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Income Tax Appellate Tribunal, ‘A’ BENCH, PUNE
ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of the ld. CIT(A)-3, Pune dated 31-10-2017 for A.Y. 2014-15 as per the following grounds of appeal.
“Ground No. 1 : On the facts and circumstances of the case, the ld. CIT(A)-3, Pune, erred on facts and in law in disallowing the sum of Rs. 61,20,563/- on account of expenses claimed related to activity of Business Process Outsourcing (BPO). The ld. CIT(A) Pune failed to appreciate the fact that the accounts of the appellant are audited, and full supporting are available with the appellant. Ground No. 2 : Summary Ground: The appellant craves leave to add, alter and/or to amend the above grounds of appeal
.”
2. The solitary grievance of the assessee is that the ld. CIT(A) sustained the disallowance of Rs. 61,20,563/- on account of expenses claimed related to activities of Business Processing Outsourcing. At the time of assessment proceedings, the ld. A.O observed that the receipts from the alleged BPO business of the assessee are NIL although they have incurred huge expenses
Pinsheel Technology Pvt. Ltd. A.Y. 2014-15 of Rs. 61,20,563/-. The assessee was asked to produce documentary evidence in respect of work done with regard to the transactions like number of data entry sheets provided by the US based company, what conversion was carried out, with-mail correspondences, etc. The assessee was unable to substantiate its case before the ld. A.O and could not produce any evidences/documents to demonstrate whether any actual work was carried out by the assessee. Therefore, on one hand, the receipts were NIL, on the other hand, there has been huge expenditure but these expenses have to be substantiated demonstrating the genuineness and the transactions for which these expenses were incurred. However, as evident from the order of the ld. A.O the assessee has not produced any documentary evidence for actual work carried out, no e-mail correspondence details, no bills regarding the expenditure incurred on infra-structure set up and alleged hiring of employees for the new business which did not materialise, nothing was placed on record. Therefore, the entire expenses were disallowed by the ld. A.O.
At the CIT(A)’s stage, it was observed that there is an agreement by the assessee which is just on a piece of paper and neither notarised nor on a stamp paper and it provides that certain work has to be done by the assessee for its clients. However, no evidence of any work done, like number of data entry sheets provided by the US company, what conversion was carried out, e- mail correspondences, if any, whether any bills were raised, nothing was furnished before the ld. CIT(A). At para 5.3.3 the ld. CIT(A) also observed that even no bills were raised by the assessee and the assessee was not able to demonstrate by furnishing any e-mail correspondence, regarding the work done, etc.
At the time of hearing before us, the ld. A.R has submitted details of expenditure of Rs. 61,20,563/- annexed at pages 10 to 12 in the paper book.
Pinsheel Technology Pvt. Ltd. A.Y. 2014-15 He submitted that these details were also placed before the revenue authorities. It is surprising that in both the orders of the subordinate authorities, there is a categorical mention that no evidence of expenses or any documents have been filed by the assessee and before us, the ld. A.R is stating that the details were filed before the revenue authorities. The ld. A.R further submitted that they are also open for verification of the documents/evidences before the first appellate authority once again. The ld. D.R did not raise any objection if the matter is restored back to the file of the ld. CIT(A) for verification.
Having heard the parties and considering the facts of the case, we find that before both the subordinate authorities no details were filed on record which is evident from the respective orders of the concerned authorities. The assessee before us stated that they are open for verification on this issue if the matter is re-adjudicated again by the ld. CIT(A). The ld. D.R also accepts this proposition. In the interest of justice, therefore, we set aside the order of the ld. CIT(A) and remand the matter back to his file for re-adjudication as per law verifying all the details/expenses and at the same time, the assessee is directed to present himself before the ld. CIT(A) and present its case on merits by furnishing all evidences/documents as and when called for.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on this 08th August 2022.