Teamex Retail Ltd, Ahmedabad V. The ITO, Ward-4(1)(1), Ahmedabad

ITA 225/AHD/2020

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1700 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-05-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 27-02-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business expenditure; Corroborative evidences; TDS
• Section: 263; 142(1); 133(6); 37(1)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No.225/Ahd/2020 Assessment Year :2016-17 Teamex Retail Limited 26, Shankarpada Tenement Nr.Nandakant Opp: Tejad-2, Ghatlodia Ahmedabad. PAN : AAECT 5486 C Vs ITO, Ward-4(1)(1) Ahmedabad. (Applicant) (Responent) Assessee by : None Revenue by : Shri C.S. Sharma, Sr.DR स ु नवाई क तार ख/D a t e o f H e a r i n g : 2 0 / 1 2 / 2 0 2 3 घोषणा क तार ख /D a t e o f P r o n o u n c e m e n t : 2 2 / 1 2 / 2 0 2 3 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER The present appeal has been filed by the assessee against order passed by the Ld.Commissioner of Income-Tax(Appeals)-8, Ahmedabad (hereinafter referred to as “ld.CIT(A) dated 4.12.2019 under section 263 of the Income Tax Act, 1961 ("the Act" for short) pertaining to Assessment Year 2016-17. 2. At the time of hearing, none appeared on behalf of the assessee. A perusal of the order-sheet reveals that, the assessee has been given as many as six opportunities for prosecution its appeal pending before the Tribunal, yet no one present on behalf of the assessee. This demonstrates that the assessee is not serious to ITA No.225/Ahd/2020 2 pursue with the present appeal, therefore, we proceed to adjudicate the matter ex parte qua the assessee-appellant after hearing the ld.DR and considering the material available on record. 3. In the appeal, the assessee has raised the following grounds: 1. The Appellant prays that the Assessment Order of passed by respected AO and appeal to CIT(A)-VIII dismissed by respected CIT(A) needs to cancel and deleted as respected AO was satisfy about the genuineness of the transactions and issued show cause notice stating disallowance of 50% of Rs. 50,33,810/- only i.e. 25,16,905/-, however in final assessment order respected AO has disallowed all expenses amounting to Rs. 50,33,810/- was disallowed. The expenditure was genuine and for the business purpose only and needs to allow to the Assessee. 2. Onus to cross examine third parties or calling information from third parties shifted to respected AO on submission of the details about Name, PAN and commission amount by assessee, however instead of cross examine the transactions, respected AO has disallowed whole commission expenses amounting to Rs.50,33,810/- even though all the payment was made through account payee cheque or net banking only. As per fact of the case and legally the expenditure should be allowed to the Assessee. 4. We would take short note of the facts as emerging out from the orders of the Revenue authorities that the assessee is a direct selling company and sells various products and services directly to the consumers. The assessee filed its return of income disclosing total income of Rs.2,41,570/-. The same was processed under section 143(1) of the Act, and thereafter, the case of the assessee company was selected for scrutiny assessment as to the allowability of deduction claimed on account of business expenses i.e. commission expenses of Rs.1,01,37,996/-, which the assessee had debited in its profit & loss account. In the notice issued under section 142(1) of the Act, the assessee was asked to produce the persons to whom commission paid above Rs.2,50,000/- along with supporting evidences i.e. copy of bill/vouchers for verification. These notices seeking the above information were issued on 30.1.2018, 26.6.2018, 20.8.2018, 16.9.2018, 20.9.2018 and 8.10.2018 and finally on ITA No.225/Ahd/2020 3 7.12.2018. In response to these various notices, the assessee did send an email dated 19.10.2018 giving certain details, however, the assessee failed to submit the details in respect of impugned commission expenses in the format sought for vide the notice under section 142(1) of the dated. The ld.AO considered whatever material filed by the assessee, but there was no material with respect to the nature of services provided by the agents to the assessee, supporting evidences such as bills/vouchers, In the absence of these vital materials, the ld.AO held that in spite of number opportunities, the assessee failed to establish its case of claiming the commission with supporting evidences like, commission details, copy of TDS deducted and paid to Government account, copy of bills/vouchers. Accordingly, the assessee having failed to prove the genuineness of the transaction, the total commission expenses paid to persons above Rs.2,50,000/-, which came to Rs.50,33,810/- out of commission expenses of Rs.1,01,37,996/- was treated as non- genuine and disallowed under section 37(1) of the Act and added to the total income of the assessee-company. This action of the AO was challenged before the ld.first appellate authority. 5. Before the ld.CIT(A) the assessee contended that details such as PAN and the commission amount were furnished and all the payments were made through account payee cheque or through net banking, and that the ld.AO ought to have issued notice under section 133(6) of the Act to the third party to prove the genuineness of the transactions. Therefore, the assessee submitted that, the ld.AO having failed to do so, the burden could not be shifted to the assessee to negate the finding of the AO. The ld.CIT(A) considered the order of the AO and submissions of the assessee, and concurrently found that the assessee had not furnished addresses of the persons as well as the nature of specific services provided by ITA No.225/Ahd/2020 4 persons to whom commission above Rs.2,50,000/- was paid; that even during the appellate proceedings the assessee has not come up with any details to prove the case of the assessee. He accordingly held that since the basic details like nature of services and addresses of those persons to whom commission so paid was wholly and exclusively for the purpose of assessee’s business, and the veracity of the expenses remained unproved, he confirmed the disallowance made by the AO of Rs.50,33,810/- . Still aggrieved, the assessee is now before the Tribunal. 6. Before us, the ld.DR supported the orders of the Revenue authorities. He further submitted that though the assessee had given a number of opportunities to prove the genuineness of the transaction for which the impugned commission payment was made to the parties, but failed to do so. Therefore, the concurrent finding of both the Revenue authorities requires to be upheld, and the appeal of the assessee should be dismissed. 7. We have heard ld.DR and perused the orders of the Revenue authorities and the material available on record. The issue before us is genuineness of the commission payment made by the assessee to the parties to whom commission above Rs.2,50,000/- stated to have been paid by the assessee. The claim of the assessee was denied by both the authorities below on the basis that ample opportunities were afforded to the assessee to furnish details of services rendered by the recipients along with supporting bills/vouchers. The onus was on the assessee to establish that the impugned commission expenses was genuine and incurred wholly and exclusively for its business purpose, but failed to substantiate the same. The relevant findings of the ld.CIT(A) on the issue are extracted as under: ITA No.225/Ahd/2020 5 “4.2 In the Statement of Facts, appellant has contended that they had provided the PAN as well as amount of payments made above Rs.2,50,000/-. Hence, it was for the AO to carry out inquiries u/s.133(6) and examine those parties to whom commissions were paid. On careful consideration, it is seen that on facts appellant has not furnished the addresses of the persons as well as the nature of specific services provided by persons to whom commission above Rs.2,50,000/- is statedly paid despite being given ample opportunities by the AO which is evident from the details of notices narrated in the impugned Assessment Order. The first notice u/s.142(1) of the Act was issued on 30.01.2018. » 4.3 In the course of appellate proceedings also appellant has not furnished any details of the specific services provided by such persons as well as the addresses of these persons. Onus is on the appellant to prove that the expense claimed is laid out wholly and exclusively for its business. Appellant has not furnished any details whatsoever of services rendered by the recipients but has simply stated that AO is free to carry out enquiries with those persons at the fog end of the scrutiny assessment process. It was incumbent upon the appellant to furnish these basic details i.e. nature of services and addresses of persons. Hence, it is not proved that the commission paid is laid out wholly and exclusively for the purposes of appellant's business as well as the veracity of the expenses also remain unproved. It is settled law that onus is on the appellant to prove that expenses claimed is laid out wholly and exclusively for the purpose of its business. Since appellant has not been able to prove the same, AO has correctly disallowed the commission paid individually above Rs.2,50,000/- as claimed. The disallowance of Rs.50,33,810/- is confirmed and Ground No.1 and 2 of the appeal are dismissed.” We find, throughout the assessment proceedings, the assessee was provided opportunities to present and justify the commission expenses in question. Even during the proceedings before us, the assessee failed to counter or dispute the conclusions reached by the ld.CIT(A). Besides, the materials already present in the assessment record, no cogent evidence has been found on record to affirm the legitimacy of the impugned commission expenditure incurred by the assessee. ITA No.225/Ahd/2020 6 Consequently, we find ourselves unable to intervene in the decisions of the Revenue authorities due to the absence of the basic details such as nature of services and address of those persons, who were paid commissions above Rs.2,50,000/- which are required to substantiate the assessee's case. Thus, the grounds of appeal raised by the assessee are dismissed. 8. In the result, the appeal of the assessee is dismissed. Order pronounced in the Court on 22 nd December, 2023 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 22/12/2023