TMI Blog2022 (11) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... n the light of report of DDIT (Inv.) Unit-1(3), Mumbai and contradictory statements given by various persons of both the sides, we found action of the AO under section 147 of the Act as legitimate one and original Ground No.1 and Additional Ground Nos. 1 2 are dismissed. Disallowance of professional fee paid - genuineness of expenses - Amount debited to WIP in the balance-sheet - HELD THAT:- Where the payment to a consultant (JIPL) was being made in crores of rupees over the period, it is highly inconvincible that with reference to services rendered there is not even a single document /report/communication ever submitted by assessee. Even a layman will not convince that after paying crores of rupees over the period to consultant assessee is not in possession of any document in the form of report/advice/road map/blueprint about the project, company, HR matters, Legal matters, financial matters, Engineering Services etc. Assessee s counsel vehemently argued the matter but despite of bench s specific reference about the reports of deliverables his reply was not satisfactory. In the lights of above observation at all the forums including ITAT, we are of the firm view that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er with respect to reduction of Rs.35,00,000/- from the WIP of the appellant company with regards to the professional fees paid to M/s. Jitnat Infrastructure Pvt. Ltd. during the year under consideration. On the pretext that no services has been rendered by the said party to the appellant company. It is therefore submitted that such reduction in WIP is unreasonable and unjustified and therefore, such reduction of WIP by Rs.35, 00,000/- should be deleted. 3. Your appellant craves to add, alter, or amend any of the grounds of appeal on or before the date of hearing of appeal. 2. Assessee has also raised the common additional grounds of appeal vide letter dated 05.12.2019 in all the A.Ys. Which are as under: Additional Ground No 1:- On the facts and in the circumstances of the case, the action of the Ld. AO in reopening the assessment u/s 148 was bad-in-law as no taxable income has escaped assessment. Additional Ground No 2:- On the facts and in the circumstances of the case, the action of the Ld AO in reopening the assessment u/s 148 was bad-in-law as the assessment sought to be reopened was completed u/s 153A. Additional Ground No 3:- On the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of five years commencing from 01.07.2006 vide an unregistered agreement dated 19.03.2007. 8. For the period Financial Year (FY) 2006-07 to 2011-12 following payments were made by the companies mentioned below: Financial Year Kaptstone Constriction Pvt. Ltd. Brickwork Trading Pvt. Ltd. Keystone Realtors Pvt. Ltd. Total 2006-07 60,00,000/- 25,50,000/- 25,50,000/- 1,05,00,000/- 2007-08 60,50,000/- 30,00,000/- 30,00,000/- 1,24,50,000/- 2008-09 70,83,908/- 32,42,409/- 32,42,409/- 1,35,68,729/- 2009-10 90,11,711/- 38,68,065/- 44,43,717/- 1,73,23,493/- 2010-11 88,08,564/- 36,72,996/- 44,73,768/- 1,69,55,328/- 2011-12 14,68,094/- 9,18,249/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endra Awahad. Further, clause 4 (b) of the agreement is not found to be a normal clause of any business transaction or agreement. In the instant case it is strange to absorb such clause that First Party shall be jointly and severally liable and obliged to pay the same to the Second party under all circumstances even if they have not availed the service of the second party. Thus, it is clear that the Second party is not at all obligatory to provide the business advisory service to the First party. Even if the services are terminated by the second party, he is bound to receive the total remuneration of Rs.3, 66, 30,600/- at any circumstances. On perusal of the statement of Shri Boman R. Irani and Shri Percy D Choudhary one of the Directors of M/s Rustomjee Group recorded on oath, it is seen that they were unable to give satisfactory answer that what services (consultancy or legal) were provided by Shri Jitendra Awhad or M/s Jitnat Infrastructure Pvt. Ltd. They gave evasive answers like services were oral and as per mutual agreement. Further they could not produce any supportive documentary evidence which can substantiate that the services are consultancy and business advisory se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itnat Infrastructure Pot. Ltd. it is submitted that out of the total amount an amount of Rs.12,50,000/- relates to the project of M/s. Brickswork Trading Pvt. Ltd. after merger with the assessee company on 31.11.2006 and further Rs.22,50,000/- relates to the assessee company which is debited by the assessee company to the WIP. In this regard copy of the ledger account of M/s. Jitnat Infrastructure Pvt. Ltd. in the books of the assessee-company from 01.04.2006 to 31.03.2007 and M/s. Jitnat Infrastructure Pot. Ltd. in the books of M/s. Brickswork Trading Pvt. Ltd. from 01.12.2006 to 31.03.2007. Further it is submitted that the Project Management Consultancy was provided by M/s Jitnat Infrastructure Pvt. Ltd. for the Ozone (commercial) Project related to M/s. Brickswork Trading Pvt. Ltd. and Elita project of the assessee company. In this regard copy of the ledger account of Professional Charges ELITA project from 01.04.2006 to 31.03.2007 in the books of the assessee company and ledger account of professional Charges in the books of M/s. Brickswork Trading Pvt. Ltd. showing the amount transferred to WIP is enclosed for your honours ready reference. Further details of project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in its submission given vide letter dated 13-02-2015. However, the contentions of the assessee are not found to be acceptable and are rejected on following grounds: - 11. AO was not convinced with the reply of assessee, objecting re-opening of the case and disallowing Rs. 35, 00,000/- out of WIP. AO relied upon the material available on record, various contradictory statements of Sh. Percy S. Chowdhary, Company Secretary of Rustomjee Group and Shri D.M. Telange, Accountant of JIPL and absence of any supporting document which substantiates the delivery of services like Advisory Report, Plan Layout, Blueprint of the Project, any form of communication between the assessee and the consultant, AO disallowed the amount of Rs. 35, 00,000/- paid to JIPL and debited to WIP. 12. Being aggrieved with the order of the AO, assessee further appealed before the Ld. CIT (A)-48, Mumbai. Ld. CIT (A) also sustained the order of AO and assessee s appeal was rejected on both the grounds i.e., re-opening of the case and disallowance of consultancy charges debited to WIP. 13. Being further aggrieved, assessee preferred an appeal before us against the order of authorities below. We have gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of reasons recorded. There is No Case of Change of Opinion as no opinion was formed on this issue earlier. Approval from CIT(C) was duly obtained vide his letter dated 04.03.2014 and notice was issued subsequently. Later notices u/s 142(1) and 143(2) were also issued and served on 15.01.2016 as per the facts on pages 12 and 13 of the assessment order. Requirement of section 147, 149 and 151 were duly met with by: - AO in this case as is evident from the above facts duly complied with all the requirements of the law as per various relevant sections. On objections raised by assessee for reopening of assessment vide letter dated 25.08.2015 AO ay dealt with these objections vide detailed order dated 15.01.2016 The requirement of Sec. 147 is only to have prima-facie reason to believe that income has escaped assessment has been held in plethora of case laws that at the time of reopening AO is not required to establish the escapement of Income. The existence of reason is enough in this regard; reliance is placed on following case laws of the Apex Court. a. Kalyanji Maji Co. v/s CIT (SC) 102 ITR 287 b. ITO v/s Lakhmani Mewal Das (SC) 103 ITR 437 c. Phool C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of search carried out in case of another person, came to know that loan transactions of assessee with a finance company were bogus as said company was engaged in providing accommodation entries, it being a fresh information, he was justified in initiating reassessment proceeding in case of assessee. Paramount communication Pvt. Ltd. Vs. PCIT (2017-TIOL-253-SC-IT): - SLP of assessee dismissed. Information regarding bogus purchase by assessee received by DRI from CCE which was passed on to revenue authorities was 'tangible material outsider record to initiate valid reassessment proceedings. 15. Assessee s earlier assessment order was passed under section 153A of the Act that itself confirms the scope of the assessment was limited to verification of incriminating material found during the search. An assessment order under section 153A r.w.s 143(3) of the Act does not deal with the materials other than incriminating material found during the search. Assessee s claim that he has already disclosed the amount debited and paid to JIPL was duly reflected in the books of accounts and verified also by the AO is not correct. For verification other than amount debited in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is liable to be rejected and order of the Ld. CIT(A) is in right perspective requires no interference. Original Ground no- 2 of the assessee is dismissed. 19. Additional Ground No-3, assessee raised this additional ground vide its application dated 05-12-2019. Through this ground assessee challenged the assessment order passed by the AO as the AO did not pass the order rejecting the objections to the reopening of the assessment 4 weeks before passing of the assessment order. 20. This Ground of appeal raised by the assessee has its roots by virtue of order of Hon ble Jurisdictional High Court in the case of Asian Paints Ltd Vs DCIT (2008) 296 ITR 90 (Bom). We have respectfully considered this landmark, assessee friendly order of the Hon ble Jurisdictional High Court. Facts of the case with relevant dates analysed keeping in view the directions of Honourable adjudicating High Court. As per our observation following facts emerged which are relevant to the matter as under: i. In the case of Asian Paints Ltd assessee was promptly complying with the notices of the A.O. whereas in the case under consideration notice u/s 148 was issued on 27-03-2014. Thereafter a copy of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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