Sunil Vishram Chawda, Hyderabad V. Income Tax Officer, Ward-14(5), Hyderabad

ITA 1566/Hyd/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6075 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-05-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 11-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Bad and doubtful debts; Commercial expediency
• Section: 131; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1566/HYD/2017 ASSESSMENT YEAR: 2014-15 SUNIL VISHRAM CHAWDA, HYDERABAD. PAN AAUPCO487H VS. INCOME TAX OFFICER, WARD 14(5), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.A. SAIPRASAD REVENUE BY : SHRI M.H. NAIK DATE OF HEARING 31/05/2018 DATE OF PRONOUNCEMENT 08/06/2018 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER DATED 26/06/2017 OF CIT(A) 6, HYDERABAD FOR AY 2 014-15. 2. BRIEFLY THE FACTS OF THE CASE ARE, THE ASSESSEE IS A PROPRIETOR OF M/S CLASSIC CHEMICALS THAT DEALS IN TRADING AND SUP PLY OF WATER TREATMENT CHEMICALS. ASSESSEE FILED HIS RETURN OF I NCOME DECLARING A TOTAL INCOME OF RS. 1,33,51,200/-. THE ASSESSMENT W AS COMPLETED ON A TOTAL INCOME OF RS. 1,48,53,990/- BY MAKING DISAL LOWANCE OF RS. 11,19,750/- ON ACCOUNT OF COMMISSION, DISALLOWING 2 0% OF EXPENSES DEBITED IN PROFIT AND LOSS ACCOUNT UNDER VARIOUS HE ADS. 2.1 DURING THE ASSESSMENT PROCEEDING, THE ASSESSIN G OFFICER FOUND THAT THE ASSESSEE HAD DEBITED A SUM OF RS .11 ,19,750/- AS COMMISSION EXPENSES. THE ASSESSING OFFICER OBSERVED THAT 2 ITA NO. 1566/HYD/17 SUNIL VISHRAM CHAWDA COMMISSION AGENTS TO WHOM THE ASSESSEE HAD SHOWN TO HAVE PAID THE COMMISSION WERE THE SAME PERSONS WHO HAD BEEN S UMMONED U/S. 131 IN THE A.Y. 2011-12 AND WHOSE STATEMENTS HAD BE EN RECORDED ON OATH. IT WAS ESTABLISHED IN A.Y. 2011-12 THAT THE P AYMENTS MADE BY THE ASSESSEE WERE NOT FOR THE ACTUAL SERVICES RENDE RED BY THOSE COMMISSION AGENTS FOR HIS BUSINESS BUT WERE MADE TO REDUCE TAX INCIDENCE. THE CLAIM OF COMMISSION PAYMENT TO THOSE PERSONS WAS REJECTED AFTER A DETAILED DISCUSSION IN THE ASSESSM ENT ORDER FOR A. Y. 2011-12 AND THE EXPENDITURE WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THAT YEAR. IN VIEW OF THE SIMILAR CIRC UMSTANCES AND THAT THE COMMISSION AGENTS WERE SAME AS IN A.Y. 2011-12 AND FOR THE REASONS ELABORATELY DISCUSSED IN THE ORDER FOR A.Y. 2011-12, AND ALSO FOR THE REASON THAT THE ASSESSEE HAD RIOT BROUGHT O N RECORD ANY MATERIAL TO SUBSTANTIATE HIS CLAIM, THE ASSESSING O FFICER DISALLOWED THE AMOUNT OF RS.11,19,750/- SHOWN AS COMMISSION PA YMENT AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A), WHO FOLLOWED HIS ORDER FOR AY 20 11-12 IN ASSESSEES OWN CASE AND CONFIRMED THE DISALLOWANCE TO THE EXTENT OF RS. 8,73,200/- ON ACCOUNT OF COMMISSION PAID TO TWO PERSONS, NAMELY SRIVARI ENTERPRISES OF RS. 3,50,250/- AND RS. 5,22, 950/- TO KAKA AGENCIES. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A) IS NOT CORRECT EITHER ON FACTS OR IN LAW AND IN BOTH. 2. THE LEARNED COMMISSIONER OF INCOME TAX(A) IS NOT JUSTIFIED IN CONFIRMING A DISALLOWANCE OF COMMISSION PAYMENT TO THE EXTENT OF RS. 8,73,200/- OUT OF TOTAL CLAIM OF RS.1 1,19,750/-. 3. THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACT THAT THE COMMISSION PAYMENTS WERE SUBJECTED TO TDS, PAID 3 ITA NO. 1566/HYD/17 SUNIL VISHRAM CHAWDA THROUGH BANKING CHANNELS, THE RECIPIENTS ARE UNRELA TED AND ASSESSED TO TAX. 4. THE APPELLANT CRAVE LEAVE TO ADD OR AMEND OR ALT ER ANY OF THE GROUNDS AT THE TIME OF HEARING OF APPEAL. 5. BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF T HE COORDINATE BENCH IN ASSESSEES OWN CASE FOR EARLIER AYS 2009-10 TO 2 012-13 IN ITA NOS. 1430 TO 1433/HYD/2015, VIDE ORDER DATED 25/05/ 2018, A COPY OF WHICH IS ON RECORD. 6. THE LD. DR ON THE OTHER HAND NEITHER CONTROVERTE D THE SUBMISSION OF THE ASSESSEE NOR BROUGHT ANY CONTRARY DECISION IN THIS REGARD. 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE CAME UP FOR CONSIDERATION BEF ORE THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR EARLIER AYS, WHERE IN THE COORDINATE BENCH HAS HELD AS UNDER: 10. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL ON RECORD. WE OBSERVE THAT ASSESSEE HAD CL AIMED COMMISSION PAYMENT AS EXPENDITURE AND PAID THROUGH BANKING CHANNEL AND DEDUCTED TDS AS PER THE PROVISIONS OF I .T. ACT. THE ISSUE BEFORE US IS, AO AFTER RECORDING STATEMEN T OF ALL AGENTS CAME TO CONCLUSION THAT ALL THE AGENTS ARE N OT GENUINE AS THEY DO NOT HAVE ANY BASIC INFORMATION OF DOING ANY BUSINESS WITH THE ASSESSEE. THE SAME VIEW WAS RATIF IED BY LD. CIT(A). WE NOTICE FROM THE STATEMENT RECORDED FROM AGENTS THAT ALL HAVE CONFIRMED THE RECEIPT OF COMMISSION AND DE CLARED THE SAME AS INCOME IN THEIR RESPECTIVE RETURNS. FROM T HE STATEMENT, WE NOTICE THAT FEW AGENTS ARE EITHER HOU SE-WIVES, STUDENTS OR RETIRED PERSONNEL. THEY DO NOT HAVE ANY INFORMATION OF THE TRANSACTION CARRIED ON WITH THE ASSESSEE BUT ALL OF THEM HAD A DIRECT LINK WITH THE ASSESSEE AS THEIR HUSBAN DS, PARENTS OR ONE OF THE FAMILY MEMBERS, WHO ARE IN DIRECT CON TACT WITH THE ASSESSEE. IT SHOWS THAT THE SUBORDINATES OR FAMILY MEMBERS HAVE ASSISTED IN CARRYING OUT THE AGENCY BUSINESS F OR THE RECIPIENT OF THE COMMISSION. 10.1 COMING BACK TO LD. CIT(A)S OBSERVATION THAT T HERE IS NO CONTRACT IN EXISTENCE. IT IS NOT NECESSARY THAT ALL AGENTS SHOULD 4 ITA NO. 1566/HYD/17 SUNIL VISHRAM CHAWDA HAVE WRITTEN AGREEMENT. GENERALLY, THESE BUSINESSES ARE RUN ON THE BASIS OF REFERRAL AND PROMPT COLLECTION OF SALE PROCEEDS. THE AGENTS REFER THE CLIENTS AND COLLECTS THE COMMISSIO N AS SOON AS THE SALE PROCEEDS ARE COLLECTED AS PER THE CONTRACT TERMS. THERE IS NO QUESTION OF BREACH IN THESE TYPE TRANSA CTIONS, UNTIL THE SALE PROCEEDS ARE REALIZED, NO AGENT IS ELIGIBL E TO CLAIM AND AS SOON AS SALE PROCEEDS ARE RECEIVED, THE DUE COMM ISSIONS ARE SETTLED. IT IS CLEAR FROM THE RECORD THAT ASSES SEE HAS NOT CLAIMED ANY BAD DEBTS IN THESE YEARS UNDER CONSIDER ATION. 10.2 WITH REGARD TO GENUINENESS, ASSESSEE HAS DECLA RED THE PROFIT AND COMMISSION CONSISTENTLY OVER THE YEARS A ND THE RESULTS ARE (REFER FINANCIAL RESULTS SUBMITTED BY L D. AR) CONSISTENT. WE ALSO NOTICE THAT ASSESSEE HAS NOT CL AIMED ANY BAD DEBTS IN THE STATEMENT OF ACCOUNTS, IT SHOWS TH AT THE SALES ARE GENUINE AND THE AGENTS PROMPTLY COLLECTS THE SA LE PROCEEDS. 10.3 FURTHER, LD. CIT(A) HAS BROUGHT ON RECORD THAT THE AGENTS HAVE DECLARED THE COMMISSION AS INCOME IN THEIR RET URN AND ALL HAVE CLAIMED REFUND. WE FIND IT DIFFICULT TO UNDERS TAND, ON WHAT WAY, IT WILL DECIDE THE GENUINENESS OF TRANSACTION IN THE CASE OF ASSESSEE, PARTICULARLY, WHEN THERE IS NO FINDING TH AT THE ASSESSEE HAS RECEIVED BACK ANY COMMISSION OR ENJOYE D ANY BENEFIT OUT OF THIS TRANSACTION EXCEPT ACHIEVING TA RGETED SALES. 10.4 CIT(A) OBSERVED THAT ASSESSEE MADE THE PAYMENT TO CERTAIN PERSONS OSTENSIBLY AND HAS NOT ESTABLISHED THE SERVICES RENDERED BY THEM. SHE FURTHER OBSERVED THAT IT CAN BE CALLED GRATUITOUS PAYMENTS TO PERSONS KNOWN TO ASSESSEE, B UT, SHE COULD NOT ESTABLISH THE RELATIONSHIP WITH THE ASSES SEE BUT EXPRESSED THAT IT IS NOT CLEAR WHETHER THEY ARE REL ATIVES, BUT, THEY WERE NOT STRANGERS EITHER. FURTHER, SHE HELD T HAT THERE IS A PREPONDERANCE OF PROBABILITY TO CONCLUDE THAT THE P AYMENTS DID NOT CONSTITUTE FOR REMUNERATION FOR SERVICES OF AGE NCY. AT THE SAME TIME, SHE ALLOWED A RANDOM AMOUNT OF RS. 5 LAK HS AS COMMISSION WITHOUT ANY BASIS. 10.5 SHE FAILED TO CONSIDER THE OTHER ASPECTS IN TH IS CASE, NONE OF THE AGENTS ARE RELATIVES TO THE ASSESSEE. NO BUS INESSMAN WILL GIVE PAYMENT TO OUTSIDERS ON GRATUITOUS BASIS, PARTICULARLY, THE AMOUNT INVOLVED ARE HUGE. THE AGENTS HAVE CONFI RMED THAT THEY HAVE RECEIVED THE COMMISSION AND THE OTHER FAM ILY MEMBERS OR SUBORDINATES HAVE ASSISTED THEM ACHIEVE THE SALES. THIS ASPECT CANNOT BE RULED OUT THAT NO BUSINESSMAN WILL DISTRIBUTE MONEY ON GRATUITOUS BASIS WITHOUT TAKING BENEFIT FROM SUCH PAYMENTS. THIS IS ALSO PREPONDERANCE OF PROBAB ILITY. ANOTHER ASPECT WAS ALSO NOT CONSIDERED BY LD. CIT(A ) THAT THERE IS NO PROOF THAT THE ASSESSEE HAS RECEIVED BACK THE ALLEGED 5 ITA NO. 1566/HYD/17 SUNIL VISHRAM CHAWDA COMMISSION PAYMENT FROM THE RESPECTIVE AGENTS. IT S HOWS THAT THE PAYMENTS ARE GENUINE. 10.6 LET US ANALYSE THIS ASPECT UNDER JUDICIAL VIEW . IN THE SIMILAR SITUATION, THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF PINKCITY INDUSTRIES (SUPRA), HAS ADJUDICATED AS BELOW: TAKING INTO CONSIDERATION THAT THE BUSINESS HAS GO NE ALMOST ALL TIME AND PAYMENT WAS MADE THROUGH ACCOUN T PAYEE CHEQUE, IN OUR CONSIDERED OPINION, THE BUSINE SS EXPENSES IS WRONGLY DISALLOWED. HENCE, THE FIRST IS SUE IS REQUIRED TO BE ANSWERED IN FAVOUR OF THE ASSESSEE A ND HE OUGHT TO HAVE BEEN ALLOWED THE EXPENSES WHICH IS AR ISING OUT OF THE BUSINESS EXIGENCY AND IN THAT VIEW OF TH E MATTER, THE OBSERVATIONS MADE IN CASE OF S.A. BUILD ERS LTD. CIT(A) 288 ITR 0001Z (SC), THE EXPENSES ARE REQUIRED TO BE ALLOWED. IN THE GIVEN CASE, THE ASSESSEE HAS MAINTAINED SALE S OVER THE YEARS AND CARRIED ON THE BUSINESS WITH THE HELP OF ONLY 2 PERSONS TO MONITOR THE SALES. IT IS NOT POSSIBLE TO ACHIEVE THE VOLUME OF 24.52 CRORES WITHOUT THE SERVICES OF SALE SMEN OR AGENTS. ALSO ALL THE PAYMENTS ARE MADE THROUGH BANK ING CHANNELS. 10.7 IN THE CASE OF ITO VS. SHYAM SUNDER JAJODIA (S UPRA), THE HONBE DELHI HIGH COURT HELD AS UNDER: THE ASSESSEE CLAIMED A DEDUCTION ON THE GROUND THAT HE HAD PAID COMMISSION TO 12 PARTIES. THE ASSESSING OF FICER REJECTED THE CLAIM OF THE ASSESSEE BY OBSERVING THA T THERE WAS NO AGREEMENT FOR THE PAYMENT OF COMMISSION. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSE E FAILED TO PROVE THAT EXPENDITURE WAS INCURRED WHOLL Y AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. ON APPEAL, THE COMMISSIONER (APPEALS) RE-APPRECIATED THE CONTROVER SY AND DELETED THE ADDITION. ON REVENUE'S APPEAL : HELD IN ORDER TO CLAIM ANY EXPENDITURE NOT BEING EXPENSE S DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENSES OR PERSONAL EXPENSES LAID OUT A ND SPENT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUS INESS, ONE'S CLAIM HAS TO BE EXAMINED UNDER THE RESIDUARY PROVISION OF SECTION 37. HENCE, IN ORDER TO BE ELIG IBLE FOR AN EXPENSE UNDER THIS SECTION, ONE HAS TO FULFIL TH E CONDITIONS; (T) THE EXPENDITURE MUST NOT BE GOVERNE D BY 6 ITA NO. 1566/HYD/17 SUNIL VISHRAM CHAWDA THE PROVISIONS OF SECTIONS 30 TO 36, (II) THE EXPEN DITURE MUST HAVE BEEN LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE, (III) THE EXPENDITURE MUST NOT BE PERSONAL IN NATURE AND (IV) THE EXPENDITURE MUST NOT BE CAPITAL IN NATURE. THE EXPR ESSION 'WHOLLY' EMPLOYED IN SECTION 37 REFERS TO THE QUANT UM OF EXPENDITURE, WHILE THE WORD 'EXCLUSIVELY' REFERS TO THE MOTIVE, OBJECTIVE AND PURPOSE OF THE EXPENDITURE. IN THE INSTANT CASE, THE ASSESSEE HAD ESTABLISHED T HAT PAYMENT WAS MADE THROUGH BANKING CHANNEL. ALL THE PAYEES RESPONDED TO THE QUERY OF THE ASSESSING OFFI CER AND SOME OF THEM SUPPLIED THE INFORMATION ABOUT THE SERVICES RENDERED BY THEM. THE COMMISSION HAD BEEN ALLOWED IN THE EARLIER YEARS AND IN THE SUBSEQUENT YEARS ON SIMILAR LINES. ALL THE PAYEES WERE ASSESSED TO T AX. THEIR PANS HAD ALSO BEEN DISCLOSED TO THE ASSESSING OFFICER. THE OBJECTION OF THE ASSESSING OFFICER WAS THAT THERE WAS NO AGREEMENT FOR PAYMENT OF COMMISSION. I T WAS FOR THE ASSESSEE TO CARRY OUT HIS BUSINESS. IF HE HAD AN UNDERSTANDING WITH CERTAIN PERSON, THEN IT MIGHT NOT BE VERY MUCH NECESSARY TO ENTER INTO AN AGREEMENT. THE ASSESSEE AS WELL AS THE PAYEES WERE WITHSTANDING TO THEIR STAND. THERE WAS NO VARIANCE IN THEIR CONDUCT. AS F AR AS THE ALLEGATION OF FAILURE TO PRODUCE DEMONSTRATIVE EVIDENCE AGAINST THE ASSESSEE WAS CONCERNED, ONE HA D TO SEE THE NATURE OF BUSINESS. THE ASSESSEE WAS IN THE BUSINESS OF SALE OF PLASTIC DANA. THE AGENTS WERE REQUIRED TO SEND CUSTOMERS FOR PURCHASE OF DANA. TH EY COULD BE INTRODUCED ON PHONE ALSO. THERE MIGHT NOT BE ANY DEMONSTRATIVE EVIDENCE IN CERTAIN CIRCUMSTANCES BUT THAT DID NOT MEAN THAT EXPENSE WAS NOT INCURRED. TH E ASSESSEE HAD SHOWN COMMISSION INCOME ON SALE OF PLASTIC DANA; IT SUGGESTED THAT HE HAD CARRIED ON BUSINESS. THUS, ALL THESE CIRCUMSTANCES WERE TO BE SEEN BEFORE MAKING THE DISALLOWANCE. IN SUCH CIRCUMSTANC ES, THE DISALLOWANCE COULD NOT BE MADE. THE APPELLATE AUTHORITY HAD APPRECIATED THE FACTS AND CIRCUMSTANC ES AND DELETED THE DISALLOWANCES CORRECTLY. THERE WAS NO MERIT IN THE INSTANT GROUND OF APPEAL ALSO. IT WAS TO BE REJECTED. IN THIS CASE, THE ASSESSEE HAS ISSUED APPOINTMENT L ETTERS AND THE NATURE OF THE BUSINESS IS SELLING OF CHEMICALS. THE ASSESSEE HAS SUBMITTED THE AGENT-WISE AND CHEMICAL WISE DETA ILS BEFORE REVENUE AUTHORITIES. IT SHOWS THAT THE AGENTS OR TH EIR SUBORDINATES HAD CONTRIBUTED IN SELLING THE CHEMICA LS. 7 ITA NO. 1566/HYD/17 SUNIL VISHRAM CHAWDA 10.8 IN THE CASE OF CIT VS. PRINTERS HOUSE (P) LTD . (SUPRA), THE HONBLE DELHI HIGH COURT HELD AS UNDER: 1. THE QUESTION THAT HAS BEEN AGITATED BEFORE US PE RTAINS TO A SUM OF RS. 32 LAKHS APPROXIMATELY PAID AS COMMISSION BY THE ASSESSEE TO SEVERAL PARTIES. THE IMPUGNED ORDER DETAILS 18 SUCH PERSONS AND ALSO EXPRESSES SATISFACTION THAT THE PAYMENTS WERE GENUI NE. MS. BANSAL, LEARNED COUNSEL APPEARING FOR THE REVEN UE, CONTENDS THAT THE PAYMENTS OF COMMISSION IS NOT IN ISSUE. THE ARGUMENT IS THAT THERE WAS NO CONSIDERATION OR CAUSE FOR PAYMENT OF COMMISSION TO THOSE PARTIES, SINCE, NO SERVICES HAD BEEN RENDERED BY THE RECIPIENTS OF COMMISSION. THIS IS COMPLETELY BELIED BY THE DETAIL ED FINDINGS RECORDED BY THE TRIBUNAL IN PARAGRAPHS 7 T O 7.13 OF THE IMPUGNED JUDGMENT. WE NOTE THAT THE TRIBUNAL HAS ALSO RECORDED THAT THERE IS NO EVIDENCE THAT COMMIS SION FLOWED BACK TO THE ASSESSEE OR THAT THE ENTRIES WIT H RESPECT TO COMMISSION PAYMENTS WERE JUST PAPER TRANSACTION. THE FOLLOWING OBSERVATIONS BEING RELEV ANT ARE EXTRACTED HEREINAFTER: ' .. THERE IS NO EVIDENCE ON RECORD TO SHOW THAT TH E COMMISSION WAS PAID TO ANY NEAR RELATIVE, FAMILY ME MBER OR SISTER CONCERN. THERE IS NO IOTA OF EVIDENCE TO SHOW THAT THE PAYMENT OF COMMISSION REPRESENTED ONLY ACCOMMODATION ENTRY OR WAS ONLY A PAPER TRANSACTION . THERE IS ALSO NO EVIDENCE TO SHOW THAT THE AMOUNT O F COMMISSION CAME BACK TO THE ASSESSEE IN ANY FORM SI NCE THE ASSESSEE HAS GIVEN FULL DETAILS INCLUDING THE ADDRESSES OF BUYERS AND ADDRESSES OF THE AGENTS AS WELL AS DETAILS OF PAYMENT ETC. THE TRANSACTIONS OF PAYM ENT OF COMMISSION AS WELL AS THE ASPECT OF RENDERING SERV ICES BY THE COMMISSION AGENTS WERE FULLY VERIFIABLE. HOW EVER, NEITHER THE ASSESSING OFFICER NOR THE LEARNED CIT (APPEALS) MADE ANY ATTEMPT AT THEIR END TO MAKE PRO BE INTO THE MATTER FOR COMING TO THE CONCLUSION THAT T HE TRANSACTIONS WERE BOGUS, UNFAIR AND FRAUDULENT. IN OUR OPINION, IN ABSENCE OF ANY SUCH MATERIAL ON RECORD AND IN ABSENCE OF ANY INQUIRY CONDUCTED TO PROVE THE NON- GENUINENESS OF THE TRANSACTIONS THE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIED IN DISALLOWING THE C LAIM OF THE ASSESSEE WHICH WAS FULLY SUPPORTED BY THE DOCUMENTARY EVIDENCE ON RECORD. 2. APART FROM EXPRESSING ITS SATISFACTION AS TO THE GENUINENESS OF THE TRANSACTION THE ITA T HAS TAKEN INTO CONSIDERATION THE FACT THAT COMMISSION HAS BEEN PAI D AND ALLOWED IN THE PAST AND THAT THE COMMISSION PERCENT AGE IS NEGLIGIBLE. MS. BANSAL CONTESTS THIS POSITION. THE TOTAL 8 ITA NO. 1566/HYD/17 SUNIL VISHRAM CHAWDA TURNOVER OF THE ASSESSEE WAS RS. 68 CRORES BEFORE T AX, INTER ALIA OF WHICH INCLUDED RS. 25.68 CRORES OF EX PORT TURNOVER. THE TURNOVER WE ARE CONCERNED WITH IS STA TED TO BE RS. 3.74 CRORES ON WHICH THE COMMISSION HAS BEEN PAID. IT HAS BEEN POINTED OUT BY MS. BANSAL THAT RA THER THAN THE STATED 0.05 PER CENT THE COMMISSION, THE COMMISSION WORKS OUT TO 1.5 PER CENT IN RELATION TO LOCAL SALES AND 7 PER CENT AS FAR AS EXPORT TURNOVER IS CONCERNED. EVEN THEN ACCORDING TO US THERE REMAINS NO REASON TO DOUBT THESE PAYMENTS. IT HAS BEEN LAID DO WN IN SEVERAL DECISIONS OF THE SUPREME COURT THAT THE ITA T IS A FINAL FORUM FOR FINDINGS OF FACT. THE HIGH COURT WO ULD INTERVENE ONLY IF A FINDING APPEARS TO BE PERVERSE, WHICH WE ARE UNABLE TO CONCLUDE IN THE / CASE IN HAND. 10.9 IN THE CASE OF CIT VS. SIDDHARTHA TRADE LINKS PVT. LTD. (SUPRA), THE HONBLE DELHI HIGH COURT HELD AS UNDER : 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORDS. WE FIND THAT IN VIEW OF THE VOLUMINOUS EVI DENCE SUBMITTED BY THE ASSESSEE IN THIS REGARD, IT CANNOT BE SAID THAT ASSESSEE, AS FAILED TO ESTABLISH THAT THE RE WAS NO EVIDENCE OF RENDERING THE CORRESPONDING SERVICES BY SUCH PERSONS. WE FIND THAT ASSESSEE HAS DULY SUBMIT TED VARIOUS DOCUMENTS PERTAINING TO LEDGER ACCOUNTS, COMMISSION PAID, BILLS RAISED AND CORRESPONDENCES I N THIS REGARD. THE SERVICES PROVIDED HAVE ALSO BEEN DULY EXPLAINED. IT IS A SETTLED LAW THAT REVENUE AUTHORI TIES CANNOT SIT INTO THE SHOE OF THE BUSINESSMAN. IN THI S REGARD, WE PLACE RELIANCE UPON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT, BOMBAY VS. WALCHAND AND CO. PRIVATE LTD. IN 65 ITR 381, WHEREIN IT WAS HELD THAT 'IN APPLYING THE TEST OF COMMERCIAL EXPEDIENCY FOR DETERMINING WHETHER AN EXPENDITURE WAS WHOLLY AND EXCLUSIVELY FOR BUSINESS, THE EXPENDITURE HAS TO BE ADJUDGED FROM THE POINT OF VIEW OF THE BUSINESSMAN AND NOT OF REVENUE'. ACCORDINGLY, WE HOLD THAT ASSESSEE HAS DULY ESTABLISHED THAT SUFFICIENT SERVICES WERE REND ERED FOR THE PAYMENT OF THE COMMISSION INVOLVED IN THIS REGA RD. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORI TIES BELOW ON THIS ISSUE AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE.' IN THE GIVEN CASE ALSO, ASSESSEE HAS PRODUCED THE D ETAILS OF SALES ACHIEVED BY THE AGENTS BY SUBMITTING ITEM-WIS E, AGENT- WISE DETAILS BEFORE REVENUE AUTHORITIES. FURTHER, A SSESSEE HAS FILED THE RELEVANT BOOKS OF ACCOUNT RELATING TO AGE NTS, PAYMENT DETAILS, ADVANCE TAX COMPLIANCE BEFORE AUTHORITIES. IT SHOWS THAT ASSESSEE KNOWS THE BUSINESS HE CARRIES ON AND AS PER THE 9 ITA NO. 1566/HYD/17 SUNIL VISHRAM CHAWDA HONBLE HIGH COURTS OBSERVATION, IT IS SETTLED LAW THAT REVENUE AUTHORITIES CANNOT SIT INTO THE SHOE OF THE BUSINES SMAN. BY REFERRING TO CIT VS. WALCHANG AND CO (SUPRA), IN AP PLYING THE TEST OF COMMERCIAL EXPEDIENCY FOR DETERMINING WHETH ER AN EXPENDITURE WAS WHOLLY OR EXCLUSIVELY FOR BUSINESS, THE EXPENDITURE HAS TO BE ADJUDGED FROM THE POINT OF VI EW OF THE BUSINESSMAN AND NOT OF REVENUE. 10.10 FROM THE ABOVE DISCUSSION, IT IS CLEAR THAT T HE ASSESSEE HAS SUBMITTED ENOUGH EVIDENCE IN SUPPORT OF UTILIZI NG THE SERVICES OF AGENTS IN THE BUSINESS AND ALSO REVENUE AUTHORITIES HAVE NOT BROUGHT ANY COGENT MATERIAL TO SHOW THAT T HE PAYMENTS WERE COME BACK TO ASSESSEE AND THESE PAYMENTS CANNO T BE CATEGORIZED AS GRATUITOUS PAYMENTS. THEREFORE, WE D ELETE THE ADDITION MADE BY THE AO. HENCE, GROUNDS RAISED BY T HE ASSESSEE ARE ALLOWED. AS THE ISSUE UNDER CONSIDERATION IS MATERIALLY IDEN TICAL TO THAT OF EARLIER AYS, FOLLOWING THE DECISION THEREIN, WE SET ASIDE THE ORDER OF CIT(A) AND DELETE THE ADDITION OF RS. 8,73,200/- MA DE ON ACCOUNT OF COMMISSION PAYMENT. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2018. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 8 TH JUNE, 2018 KV COPY TO:- 1) SHRI SUNIL VISHRAM CHAWDA, C/O CH. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO. 1, ASHOKNAGAR, HYDERABAD 500 020. 2) ITO, WARD 14(5), 6 TH FLOOR, C-BLOCK, IT TOWERS, AC GUARDS, HYDERABAD 500 004 3) CIT(A) 6, HYDERABAD. 4) PR. CIT - 6, HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE 10 ITA NO. 1566/HYD/17 SUNIL VISHRAM CHAWDA S.N0 DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER