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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH, JM & SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member)
The captioned appeal by assessee for Assessment Year [AY] 2006-07 assails the order of Ld. Commissioner of Income Tax (Appeals)-32 [CIT(A)], Mumbai dated 10/01/2014 qua confirmation of disallowance of Rs.12,65,614/- out of professional fees. It is noted that the appeal has been filed with a delay of 15 days and the assesse, vide his request letter dated 14/04/2014 along with affidavit of the partner of the firm, requested for condonation of the same wherein delay has been attributed to change in counsel and other factors beyond the control of the assessee. No serious objection has been raised by the revenue and in the interest of justice and keeping in mind the minor delay, we condone the same and proceeds to decide the appeal on merits.
Facts leading to the dispute are that the assesse, being resident firm, was assessed u/s 143(3) at Rs.19,78,330/- vide Assessing Officer [AO] order dated 03/11/2008 after disallowance of professional fee of Rs.14,73,298/-. The assesse was engaged in the business of trading of computer software & hardware and claimed an expenditure of Rs.14,73,298/- as professional fee which was paid to nine persons for sums ranging between Rs.17000/- to Rs.7,22,988/-. To verify the genuineness of the same, summons u/s 131 of the Act were sent to three payees out of which two persons namely Akshay Shah & Mary Sajji attended the proceedings and recorded statement on oath whereas the third person namely Ashok Shah never turned up to confirm the transaction. The two payees denied having rendered any services to the assessee which led the Ld. AO to make the impugned additions of Rs.14,73,298/- claimed as professional fees. 3. The assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 10/01/2014 and in support submitted few ITA No.2268//M/2014 Samar Technology Assessment Year-2006-07 confirmations from payees and TDS certificates, against which a remand report was called from the Ld. AO. The assessee was also provided with cross- examination of one of the payee as per his request. After perusing remand report, assessee’s submissions, statements made by payees and other material, the Ld. CIT(A) finally provided part relief to assessee by restricting the disallowance to Rs.12,65,614/-. Still aggrieved, the assessee is in appeal before us.
The Ld. Counsel for Assessee [AR], Bhupendra Shah, invited our attention to the fact that the assessee was engaged in software development and since it did not have any employee of its own, it engaged outside professional to carry out the said work. Further, the assessee deducted TDS from the impugned payment as required by law and made all the payments through banking channels and therefore, fulfilled its part of obligations and hence, nothing more could be asked from the assessee to substantiate his claim.
Per Contra, the Ld. Departmental representative drew our attention to the fact that the various payees categorically denied having rendered any services to the assessee which in itself justify the impugned addition notwithstanding the fact that the payments were through banking channels after deduction of TDS therefrom.
We have heard the rival contentions and perused relevant material on record. A perusal of Profit & loss Account placed in the paper book reveals that the assessee has achieved turnover of Rs.73.04 Lacs and reflected Gross Profit & Net Profit of Rs.26.29 Lacs & Rs.5.05 Lacs respectively. However, the bifurcation of sales between trading and service activity does not emanate from the record and the Ld. AR also could not provide the same per query from the bench. Therefore, on the facts, in the interest of justice & keeping in mind the quantum of sales revenue, we see no harm in providing another opportunity to assessee to contest his claim before Ld. AO by proving the factum of rendering Samar Technology Assessment Year-2006-07 of services by the respective payees. Therefore, the matter is restored back to the Ld. AO for fresh appreciation and adjudication qua professional fees paid by the assessee. The assessee is directed to substantiate his claim forthwith before Ld. AO failing which AO shall be at liberty to decide the same as per law on the basis of material available on record.
The assessee has assailed levy of interest u/s 234 and the same being mandatory and consequential in nature, require no interference on our part and therefore, treated as dismissed.
In nutshell, the assessee’s appeal stands partly allowed for statistical purposes.
Order pronounced in the open court on 01st May, 2017.
Sd/- Sd/- (Mahavir Singh) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 01.05.2017 Sr.PS:- Thirumalesh आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent 2. आयकर आयु�(अपील) / The CIT(A) 3. आयकर आयु� / CIT – concerned 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard File 6.