TMI Blog2016 (12) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the comparative chart of the revenue receipts during the previous and subsequent years. The ld.AR of the assessee has also shown before us the copy of lease agreement of the building, where the company's registered office is situated. On verification of the documents/evidences as submitted by the assessee before us, we are of the view that there is business activity.We find that the matter in hand requires further examination by the AO. Therefore, it is appropriate to remit the matter/case to his file to examine the details of expenditure and receipts afresh as submitted by the assessee before us. - ITA No. 610/Kol/2016 - - - Dated:- 19-10-2016 - N.V. Vasudevan, Judicial Member And A.L. Saini, Accountant Member A.K. Tibrewal, FCA, ld.AR for the Assessee Rajat Kumar Kureel, JCIT, ld.DR for the Department ORDER Per Dr A.L. Saini, AM The above cited captioned appeal filed by the assessee pertaining to assessment year 2008-09, is directed against the order passed by the Commissioner of Income-tax (Appeals)-16, Kolkata in Appeal No. 288/CIT(A)-16/Kol/2014-15/C- 8(1), dated 03-02-2016, which in turn arises out of the order passed by the Assessing Officer u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of detail of Consultancy charges paid, it seen that a sum of ₹ 7,50,000/- was paid to K. Bhattacharya. On 31.03.2008 the said consultancy payment was transferred in the name of Group companies viz: BIP Developers, TCG Software Park for expenses amounting to ₹ 6,71,000/-. Furthermore, it is observed that Total Consultancy payment claimed by assessee amounting to ₹ 24,18,707/- has not been incurred in connection with earning of income, but to merely accommodate its group associates. From the details filed it is observed that: (i) consultancy paid to Kaushik Chakraborty for Public Relationship, (2) K. Bhattacharya ₹ 79,000/- for Real Estate Consultant, (3) Anudeep ₹ 5,71,500/- for Advisory, (4) Rajneesh Agarwal ₹ 7,50,842/- for Tax Consultancy, (5) K: Sekhar ₹ 4,22,500/- for Company Law, (6) For Data Entry ₹ 1,75,000/-. From the aforementioned details of payments made it is clearly evident that various group companies have taken services of these professionals in their part but consultancy fee was claimed in the assessee company. The aforesaid consultancy payment is not related to assessee business and is hence, disallowed and not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is done during the year. Consultancy income is received from the group concern. It is also shown as debtor. Payments are made to the group concerns only. Only artificial loss is created in this year. 8. Contention of the A.R that the income has increased in subsequent years is not acceptable here as Income Tax proceeding of every year is a different proceeding. Time and again, it has been held by various courts that resjudicata is not to be applicable in the Income Tax proceedings. 9. Hence, the A.O. has clearly made out the case that artificial loss has been created by the assessee. 10. Hence, The addition of the A.O. is sustained and the appeal of the assessee is dismissed. 4. Not being satisfied with the order of the Commissioner of Income-tax (Appeals) the assessee is in further appeal before us and has taken the following grounds of appeal:- 1) That the Learned Commissioner of Income Tax (Appeals)-16, Kolkata erred in dismissing the appeal of the Appellant Company by way of passing an order dated 3rd February, 2016 on arbitrary conclusions based on irrelevant considerations, suspicion, surmises and conjectures and therefore the same is illegal, inva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at source of ₹ 1,69,950 and Advance Tax of ₹ 2,00,000 being prepaid taxes claimed by the Appellant Assessee company. 5. First three grounds of appeal relate to the disallowance made by the AO on account of ' accommodation entries 'and observation of the AO that the assessee does not have any business activity. Briefly stated, that the assessee is a private limited company engaged in investment activities. The said first three grounds of appeal raised by the assessee are likely to be technical in nature therefore we are going to deal with them first. The main grievance of the assessee is that the observation of the Assessing Officer that 'the assessee company engages in accommodation entries and does not have any business activities' is wrong and without any base. The Assessing Officer made the additions and disallowed assessee's expenses based on the findings that the assessee company does false entries in its books ( accommodation entries) and does not have business activities. 6. The ld.AR for the assessee has submitted that the AO was wrong in treating the assessee company being engaged in the transaction of accommodation entries. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him. The details of disallowances confirmed by the ld.CIT(A) are as under:- a. disallowance of ₹ 6,66,667/- made on a/c of bad debts b. disallowance of ₹ 10,97,669/- made on account of depreciation c. disallowance of ₹ 4,90,000/- made u/s. 80G of the Act d. AO assessed income of ₹ 16,85,400/- under the head 'income from other sources ' against the head of 'business income ', as claimed by the assessee e. disallowance of ₹ 1,85,90,613/- being carry forward of business loss, and f. disallowances of ₹ 1,69,950/- and ₹ 2,00,000/- made on a/c of TDS and Advance Tax The ld.AO has disallowed/made the above cited expenses,which are narrated bythe assessee in the form of Grounds of Appeal. As we explained in earlier para that AO has disallowed these expenses observing that no business activity was carried on by the assessee during the year under consideration. The ld. CIT(A) has confirmed this action of the AO. 11. The ld.AR for the assessee has submitted that the assessee has been carrying on its business during the previous and subsequent years. The ld.AR of the assessee has shown before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company was mentioned in the said memorandum of association. But the assessee company was not doing any business during the previous years and the year under consideration. Merely because the object mentioned in the memorandum of association about the business activity it is not mean that the assessee company has done its business activity during the previous years. The assessee has not discharged its primary onus being business carried on by it. The AO has not noticed any business activity of the assessee company. 13. Having heard the rival submissions and perused the material available on record, we are of the view that there is merit in the submissions of the assessee. As the propositions canvassed by the ld.AR for the assessee are supported by the facts narrated above, he adduced the proof by showing the I.T return for the previous year that the so-called assessee company was in existence. We do not find any force in the submissions of the ld.DR. We find that the memorandum of association of a company is mandate. We find that the AO made the said disallowances on his presumption only on the ground that the assessee company was not engaged in any activity. The assessee has sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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