M/S. COMMUNE MARKETING AND EVENTS PVT. LTD.,NEW DELHI vs. ACIT, NEW DELHI

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ITA 1196/DEL/2017Status: DisposedITAT Delhi20 February 2020AY 2013-1417 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the appeal filed by the assessee. The Tribunal noted that the assessee was absent during the hearing. The Revenue was represented by the Sr. DR, who relied on the assessment order and the CIT(A)'s order. The Tribunal found that the CIT(A) had passed a speaking order with detailed reasons for its decision. No material was presented before the Tribunal to persuade it to take a view different from that of the CIT(A). Therefore, the Tribunal declined to interfere with the impugned appellate order of the CIT(A). The Tribunal explicitly clarified that the assessee would be at liberty to approach the ITAT for restoration of the appeal in accordance with Proviso to Rule 24 of Income Tax (Appellate Tribunal), Rules, 1963, if they chose to do so, and the matter would be considered in accordance with law. The ratio of the decision is that an appeal will be dismissed if no new material is presented to challenge the findings of the lower appellate authority, and the assessee remains absent.

What were the facts?

The assessee, Commune Marketing and Events Pvt. Ltd., filed an appeal against the order of the Commissioner of Income Tax (Appeals)-35, New Delhi, for Assessment Year 2013-14. The appeal challenged the confirmation of a disallowance of Rs. 41,55,957/- claimed as consultancy fees paid to several individuals. The Assessing Officer (AO) had disallowed this amount, stating that the assessee failed to provide sufficient evidence of services availed, business nexus, and the qualifications of the service providers. Despite multiple opportunities, the assessee did not furnish the required details, including agreements and the nature of services. The AO also noted that the service providers did not respond to notices issued under Section 133(6). The CIT(A) admitted additional evidence but found it insufficient to establish the nature of services as legal consultancy, noting that PAN was missing for many parties and the agreements were general in nature.

What were the issues?

1. Whether the disallowance of Rs. 41,55,957/- claimed as consultancy fees is erroneous and contrary to facts, as per Section 37(1) of the Income Tax Act, 1961? Assessee's Contentions (implied by grounds of appeal): - The CIT(A)'s order is erroneous and contrary to facts. - The CIT(A) erred in confirming the disallowance of Rs. 41,55,957/- debited as consultancy fees paid to consultants for event management and related consultancy. - The CIT(A) erred in stating that the consultancy fees were paid to persons for rendering legal services, when they were for event management and related consultancy. Revenue's Contentions (as per AO and CIT(A) orders): - The assessee failed to provide evidence of services availed, business nexus, and qualifications of service providers. - Invoices and TDS deduction are not sufficient to establish commercial expediency and business purpose. - Service providers did not respond to notices, suggesting services were not rendered. - Agreements submitted were general and did not specify legal or specific professional consultancy. - The assessee failed to discharge its onus to prove the genuineness and business purpose of the expenditure.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 133(6),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI

Before: SHRI H.S.SIDHU & SHRI ANADEE NATH MISSHRA

(A) This appeal has been filed by the Assessee against the impugned appellate order dated 19.01.2017 passed by Learned Commissioner of Income Tax (Appeals)- 35, New Delhi [in short, “Ld. CIT(A)”] pertaining to Assessment Year 2013-14. The Assessee has raised following grounds of appeal :- “1. The order of the learned CIT(A) is erroneous & contrary to the facts.

2. The learned CIT(Appeal) has erred on facts and in law in confirming the disallowance of Rs. 41,55,957/- debited under the head consultancy (Commune Marketing and Events (P.) Ltd.) fee as detailed hereunder paid to consultants for event management and related consultancy. Sukhmani Singh Rs. 9,72,184 Vivek Sethia Rs. 12,00,000 Zinnia Nandi Saxena Rs. 8,94,996 Roshni Dindsa Chawla Rs. 6,08,777 Manishi Gupta Rs. 4,80,000 ---------------------- Rs. 41,55,957

3. The learned C.I.T (Appeal) has erred on facts in stating consultancy fee paid detailed hereinabove as legal expenses paid to persons for rendering legal services.”

(B) The relevant portion of the assessment order dated 25/02/2016 is reproduced as under :-

(Commune Marketing and Events (P.) Ltd.) (Commune Marketing and Events (P.) Ltd.) (Commune Marketing and Events (P.) Ltd.)

(C) The Ld. CIT(A) has admitted additional evidences furnished by the assessee during appellate proceedings before us the relevant portion of the aforesaid impugned appellate order dated 19/01/2017 of the Ld. CIT(A) is reproduced as under :-

(Commune Marketing and Events (P.) Ltd.) (Commune Marketing and Events (P.) Ltd.) (Commune Marketing and Events (P.) Ltd.) (Commune Marketing and Events (P.) Ltd.)

(D) On merits, the relevant portion of the impugned appellate order dated 19.01.2017 of Ld. CIT(A) is as under (Commune Marketing and Events (P.) Ltd.)

(Commune Marketing and Events (P.) Ltd.) (Commune Marketing and Events (P.) Ltd.) (Commune Marketing and Events (P.) Ltd.) (Commune Marketing and Events (P.) Ltd.)

(E) At the time of hearing, Revenue was represented by Shri Jagdish Singh, Learned Senior Departmental Representative (“Ld. Sr. DR”, for short). However, none was present from the assessee’s side. In the absence of any (Commune Marketing and Events (P.) Ltd.) representation from assessee’s side, at the time of hearing before us, we heard the Ld. Sr. DR; who relied upon the assessment order dated 25/02/2016 of Assessing Officer; and on the aforesaid impugned appellate order dated 19.01.2017 of the Ld. CIT(A). After perusal of the materials on record ; we find that the Ld. CIT(A) has passed speaking order, relevant portions of which have already been reproduced in earlier part of this order. We find that the Ld. CIT(A) has given detailed reasons for her decision on merits in the aforesaid impugned appellate order dated 19.01.2017. During appellate proceedings in Income Tax Appellate Tribunal (“ITAT”, for short) no material has been brought for our consideration to persuade us to take a view different from the view taken by the Ld. CIT(A) in the impugned appellate order dated 19.01.2017. After hearing the Ld. Sr. DR, and after perusal of materials on record, and further, in view of the foregoing discussion, we decline to interfere with the aforesaid impugned appellate order dated 19.01.2017 of Ld. CIT(A), and accordingly, this appeal is dismissed.

(F) Before we part; we explicitly clarify that the assesee will be at liberty to approach ITAT for restoration of the appeal in accordance with Proviso to Rule 24 of Income Tax (Appellate Tribunal), Rules, 1963. If the assessee does approach ITAT for restoration of the appeals in ITAT, the matter will be considered in accordance with law having regard to the facts and circumstances.

(Commune Marketing and Events (P.) Ltd.)

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