Case Law Details
Fiitjee Ltd Vs PCIT (Delhi High Court)
Conclusion: Web advertisement expenses and depreciation claimed by assessee in respect of software purchase was not an allowable deduction as the expenses claimed by assessee were bogus and assessee would not have been able to substantiate the genuineness of the transactions by producing relevant and material evidence.
Held: AO had disallowed the web advertisement expenses and the depreciation claimed by assessee in respect of software purchase on the ground that the web advertisement expenses were found to be bogus and assessee was not able to establish, during the assessment proceedings, the genuineness of the purchase of software in respect of which the depreciation was claimed and assessee was also not able to establish the actual use to which the software, on which depreciation was claimed, was put. The appeal preferred by assessee before the CIT (A) was allowed for the assessment year 2005-06 and 2004-05 as well. Tribunal re-appreciated the evidence on record, in extenso, and reversed the orders passed by the CIT(A) and restored the assessment orders for both the assessment years. On appeal by assessee. It was held that no substantial question of law arose for the reason that the issues with regard to the genuineness of the transactions undertaken by assessee in relation to web advertisement development and purchase of customized software were purely factual issues. Tribunal concerned with the view of AO that assessee could not establish the genuineness of these transactions. One of the aspects taken note of by AO, while holding the said transactions to be not genuine (and that was not the only reason given by AO and accepted by the Tribunal) was that Sh. S.K. Gupta, who was an accommodation entry provider had accepted to have provided the accommodation entries through his entities, which were claimed to have rendered the aforesaid services and supplied the software to assessee. During his cross-examination, the said Sh. S.K. Gupta had retracted from his earlier statement. However, Tribunal found that his retraction and his statement in favour of the assessee was neither here nor there, since there was, otherwise, ample evidence which pointed to the fact that the said transactions were not genuine. Else, assessee would have been able to substantiate the genuineness of the transactions by producing relevant and material evidence, which it failed to do. While it was open to AO to not rely upon the statement of Sh. S.K. Gupta, or rather ignore the retraction, yet, his primary duty was to verify the soundness of the claim of the assessee of having made genuine payment. AO had not placed reliance only on the statement of Sh. S.K. Gupta. In fact, he had undertaken a thorough investigation and established that the expenses claimed by assessee in relation to the two transactions aforesaid, were bogus.
I.T.A. No. 823/2019 & I.T.A. No. 824/2019
1. These two appeals assail the common order passed by the learned Income Tax Appellate Tribunal, Delhi Bench “D: New Delhi (ITAT) in ITA Nos. 2937 and 2773/Del/2011, preferred by the Revenue against the orders dated 16.03.2011 and 07.03.2011, passed by the learned CIT(A) – XIX, New Delhi in relation to assessment years 2004-05 and 2005-06 respectively.
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