M/S CORNER CONTRACTORS P. LTD.,MUMBAI vs. NFAC, DELHI

आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 30/11/2023, passed by NFAC, Delhi for the quantum of assessment passed u/s.143(3) for the A.Y.2021-22. 2. Before us following effective grounds have been raised:-

3. The learned CIT(A) has erred in not taking into account the bills of Dr. Abhishek Shukla for deciding the issue.

4. Before ld. CIT(A), assessee had made following submissions with regard to fee paid to Dr. Abhishek Shukla. The relevant portion of which is reproduced hereunder:- “1. In this respect, it is respectfully submitted that the disallowance made by the AO is unlawful and unwarranted. The appellant attempted to file the details called for on IT portal but it was unable to upload the same. Hence the CA vide its email dated 22.12.2022 at 6:43 pm had filed PAN Card copy, Ledger account, Bank statement highlighting payment of Dr Abhishek Shukla and covering letter through email addressed to delhi.cil.naec@incometax.gov.in and to JAO at mumbai.ito15.11@incometax.gov.in. Copy of the same as proof is enclosed herewith. On perusal of the covering letter, it can be seen that copy of ITR was requested to Dr. Abhishek Shukla but it was not received. Hence, request was made to the A.O. to exercise the powers vested in him and procure such personal details. On perusal of the details submitted, it can be seen that the Appellant has deducted tax at source in respect of fees paid to Dr. Abhishek Shukla and the payment is made through regular banking M/s. Conner Contractors P. Ltd., channel. Therefore, no disallowance can be made in the hands of the Appellant by invoking provisions of section 40 of the Act. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx It is further submitted that while sending e-mail, inadvertently the bills for amounts paid to Dr. Abhishek Shukla remained to be enclosed. Hence, the same are being filed. It is submitted that the taking into consideration TDS, Bank Statement, etc. it is evidend that Dr. Abhishek Shukla has been paid fees and the same stands evidenced from bills issued by him. It is submitted that any material is placed before the appellate authority for the first time, the same should be entertained by him when it is of clarificatory nature so as to test the fairness and propriety of income assessed by the Assessing Officer. In this respect, the appellant relies on the following decisions:- xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx It is submitted that the Appellant had sent email to the A.O. as well as JAO on 22.12.2022 itself but the assessment order has been passed on 23.12.2022 without taking into account the details filed by the Appellant that were made available on record. It is needs to be noted that the A.0. had uploaded the notice dated 16.12.2022 directly on the portal without sending intimation to the Appellant via SMS or email. However, when the CA voluntarily checked the portal, he took cognizance of the notice uploaded on the portal and immediately on intimation thereof, the Appellant managed to send details via e-mail. However, the assessment order has been passed on 23.12.2022 without considering the details filed. As such the order passed by the A.O. is in violation of principles of natural justice and unlawful. It is apparent from the assessment order that the case of the Appellant is selected for scrutiny under CASS for the reason that large payments made w/s. 194J to persons who have not filed return of income in comparison to total payments on TAN corresponding to PAN in Form 260 for section code 194J. It is respectfully submitted that there is no provision under the Act to M/s. Conner Contractors P. Ltd., make addition in the hands of an assessee in respect of any expenditure claimed if the counter party fails to offer to tax corresponding income in its hands. Therefore, the disallowance made by the A.O. is unlawful and deserves to be set aside.

5. The ld. CIT(A) treated the reply filed before the ld. AO on email, which has not been considered by the ld. AO to have been filed during the course of the assessment proceedings. He also perused the submissions made by the assessee, however has confirmed the said addition after observing and holding as under:- 8.4 The reply sent by the appellant through email on 22.12.2022 has been perused and considered carefully. A perusal of copy of account in the name of Dr. Abhishek Shukla shows that the appellant has made him montly payment of Rs. 4,00,000/-, under the head consultancy fees and Rs. 40,000/- under the head reimbursement of house rent paid by him. Regular monthly payment of fix amount indicates that the payment made to Dr. Abhishek Shukla is salary in nature, not consultancy fee as claimed by the appellant company. But the appellant has shown the same under the head professional fee and made lessor TDS u/s 194J 8.5. The appellant has itself mentioned that it forgot to furnish copy of bills pertaining to the payment of professional fee to Dr Abhishek Shukla while it was sending reply through email. During the appellate proceedings, the appellant furnished copy of the bills but a perusal of point no. 12 of Farm 35 shows that the appellant has claimed that it has not furnished any additional evidence during the appellate proceedings. In its written submission too, the appellant has not requested to accept additional evidence under rule 46A. Therefore, these bills are not taken into account for deciding the issue. 8.6. Without prejudice to what has been stated in para 9.5. above, the bills of payment of professional fee to Dr. Abhishek Shukla do not show that what was the nature of consultancy services M/s. Conner Contractors P. Ltd., provided by Dr Abhishek Shukla for which such huge amount was being paid to him despite the fact that no business activity was carried out by the appellant company during the year under reference and the appellant company was incurring huge loss. The appellant has not furnished a copy of contract for consultancy services with Dr. Abhishek Shukla. Thus, the business exigency for such huge payment is not proved. Moreover, if the consultancy services was being taken for upcoming real estate projects, the payment should have been shown as a part of work in progress keeping in view the fact that no business was carried out by the appellant company during the year under reference. Keeping in view the facts and circumstances of the case, I am of considered opinion that the payment made to Dr. Abhishek Shukla was not for the purpose of business. The appellant has failed to prove the business exigency of this expenditure. It is therefore held that the addition made by Id. AO on account of the payment made to Dr. Abhishek Shukla is justified and deserves to be sustained and upheld. Accordingly, the ground no. 2 of the appeal is dismissed and not allowed.

6. He also confirmed the disallowance of Rs.45,000/- made u/s.40(a)(ia) after observing and holding as under:- “7.1 I have carefully considered the written submission of the appellant on the issue under reference. It is a fact that the appellant has admittedly not made TDS on payment of Rs. 1,50,000/- u/s 194J of the Income Tax Act, 1961, I have also perused and considered the proviso to section 40(a)(ia) and first proviso to section 201(1) of the Income Tax Act, 1961 It is the responsibility of the person who has made payment without making TDS to prove that the payee has furnished his return of income u/s 139 of the Income Tax Act, 1961, he has taken into account such sum for computing income in such return of income; and he has paid the tax due on the income declared by him in such return of income. Since the appellant has failed to prove that the payee has fulfilled all terms and conditions as stipulated in the first proviso to section 201(1) of the Income Tax Act, 1961, the addition made by the Id. AO is justified and deserves to be upheld. Accordingly, ground no. 1 of the appeal is dismissed and not allowed.”

M/s. Conner Contractors P. Ltd., 7. Before us assessee had filed certain additional evidences like Consultancy Agreement dated 01/08/2019 between Dr. Abhishek Shukla and the assessee, copy of ledger account of legal and professional fees paid to the said person and invoice copy of Accord Fintech P Ltd., dated 26/06/2020 stating that same was for renewal of subscription for which no TDS was required to be deducted. The petition for admission of additional evidences reads as under:- “2. Before the CIT(A), the appellant had requested to grant opportunity to provide the details required while disposing the appeal. However, without granting any opportunity, the CIT(A) confirmed the disallowance made by the A.O. in respect of Legal & Professional Fees paid on the ground that the appellant had not furnished copy of contract for consultancy services rendered by Dr. Abhishek Shukla.

3. Since the appellant was not granted an opportunity to adduce required evidences, the appellant could not produce the same before lower authorities. Similarly, The Appellant also humbly submits that it had not received proper guidance while representing its case before the lower authorities which culminated into unwarranted addition in the hands of the Appellant.

4. However, at this appellate stage, the Appellant has been able to provide required details and file /adduce before Your Honours paper book which contains the Contract with Dr. Abhishek Shukla, ledger copies of Legal & Professional fees as well as that of Dr Abhishek Shukla and copy of invoice. which show that these transactions basically were entered into regular course of business and the disallowance thereof in the hands of the Appellant is unjustified / unwarranted.