TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 964
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....nagement and Consultants P. Ltd. In the course of these investigations, the Department found that Mr. Sandeep Sitani, C.A. was controlling about 20 concerns which were allegedly used to provide accommodation entries. One of such concerns was M/s. Nova Corporate Service Pvt. Ltd.; whose two Directors Mr. Pradeep Prajapati and Dinanath Yadav were persons of no means, staying in a chawl and were allegedly working at the behest of Mr. Sitani. The details of such transactions were, inter alia, forwarded to the Assessing Officer in this case. 2.2 In the course of assessment proceedings, the Assessing Officer (AO), as per the information received from the DDIT (Inv.), observed that the assessee had made the following payments to M/s. Nova Corporate Services P. Ltd. ('Nova') during the period under consideration: - S. No. Date of Payment Amount Paid (Rs. ) Type of Services 1 20.02.2007 17,35,568 Professional or Technical Services 2 09.03.2007 31,54,058 Professional or Technical Services The above payments were made against 11 bills raised by 'Nova' for liasoning services rendered by 'Nova'. The AO called upon the assessee to establish the genuineness of these expenses....
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....d existence of 'Nova' was not in doubt, that all payments to 'Nova' were made by cheque. It was also submitted that for the services rendered by 'Nova', the assessee has billed its various clients and the genuineness of the bills to its customers and receipts thereof have been accepted by the AO. It was further submitted that 'Nova' had shown/declared above receipts from the assessee in its return of income. It was also submitted that statutory dues like service tax, etc. have been paid in relation to these transactions. The learned CIT(A), however, did not accept the arguments put forth by the assessee and proceeded to confirm the AO's order vide the impugned order dated 20.10.2010. 3. Aggrieved by the order of the CIT(A)-30, Mumbai dated 20.10.2010 for A.Y. 2007-08, the assessee has preferred this appeal before the Tribunal raising the following grounds: - "1. Addition u/s. 69 - for the disallowance of alleged professional payments - Rs. 443,624/- a) The Id. CIT(A) erred in confirming the disallowance of recurring professional and other committed payments made during the course of rendering professional service by treating the same as alleged bogus accommodation entries. As p....
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....ssessee contended that the provisions of section 69 of the Act could not have been invoked in the case on hand because there are no investments outside the assessee's books of account. All entries in respect of the payment for professional services rendered by 'Nova' are properly recorded in the assessee's books of account, are made by cheque, confirmed by 'Nova' to having been received by them, declared in their return of income for the relevant year, etc. and therefore the invoking of the provisions of section 69 of the Act was not justified. 4.2.2 The learned A.R. for the assessee then assailed the AO's making the disallowance of payment for professional services amounting to Rs. 48,49,624/- as unproved purchases contending that the AO's conclusion was not supported by facts. It was submitted that the AO had not rejected the assessee's books of account, that all payments are made by cheque to 'Nova' who is not a related party; that the existence of 'Nova' has been proved beyond doubt; that 'Nova' has filed confirmation for having received the above amounts totalling Rs. 48,49,624/- and also declaring these amounts as receipts in its return of income for the relevant period; tha....
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....is difficult to believe that 'Nova' could render the services allegedly rendered. It was therefore placed that the orders of the authorities below be upheld. 4.4.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited. Admittedly 'Nova' exists and is assessed to tax. There is also no dispute that all the payments, made by the assessee to 'Nova' for professional services rendered, are by cheque and that 'Nova' has shown all these receipts from the assessee in its return of income and has offered the same for tax. We find that the AO has not been able to bring on record any material evidence to prove that the professional services were not rendered by 'Nova' or that any money in respect of the payments to 'Nova' had flown back to the assessee. The AO has also not been able to controvert or rebut the evidence filed by the assessee to show that various customers were billed by it for the services rendered by 'Nova' on behalf of the assessee. The books of account of the assessee were also not rejected. On an appreciation of the material on record, we are of the considered view that the AO has disallo....