M/S SHREE GOVINDBUILDNEED PVT. LTD., JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, JAIPUR

ITA 347/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1789 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 13-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Assessee Lawyers: P C SHARMA
• Keywords: Business expenditure; Rule of consistency; Wrong claim; Corroborative evidences
• Section: 131; 10

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S A, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 347/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2013-14 M/S SHREE GOVIND BUILDNEED PVT. LTD., C-30, DOCTOR BUNGLOW, JHOTWARA ROAD, BANI PARK, SHASTRI NAGAR, JAIPUR-302016. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, JAIPUR. TAN/PAN NO.: AAJCS 9533 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. SHARMA (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25/09/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 19/11/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 12/02/2018 OF LD. CIT (A)-2, UDAIPUR FOR THE A.Y. 20 13-14. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A)-2, UDAIPUR HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF ENTIRE COMMISSION AMOUNT OF RS. 97,58,305/- PAID DURING THE YEAR TO VARIOUS PARTIES, RELYING ON THE FINDINGS OF THE A.O. BASED ON ASSUMPTIONS, PRESUMPTIONS, SURMISES AND IGNORING TH E RULES OF CONSISTENCY UNDER THE FACTS AND CIRCUMSTANCES OF TH E CASE, THE ADDITION CONFIRMED, MAY PLEASE BE DELETED. ITA 347/JP/2018_ M/S SHREE GOVIND BUILDNEED P LTD. VS ACIT 2 2. THE LD. A.O. AS WELL AS/ THE LD. CIT(A) HAS GRO SSLY ERRED IN REJECTING THE LEGITIMATE BUSINESS EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES HAVING CONSISTENT ALLOWABILIT Y IN PREVIOUS THREE YEARS UNDER SIMILAR CIRCUMSTANCES WHERE THE DISALLO WANCES WAS RESTRICTED IN APPEALS TO 5%, 3.76% AND 5% OF THE TO TAL COMMISSION EXPENDITURE. THE DISALLOWANCE OF ENTIRE COMMISSION EXPENDITURE OF RS. 97,58,305/- UNDER THE FACTS AND CIRCUMSTANCES O F THE CASE IS ILLEGAL, UNJUSTIFIED AND LIABLE TO BE QUASHED FOR W HICH RELIEF MAY PLEASE BE GRANTED. 3. THE ASSESSEE MAY PLEASE BE PERMITTED TO RAISE MO RE/ADDITIONAL GROUNDS OF APPEAL BEFORE OR AT THE TIME IF HEARING. 2. THE ASSESSEE IS A COMPANY AND ENGAGED IN THE BUSI NESS OF TRADING OF VARIOUS TYPES OF PIPES, SANITARY WARES, BATH FITT INGS AND ACCESSORIES ETC. USED IN CONSTRUCTION OF BUILDINGS. THE ASSESSEE IS A LSO ENGAGED IN TRADING OF IRRIGATION PIPES AND FITTINGS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAS PAID COMMISSION OF RS. 97,58,305/- ON THE SALE OF RS. 15 ,66,26,437/- @ 6.23% OF THE SALES WHICH IS VERY HIGH IN COMPARISON TO THE PREVAILING RATE IN THE TRADE. THE ASSESSING OFFICER PROPOSED TO VERIFY THE CLAIM OF THE ASSESSEE AND ASKED THE ASSESSEE TO PRODUCE THE PERSONS FOR E XAMINATION. SINCE THE ASSESSEE DID NOT PRODUCE THE PERSONS TO WHOM THE COM MISSION WAS PAID, THE ASSESSING OFFICER ISSUED SUMMONS U/S 131 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) TO TEN PERSONS. SINCE NONE OF THE PERSONS APPEARED BEFORE THE ASSESSING OFFICER AND ONLY THRE E PERSONS HAVE RESPONDED TO THE NOTICE ISSUED BY THE ASSESSING OFF ICER AND ACCEPTED THE ITA 347/JP/2018_ M/S SHREE GOVIND BUILDNEED P LTD. VS ACIT 3 RECEIPT OF COMMISSION FROM THE ASSESSEE. HOWEVER, TH E ASSESSING OFFICER EXAMINATION OF THE BANK DETAILS FOUND THAT THE COMM ISSION PAID BY THE ASSESSEE AT THE END OF THE FINANCIAL YEAR WAS IMMEDI ATELY WITHDRAWN OR TRANSFERRED FROM THE SAID ACCOUNT TO SOME OTHER ACC OUNT AND HENCE THE ASSESSING OFFICER SUSPECTED THAT THE AMOUNT CLAIMED TO HAVE BEEN PAID AS COMMISSION WAS ACTUALLY SIPHONED ON ACCOUNT OF EXPEN DITURE. THE ASSESSING OFFICER FURTHER NOTED THAT THE NON-COMMIS SION SALES WAS RS. 7,88,90,251/- AND THEREFORE, THE ASSESSEE HAS OFFER ED THE INCOME IN THE RETURNED INCOME LESS THAN THE COMMISSION AMOUNT IF CALCULATED ON THAT SALES MADE WITHOUT COMMISSION. THE ASSESSING OFFICER HAS ACCORDINGLY DISALLOWED THE PAYMENT OF COMMISSION. 3. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED. 4. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE COMMISSI ON PAYMENT ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PRODUCE THE RECIPIENT FOR EXAMINATION AND FURTHER THE SUMMONS ISSUED BY THE A SSESSING OFFICER U/S 131 OF THE ACT TO TEN PERSONS, NONE HAS APPEARED BE FORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSEE FILED ALL THE RELEVAN T EVIDENCES WHICH INCLUDES CONFIRMATION WITH RETURN OF INCOME AS WELL A S OTHER DETAILS OF THE ITA 347/JP/2018_ M/S SHREE GOVIND BUILDNEED P LTD. VS ACIT 4 RECIPIENTS. THE COMMISSION HAS BEEN PAID AFTER DEDUC TION OF TDS AND ALL DETAILS WERE FILED BEFORE THE ASSESSING OFFICER. THE LD AR HAS FURTHER SUBMITTED THAT THE COMMISSION WAS PAID TO THE FORTY PERSONS OUT OF WHICH THE ASSESSING OFFICER HAS TEST CHECKED THE PAYMENT TO TEN PERSONS BY ISSUING SUMMONS U/S 131 OF THE ACT AND CONSEQUENTLY DISALLOWED THE ENTIRE PAYMENT OF COMMISSION. HE HAS FURTHER CONTEN DED THAT THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON ACC OUNT OF COMMISSION PAYMENT IN THE EARLIER YEARS WHICH RESTRICTED BY THE LD. CIT(A) ONLY TO 5% OR SOME AD HOC AMOUNT OF RS. 3.00 LACS IN THE EARLI ER YEARS. HE HAS REFERRED TO THE DETAILS OF DISALLOWANCE MADE BY THE ASSESSING OFFICER IN THE EARLIER YEARS AND SUBMITTED THAT THE DISALLOWANCE SU STAINED BY THE LD. CIT(A) NEVER EXCEEDS 5% OF THE TOTAL PAYMENT. IN SUP PORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF HARISH CLAYS VS ACIT & AN R DECISION DATED 23 RD NOVEMBER, 2016 2017 TAXPUB (DT) 0085 (RAJ. HC). THUS, THE LD AR HAS CONTENDED THAT THE ASSESSING OFFICER IS BOUND TO FO LLOW THE RULE OF CONSISTENCY AND THE PAYMENT OF COMMISSION WAS ACCEPT ED BY THE ASSESSING OFFICER IN THE EARLIER YEAR EXCEPT THE DI SALLOWANCE OF 5 TO 10% ON AD HOC BASIS THEN THE ENTIRE DISALLOWANCE FOR THE YEAR UNDER CONSIDERATION IS NOT JUSTIFIED. HE HAS RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG VS. CIT (1991) 100 ITA 347/JP/2018_ M/S SHREE GOVIND BUILDNEED P LTD. VS ACIT 5 CTR 0267 AS WELL AS DECISION OF HONBLE DELHI HIGH CO URT IN THE CASE OF CIT VS. AMIT JAIN (2015) 374 ITR 0550 (DEL) AND CONT ENDED THAT IN ABSENCE OF DISTINGUISHING FACT OR MATERIAL FOR THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER CANNOT TAKE A DIVERSE STAND F ROM THE PRECEDING ASSESSMENT YEARS. THUS, THE LD AR HAS SUBMITTED THAT WHEN THE EXPENDITURE WAS INCURRED WHOLLY OR EXCLUSIVELY FOR TH E BUSINESS PURPOSES AND HAVING CONSISTENT ALLOWABILITY IN PREVIOUS YEARS , THE DISALLOWANCE MADE FOR THE YEAR UNDER CONSIDERATION FOR THE ENTIR E EXPENDITURE IS ILLEGAL, UNJUSTIFIED AND LIABLE TO BE QUASHED. THE BOOKS OF A CCOUNT OF THE ASSESSEE WERE SUBJECTED TO AUDIT AND NO DEFECT WAS FOUND BY TH E ASSESSING OFFICER. FURTHER THE DECLINE IN GP AND NP RATE HAS BEEN DULY EXPLAINED BY THE ASSESSEE THEN THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF THE ENTIRE COMMISSION PAYMENT IS NOT JUSTIFIED. 5. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO PRODUCE EIGHT PAR TIES FOR EXAMINATION AND VERIFICATION OF THE CLAIM OF THE ASSESSEE, HOWEV ER, THE ASSESSEE FAILED TO PRODUCE ANY OF THE PARTIES BEFORE THE ASSESSING OFFICER FOR EXAMINATION. THE ASSESSING OFFICER THEN ISSUED SUMMONS U/S 131 OF THE ACT TO TEN PERSONS BUT NONE HAS APPEARED BEFORE THE ASSESSING OFFICER. EVEN THE RECORD FURNISHED BY THESE PARTIES WERE EXAMINED BY T HE ASSESSING OFFICER ITA 347/JP/2018_ M/S SHREE GOVIND BUILDNEED P LTD. VS ACIT 6 AND IT WAS FOUND THAT THESE PERSONS HAVE NOT PAID AN Y TAX ON THE INCOME AND SOME OF THE PERSONS HAVE EVEN NOT FILED RETURN OF INCOME. FURTHER THE ASSESSING OFFICER NOTED THAT THE PAYMENT OF COMMISS ION @ 6.3% IS VERY HIGH AND THE ASSESSEE HAS DECLARED THE INCOME WHICH IS LESS THAN 6.3% ON THE SALES WHICH IS WITHOUT COMMISSION. THUS, THE ASSE SSING OFFICER HAS CLEARLY GIVEN A FINDING THAT IF THE ASSESSEE WOULD HAVE PAID THE COMMISSION ON THE ENTIRE SALE THEN IT WOULD HAVE RESULT LOSS IN STEAD OF ANY PROFIT. THE DOCTRINE OF RESJUDICATA IS NOT APPLICABLE IN THE MA TTER OF TAXATION RATHER THE ASSESSING OFFICER HAS BROUGHT OUT A CASE OF SIPHONI NG OF MONEY ON ACCOUNT OF BOGUS CLAIM. THE ASSESSEE HAS FAILED TO E STABLISH THE SERVICES RENDERED BY THESE PERSONS TO WHOM THE COMMISSION WAS PAID BY THE ASSESSEE. HE HAS RELIED UPON THE ORDERS OF THE AUTH ORITIES BELOW. 6. IN REJOINDER, THE LD AR OF THE ASSESSEE HAS SUBM ITTED THAT ALL THE DETAILS WERE PRODUCED BEFORE THE ASSESSING OFFICER A S WELL AS LD. CIT(A) AND IN THE EARLIER YEARS ONLY PARTIAL DISALLOWANCE T O THE EXTENT OF 5% WAS SUSTAINED BY THE LD. CIT(A) AND THEREFORE, THE ASSES SING OFFICER IS BOUND TO MAINTAIN THE RULE OF CONSISTENCY. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THOUGH IN THE PRECEDING YEARS, T HE ASSESSING OFFICER DISALLOWED THE COMMISSION @ 10% WHICH WAS RESTRICTED B Y THE LD. CIT(A) ITA 347/JP/2018_ M/S SHREE GOVIND BUILDNEED P LTD. VS ACIT 7 TO 5% AND IN ONE OF THE YEARS IT WAS RESTRICTED TO R S. 3.00 LACS. HOWEVER, THE EARLIER YEARS DISALLOWANCE BEING AN AD HOC DISAL LOWANCE WAS BASED ON THE FACT THAT THE ASSESSEE HAS NOT PRODUCED SUPPORT ING EVIDENCE OF THE EXPENDITURE. DURING THE YEAR UNDER CONSIDERATION, T HE ASSESSING OFFICER UNDERTAKEN THE EXERCISE OF ENQUIRY AND VERIFICATION OF THE CLAIM OF THE ASSESSEE. IT IS SETTLED PROPOSITION OF LAW THAT THE ONUS IS ON THE ASSESSEE TO ESTABLISH THAT THE EXPENDITURE IS INCURRED WHOLLY AND EXCLUSIVE FOR THE PURPOSE OF BUSINESS. IN ORDER TO ESTABLISH THE CLAI M OF EXPENDITURE WHOLLY AND EXCLUSIVELY LEND OUT FOR THE PURPOSE OF BUSINES S, THE ASSESSEE IS REQUIRED TO PRODUCE SUPPORTING EVIDENCE TO SHOW THAT THE EXPENDITURE WAS INCURRED AGAINST THE SERVICES RENDERED BY THESE PER SONS. WE FIND THAT, THOUGH THE ASSESSEE HAS FILED CONFIRMATION FROM THE PERSONS AND THE PAYMENT WAS MADE AFTER DEDUCTION OF TDS, HOWEVER, WHE N THE ASSESSING OFFICER HAS ISSUED THE SUMMONS TO TEN PERSONS, NONE HAS APPEARED BEFORE THE ASSESSING OFFICER AND ONLY THREE PERSONS RESPON DED TO THE SUMMONS ISSUED BY THE ASSESSING OFFICER. THE LD. CIT(A) IN TH E IMPUGNED ORDER HAS CONSIDERED THIS ISSUE IN PARA 5.1 TO 5.7 AS UNDER: 5.1 FIRST AND FOREMOST, THE BACKGROUND OF THE MAKI NG DISALLOWANCE NEEDS TO BE APPRECIATED. THE AO HAS BEEN REQUESTING THE APPE LLANT SINCE NOV. 2016 TO PRODUCE 8 PARTIES TO WHOM COMMISSION PAYMEN TS IS CLAIMED BY THE APPELLANT. THE APPELLANT WAS IMPRESSED UPON THE IMPORTANCE OF INTENDED VERIFICATION OF COMMISSION EXPENSES BY THE AO IN THE MONTH OF ITA 347/JP/2018_ M/S SHREE GOVIND BUILDNEED P LTD. VS ACIT 8 DEC. 2016 & JAN. 2017. IN SPITE OF SUCH EMPHASIS BY THE AO IN THE MONTH OF DEC. 2016 & JAN. 2017, WHEN THE APPELLANT DID NO T PRODUCED SINGLE WITNESS, THE AO ISSUED SUMMONS U/S 131 TO 10 WITNES SES INCLUDING 3 FROM THE LIST OF 8 PERSONS REQUESTED TO BE PRODUCED BY T HE APPELLANT. IT IS A FACT ON RECORD, NONE OF THESE 15 PERSONS HAVE APPEARED B EFORE THE AO FOR NECESSARY VERIFICATION AND INQUIRY BY THE AO. THE R EPLIES BY 3 PARTIES WERE BY THE DAK AS NARRATED BY THE AO ON PAGE 3 & 4 OF T HE ASSESSMENT ORDER WERE RAISING EYEBROWS OF THE AO INSTEAD OF SATISFYI NG THE AO. THEREFORE, THE AO WAS UNDER COMPULSION TO FORM ADVERSE VIEW AN D MADE THE DISALLOWANCE. 5.2 THE ABOVE BACKGROUND IS TOTALLY NEW TO THE ASSE SSMENT OF THIS A.Y. WHICH WAS NOT THERE WHILE MAKING THE ASSESSMENT AS WELL A S WHILE DECIDING THE APPELLATE ORDER IF ANY FOR EARLIER A.YS. THEREFORE, THE APPELLANTS ARGUMENTS MADE IN PARA 12 OF ITS SUBMISSION REPROD UCED IF OF NO RELEVANCE AND OF ANY CONSEQUENCE. 5.3 THE APPELLANT SEEMS TO BE BANKING ON PAYMENT BY CHEQUE AND TDS MADE IN MOST OF CASES. HOWEVER, NONE OF BOTH CAN STAND A S SACROSANCT FOR GENUINENESS OF THE EXPENSES WHEN NOT A SINGLE WITNE SS FROM 15 PERSONS FROM 38 TOTAL WITNESS WERE CALLED BY THE AO FOR VER IFICATION BY REQUEST TO THE APPELLANT OR BY ISSUE OF SUMMONS U/S 131. INFEC T, THE DETAILS RECEIVED IN DAK FROM 3 WITNESSES REVEALS MANY ADVERSE THINGS AS SUMMARIZED BY THE AO IN PARA 4.6 REPRODUCED ABOVE AND PRECISELY, THESE WERE THE REASONS WHY THE AO WAS DESIRING THE VERIFICATION OF THE COMMISSION EXPENSES. 5.4 IN THE ADVERSE BACKGROUND OF NON-PRODUCTION ANY WITNESS FOR COMMISSION PAYMENT, SEVERAL ADVERSE OBSERVATIONS MADE BY THE A O IN PARA 4.6 DOES CARRY WEIGHT TO ADJUDICATE THE MATTER BECAUSE THE I NCREASING TURNOVER BY ITA 347/JP/2018_ M/S SHREE GOVIND BUILDNEED P LTD. VS ACIT 9 ITSELF DO NOT NECESSARILY JUSTIFY THE INCREASE IN E XPENSES. THE RELEVANT ADVERSE OBSERVATIONS OF THE AO ARE REPRODUCED AS UN DER:- A. THE ASSESSEE HAS PAID COMMISSION OF RS. 97,58,30 5/- ON SALES OF RS. 15,66,26,437/- I.E. AT AVERAGE RULE OF 6.23% WHICH IS MUCH HIGHER IN THIS TRADE OR IN ANY TRADE. D. NO BILLS WERE FURNISHED BY ANY OF THE PERSON FOR COMMISSION EXPENSES. THE ASSESSEE HAS SUO-MOTO PAID COMMISSION TO THEM. E. SALE BILLS DO NOT CONTAIN NAME ANY OF THE BROKER OR PERSON ALLEGED TO BE BROKER, SO IT CANNOT BE VERIFIED THAT FOR WHICH SAL ES THEY HAVE BEEN PAID COMMISSION. F. THE COMMISSION PAID VARIED FROM 4% TO 8%. G. COMMISSION HAS ALLEGED TO HAVE BEEN PAID ON SALE S TO INDIVIDUALS ALSO. 5.5 THOUGH THERE CANNOT BE STRAIT-JACKET FORMULA FO R THE PERCENTAGE OF COMMISSION, SALES WHICH MAY OR MAY NOT CARRY COMMIS SION EXPENSES, AND REASONABLE AND JUSTIFIABLE LEVEL OF COMMISSION EXPE NSES, THE VERIFICATION EXERCISE INTENDED AND UNDERTAKEN BY THE AO WAS PREC ISELY TO COME AT RIGHT CONCLUSION ON ABOVE ASPECTS. IT IS PRECISELY THE FAILURE OF THE APPELLANT IN PRODUCING WITNESS OF COMMISSION EXPENS ES THE WAS UNDER COMPULSION TO MAKE CERTAIN ADVERSE OBSERVATIONS AS UNDER:- B. ASSESSEES NON-COMMISSION SALES WAS RS. 7,88,90, 251.45, IF WE CALCULATE ONLY COMMISSION PART ON THIS SALE THEN IT COMES TO RS. 48,91,195/- WHERE AS INCOME AS PER RETURN WAS RS. 46,08,958/- WHICH I S BELOW THIS FIGURE. IT MEANS THAT THE ASSESSEE HAS PAID COMMISSION OUT OF ITS POCKET AND NOT OUT OF PROFITS. WHICH IS NOT POSSIBLE IN ANY BUSINESS? C. DURING THE YEAR UNDER CONSIDERATION GROSS PROFIT RATE AND NET PROFIT RATE HAS BEEN DECLINED FOR WHICH ASSESSEE FAILED TO SUBM IT ANY JUSTIFICATION. G. IT WAS SEEN THAT FOR SALE OF SOME OF THE GOODS T O A PARTICULAR BUILDER COMMISSION IS SHOWN TO HAVE BEEN PAID AND FOR OTHER SALES TO SAME BUILDER NO COMMISSION HAS BEEN PAID. ITA 347/JP/2018_ M/S SHREE GOVIND BUILDNEED P LTD. VS ACIT 10 5.6 THE REPLIES RECEIVED FROM THREE PARTIES TO WHOM COMMISSION IS CLAIMED TO HAVE BEEN PAID BY THE APPELLANT, THE FOLLOWING EXCE RPTED FINDING OF THE AO AS MENTIONED IN PARA 4.5 ON PAGE 3 & 4 OF THE ASSESSMENT ORDER DOES NOT INSPIRE TO TREAT WHOLE OF COMMISSION EXPENSES A S GENUINE:- 1. SHRI ASHOK KUMAR BAID:- HE HAD SUBMITTED THAT H E RECEIVED COMMISSION OF RS. 3,31,470/- FROM M/S SHREE GOVIND BUILDNEED PVT. LTD. HE HAD NOT MENTIONED THE DETAILS OF SALES ON WHICH HE RECEIVED COMMISSION. HE HAD NOT ATTENDED DESPITE SPECIFICALLY WRITTEN IN THE SU MMON. ON EXAMINATION OF BANK ACCOUNT IT WAS FOUND THAT ON 02.01.2013 RS. 2, 98,323/- WAS DEPOSITED IN HIS BANK ACCOUNT AND ON 04.01.2013 RS. 3,00,000/ - WERE SIPHONED OUT. SINCE SHRI ASHOK KUMAR BAID HAD NOT ATTENDED PERSON ALLY THEREFORE, NATURE OF WORK DONE BY HIM CANNOT BE VERIFIED. WITHDRAWAL OF RS. 3,00,000/- ON 04.01.2013 CANNOT BE VERIFIED. 2. SRI SANJAY KUMAR HARLALKA:- HE DID NOT ATTEND TH E OFFICE ON REQUISITE DATE. HE SUBMITTED REPLY ON 26.02.2016 STATING THAT HE HA D RECEIVED COMMISSION OF RS. 4,37,974/- FROM SHREE GOVIND BUILDNEED PVT. LTD. HE FILED COPY OF ITR- V FOR THE A.Y. 2013-14 AND COPY OF BANK ACCOUNT WAS FURNISHED. GROSS TOTAL INCOME OF ASSESSEE WAS RS. 6,58,727/- THIS INCLUDES COMMISSION OR NOT VERIFIABLE. ON VERIFICATION OF BANK ACCOUNT IT WAS FOUND THAT RS Y 3,94,177/- WAS DEPOSITED ON 07.03.2013 AND ON VERY NEXT DAY RS . 4,00,000/- WAS TRANSFERRED TO SHRI NAND KISHORE THROUGH RTGS VIDE LETTER NO. ACIT/CIR.- 4/92/2015-16/1918 DATED 02.03.2016 SHRI SANJAY KUMA R HARLALKA WAS AGAIN REQUESTED TO ATTEND THIS OFFICE ON 04.03.2016 . THIS LETTER WAS DULY SERVED UPON HIM ON 02.03.2016 BUT HE DID NOT ATTEND . SIGNATURE ON SUBMISSION FILED ON 26.02.2016 AND CONFIRMATION FIL ED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS WERE ENTIRELY DIFFERE NT. 3. SHRI MANOJ VYAS:- HE DID NOT ATTEND BUT FURNISHE D REPLY ON 14.03.2016 STATING THAT HE RECEIVED A SUM OF RS. 3,49,455/- ON ACCOUNT OF COMMISSION. ON EXAMINATION OF BANK ACCOUNT IT WAS FOUND THAT HE RECEIVED RS. 3,14,509/- ON28.03.2013 AND ON 29.03.2013 RS. 3,14, 539/- WAS TRANSFERRED TO MAHENDRA KUMAR BY RTGS. SHRI MANOJ VYAS IS NOT F ILING RETURN OF INCOME. SIGNATURE O SUBMISSION FILED ON 14.03.2016 AND CONF IRMATION FILED BY THE ASSESSEE DURING ASSESSMENT PROCEEDING WERE ENTIRELY DIFFERENT. 5.7 THERE CANNOT BE DISPUTE TO THE RATIO LAID DOWN BY THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF M/S LAXMI ENGINEERING IND USTRIES VS. ITO (2008) 215 CTR 0319 THAT FOR INCURRING OF ANY EXPENDITURE DURING THE COURSE OF ITA 347/JP/2018_ M/S SHREE GOVIND BUILDNEED P LTD. VS ACIT 11 BUSINESS THERE IS NO REQUIREMENT OF ANY WRITTEN AGR EEMENT FOR THE PAYMENT OF COMMISSION. AT THE SAME TIME, THE VERY C ONDUCT OF BUSINESS, RELEVANT VOUCHERS, ACCOUNTING MADE AND GENERAL INST RUCTIONS FROM TIME TO TIME ON SUBJECT BY THE BUSINESSMAN ARE ALWAYS ABLE TO JUSTIFY THE CLAIM OF BUSINESS EXPENDITURE WHEN CALLED UPON BY THE AO. IN THIS CASE THERE IS VISIBLY FAILURE TO DO SO BY THE APPELLANT. I AM SUR PRISED TO NOTE THAT NONE OF ABOVE IS PRESENT TO DEFEND THE APPELLANT AND JUS TIFY THE EVER INCREASING COMMISSION EXPENSES. THIS IS REQUIRED OF APPELLANT WHEN THIS ISSUE IS GETTING ATTENTION OF THE DEPARTMENT SINCE LAST THRE E / FOUR YEARS. T HEREFORE, THE DECISION OF THE AO TO NOT CONSIDER SUCH UNVERIF IABLE EXPENSES IS CONFIRMED. IN MY CONSIDERED VIEW, THE COMMISSION EX PENSES CLAIMED OF RS. 97,58,305/- IS NON-GENUINE AND HENCE THE SAME I S CONFIRMED. THUS, WE NOTE THAT AS FAR AS ENQUIRY CONDUCTED BY THE ASSESSING OFFICER IN RESPECT OF THE PERSONS WHO WHOM SUMMONS WERE ISSUED IT WAS BROUGHT ON RECORD THAT THE ASSESSEE HAS CLAIMED THE EXPENDITUR E WITHOUT ANY AGREEMENT WITH ANY OF THE PARTIES AND FURTHER SOME O F THE PARTIES AS NOTED BY THE ASSESSING OFFICER HAS NOT FILED RETURN OF INCOME. THE FACT THAT THE AMOUNT WAS TRANSFERRED AT THE FAG END OF THE FIN ANCIAL YEAR IN THE ACCOUNTS OF THESE PARTIES AND IMMEDIATELY THEREAFTE R WAS WITHDRAWN AGAIN SHIFTING THE BURDEN ON THE ASSESSEE TO PROVE THE CL AIM OF EXPENDITURE. THEREFORE, TO THE EXTENT OF THE EXPENDITURE ON WHICH THE ASSESSING OFFICER HAS CONDUCTED ENQUIRY, THE ASSESSEE FAILED TO DISPR OVE THE ENQUIRY CONDUCTED BY THE ASSESSING OFFICER. SINCE THE ASSES SING OFFICER HAS NOT CONDUCTED ANY ENQUIRY IN RESPECT OF THE REMAINING P ARTIES, THEREFORE, WE ITA 347/JP/2018_ M/S SHREE GOVIND BUILDNEED P LTD. VS ACIT 12 RESTRICT THE DISALLOWANCE TO THE EXTENT OF THE AMOU NT PAID TO THE TEN PERSONS IN RESPECT TO WHOM THE ASSESSING OFFICER HAS CONDUCTED THE ENQUIRY. ACCORDINGLY THE DISALLOWANCE MADE BY THE AS SESSING OFFICER IS RESTRICTED ONLY TO THE TEN PERSONS AND THE REMAININ G DISALLOWANCES MADE BY THE ASSESSING OFFICER WITHOUT CONDUCTING A PROPER ENQUIRY IS DELETED. 7.1 IT IS CLARIFIED THAT ONCE THE ASSESSEE HAS FILE D THE RELEVANT DOCUMENTS IN SUPPORT OF THE CLAIM AND THE ASSESSING OFFICER HAS CONDUCTED ENQUIRY IN RESPECT OF THE PART OF THE CLA IM TO DISPROVE THE DOCUMENTS FILED BY THE ASSESSEE THEN SO FAR AS THE CLAIM WHICH HAS BEEN SUPPORTED BY THE DOCUMENTARY EVIDENCE AND HAS NOT B EEN DISPROVED BY THE ASSESSING OFFICER THROUGH A PROPER ENQUIRY, THE SAME CANNOT BE DISALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/11/2018 SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19 TH NOVEMBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S SHREE GOVIND BUILDNEED PVT. LTD., JAIPUR. ITA 347/JP/2018_ M/S SHREE GOVIND BUILDNEED P LTD. VS ACIT 13 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CIRCLE-4, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 347/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR