appellant in the books of T G Quality Management Consultants Pvt. Ltd. for the year under consideration dated 1.4.2006 at Page 82 along with copy of letter dated 1 .4.2006 issued by M/s T G Quality Management Consultants Pvt. Ltd. confirming receipt of Rs.1,00,00,000/- for services rendered by it to M/s LMZ Energy (India) Ltd. at Page 83. (iv) Copy of PAN of T G Quality Management Consultants Pvt. Ltd. at Page 84. (v) Copies of the following letters as filed during the course of assessment proceedings:- Dated 5.6.2008, copy placed at Pages 85-86 Dated 23.6.2008, copy placed at Pages87-93 Dated 1.12.2008, copy placed at Pages 94-96 Dated 10.12.2008, copy placed at Pages 97-99 (vi) List of the qualified professionals working for T G Qual ..... 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