TMI Blog2016 (5) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... Mum/2010 - - - Dated:- 13-4-2016 - Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain, Judicial Member For The Assessee : Shri Naresh Kumar For The Revenue : Shri Sandeep Goel ORDER Per Jason P. Boaz, A.M. This appeal by the assessee is directed against the order of the CIT(A)-30, Mumbai dated 20.10.2010 for A.Y. 2007-08 for A.Y. 2007-08 2. The facts of the case, in brief, are as under: - 2.1 The assessee, a firm engaged as Architects, Designers and Planners, filed its return for A.Y. 2007-08 on 31.07.2007 declaring total income of ₹ 21,96,770/-. The return was processed under section 143(1) of the Income Tax Act, 1961 (in short 'the Act') and the case was taken up for scrutiny. On the basis of information received from the Financial Intelligence Unit ( FIU ) about high value cash transactions observed in bank accounts of certain parties in ICICI Bank and ABN Amro Bank, Mumbai the DDIT (Inv.), Unit VIII(1), Mumbai conducted a survey under section 133A of the Act on 24.06.2008 in the case of M/s. Nupur Management and Consultants P. Ltd. In the course of these investigations, the Department found that Mr. Sandeep Sitani, C.A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not satisfied with the explanation furnished by the assessee. The AO was of the view that at least five persons would be required to executive the work for which the assessee paid Nova charges amounting to ₹ 48,49,624/- and insisted that the assessee produce five persons for examination in this regard. Since the assessee submitted that only Mr. Shoaib Mulla carried out the work through Nova , it could not produce five persons as sought for, the AO concluded that the payments made by the assessee to Nova were not genuine and disallowed the expenditure claimed in this regard observing that hence, the entire amount of Rs. 48,49,624/- is added to the total income of the assessee as unexplained and unproved purchase/investment as per section 69 of the I.T. Act. The assessment was accordingly completed under section 143(3) of the Act vide order dated 31.12.2009 wherein the income of the assessee was determined at ₹ 70,86,390/- as against returned income of ₹ 21,96,770/-, in view of the disallowance of claim of payments to Nova amounting to ₹ 48,49,624/-. 2.3 Aggrieved by the order of amt for A.Y. 2007-08 dated 31.12.2009, the assessee preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e) Without prejudice to the above, as the alleged deficiency has not prompted the Assessing Officer to invoke Sec 145, on merits, the disallowance has no base. The same should be deleted 2. LEVY OF PENAL INTERESTS The appellant, on merits, denies its liability to penal interest. 3. The Appellant craves leave to add, amend or alter all or any of the above Ground of Appeal. 4. Ground No. 1(1) to (e) - Disallowance of Service Charges paid - Rs. 48,89,624/- 4.1 This is the only substantial ground of appeal, which relates to the disallowance of professional payments amounting to ₹ 48,49,624/- made by the assessee to Nova for rendering of professional services by treating the same as unexplained/unproved purchase/investment under section 69 of the Act. 4.2 The learned A.R. for the assessee was heard in support of the grounds raised at S.No. 1(1) to (e) (supra). At the outset, the learned A.R. for the assessee contended that from the orders of the authorities below, it appeared that neither the AO nor the learned CIT(A) are clear as to under which section to impugned disallowance of professional fees of ₹ 48,49,624/- paid to Nova ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard, further stated that the AO has not brought on record any material to show that any money paid by the assessee to Nova has been received back by him. The learned A.R. for the assessee submitted that the facts of the case on hand are identical to the facts of the case in CIT vs. Mundra Port and Sez Ltd. (2014) 45 taxmann.com 361 (Gujarat) where the Hon'ble Gujarat High Court, on identical facts, confirmed the order of the ITAT deleting the disallowance on account of consulting charges. The learned A.R. for the assessee prayed that in the light of the above factual and legal situation, the disallowance of the assessee claim for payment of professional charges of ₹ 48,49,624/- to Nova for services rendered made and confirmed by the authorities below ought to be deleted as it is based only on suspicions and surmises being factually and legally unsustainable. 4.3 Per contra, the learned D.R. for Revenue strongly supported the orders of the authorities below. It was submitted that the AO, after having made the required enquiries arrived at the conclusion that the payments to Nova amounting to ₹ 48,49,624/- was nothing but accommodation entries. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of sales have been made to the Government Department i.e. Defence Research and Development Laboratory, Hyderabad. Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were infact made. In our view, merely because the suppliers have not appeared before the Assessing Officer or the CIT(A), one cannot conclude that the purchases were not made by the respondent-- assessee. The Assessing Officer as well as CIT(A) have disallowed the deduction of ₹ 1.33 crores on account of purchases merely on the basis of suspicion because the sellers and the canvassing agents have not been produced before them. We find that the order of the Tribunal is well a reasoned order taking into account all the facts before concluding that the purchases of ₹ 1.33 crores was not bogus. No fault can be found with the order dated 30.04.2010 of the Tribunal. 4.4.2 A similar issue had come up before the Hon'ble Gujarat High Court in the case of CIT vs. Mundra Port and Sez Ltd. (2014) 45 taxmann.com 381 (Guj.), wherein the Mundra Port had paid consultancy charges to va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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