ADITYA BIRLA SUNLIFE INSURANCE COMPANY LIMITED,MUMBAI V. CIT (A) 54, MUMBAI

ITA 1828/MUM/2024

AI Insights

The case involves cross-appeals by Aditya Birla Sunlife Insurance Company Ltd. and the Income Tax Department against the order of the CIT(A)-54, Mumbai, concerning the assessment year 2021-22. The appeals addressed issues related to the disallowance of commission expenses, additions as unexplained expenditure, and the applicability of section 14A of the Income Tax Act. The Tribunal considered various precedents and the specific regulatory framework governing insurance companies, particularly the Insurance Act, 1938, and IRDAI regulations. The Tribunal's decision emphasized the special provisions applicable to insurance businesses under section 44 of the Act, which override general provisions.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 32896 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-07-2024
• Assessment Year: 2021-2022
• Appeal Filed On: 10-04-2024
• Other Referred Cases: PCIT v Oriental Insurance Co. Ltd., JCIT TATA AIA Life Insurance Co. Ltd., Aegon Religare Life Insurance Co. Ltd. v ACIT, DCIT v. Edelweiss Tokio Life Insurance Ltd., Life Insurance Corporation of India v. CIT, Sahara India Life Insurance Co. Ltd. vs. ACIT
• Laws Referred To: Income-tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence; Unexplained expenditure; Capital Gains; Principle of natural justice; TDS
• Section: 143(3); 142(1); 69C; 234B; 28; 10; 14A; 43B; 2(A); 37(1); 72

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH MUMBAI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 1828/MUM/2024 Assessment Year: 2021-22 Aditya Birla Sunlife Insurance Company Ltd., 16th Floor, Tower 1, One World Centre, 841, Senapati Bapat Marg, Elphinstone Road, Mumbai – 400013 (PAN : AABCB4623J) Vs. Commissioner of Income Tax (A) – 54, Mumbai (Appellant) (Respondent) ITA No. 3044/MUM/2024 Assessment Year: 2021-22 Deputy Commissioner of Income Tax – Central Circle – 5(3), Mumbai Vs. Aditya Birla Sunlife Insurance Company Ltd., 16th Floor, Tower 1, One World Centre, 841, Senapati Bapat Marg, Elphinstone Road, Mumbai – 400013 (PAN : AABCB4623J) (Appellant) (Respondent) Present for: Assessee : Shri Ronak Doshi, CA Revenue : Shri Ajay Chandra, CIT DR Date of Hearing : 30.07.2024 Date of Pronouncement : 28.10.2024 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: These two appeals filed by the assessee and revenue are against the order of Ld. CIT(A)-54, Mumbai, vide order no. ITBA/APL/S/250/2023-24/1063528021(1), dated 28.03.2024 passed 2 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 against the assessment order by Assessing Officer, Assessment Unit, u/s. 143(3) r.w.s. 144B of the Income-tax Act (hereinafter referred to as the “Act”), dated 27.12.2022 for Assessment Year 2021-22. 2. Grounds taken by the assessee are reproduced as under: GROUND NO.1: 1. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in upholding the order passed by the Assessing Officer, National Faceless Assessment Centre (hereinafter referred to as “the AO” u/s. 143(3) r.w.s. 144B of the Act by observing that the order has been passed as per the law and there is no case of violation of natural justice. 2. The Appellant prays that on facts, it be held that order passed by AO, inter alia, without adhering to principle of natural justice and without providing the Video Conferencing download link is bad in law and liable to be quashed. WITHOUT PREJUDICE TO GROUND NO. I ABOVE, GROUND NO. II: 1. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in passing the appellate order without giving personal opportunity of hearing and with pre-conceived mind, ignoring the special provisions of section 44 read with First Schedule and observing that Appellant was not interested in pursuing the appeal. 2. The ld. CIT(A) failed to appreciate that AO had firstly not granted proper opportunity before making certain additions in the assessment order and before the CIT(A) for genuine reason, with a view to file additional evidences, Appellant was seeking adjournment. 3. The Appellant prays that the order passed by the ld. CIT(A) upholding the additions/disallowances made by AO be held as bad in law. WITHOUT PREJUDICE TO GROUND NO. I, & II ABOVE, GROUND NO. III: DISALLOWANCE OF COMMISSION EXPENSES AMOUNTING TO RS. 5,01,89,70,000/-: 1. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in upholding the action of the ld. AO in disallowing commission expenses u/s 37(1) of the Act amounting to Rs. 5,01,89,70,000/-. 2. In light of section 44 read with First Schedule and even otherwise, the Appellant prays that the commission expenses amounting to Rs. 5,01,89,70,000/- be allowed as deduction while computing the income of the Appellant as per law WITHOUT PREJUDICE TO GROUND NO. I& II ABOVE, GROUND NO. IV: ADDITION OF RS. 2,48,69,38,754/- AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT: 1. On the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of the ld. AO in making addition of Rs. 2,48,69,38,754/- as unexplained expenditure u/s 69C of the Act. 3 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 2. In light of section 44 read with First Schedule and even otherwise, the Appellant prays that the addition made u/s 69C of the Act be deleted. WITHOUT PREJUDICE TO GROUND NO. I & II ABOVE: GROUND NO. V: LEVY OF INTEREST U/S. 234A & 234B OF THE ACT: 1. On the facts and circumstances of the case and in law, the CIT(A) erred in upholding interest u/s.234A and further upholding levy of interest u/s.234B. 2. The Appellant prays that on facts, interest u/s.234A be deleted and interest u/s.234B be deleted or be appropriately reduced. 2.1. Grounds taken by the Revenue are reproduced as under: “Whether on the facts & circumstances of the case and in law, the ld. CIT(A) has erred in holding that it is not permissible to the AO to travel beyond section 44 and schedule-I and make disallowance by applying provision of section 14A, when the assessee itself has travelled beyond section 44 & schedule-1 by claiming exemption u/s. 10?” 3. Since these are cross appeals, we take up both together for adjudication by passing a consolidated order. Brief facts of the case are that assessee is engaged in life insurance business. Assessee prepares its financial statements and presents the same in accordance with provisions of Insurance Act, 1938 amended from time to time, Insurance Regulatory and Development Authority of India (IRDAI) regulations and orders/directions/circulars issued thereto. Assessee filed its return of income on 09.02.2022 reporting total income under the normal provisions of the Act at Rs.19,21,37,638/-. 3.1. According to the assessee, since its financial statements are governed by the provisions of the Insurance Act, 1938 and IRDAI regulations, accounts of the assessee are binding on the ld. Assessing Officer under the Act and he has no general power to correct the errors in the accounts of insurance business and undo the entries made therein. According to it, surplus arrived from the business of life insurance accounted and presented in accordance with the provisions of Insurance Act and IRDAI regulations is the starting point for making 4 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 adjustment u/s.44 r.w. First Schedule of the Act. According to the assessee, computation provisions of section 44 r.w. First Schedule are non-obstanted which overwrites all the other provisions of the Act and therefore Assessing Officer cannot make any other adjustments provided under other sections of the Act. Thus, it is claimed that section 44 of the Act is a special provision governing computation of taxable income earned from business of insurance and has an overriding effect over other provisions contained in the Act. Income has to be computed in accordance with the rules contained in the First Schedule to the Act and no adjustments can be made therein and the ld. Assessing Officer cannot exercise his jurisdiction in relation thereto. 4. For this purpose, it is worthwhile to reproduce the provisions contained in section 44 of the Act which deals with insurance business. “44. Insurance business.—Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head “Interest on securities”, “Income from house property”, “Capital gains” or “Income from other sources”, or in section 199 or in sections 28 to 43B, the profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or by a co-operative society, shall be computed in accordance with the rules contained in the First Schedule. 4.1. Further, First Schedule referred in aforesaid section 44 has three parts, viz. Part A which deals with life insurance business, Part B with other insurance business and Part C refers to other provisions. Part A of the First schedule containing rules 1 to 4 relevant to the present case before us are reproduced as under: “1. Profits of life insurance business to be computed separately.—In the case of a person who carries on or at any time in the previous year carried on life insurance business, the profits and gains of such person from that business shall be computed separately from his profits and gains from any other business. 2. Computation of profits of life insurance business.—The profits and gains of life insurance business shall be taken to be the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938 (4 of 1938), in respect of the last inter- valuation period ending before the commencement of the assessment year, so as to exclude from it any surplus or deficit included therein which was made in any earlier inter-valuation period.] 5 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 3. [Deductions.] Omitted by the Finance Act, 1976 (66 of 1976), s. 23(w.e.f. 1-4- 1977). Earlier, the rule was first amended by the Finance Act, 1966 (13 of 1966), s. 36 (w.e.f. 1-4-1966) and by the Finance Act, 1965 (10 of 1965), s. 65 (w.e.f. 1- 4-1965).] 4. Adjustment of tax paid by deduction at source.—Where for any year an assessment of the profits of life insurance business is made in accordance with the annual average of a surplus disclosed by a valuation for an inter-valuation period exceeding twelve months, then, in computing the income-tax payable for that year, credit shall not be given in accordance with section 199 for the income- tax paid in the previous year, but credit shall be given for the annual average of the income-tax paid by deduction at source from interest on securities or otherwise during such period.” 5. With this background of facts and applicable law, we first take up the appeal filed by the Revenue in which the only issue raised is in respect of disallowance made by the ld. Assessing Officer u/s. 14A for which ld. CIT(A) held that it is not permissible for the ld. Assessing Officer to travel beyond provisions of section 44 r.w. First Schedule of the Act, when the assessee itself has travelled beyond the said section by claiming exemption u/s. 10. 6. On this issue, ld. Assessing Officer observed that assessee had reported investment in equities of Rs. 1,23,53,47,23,000/-, investment in debentures and bonds of Rs. 1,55,61,12,29,000/- and other investment of Rs. 20,00,00,000/-. Total investments of Rs. 2,79,34,59,52,000/- had been made in AY 2021-22. Further, assessee had reported investment in equities of Rs. 8536,00,37,000/-, investment in debentures and bonds of Rs. 12636,64,28,000/- and other investment of Rs. 50,00,000/- in AY 2020-21. It was noticed by the ld. Assessing Officer that assessee had not reported any expenditure attributable to income earned on these investments. In this regard, assessee was asked to provide computation of disallowance u/s 14A r.w.r 8D. 6 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 6.1. During the course of assessment proceedings, assessee vide its submissions dated 29.11.2022 and 15.12.2022 substantiated the reasons for non-applicability of section 14A of the Act in terms of provisions of section 44 r.w. First Schedule. Further, assessee submitted that it had not claimed dividend income of Rs.148,80,28,000/- earned during the year as exempt but had offered the same for taxation in its return, so filed. According to the assessee, second proviso to section 10(34) was inserted w.e.f. 01.04.2021 whereby exemption available for dividend received on or after 01.04.2020 was withdrawn. Thus, dividend income earned by the assessee was chargeable to tax during the year under consideration and was not claimed as exempt. Accordingly, there was no occasion for invoking the provisions of section 14A for making any disallowance thereunder. However, ld. Assessing Officer did not accept the submissions made by the assessee. 6.2. Ld. Assessing Officer calculated the difference of investments in AY 2021-22 and AY 2020-21 which was Rs. 67,61,44,87,000/- and calculated the amount of disallowance u/s 14A r.w.r 8D at Rs. 67,61,44,870/- (being 1% of the difference of Rs.67,61,44,87,000/- so calculated) and added it to the total income of the assessee. 7. Before the ld. CIT(A), assessee in its statement of facts, submitted that Hon'ble Mumbai ITAT in the assessee's own case for AY 2004-05 in ITA No.602/Mum/2009, for AY 2012-13 in ITA No. 681/Mum/2017, for ΑΥ 2013-14 in ITA No.3911/Mum/2017 and for AY 2014-15 in ITA No.6390/Mum/2017 had held that assessee being a life insurance company, it was not permissible for the Assessing Officer to travel beyond section 44 and First Schedule of the Act and that he could not make any disallowance u/s 14A of the Act. Similar view was taken in 7 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 the assessee's own case for AY 2009-10 in ITA No.3911/Mum/2017 order dated 19.02.2019, relevant extracts from which are as under: 5. Considering the decision of Tribunal wherein it was held that while making assessment for insurance companies, it is not permissible for Assessing Officer to travel beyond section 44 and First Schedule and made the disallowance by applying section 14A. We have further noted that Id. CIT(A) granted relief to the assessee by following the decision of Tribunal in assessee's own case for Assessment year 2001- 02 and 2004-05 that it is not permissible for Assessing Officer to travel beyond section 44 and First Schedule of the Act and cannot made a disallowance under section 14A. No contrary law is brought to our notice, therefore, respectfully following the decision of co-ordinate bench and consistency, ground no.1 of the appeal is dismissed. 8. Ld. CIT(A), following the decisions of Coordinate Bench of ITAT, Mumbai in assessee’s own case as stated above, deleted the disallowance of Rs.67,61,44,870/- made by the ld. AO u/s. 14A of the Act rwr 8D. Before, us, ld. Counsel for the assessee, in addition to the aforesaid, stated that contention of the assessee has been accepted by the ld. CIT(A) in AYs 2005-06, 2006-07 and 2007-08 that section 14A is not applicable to it against which Department has not preferred any appeal before the Tribunal. Furthermore, it is submitted that for AY 2008-09 and 2009-10, ld. AO has not made any disallowance under section 14A of the Act, after taking into consideration the submissions of the assessee. 8.1. Ld. Counsel placed reliance on the decision in the case of other insurance companies in addition to its own cases wherein it has been held that applicability of section 14A is excluded in case of insurance companies. As section 44 begins with a non obstante clause and overwrites other provisions of the Act. The other judicial precedents referred by ld. Counsel are- i) PCIT v Oriental Insurance Co. Ltd. [2020] 118 taxmann.com 248 (Delhi HC) ii) JCIT TATA AIA Life Insurance Co. Ltd. in ITA No. 1897 & 1757/Mum/2023 8 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 iii) Aegon Religare Life Insurance Co. Ltd. v ACIT in ITA No. 4110 & 4130/Mum/2014 iv) DCIT v. Edelweiss Tokio Life Insurance Ltd. in ITA No. 6270/Mum/2018 9. We have considered the submissions made before us and find that the issue raised by the Revenue is no longer res integra as dealt by the Coordinate Bench ITAT Mumbai in assessee’s own case for several preceding years as well as in other insurance companies, all of which are stated above. Before us, no contrary law is brought to our notice nor anything factually distinguishable. Therefore, respectfully following the decision of Coordinate Bench and for consistent view, we do not find any reason to interfere with the findings arrived at by ld. CIT(A). Ground raised by the Revenue is dismissed. 10. In the result, appeal by the Revenue is dismissed. 11. Now, we take up the appeal by assessee. In the course of hearing, it is submitted that ground nos.1 and 2 are not pressed. Accordingly, both the grounds are dismissed as not pressed. 12. Ground no.3 is in respect of disallowance of commission expenses amounting to Rs.501,89,70,000/-. In this respect, ld. AO called for details of payments made towards commission expenses to be substantiated with documentary evidences for its allowability u/s.37(1) of the Act. He also required a reconciliation of the amount claimed in the profit and loss account with the bank account in this respect. He further required copies of agreements in respect of the commission so paid along with name, PAN and address of the parties to whom the said payments were made. Assessee furnished the requisite details and 9 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 documents except for providing the copies of agreement and reconciliation of amounts between profit and loss account and the bank account, owing to its huge volume. Ld. AO thus, observed that assessee had not given complete details and disallowed the claim to make an addition of it to the total income. 12.1. Before the ld. CIT(A), assessee could not furnish the documents which remained to be placed before the AO due to administrative issues at its end for which an affidavit is placed on record. Assessee has stated in its affidavit that owing to change of frequent employees during the period of appellate proceedings, it could not file the copy of agreements and reconciliation statement. Thus, ld. CIT(A) upheld the disallowance so made by the ld. AO. 13. Before us, assessee made an application u/r. 29 of the Income Tax (Appellate Tribunal) Rules, 1963 (ITAT Rules) containing the following documents: 1. Board approved policy for payment of commission or remuneration or reward to insurance agents and insurance intermediaries. 2. Schedule V of IRDAI (Payment of Commission or Remuneration or Reward to insurance agents or insurance intermediaries) Regulations, 2016 for FY 2020-21. 3. Relevant extract of Schedule 2 of Financial Statements for FY 2020-21 filed with IRDAI reflecting break-up of commission expenses. 4. Specimen copy of agreements entered into with insurance agents for payment of commission on sample basis. 5. Specimen copy of TDS certificates evidencing deduction of TDS on commission paid to insurance agents during AY 2021-22. 10 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 14. Ld. Counsel asserted that but for the above stated documents, assessee had furnished all the required details which have not been considered in proper perspective. Before the ld. AO, assessee had explained the nature of its business of providing life insurance which is carried out through life insurance intermediaries (IM) who push life insurance products in order to create awareness and demand among the general public. These IMs explains the insurance products, answers individual queries, handle their objections and finally close the sale. For all these endeavours, assessee compensates these IMs in the form of commission payment for soliciting and procuring insurance business. It was explained before the ld. AO that these commission payments are in accordance with the IRDAI regulations which is allowed by the said insurance regulator. To substantiate the same, assessee had furnished a copy of IRDAI regulations. 14.1. Further, assessee furnished relevant extracts of the audited financial statements in this respect giving details of name of agent, PAN and amount of commission paid. Ld. Counsel thus asserted that detailed explanation was given on what commission agents do, who are regulated by IRDAI. All these details were given in respect of agents aggregating to 45,566 in numbers which is a huge volume in itself. In respect of requirement of reconciliation, it was stated that owing to such a large volume of data, i.e., 45,566 commission agents, it is impracticable to reconcile each entry of payment of commission in the bank account, more particularly when the accounts of the assessee are audited and submitted to its regulator, i.e., IRDAI. Also, the agreements with the commission agents are standard agreements and are in accordance with IRDAI guidelines. In this respect, ld. Counsel referred to specimen copy of agreement entered into with the commission agents 11 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 placed in the paper book which has been furnished as part of additional evidences under Rule 29 of the ITAT Rules. 14.2. Ld. Counsel also contended that payments to commission agents have been made through banking channels and necessary TDS compliances have been done. There are no proceedings initiated u/s. 201 of the Act to treat the assessee as assessee in default for TDS non compliances. He also asserted that under the IRDAI regulations, insurance companies are required to file their returns giving details of payments of commission, remuneration and reward which has to be filed within 45 days of expiration of each financial year in the prescribed format. Copy of the said return for the year under consideration is placed as part of the additional evidence before the Bench. In this respect, ld. Counsel stated that there is no notice received from the insurance regulator stating any adverse comment or observation or finding on the returns so filed by assessee. 14.3. In order to justify the furnishing of additional evidences u/r. 29 of the ITAT Rules, ld. Counsel submitted that genuineness of the commission payments has not been doubted by the ld. AO. The disallowance has been made only on account of assessee not furnishing the copies of agreements entered into by the assessee with the commission agents and reconciliation of the amounts appearing in profit and loss accounts and bank accounts for which the assessee was constrained owing to huge volume of 45,566 commission agents. 14.4. In light of these facts, ld. Counsel asserted and prayed that the issue need not be restored back to the authorities below but be decided by the Hon’ble Bench taking into consideration the factual matrix of the present case. He further submitted that assessee is engaged in the life 12 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 insurance business, its profits and gains from such business is to be computed in a special manner laid down in accordance with the provisions of section 44 of the Act read with Rules contained in First Schedule. Moreover, such income from life insurance business is taxable at the rate of 12.5% plus applicable surcharge and cess under section 115B of the Act. 14.5. He also invited attention to the decision of the Hon'ble Supreme Court in the case of Life Insurance Corporation of India v. CIT [1964] 51 ITR 773 which held as under: “Under rule 2 of the Schedule the ITO has to compute the profits and gains of a life insurance company at the greater of the two methods of assessments mentioned in clauses (a) and (b). There may be no restriction upon his jurisdiction in the computation of profits and gains under clause (a) but under clause (b) the computation can be made within a limited field. He has to accept the annual average of the surplus disclosed by the actuarial valuation made in accordance with the Life Insurance Act in respect of the last inter-valuation period, so as to exclude therefrom any surplus or deficit included therein which was made in the earlier inter-valuation period, and expenditure not allowable under section 10 in computing the profits. This is made explicit by rule 3 which makes it obligatory upon the ITO to make the computation of the surplus for the purpose of rule 2 according to the scheme provided in clauses (a), (b) and (c) of rule 3. Under rule 2(b) of the Schedule the ITO has, therefore, no power to change the figures in the accounts of the assessee. He has to take the surplus as disclosed by the actuarial valuation made by the assessee under the Insurance Act and then to arrive at the average mentioned in the rule. He has the power to exclude any surplus or deficit included in the actuarial valuation in respect of an earlier inter- valuation period and any expenditure other than an expenditure which may under section 10 of the Act be allowed. What the ITO in the present case did not come within rule 2(b). It is clear that the Act contemplates that the assessment of insurance companies should be carried out not according to the ordinary principles applicable to business concerns as laid down in section 10, but in quite a different manner. Insurance companies do not compute their profits in the ordinary way because premiums cover risks which run into future years and loss includes losses from previous years. The method prescribed ensures that by making the average of several years a fair and reasonable conclusion is reached. Actuarial estimation plays an important part and surplus only results when there is an excess of the fund over the liability after all other charges are met. The rules which have been quoted lay down two different methods of ascertaining profits. Rule 2(a) merely compares the gross external incomings of the preceding year with the management expenses. Rule 2(b) contemplates the annual average of the surplus of deficit disclosed by actuarial valuation. [emphasis supplied by us by underline] 13 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 14.6. Thus, on first principles, since the computational provisions of section 44 read with rules contained in First Schedule override all other provisions of the Act, therefore the other provisions of the Act are not applicable. Further, neither the Id. AO nor the ld. CIT(A) in their respective orders, have commented on the applicability of section 44 of the Act, contended the ld. Counsel for the assessee. 14.7. He also placed reliance on the decision of Hon’ble Delhi High Court in the case of Sahara India Life Insurance Co. Ltd. vs. ACIT [2023] 457 ITR 548(Delhi HC), wherein it has been specifically observed that provisions under sections 28 to 43B of the Act would not be applicable to the Life Insurance Companies. Thus, no disallowance of commission expenses could be made by the Id. AO by applying the provisions of section 37(1) of the Act. 15. Ld. CIT DR submitted that assessee failed to substantiate the genuineness of the claim of commission payments even though several opportunities were provided by the ld. AO. According to him, since the submissions made by the assessee were incomplete, the disallowance so made is justified. Furthermore, assessee did not furnish the required documents at the first appellate stage despite ample opportunities given to it. 16. We have heard both the parties and perused the material on record. The factual position of the assessee being engaged in the life insurance business and being governed by the Insurance Act, 1938 and IRDAI regulations coupled with provisions of section 44 r.w. First schedule to the Act is undisputed. Also, the commission payments made by the assessee for the purpose of its business is not doubted in its genuineness which is regulated by IRDAI regulations. The 14 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 disallowance so made is on account of assessee not furnishing copies of agreements made with commission agents and reconciliation between the amount in profit and loss account and charged to bank account. 16.1. Assessee had given names, PAN details and the amounts paid to each of the commission agents, totalling to a voluminous number of 45,566 such commission agents. For want of agreements with commission agents, it is noted that specimen copy along with other related documents has been placed on record by way of an additional evidence u/r 29 of the ITAT Rules. Considering the facts on record, submissions made before us including the additional evidences filed u/r 29 of ITAT Rules, we admit the additional evidences furnished by the assessee u/r 29 of the ITAT Rules. Since these documents forms the basis of addition made by the ld. Assessing Officer and were not verified, we find it appropriate to remit the matter back to the file of ld. Jurisdictional Assessing Officer (JAO) for the limited purpose of verification of the same and consider the claim of the assessee subject to the said verification and provisions of law. Needless to say that assessee be given reasonable opportunity of being heard. Accordingly, ground no.3 is allowed for statistical purposes. 17. Ground No.4 is in respect of addition for expenses claimed by the assessee treated as unexplained expenditure u/s.69C of the Act amounting to Rs.248,69,38,754/-. Ld. Assessing Officer in this respect observed that assessee had made purchases from different parties who have either not filed their returns, i.e., these parties being non-filers or parties who had declared very small income as compared to their return of income, leading to doubting the genuineness of these parties. Necessary details were called for from the assessee who furnished the list of suppliers along with their names, PANs, details of nature of 15 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 services/products availed, list of vendors with whom there was no transaction undertaken by the assessee during the year and copies of sample invoices. However, ld. Assessing Officer held that assessee did not provide the details regarding the purchases made from these parties and considered them as unexplained expenditure by making an addition u/s.69C of the Act. 17.1. In this respect, assessee had contended that ld. Assessing Officer nowhere specified the monetary value of the alleged transactions and provided details of the vendors who have been alleged to be non-filers of return or those showing lower turnover. A very short window of 3 days was provided to submit voluminous data which was subsequently limited to 147 parties. In this respect, assessee submitted that it had never entered into any transaction with 75 vendors during the year and for the remaining 72 vendors, it had supplied the details containing their names, PANs, nature of purchase and sample copies of invoices. It was also claimed that all the payments to the vendors are through banking channels and necessary TDS compliance has been done wherever required. 18. Before us, it is contended that addition has been made u/s.69C of the Act whereby addition could be made only when source of such expenditure is not explained by the assessee or the explanation supplied by the assessee is not satisfactory in the opinion of the ld. Assessing Officer. It is submitted that section 69C deals only with the authenticity of the source of the expenditure. All the expenses are duly accounted in the books of accounts which has been subjected to audit and the source of such expenditure stands explained. Thus, the addition made by the ld. Assessing Officer merely on the basis of information that the alleged vendors are non-filers of returns or have 16 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 shown lower turnover in their return does not warrant any addition u/s. 69C of the Act. 18.1. To buttress the contention, assessee placed reliance on the decision of Hon'ble High Court of Delhi in the case of CIT vs. Radhika Creation [2011] 10 taxmann.com 138 (Delhi HC) wherein it is held as under: “5. Insofar as the first aspect of the matter is concerned, we find that section 690 clearly stipulates that where, in any financial year, the assessee has incurred an expenditure and he offers no explanation about 'the source of such expenditure or part thereof or the explanation, if it is offered by him, is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. Thus, the focus of section 69C is on the \"source\" of such expenditure and not on the authenticity of the expenditure itself. It is an admitted position that the expenditure was shown by the assessee in its regular books of account and it is because of this reason that the Income-tax Appellate Tribunal had observed:- \"As the expenditure was accounted in the regular books, the source is obviously explained. The provisions of section 69C are not applicable as there was no unaccounted expenditure.\" [Emphasis supplied]\" 6. What the Assessing Officer attempted to do was to go into the authenticity of the expenditure and he returned a finding that the expenditure was not authenticated by vouchers and, consequently, he added the said expenditure as unexplained expenditure under section 69C. We are in agreement with the observations and findings of the Commissioner of Income-tax (Appeals) as well as that of the Income- tax Appellate Tribunal that this is not a case which falls under section 69C. Clearly, section 69C refers to the 'source of the expenditure' and not to the expenditure itself. Consequently, the Assessing Officer was clearly wrong in treating the said expenditure as unexplained expenditure under section 69C of the said Act and the lower appellate authorities were right in their conclusions in deleting the said addition.” 18.2. Ld. Counsel referred to the information summary supplied by the ld. Assessing Officer along with notice u/s. 142(1) dated 16.12.2022 to demonstrate that this “information summary” itself contained details of each of the party including their names, PANs, their status, nature of services/products and the amounts. According to him, this list included several parties with which assessee had undertaken transaction for its services or products like Mahanagar Telephone Nigam Ltd., The Indian 17 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 Hotels Co. Ltd., Indian Bank, United India Insurance Co. Ltd., American Express Banking Corporation, Lemon Tree Hotels Ltd., Make my Trip India Ltd., Vodafone Idea Ltd., Spice Jet Ltd., etc., to name a few. By pointing to such names in the list provided by the ld. Assessing Officer, it was submitted that one fails to understand as to how ld. Assessing Officer has figured these parties as non-filers of returns or having very less income as compared to their turnover to doubt the genuineness of the transactions. 19. We have gone through the material placed before us along with the contentions raised. We note that ld. Assessing Officer has made the said addition by observing that assessee did not provide the necessary documentary evidence to support its claim. After several opportunities, assessee furnished the details during a short window of 3 days provided by the ld. Assessing Officer which remained to be examined and verified by him, leading to the stated addition. Ld. CIT(A) also observes that during the first appellate proceedings, no submissions were made. For the claim of deduction of expenses, it is incumbent upon the assessee to substantiate its claim based on satisfactory explanation supported by relevant documentary evidences. In the interest of justice and fair play, we find it proper to remit this issue back to the file of ld. Assessing Officer for limited purpose of examination and verification of the relevant material and consider the claim of the assessee in accordance with the provisions of the law. Needless to say, that assessee be given reasonable opportunity of being heard. Accordingly, ground no.4 is allowed for statistical purposes. 20. Ground no.5 relates to levy of interest u/s. 234A and 234B of Act which is consequential in nature. For levy of interest u/s.234A, ld. Assessing Officer is directed to verify the details relating to the filing of 18 ITA No.1828 and 3044/MUM/2024 Aditya Birla Sunlife Insurance Co. Ltd., AY 2021-22 returns by the assessee and accordingly charge interest in accordance with the provisions of law. Levy of interest u/s. 234B is consequential in nature and therefore not adjudicated upon. 21. In the result, appeal of the assessee is partly allowed for statistical purposes and that of the revenue is dismissed. Order is pronounced in the open court on 28 October, 2024 Sd/- Sd/- (Pavan Kumar Gadale) (Girish Agrawal) Judicial Member Accountant Member Dated: 28 October, 2024 MP, Sr.P.S. Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 5 Guard File CIT BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "