TMI Blog2015 (8) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... r, for which the assessee cannot be penalized. Though we are aware that it is second round of the appeal before the ITAT, still to meet the end of justice the only option left with us is to set aside the matter to the file of the Assessing Officer to examine the veracity of the documents filed by the assessee in support of the genuineness of the claimed payment of ₹ 4,55,41,557 to Star India Pvt. Ltd. after affording opportunity of being heard to the assessee and decide the issue afresh. It is ordered accordingly. - Decided in favour of assessee for statistical purpose. Non deduction of tax at source under section 40(a)(ia) - no bills or vouchers were filed by the Appellant to substantiate payments made to Star India - Held that:- Direction to the Assessing Officer by the Learned CIT(Appeals) to disallow payments made by the assessee under sec. 40(a)(ia) of the Act was a question of taxability of income from a new source of income which has not been considered by the Assessing Officer, hence it was exceeding of jurisdiction by the CIT(Appeals) in a set aside matter by the ITAT in the present case. The decisions relied upon by the CIT(DR) having distinguishable facts are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under any sort of control is blatantly incorrect. 3. That the learned CIT(A) has completely disregarded the fact that Star India had already filed its confirmation with the learned AO on March 10, 2014. 4. Without prejudice to the fact that Star India had already filed its confirmation and same is placed on records, learned CIT(A) has completely disregarded the alternate evidence filed by the Appellant related to payments made to Star India which included copy of ledger account incorporating the details of invoices received and payments made to Star India, copy of invoices issued by Star India and extracts of bank statements evidencing the payment to Star India. 5. That the learned CIT(A) has grossly erred both on facts and in law in holding that amount not confirmed by Star India should be disallowed under section 68 of the Act. 6. That the notice issued by learned CIT(A) for enhancement of additions made by learned AO and enhancement so made is illegal, bad in law, unjust and without jurisdiction. 7. That the learned CIT(A) has grossly erred on facts and in law enhancing the addition made by learned AO by directing the learned AO to disallow payments made by the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to its vendors without deduction of tax at source under section 40(a)(ia) of the Act. 11.1. The learned CIT(A) has disregarded the fact that such payments were made without deduction of tax in light of lower tax withholding certificate furnished by the vendors and submitted by Appellant to learned CIT(A). 11.2. The learned CIT(A) has erred in disallowing payments amounting ₹ 67,75,238 made to Star India Private Limited on the premise that no documents or evidences was submitted by the Appellant when such specific documents were never asked by learned CIT(A) to verify the payment made to such vendor. 12. That the learned CIT(A) has erred on facts and in law in disallowing the payment of ₹ 54,341 made to its vendors for supply of materials without deduction of tax at source under section 40(a)(ia) of the Act on the ground that these payments are made for work undertaken by the vendors and are subject to withholding tax under section 194C of the Act. 13. That the learned CIT(A) has erred on facts and in law in disallowing the payment of ₹ 13,14,406 made to its vendors for supply of materials without deduction of tax at source under section 40(a)(ia) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material available on record and has passed a perverse order in utmost haste without giving adequate opportunity of being heard which is against the principles of natural justice. 2. Heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon. 3. Ground No.1 is general in nature, hence, does not need independent adjudication. 4. Ground Nos.2 to 5: The facts in brief are that the appellant is engaged in the business of advertising, communication, publicity and other services for its customers. The appellant undertakes advertising services for its clients in capacity of an agent. The appellant acts as an intermediary between its clients and the third party vendors in order to facilitate the placement of advertisements. The appellant is remunerated on the basis of an agreed commission fixed as a percentage of the advertisement spends with third party vendors on behalf of its clients. Therefore, only such commission is recognized as an income and the payments to be made to third party vendors towards abovementioned advertisement spend on behalf of client is recognized as re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, Ld. A.O. has added ₹ 45,541,557 (being amount claimed by the appellant as paid/payable to Star India) to the returned income of the appellant and passed the assessment order dated February 28,2014. As per the assessment order, Star India did not respond to the notice issued by the Ld. A.O. under sec. 133(6) of the Act in the given time. 7. Subsequently, the appellant was informed by Star India that it had responded to the notices issued by Ld. A.O. through speed post and the same was delivered to the Ld. A.O. on March 10,2014. In the said response filed by Star India, vendor has confirmed that it had collected ₹ 74,376,857 from the appellant in A.Y 2007-08. Copy of response filed by Star India obtained from Ld. A.O. is enclosed as Annexure II. Since confirmation has reached the office of the Ld. A.O. after the order was passed, cognizance of such confirmation has not been taken by the Ld. A.O. However, once effect of such confirmation is considered, the additions made by the Ld. A.O. will not survive, claimed the assessee. 8. The aggrieved assessee went in first appeal but could not succeed as the Learned CIT(Appeals) has upheld the disallowance of ₹ 4,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93 (Cal.); iii) CIT vs. Nikunj Eximp Enterprises Pvt. Ltd. - 35 Taxmann 384 (Bombay) iv ) Sagar Bose Vs. ITO - 56 ITD 561 (Cal.); v ) Rajesh P. Soni vs. CIT - 100 TTJ 892 (Ahd.); vi) Anish Ahmed Sons vs. CIT - 297 ITR 441 (S.C); 10. The Learned AR submitted further that provisions of section 68 are not applicable as held by the Learned CIT(Appeals) while upholding the disallowance since there is no outstanding credit balance of ₹ 4,55,41,557 in the books of the assessee on account of Star India Pvt. Ltd. and the closing balance on 31.3.2007 is nil. He submitted that assessee had availed services from Star India Pvt. Ltd. on behalf of its clients and such payments form part of the pass through cost and were not made towards purchases. The credit in the account of Star India Pvt. Ltd. in the subject assessment year was explained by way of a corresponding debit in the books of the assessee as recoverable from clients which are not disputed by the authorities below. He contended further that the issue of addition under sec. 68 of the Income-tax Act, 1961 was not subject matter in the original assessment or revised assessment framed by the Assessing Officer. Wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus in absence of confirmation from Star India Pvt. Ltd. disallowed the payment claimed to have been made to them by the assessee at ₹ 4,55,41,557. The same has been upheld by the Learned CIT(Appeals). We thus find that the authorities below have not bothered themselves to verify the other evidences filed by the assessee before the Assessing Officer in support of the genuineness of the claim, which were confirmation obtained by the assessee from Star India Pvt. Ltd. along with reconciliation with their accounts maintained by the assessee; ledger account of Star India Pvt. Ltd. maintained by the assessee; invoice received from Star India Pvt. Ltd.; relevant extracts of bank statement highlighting the payments made to Star India Pvt. Ltd. by the assessee and reconciliation between amount confirmed by Star India Pvt. Ltd. to the Assessing Officer and amount as per accounts of assessee. This fact had also not been rebutted by the department that after completion of the assessment under sec. 254/143(3) on 28.2.2014, the Star India Pvt. Ltd. had filed its confirmation to the Assessing Officer on 10.3.2014, which was not entertained by the Assessing Officer since he had completed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification of pass through cost and, therefore, enhancement made is illegal and without jurisdiction. The Learned AR submitted that disallowance under sec. 40(a)(ia) of the Act as directed by the Learned CIT(Appeals) was not the subject matter of the earlier assessment. He placed reliance on the decision of Hon'ble High Court of Delhi in the case of CIT vs. Sardari Lal Co. - 251 ITR 864 (Del.) . He also placed reliance on the following decisions: i) Saheli Synthetics (P) Ltd. vs. CIT - 302 ITR 126 (Guj.) ii) DCIT vs. Surat Electricity Co. Ltd. - 377 ITR 271 (Guj.) iii) CIT vs. Union Tyres - 107 Traxmann 447 (Del.); iv) ITO vs. Jabal Woodcrafts India - ITA No. 803/Del/2009 15. The learned CIT(DR) on the contrary submitted that the facts of the above cited case of Sardari Lal Co. are distinguishable hence it is not relevant in the present case. He submitted that in the case of Sardari Lal Co.(supra), the Assessing Officer had not looked into some facts for which directions were issued by the appellate authority. It was in this light of the matter, the Hon'ble Delhi High Court held as looking from the aforesaid angles, the inevitable conclusion is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , since issue of method of accounting followed by the assessee, non-deduction of TDS and pass through cost was very much part of the original assessment, DRPs order and the set aside order of the ITAT. We, thus find that the setting aside order of the ITAT, has become more relevant to decide the issue. The relevant para numbers 21 to 24 of the order dated 31.1.2012 of the ITAT is being reproduced hereunder: 21. In this regard, it is seen that indeed, the A.O. 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 A.O. went on to make the addition of ₹ 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. No body 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts made by the assessee under sec. 40(a)(ia) of the Act, the Learned CIT(Appeals) has introduced in the assessment a new source of income, which is not allowed in an assessment which was made by the Assessing Officer strictly in compliance of the order of the ITAT for reconsideration of addition of ₹ 89,39,92,188 after examining the evidence and upholding opportunity of being heard to the assessee. In the case of DCIT vs. Saheli Synthetics Pvt. Ltd. (supra), it was held that order of Learned CIT(Appeals) to set aside assessment, which does not involve a proposal for enhancement cannot be used for the purpose of expending the scope of the powers available to the Assessing Officer while making fresh assessment pursuant to a set aside. In the case of CIT vs. Sardari Lal Co. (supra), the Hon'ble jurisdictional High Court has been pleased to hold that the ITAT was justified in holding that in calling for a remand report on the noted four points, the AAC had exceeded his jurisdiction. While computing the total business income of the assessee, the Assessing Officer in that case had estimated the sales at an enhanced figure and had applied a higher rate of gross profit. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
