TaxTMI 
TaxTMI 
2013 (8) TMI 284
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Management Consultants Ltd, which was managed & controlled by an admitted entry provider Sh. S. K. Gupta, to the assessee's disclosure of Rs. 50.00 Lakhs without any justification. 2. On the facts and in the circumstances of this case, the Ld C1T(A) has erred in not fully appreciating the fact that disclosure ~ account of bogus claim of consultancy charges payments to M/s T&G Quality Management Consultants Ltd was made by the assessee company during the survey operation. 3. On the facts and in the circumstances of this case, the Ld. CIT(A) has erred in deleting the addition of Rs. 5,25,000/- made be AO 0 account of unsubstantiated payments of software development charges to M/s Hi Tech Computech (P) Ltd, another company managed & controlled by an admitted entry provider Sh. S. K. Gupta . 4. On the facts and in the circumstances of this case, the Ld. CIT(A) has erred in deleting the addition of Rs. 10.00 Lacs on account of personal expenses of Sh. Siddharth Sikka, Director of the assessee company without fully appreciating the nature, scale and the mode of payments thereof. 5. On the facts and in the circumstances of this case, the Ld. CIT(A) has erred in restricting the disall....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ure action on Shri S.K. Gupta and the subsequent survey on the asseessee, that there was no documentary evidence available with either party to substantiate that any consultancy had been provided to the assessee by M/s T & G Quality Management Consultants and therefore the payment of Rs. 1 Crore made by the assessee allegedly as consultancy charges payments, were bogus in nature. It is apparent that the bills raised for this were only in the nature of accommodation bills as no specific services had been provided by the Companies controlled by Shri. S.K. Gupta. The additions made on account of consultancy charges to M/s. T & G Quality Management Consultants Ltd. and software development charges to M/s Hi Tech Computech (P) Ltd. were not only based on the statements recorded on oath during the search and survey proceedings, of Shri S.K Gupta and Shri M.D Gupta, the latter being the Director of the assessee Company, but also the fact that no documentary evidence other than bills were found which could support the fact that the relevant services had been provided by the companies of Shri S.K Gupta. There was no written correspondence, e-mails etc to substantiate the fact that services....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 300lTR 157(Mad), that whether though an admission made during survey is extremely important piece of evidence it cannot be said to be conclusive and it is open to person ,who has made the admission, to show that it is incorrect. The above mentioned decision of the Madras High Court has been upheld by the Hon'ble Supreme Court in 25 Taxmann.com 413(SC). An examination of the said judgements point towards the fact that even in the case under consideration, the statements recorded were not being treated as conclusive evidence. Rather, all the circumstantial evidence surrounding the case, including the fact that there was no evidence with the assessee, to support his retraction from the statement made earlier, in the form of any evidence, documentary or otherwise. Hence, he could not in this case prove, how it was open to him to show that the statements made were incorrect. Without prejudice to the above, it may be added here that even if this had been a case where no statement had been recorded, the facts and circumstances of the case are so heavily stacked against the assessee, as is evident from the details given above. The assessee had no evidence at hand whatsoever to make out a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....before him during the course of appellate proceedings. In the course of search operation, carried on 12.12.2006 at the business and residential premises of Shri S.K. Gupta and his various concerns in which he had interest u/s 132 of the Act. The statement of Shri S K Gupta was recorded on 12.12.2006 u/s 132(4) of the Act. Later, on 27.12.2007, statement of Shri S K Gupta was again recorded by the Directorate of Investigation u/s 131 of the Act. Shri S.K. Gupta in his statement stated that his concerns raised bills for services only to provide accommodation entries to the assessee and other companies. It was stated that none of the concerns rendered any services to the assessee or other companies on whom bills were raised. In this appeal the assessee's concerned with payment made by the assessee to two concerns of Shri S K Gupta, viz T & G Quality Management Consultants (P) Ltd who was paid Rs.1 crores as consultancy fee for the assessment year 2006-07 and M/s. High Tech Compoutect (P) Ltd who was paid Rs.5.25 lacs for AMC and for upgradation of MIS software. 7. The written submissions filed by the Ld. A.R. are as under: "The assessee is in receipt of the written submissions filed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bove disclosure made during survey proceedings. During the course of the assessment proceedings the AO made additions to the income returned by the assessee. The additions made were based mainly on the statements of Shri S K Gupta recorded on 13/06/2006 and 27/12/07. The AO also relied on other statements of Shri S K Gupta recorded on 22/10/2008, 24/10/2008, 3/11/2008, 17/12/2008 and 18/12/08, recorded during assessment proceeding of Shri S K Gupta. All the statements were recorded at the back of the assessee. The Assessing Officer also relied 'on the statement of Shri M D Gupta dated 27/28/12/06. The appellant filed appeal before the first Appellate Authority assailing the orders of the AO. Before the first Appellate Authority detailed written submissions were filed and also an application u/s 46A of the Act to bring on record additional evidence. In the submissions and evidence submitted to the first Appellate Authority the assessee had placed on record certificate dated 26/02/2010 of Shri S.K. Gupta retracting from all his statements given by him against the assessee. It was pleaded in the certificate that the statements were recorded under pressure and duress and actually serv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....This can be verified from the Profit & Loss ac2:ount of T & G Quality Management Consultants Pvt. limited as per which its' total income is Rs.120 lacs. If the statement of Shri S.K. Gupta is taken to the logical end then the fair value of the accommodation given would at best the Rs.24 lacs which is much lower than the surrender of Rs.50 lacs offered for assessment., The principal of law is that any statement made by a person has to be taken as a whole. It is not permissible for dividing the statement into parts and using such parts as evidence as would suit ones' purpose. The Assessing Officer has done just that forbidden act. If the statement of Shri S.K. Gupta was so sacrosanct as to compel the consideration of the entire amount as paid to him as spurious then on the same authority the other part of the statement of Shri S.K. Gupta asserting that only 15-20% of the whole could be coloured and not have been ignored at all. I(a) The statement on oath recorded during the survey proceedings of Shri M.D. Gupta (pages 46 to 60 of PB) accepting the accommodation entries and surrendering income during the survey proceedings also has no evidentiary value. Reliance is placed on the deci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation made by Shri Sikka on additional income for two years. The statement of the Managing Director is in tune with the disclosure made during the survey proceedings as a matter of settlement. As regards the other additions the Ld. DR has not assailed the orders of the CIT(A) and he merely reiterated what has been stated in the assessment order. Reliance placed on the case laws are therefore not applicable to the facts of the present appeal. The assessee has produced all proof that was necessary to support its contentions. It is rather the AO who has no proof or support in respect of his contentions in terms of the authorities as explained and stated hereinabove. The survey statement was inadmissible as evidence in the light of the decision of the supreme authorities on the point. The consideration of the statements being based at the threshold itself, there is no scope for examining their merits. All case laws as cited on both the aspects by the Ld. DR are out of context and otiose. Effectively the ground as raised in appeal is misconceived because the Ld. CIT(A) upheld the addition on merits. The Ld. C1T(A) appreciated the evidence before him to come to the conclusion that co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on here that the appellant company received part consultancy fee of Rs.4,35,00,0001- from M/s. LMZ Energy (India) Ltd during the year under consideration. The following documentary evidence were filed during the course of assessment proceedings to prove the genuineness of the transaction between the appellant company and M/s. T & G Quality Management Consultants Pvt. Ltd. Copy of consultancy agreement dated 30.08.2004 between LMZ Energy (India) Ltd. and the appellant company is placed at Pages 74-80. The scope of consultant to be provided by the appellant company is at Page 76 which is reproduced below:- (a) To keep the customer informed about local conditions at the site to provide any support to the customer at the site, including arrangements with local authorities and obtaining the required permits from them; (b) To provide the customer information related to geological conditions to facilitate his awareness for taking decisions in relation to construction activity at the site and a proper arrangements for artesian water; (c) To provide information about local suppliers, service and work vendors, to collect required quotations from them for scope assigned by the customer. ....