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TMI Blog2019 (12) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... d arises from the order in ITA No. 2773/Del/2011, whereas ITA No. 824/2019 relates to the assessment year 2004-05 arising from the order passed by the Tribunal in ITA No. 2937/Del/2011. 3. The appellant M/s Fiitjee Ltd. is the successor of M/s Times A & M (India) Ltd. The Assessing Officer in both the years under consideration, disallowed the web advertisement expenses and the depreciation claimed by the respondent assessee in respect of software purchase, on the ground that the web advertisement expenses were found to be bogus, and that the assessee was not able to establish, during the assessment proceedings, the genuineness of the purchase of software in respect of which the depreciation was claimed, and the assessee was also not able to establish the actual use to which the software, on which depreciation was claimed, was put. The appeal preferred by the assessee before the CIT (A) for the assessment year 2005-06 was allowed, and following the said decision, the CIT (A) allowed the appeal of the assessee for the assessment year 2004-05 as well. From the said two orders of the CIT (A), the aforesaid two appeals arose before the Tribunal at the instance of the Revenue. The Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing officer noted that all the companies, which provided the web advertisement services to the assessee, are stationed at the same address. Therefore, AO issued notices u/s 133 (6) of the act asking for comprehensive details. In case of one company notice returned back unserved, with comments that no such firm exist. In case of other concerns, there was no response. Therefore, assessee was asked to provide the current addresses of these companies. Later on, he found that one Shri SK Gupta, who is an accommodation entry provider who was also surveyed by the income tax department and stated earlier that he is an accommodation entry provider, controls these companies. Therefore, summons under section 131 of the income tax act was issued to these companies. However, nobody complied with those summons. Therefore, the AO deputed the inspector to verify the existence of those companies who reported that no such companies existed at the new addresses given by the assessee. Therefore, further summons were also issued under section 131 to these companies for the compliance, which was received by one person on behalf of all the companies. However, in response to the summons also there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer in his assessment order. In view of this, we do not have any reason to sustain the order of the learned CIT appeal, but looking at the order of the learned assessing officer, we have every reason to restore the order of the learned assessing officer. 20. Now we come to the findings of the learned CIT appeal that on identical facts and circumstances in case of some other group concern, the additions have been deleted, and therefore he deletes the addition in case of the assessee for this year too. Firstly, the learned CIT appeal failed to notice a startling difference in the level of enquiries made by the learned assessing officer in the present case. With respect to the website advertisement expenditure, the Ld. Assessing officer has conclusively proved that Java server page on which the website of the service provider is maintained, such technology was never in existence. The learned CIT appeal did not have any answer about the same. Further, with respect to the software development the questions raised by the AO about the project and various development cycle for development of the software were never answered by CIT appeal. Leaving aside even the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has made payment by account payee cheques. It is a matter of common knowledge that whenever there is an allegation of accommodation entries the transactions are always through account payee cheques. 21. With respect to the software purchase by the assessee and claim of depreciation thereon is squarely covered against the assessee by the decision of the honourable Delhi High Court in case of Chintel (supra) wherein the assessee could not prove the purchase of the software as genuine transaction as it was also developed by an entry operator controlled company, the honourable Delhi High Court confirmed the disallowance of depreciation on the same held as under :- "AYs 2009-10 and 2010-11 24. Turning to the appeals for AYs 2009-2010 and 2010-11 the short question involved is whether the Assessee was able to demonstrate that it was the Assessee which, in fact, purchased the software for a value of over Rs. 4.24 crore from MIL whose address has not been able to be verified by the AO. 25. The Court finds that the ITAT has reexamined every shred of evidence to come to clear conclusion that the Assessee was not able to demonstrate the genuineness of the purchase softwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded of Shri SK Gupta by the learned assessing officer during the course of assessment proceedings of the assessee. Further, the learned assessing officer has not made the disallowance on the basis of the statement of Shri SK Gupta but on account of failure of the assessee to substantiate that, it has incurred for web advertisement development charges as well as purchase of customized software on which depreciation is claimed." (emphasis supplied) 9. The finding returned by the Tribunal is a finding of fact upon appreciation of evidence and it is a plausible view. The appellant could not substantiate that it incurred web advertisement development charges and that it purchased customized software. The same, certainly, cannot be labled as perverse. 10. Mr. Aggarwal has argued that on identical facts and circumstances, for other assessment years and in respect of other group concerns, the additions made by the AO on the same counts, have been deleted. He submits that even this Court had dismissed the appeal preferred by the revenue against the orders passed by the Tribunal. In this regard, Mr. Aggarwal has placed reliance on the order dated 09.01.2018, passed in ITA No. 19/2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the merits of additions made i.e. disallowance of the credit claimed, the ITAT and this Court had ruled against the Revenue. The Revenue had premised the reopening of assessment on the basis of a statement made by one Mr. S.K. Gupta. The AO in the re-assessment order refused to give effect to the retraction of that statement, brushing aside the later statement, on the ground that it was made years later. At the same time, this Court for another Assessment Year (AY 2002-03) held that whilst it was open to the AO to not rely upon the statement taken into account or rather ignore the retraction, yet, primary duty to verify the soundness of the claim of having been made genuine payment had to be gone into and verified. This was not done and consequently in ITA 19/2018 Principal Commissioner of Income Tax (Central)-I vs. M/s FIIT JEE Ltd. decided on 9.1.2018, the Court upheld the order of ITAT setting aside the additions on merits made during the re-assessment. This Court had then observed, as follows: ".........The facts of the case are that for A.Y. 200203, the scrutiny assessment was completed on 17.12.2005 bringing to tax a total amount of Rs. 1,95,97,564/-. Re-assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s advanced by Mr. Aggarwal. The Tribunal has specifically highlighted the error committed by the CIT(A) while allowing the assessee's appeal. 14. We have consciously set out, in extenso, the finding returned by the Tribunal in the common impugned order. A perusal of the same shows that the Tribunal has, at great pains, analysed the evidence placed on record to evaluate whether the transactions in question, namely one relating to web advertisement development and the other related to the purchase of the customized software, were genuine, or not. 15. The Tribunal concerned with the view of the Assessing Officer that the appellant/ assessee could not establish the genuineness of these transactions. One of the aspects taken note of by the Assessing Officer, while holding the said transactions to be not genuine (and that was not the only reason given by the Assessing Officer, and accepted by the Tribunal) was that Sh. S.K. Gupta, who is an accommodation entry provider had accepted to have provided the accommodation entries through his entities, which were claimed to have rendered the aforesaid services and supplied the software to assessee. During his cross-examination, the said Sh. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er orders, inter alia, passed by this Court, also has no merit for the reason that the Tribunal has dealt with the said submissions in the following manner. "22. Now we come to the various decisions relied upon by the learned Senior Advocate submitting that the issue squarely covered in favour of the assessee by quoting the decision of the coordinate benches which also confirmed by the honourable High Court in case of FIITJEE Ltd. 23. We first refer to the decision of the coordinate bench in ITA number 4946/del/2010 for assessment year 2002 - 03 where in para number 9 of the order it is stated that the assessing officer did not make any effort of examining any of the companies and evidences produced by the assessee and in that case, the addition was only made by the assessing officer on the statement of Shri SK Gupta, without affording any opportunity for cross examination. In the Present case, the assessing officer has made detailed enquiry. De hors the statement of Shri SK Gupta, assessee has failed to show that it has incurred expenditure for web advertisement and purchased the software. Further, we did not find the observation of the coordinate bench with respect to the non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced. Inference and conclusion based upon appreciation of fact does not give rise to a question of law. In this context that the appellant claims and asserts that the decision of the Tribunal was perverse, and therefore substantial question of law arises from the impugned order. A finding of a Tribunal on fact does not become perverse merely because another finding or conclusion was possible. Test and benchmark of perversity is far stringent and strict. Factual findings can be only interfered with when they are patently unreasonable, not supported by any evidence or are based upon extraneous and irrelevant material. Interference may be justified when the conclusions are based upon mere conjectures and surmises or where no person acting judicially and properly instructed under the relevant law could have come to the same decision and conclusion. In the current factual matrix, having noted the evidence and material before the Tribunal, the final conclusion arrived at, it cannot be said, that Tribunal's conclusion was based upon no evidence to support or was rationally not possible or entirely unreasonable. The conclusion is also not contradictory." (emphasis supplied) 21. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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