OMEGA IT RESOURCES PVT,TRICHY vs. ASSESSING UNIT INCOME TAX, DEPARTMENT, CHENNAI

PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:

This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2021-22, vide order dated 30.11.2023.

:-2-: ITA. No: 1531/Chny/2023 professional expenses claimed by the assessee u/s. 37 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

:-3-: ITA. No: 1531/Chny/2023 4. Before the ld. CIT(A), the assessee filed a written submissions and reiterated the arguments made before the Assessing Officer. The assessee also relied upon case laws which are reproduced as under: (i) Havells India Ltd vs DCIT (TS-825-ITAT2022(Del)). (ii) Fancy Wear vs ITO [2017] 87 Taxmann.com 183 (iii) Sonicwall Technology System India Pvt Ltd vs ACIT ITA No. 3860/Mum/2019 (iv) M/s. Kesha Appliances Pvt Ltd vs ITO, ITA No. 2175/Del/216.

:-4-: ITA. No: 1531/Chny/2023 filed a written submission and confirmed that the recipient of consultancy charges by Ms. Hima Bindu Poreddy of Rs.60,13,310/-, has filed her return of income and had furnished the copy of ITR-3 acknowledgment filed u/s. 139(8A) of the Act on 24.12.2022 before the ld. CIT(A). The Ld. Counsel for the assessee, stated that, the assessee submitted the relevant details of expenses like ledger account, TDS made u/s. 194J of the Act, name email ID, details of services availed, copies of bills and vouchers during the assessment proceedings. The Ld. Counsel for the assessee had placed on record that the bills and invoices issued by the recipients to establish the nature of sources provided by them in relation to the business carried on by the assessee. Apart from the relevant details, the assessee also had declared that the recipients are not related parties as per the provisions of section 40A(2)(b) of the Act. The Ld. Counsel for the assessee, requested to allow the expenditure claimed, by relying on the decision of coordinate bench of ITAT, Mumbai in the case of Sonicwall Technology System India Pvt Ltd vs ACIT ITA No. 3860/Mum/2019, which is squarely applicable to the present case by quashing the order of both CIT(A) and Assessing Officer.

:-5-: ITA. No: 1531/Chny/2023 7. Per contra, the ld. DR defended the action of the Assessing Officer and the ld.CIT(A), as the recipients of consultancy charges claimed as expenditure by the assessee have not responded to the notices u/s. 133(6) of the Act and hence, rightly disallowed the expenditure as the assessee could not furnish the copies of income tax returns filed by the respective recipients, having declared the corresponding revenues.

Since, the assessee had claimed expenditure of Rs.60,84,552/-, the ld.AO asked the assessee to prove the allowability of the expenses u/s. 37 of the Act for which assessee had furnished relevant details of expenditure of consultancy charges paid like

:-6-: ITA. No: 1531/Chny/2023 detailed ledger account, name of the person, their E-mail ID, PAN, TDS made u/s. 194J of the Act, details of service availed along with copies of bills and vouchers and during the first appellate proceedings, the assessee also placed on record the copy of return of income filed u/s. 139(8A) of the Act by Ms. Hima Bindu Po reddy and asserted that recipient has offered the amount received from assessee in their return of income. The assessee also relied on the case law of ITAT (Mumbai) in the case of M/s. Sonicwall Technology System India Pvt Ltd vs ACIT (Supra), which according to assessee is squarely applicable to the present case. According to assessee, merely because the recipient have not responded to section 133(6) notices issued by the ld.AO, cannot be the reason to disbelieve the genuine transaction which is corroborated by relevant/contemporary evidences. We find force in the contention of the assessee. We find that assessee by filing all the documents as stated (Supra) has discharged the burden to prove the genuineness of the transaction. Therefore, considering the documents relied upon and submissions made by the assessee, we are of the prima facie view that, the expenditure of professional charges/consultancy fees needs to be allowed, provided the recipient Ms. Hima Bindu Po reddy, had offered the amount of

:-7-: ITA. No: 1531/Chny/2023 Rs.60,13,310/- as her income in her return of income, then the same be allowed after verification by the Assessing Officer. For that, we are remitting for limited purpose back to the file of Assessing Officer and allow expenditure in accordance with law.