TMI Blog2019 (12) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... y that the expenditure is bogus. This Court in Alpasso Industries (P) Ltd. v. Income Tax Officer [ 2018 (8) TMI 761 - DELHI HIGH COURT] rejected a similar submission of the appellant/ assessee and, while doing so, this Court reiterated the legal position as to when a finding of fact could be classified as perverse. - ITA 823/2019 and ITA 824/2019 - - - Dated:- 6-12-2019 - MR. VIPIN SANGHI AND MS. REKHA PALLI JJ. Appellant Through: Mr. C.S. Aggarwal, Sr. Adv. with Mr. Ravi Pratap Mall and Mr. Uma Shankar, Advs. Respondent Through: Mr. Sunil Agarwal, Sr. Standing Counsel with Ms. Priya Sarkar, Adv. VIPIN SANGHI, J. (ORAL) C.M. No. 40928/2019 in I.T.A. No. 823/2019 and C.M. No. 40929/2019 in I.T.A. No. 824/2019 Exemptions allowed, subject to all just exceptions. The applications stands disposed of. I.T.A. No. 823/2019 I.T.A. No. 824/2019 1. These two appeals assail the common order passed by the learned Income Tax Appellate Tribunal, Delhi Bench D: New Delhi (ITAT) in ITA Nos. 2937 and 2773/Del/2011, preferred by the Revenue against the orders dated 16.03.2011 and 07.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 05 amounting to ₹ 2270,000/ . On questioned by the AO to prove the genuineness of the web advertisement charges, assessee could submit the copies of invoices and allotment domain name. To explicitly make it clear that Globextech India private limited has been paid a sum of INR 750,000 by the assessee for provision of web advertisement charges. To support and substantiate the allowability of the above expenditure, assessee submitted following details:- I. invoice copies to GlobexTech India Ltd from Omega Technologies Ltd dated 12/11/1998 to show the allotment of domain name Globextechin.com II. letter dated 26/3/2004 by assessee to Globex Tech India Ltd for giving advertisement III. advertisement provided by the appellant company to the advertiser IV. Letter dated 1/4/2004 from the advertiser confirming that the advertisement has been placed on the website. V. Confirmation of account from advertiser VI. Master detail of the company of the recipient on registrar of companies website VII. pan and CIN number VIII. Affidavit from the advertiser in response to letter issued by the appellant company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst version only in June 1999 and upgraded in December 1999. This fact is neither controverted by the assessee nor by the learned CIT A. Therefore, it is apparent that such services were not at all in existence in the whole world on 12/11/1998. There is no answer in the order of the learned CIT A, on all these observations of the learned assessing officer. 19. With respect to the software purchase, the assessee could not produce even a single piece of evidence that how the software was developed as it was customized software. There is no answer about the requirement document of the software, about the development cycle, about the project phases, testing phases, running phases etc. There was no backup copy available with the assessee. Only precious thing available with the assessee was an obscure user manual copy. Even the original user manual was also not available. The assessee could not produce the technical person who was associated with the development of the software. To scuttle the enquiry of the AO, merely a name was thrown and AO was asked to make necessary enquiry from the said person of the company who sold the software. It is the duty of the assessee to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee supported it with the necessary evidences. He further stated that the learned assessing officer disallowed the claim out rightly without making any effort of examining any of the companies. However, looking at the facts of the case of assessee, the learned assessing officer issued summons to each of the companies, deputed the inspector who submitted a report about the nonexistence of this companies and further 133 (6) notices remained unserved and unanswered. Perhaps these facts, the learned CIT appeal has lost sight of. The learned CIT A further stated that the AO relied upon the statement of Sri SK Gupta, without affording any opportunity for cross-examination. This finding is devoid of any merit as the AO has not at all issued any summons or enquired anything from Sri SK Gupta during the course of assessment proceedings. The learned assessing officer has merely taken as a support material of the statement of Shri SK Gupta dated 13/12/2006 during the course of search proceedings on Sri SK Gupta. Therefore, it is totally incorrect for CIT Appeal to have mentioned that the AO has made the addition on the basis of statement of Shri SK Gupta and A O has not granted an opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee against which invoices were raised and payments received. The statement of Shri. S.K. Gupta was recorded on 30.11.2009. Particular reference has been made by Mr. Aggarwal to Question No. 18 put to Mr. S.K. Gupta, FCA during his cross examination conducted on 30.11.2009 and the answer given by him to the said question, which reads as follows: Q.18. I further put to you Sh. Gupta that similar services of the nature of advertisement and animation of software have been provided to Times A M (I) Ltd. by Six companies of your group names of which are as under:- 1. Centenary Software (P) Ltd. 2. Era Advertising and Marketing Co. (P) Ltd. 3. P.G. Travels Hindustan Com. (P) Ltd. 4. Globex Tech (P) Ltd. 5. Hi. Tech Computech (P) Ltd. 6. Bolni Exim (P) Ltd. Ans. Yes we have provided actual services to the above companies through our group of companies. 6. Mr. Aggarwal submits that the said witness was not re-examined and, therefore, the statement made by Shri S.K. Gupta, during his cross examination, could not be disregarded. Failure of the Assessing Officer and the ITAT to deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of Mr. S.K. Gupta recorded on 13.12.2006, who stated that he had provided accommodation entries to various entities. The CIT (A) had deleted the addition of ₹ 1.14 crores on the premise that payments had been made through bank channels and the service providers, in respect of whom expenses were claimed, were income tax assessees. The ITAT had affirmed the said finding of the CIT (A). This Court dismissed the appeal preferred by the Revenue by observing as follows: Upon an overall conspectus of the circumstances, it is evident that the CIT(A) carried out a detailed analysis of the material on record, including, especially with respect to the genuineness of the transaction, whereby, the service providers were paid money towards expenses claimed in the assessee s returns. These findings are also collaterally supported by the fact that the service providers were income tax assessees. The ITAT confirmed these findings of fact. In the opinion of the Court, no question of law arises. 11. Mr. Aggarwal has also placed reliance on the order passed by this Court in ITA No. 222/2018, dated 23.02.2018 in the Revenue s appeal preferred against the order passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) deleted the additional sum i.e. ₹ 1.14 Crores after verifying the expenses and observing that the payments were made through banking channels and that the service providers, in respect to whom expenses were claimed, were income tax assessees. The ITAT confirmed these findings. Upon an overall conspectus of the circumstances, it is evident that the CIT(A) carried out a detailed analysis of the material on record, including, especially with respect to the genuineness of the transaction, whereby, the service providers were paid money towards expenses claimed in the assessee s returns. These findings are also collaterally supported by the fact that the service providers were income tax assessees. The ITAT confirmed these findings of fact. In the opinion of the Court, no question of law arises. The appeal is therefore dismissed. For the same reasons, since on the merits, the additions are not sustainable, the Court is of the opinion that no substantial question of law arises. The appeal is consequently, dismissed. (emphasis supplied) 12. Mr. Aggarwal submits that the Tribunal, while passing the impugned order, has f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other assessment years, the assessee had got away by claiming similar expenses towards web advertisement charges and purchase of customized software with the dismissal of the revenue s appeal, even by this Court, is neither here, nor there. This is for the reason that each assessment year is separate and, as noticed by the Tribunal, the level of scrutiny undertaken by the Assessing Officer in other years where the assessee had succeeded, was far less and the Assessing Officer had not done a thorough investigation to support the disallowance of the expenditure claimed by the assessee on the aforesaid two heads. The same cannot be said about two assessment years in question, namely assessment years 200405 and 2005-06. 17. In fact, a perusal of the order passed by this Court in ITA No. 222/2018, dated 13.02.2018, extracted hereinabove shows that this Court had observed in relation to its order pertaining to the assessment year 200203 (for the same assessee), that while it was open to the Assessing Officer to not rely upon the statement of Sh. S.K. Gupta, or rather ignore the retraction, yet, his primary duty was to verify the soundness of the claim of the assessee of havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above order of the coordinate bench has quashed the reassessment proceedings and therefore it did not discuss anything on the merits of the issue. In para number 10.5 of the order stated that as the reopening was quashed and the CO of the assessee was allowed, coordinate bench did not thought it fit to go into merits of the appeal of the revenue at all. Therefore, that decision does not cover the issue on merit. 25. On the order of the coordinate bench in ITA number 3650/del/2013 and referred to para number 10.4 of the order facts are identical to the decision in 2003-04, where the reassessment has been quashed and the appeal of the revenue was dismissed without considering the merits. 26. Similarly, order of the coordinate bench for assessment year 2005 06 in ITA number 4947/del/2010 in paragraph number 6 of that order says that there was no addition on account of web hosting advertisement charges as well as purchase of software and disallowance of depreciation thereon. Further addition has been deleted in para number 6.1 merely on the on the fact that cross-examination of Sri. SK Gupta was not granted to the assessee. 27. In view of this we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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