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TaxTMI 
TaxTMI 
TaxTMI 
2013 (4) TMI 266
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....me as the deemed income of the Appellant. 1.1. That the learned AO has grossly erred in adopting a contradictory approach wherein he has made a disallowance of the payments made to third parties and has termed it as deemed income despite the fact that learned DRP has clearly held that the disallowance cannot be termed as deemed income and had directed the learned AO to verify the pass through cost. 1.2 The learned AO has grossly erred both on facts and in law in holding a huge disallowance which is based on presumptions, assumptions, conjecture and surmises without giving adequate opportunity to Appellant to support its claim in the course of assessment proceedings and DRP proceedings and such an assessment violates the principles of natural justice and deserves to be annulled. 1.3. The learned AO and learned DRP did not afford any opportunity of being heard to the appellant to substantiate its claim with respect to notices that were issued to the vendors of the appellant under section 133(6) of Act and where no confirmation was received from such vendors. 1.4. The learned AO and learned DRP has completely disregarded the details related to vendor payments submitted by the Appe....
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.... the ld. Assessing Officer and ld. DRP has erred on facts and in law in not following principle of consistency considering the fact that advances of similar nature were received by assessee in A.Y. 2006-07 and A.Y. 2007-08 and its treatment of considering as advances was not challenged by the ld. Assessing Officer in the assessment of those years. 9. Without prejudice to the above, learned AO and learned DRP has grossly erred by considering the entire amount of advance as income of the assessee without appreciating the fact that such advance includes the pass through cost which is not the income of the assessee. The Ld. Assessing Officer and DRP have disallowed the pass through cost by holding that such details were not submitted to the Assessing Officer without appreciating the fact that such details were never asked for by either the Ld. Assessing Officer or Ld. DRP. 10. That the learned AO has erred, in law and facts, in holding that the Appellant has furnished inaccurate particulars and has concealed the particulars of its income and has also erred in initiating the penalty proceedings under section 271 (1 )(c) of the Act. 11. That the learned AO, in law and facts, has erred....
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.... with the confirmed amount received from the parties and in balance 3 cases the notices did not receive back nor any confirmation received. Accordingly, Assessing Officer proposed to disallow entire amount of Rs. 1,58,11,63,105/-. 4. Before the DRP, it was submitted that assessee undertakes advertising services for its clients in capacity of an agent. The assessee acts as an intermediary between its clients and the third party vendors in order to facilitate the placement of advertisement. The assessee is remunerated on the basis of an agreed commission fixed as a percentage of the advertisement spends on behalf of its clients. Therefore, only such commission is recognized as an income and the payments to be made to third party vendors recognized as pass through cost and are not debited to profit and loss account. This implies that though above liability to the vendors has been recognized in the books of accounts, the same has not been routed through the profit and loss account as the same has been netted off against the corresponding revenue received from the client for whom such services are purchased from vendors. Further, it was submitted that the assessee pays to the third pa....
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.... notices returned unserved, the action of Assessing Officer was correct. DRP further observed that the Assessing Officer in the remand report found that in 18 cases amount totaling to Rs. 37,77,54,192/- was explained and therefore acceptable. The Assessing Officer was directed not to make addition to this extent. 6. Against the above said orders of the Revenue, the assessee is in appeal before us. 7. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that DRP has properly appreciated the mode of accounting of the assessee. We agree with the DRP that Assessing Officer is well within his rights to verify the genuineness of the claim of pass through cost. If the recipients of such pass through cost either do not confirm the amount at all or confirm only part amount, the Assessing Officer is correct to add remaining unconfirmed amount after giving opportunity to the assessee. In this regard, we find that in this case the Assessing Officer issued notices u/s. 133(6) to all the vendors of the assessee. Vendors numbering 18 were found acceptable. In this regard, we note that assessee has pleaded that adequate opportunity was not give....
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....e assessee by confronting the entire evidence collected to the assessee." 8. As in the above case, in this case we note that assessee needs to be provided a further opportunity to substantiate its claim in case of vendors from whom the confirmation has not been received. Hence, in accordance with ITAT decision as above, we remit this issue to the file of the Assessing Officer to consider the issue afresh, after giving the assessee proper opportunity of being heard. 9. Apropos addition of Rs. 16,699,360/- On this issue the Assessing Officer noted that advances claimed to be received as on March 31, 2008 amounting to Rs. 16,699,360/- as appearing in the balance sheet are from following two parties:- Name of the party Amount (Rs.) Samsung India Electronics Pvt. Ltd. 64,99,721/- Samsung Telecommunications India 1,01,99,639/- Pvt. Ltd. These amounts have not been shown as receipts by the assessee. Rather assessee has shown the same as advance. On being asked by the Assessing Officer, it was explained that as per the provisions of the Act, tax has to be deducted by the payer either on payment or on accrual of expenses whichever is earlier. Accordingly, client of the assessee have pa....