Income Tax Appellate Tribunal - Mumbai
Nuevo Consultancy Services Ltd ( ... vs Dcit 3(1), Mumbai on 1 June, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH, MUMBAI
BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND
SHRI PAWAN SINGH, JUDICIAL MEMBER
ITA no.4237/Mum./2012
(Assessment Year: 2006-07)
Nuevo Consultancy Services Ltd.
(Formerly Known as Forbes Infotainment
Ltd). 41/44, Shapoorji Pallonji Centre Minoo ................ Appellant
Desai Marg, Colaba, Mumbai 400005
PAN AABCD7314A
v/s
DCIT 3(1) ................ Respondent
Mumbai 400020
Assessee by : Shri. None
Revenue by : Shri. Kailash Kanojiya
Date of Hearing -03.05.2017 Date of Order - 01.06.2017
ORDER
PER: SHAMIM YAHYA This appeal by the assessee is directed against order of Ld. CIT-A dated 19.06.2012 and pertains to assessment year 2006-07.
2. The grounds of appeal read as under:
1. The learned Commissioner of Income Tax (Appeals) ['CIT(A)'] erred in making an addition of Rs.1,04,76,814 under section 69C of the Income tax Act ('the Act') by treating Nuevo Consultancy Services Ltd ITA no.4237/Mum./2012 purchases as bogus purchases on account of (i) difference in balances of creditors amounting to Rs.11,28,265 (ii) non receipt of reply from creditor parties amounting to Rs.93,48,549.
2. The learned CIT(A) failed to appreciate that the Appellant has neither furnished any inaccurate particulars nor concealed any particulars of income.
3. The learned CIT(A) erred in completing the assessment on the basis of conjecture, mere suspicion and summarizing without any material or basis and by ignoring the relevant materials placed on records by the appellant in support of its submissions and therefore, the Appellant prays that addition of Rs.1,04,76,814 may be deleted.
4. The learned DCIT erred in making appellant responsible for producing the creditor parties without issuing summons under section 131 of the Act from his end.
5. The learned CIT(A) erred in making addition of Rs.11,28,265 by ignoring explanations and evidences submitted to him during the course of assessment proceedings and therefore, the Appellant prays that addition of Rs.11,28,265 may be deleted.
6. The learned CIT(A) failed to understand that the Appellant does not have any direct control over the creditors for not giving reply to notice under section 133(6) of the Act.
Therefore, the Appellant prays that addition of Rs.93,48,549 made on account of non-submission of reply to such notice may be deleted.
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Nuevo Consultancy Services Ltd ITA no.4237/Mum./2012
7. The learned CIT(A) ought to consider all evidences and materials regarding purchases and commissions produced by the appellant and therefore, additions of Rs.1,04,76,814 made by him is arbitrary and without any basis and the same should be deleted.
8. On the facts and circumstances of the case, the provisions of section 69C of the Act are not applicable and therefore, the Appellant prays that addition of Rs.1,04,76,814 may be deleted.
9. The Appellant prays that:
i) addition of Rs1,04,76,814 may be deleted;
ii) an opportunity to be heard may be granted;
iii) any other relief your honours may deem fit.
10. The Appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.
3. The A.O in this case made the impugned addition by observing as under:-
"During the course of hearing, the assessee company was asked to produce confirmations in respect of transactions entered into by the assessee with number of parties. After perusal of the confirmations submitted and the details of purchases and other transactions 3 Nuevo Consultancy Services Ltd ITA no.4237/Mum./2012 made, it is found that the assessee company failed to submit the confirmations in respect of following parties :-
S.No Name of the Party Nature of transaction Amounts (Rs.)
1. Online Infotainment Distributor's commission 24,00,339/-
& expenses
2. Mega Infotainment Distributor's Commission 34,76,407/-
3. Net Magic Solutions Professional fees paid 33,27,803/-
Pvt. Ltd.
4. PAN India Network Purchase of Lotteries 70,92,698/-
Infravest Pvt. Ltd
5. Microtek International Purchase of computers 2,40,000 P.Ltd.
6. CMC Ltd. Purchase of computers 30,81,148/-
Total 1,96,18,395/-
The assessee was given sufficient time to get the confirmations.
However, in respect of above mentioned parties, the assessee did not submit any confirmation till the fag-end of the assessment proceedings. With a view to examine the genuineness of above said transactions entered into with such parties, notices were issued u/s.133(6) of the I.T. Act to the above parties. The reply to notice was required to be provided to this office by 30/12/2009. However, only one reply from M/s. PAN India Network Infravest Pvt. Ltd. was received till date, where discrepancy has been found between the amount of sale of lotteries and purchase amount as per the assessee. Further, no reply was received from the remaining 8 4 Nuevo Consultancy Services Ltd ITA no.4237/Mum./2012 parties mentioned above. The proposed addition is computed as follows:
Sl.No Name of the party Nature of Amt.(in Rs.) Amount Difference Proposed transactions shown by the (in Rs.) addition assessee shown by the party
1. Online Distributor's 24,00,339/- No reply 24,00,339/- 24,00,339 Infotainment commission & received expenses
2. Mega Distributor's 34,76,407 No reply 34,76,407 34,76,407 Infotainment commission received
3. Net Magic solution Professional 33,27,803 No reply 33,27,803 33,27,803 Pvt. Ltd. fees paid received
4. PAN India Purchase of 70,92,698 59,64,433 11,28,265 11,28,265 Infravest Pvt. Ltd. lotteries
5. Microtek Purchase of 2,40,000 No reply 2,40,000 1,44,000 (on Internnationl P. computers received account of Ltd. depreciation).
6. CMC Ltd. Purchase of 30,81,148 No reply 30,81,148 18,48,689(on computers received. account of depreciation).
Proposed Addition 1,01,65,203/-
The assessee was intimated about the same and was asked to substantiate that the transaction entered into with the above parties were genuine. The assessee was further asked to reconcile the discrepancy in the case of purchase of lotteries from M/s. PAN India Network Infravest Pvt. Ltd. In response to the same, the assessee stated that it is unable to produce the confirmations from the above parties. However, the assessee company submitted copy of ledger account in their books, bills, credit notes and TDS certificates issued to them.
The contentions of the assessee have been carefully considered. The assessee has only submitted the copy of ledger account in their 5 Nuevo Consultancy Services Ltd ITA no.4237/Mum./2012 books of the above mentioned parties, bills, credit notes and TDS certificates issued to -melt!. However, here, the major issue is about the genuineness of the claim of the assessee that the payments shown towards transactions entered into with the above mentioned parties had been incurred for the purpose of business. The assessee was given sufficient opportunity as evident from the discussion made above and it has failed to submit any confirmation from both the parties, raising questions about the genuineness of the claim of the assessee. This office also issued notices u/s.133(6) to both the parties, but none of the parties confirmed the transactions made with the assessee. The onus to prove genuineness of various expenses debited to P&L a/c lies upon the assessee and the assessee failed to discharge such onus cast upon it. The production of ledger account, bills and credit notes do not itself substantiate the genuineness of the expenditure. Further, it is also important to note that the assessee has not been able to bring anything on the record, which may have proved that the confirmations were not provided by above parties due to any specific reason, such as dispute, litigation, etc., The amount involved in the above said transactions entered into with the above parties is not a small amount. The assessee has no plausible reason 6 Nuevo Consultancy Services Ltd ITA no.4237/Mum./2012 for not substantiating the genuineness of the above mentioned transactions by way of confirmations.
In view of the same, the claim of expenses and depreciation on the purchase of computers purchased from above-mentioned parties is not found to be genuine. Therefore, it is treated as expenditure not laid out or expended wholly & exclusively for the purpose of business and accordingly, the same is disallowed u/s.37(1) of the I.T. Act. Penalty proceedings u/s.271(1)(c) of the I.T. Act are initiated separately for furnishing inaccurate particulars of income, thereby concealment of income chargeable to tax."
4. Upon assessee's appeal Ld. CIT-A held as under:-
The five ground of appeal pertains to addition of Rs.1,01,65,203/- on account of non genuine expenses. The AO issued notices u/s.133(6) to various parties and no replies were received with respect to six parties mentioned at page 4 of the assessment order and there was discrepancy in the account of the appellant and of PAN India Infravest Pvt. Ltd.
The AO gave opportunity for reconciliation and asked the appellant company to produce the parties to prove the genuineness of transaction but neither reconciliation were submitted nor parties were produced. The AO, therefore, made additions totalling Rs.1,01,65,203/-.7
Nuevo Consultancy Services Ltd ITA no.4237/Mum./2012 The appellant filed additional evidences which was forwarded to AO vide CIT(A)-7 letter dated 12.08.2010. The AO furnished his report vide letter dated 04.11.2011. The appellant filed comments on the remand report on 28.11.2011 and explained the case in course of hearing on 30.04.2012. Party wise additions are discussed hereunder:
(i) Online Infotainment, (ii) Mega Infotainment, (iii) Netmagic Salutations Pvt. Ltd. & (iv) M/s. Microtech International (P).
Ltd.
Despite lapse of more than 5 years from the end of previous year, the appellant has failed to furnish confirmation from these four parties and the AO's notices issued to these parties could not be served.
Thus the transaction with these four parties has correctly been held to be not genuine and the disallowance of claim of expenses in these four parties amounting to Rs.24,00,339/- Rs.34,76,407/-, Rs.33,27,803/-, Rs.1,44,000/- respectively are confirmed.
M/s PAN India Network Infravest Pvt. Ltd.
The appellant has failed to furnish reconciliation of Rs.11,28,265/- and has failed to furnish any evidence that the amount pertain to TDS certification, hence, addition of Rs.11,28,265/- is confirmed.
M/s CMC Ltd.
The AO in the remand report has stated that the confirmation of the party signed on 2010 supported by copies of Tax invoice have been filed therefore the assessee's claim regarding 8 Nuevo Consultancy Services Ltd ITA no.4237/Mum./2012 genuineness of transaction appears to be acceptable. In view of AO's report the addition of Rs.18,48,689/- is deleted.
5. Against above order is in appeal before us. None appeared on behalf of the assessee.
6. We find that this case is pending for the past five years. In the recent past despite several notices none has appeared on behalf of the assessee. Hence we proceed to adjudicate the issue by hearing the learned departmental representative and perusing the records. We find that in this case the assessing officer has made the addition due to the reason that the persons to whom the payment for the expenditure were claimed to be made could not be located. Despite several opportunities the assessee has failed to substantiate the claim. Upon assessee's appeal learned CIT-A has obtained a report from the assessing officer. After detailed finding from the assessing officer regarding the additional evidences learned CIT-A has deleted the part of the addition and sustained the rest as the assessee could not substantiate the rest of the claim. In our considered opinion there is no infirmity in the order of learned CIT-A. It is based upon correct appreciation of the facts and the evidences brought by the Assessing Officer on record. Hence we uphold the order of learned CIT-A. 9 Nuevo Consultancy Services Ltd ITA no.4237/Mum./2012
7. In the result this appeal by the assessee stands dismissed.
Order pronounced in the Open Court on 01.06.2017
Sd/- Sd/-
PAWAN SINGH SHAMIM YAHYA
JUDICIAL MEMBER ACCOUNTANT MEMBER
MUMBAI, DATED: 01 .06.2017
Copy of the order forwarded to:
(1) The Assessee;
(2) The Revenue;
(3) The CIT(A);
(4) The CIT, Mumbai City concerned;
(5) The DR, ITAT, Mumbai;
(6) Guard file.
By Order
Nishant Verma
Sr. Private Secretary
(Dy./Asstt.Registrar)
ITAT, Mumbai
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