Mr. Gurpreet Singh, New Delhi V. ACIT, New Delhi

ITA 4091/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4951 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 22-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P SINGH SENIOR
• Assessee Lawyers: RAJAN MALIK
• Keywords: Business expenditure; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4091/DEL./2015 (ASSESSMENT YEAR : 2011-12) SHRI GURPREET SINGH, VS. ACIT, CIRCLE 32 (1), 1/14, DOUBLE STOREY, JANGPURA, NEW DELHI. NEAR DAV SCHOOL, NEW DELHI 110 014. (PAN : ABHPS5345J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJAN MALIK, ADVOCATE REVENUE BY : SHRI B.P. SINGH, SENIOR DR DATE OF HEARING : 16.10.2018 DATE OF ORDER : 23.10.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, SHRI GURPREET SINGH (HEREINAFTER REF ERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 31.03.2015 PASSED BY LD. CIT (APPEALS)- 18, NEW DELHI QUA THE ASSESSMENT YEAR 2011-12 ON THE GROUNDS INTER AL IA THAT :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD. CIT (APPEALS) IS BAD & ERRONEOUS IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.38,36,167/- MADE BY THE LD. AO O N ACCOUNT OF COMMISSION / BROKERAGE PAID BY THE APPEL LANT. ITA NO.4091/DEL./2015 2 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : THE ASSESSEE IS INTO MUTU AL FUND DISTRIBUTION; DISTRIBUTING INSURANCE AND POSTAL/GOVERNMENT PRODUC T AND SCHEME; AND INVESTING IN MUTUAL FUNDS, FILED RETURN OF INCOME A T THE INCOME OF RS.38,91,330/-. FROM P&L ACCOUNT, AO NOTICED THAT AN AMOUNT OF RS.83,38,000/- HAVE BEEN DEBITED AS AN EXPENDITURE ON ACCOUNT OF FURTHER PAYMENT OF COMMISSION PAID TO THE SUB-BROKE R ON SALE OF FINANCIAL PRODUCTS. IN ORDER TO VERIFY THE PAYMENT OF COMMISSION PAID BY THE ASSESSEE, A LIST OF RECIPIENT OF COMMISSION HAS BEEN PROVIDED BY THE ASSESSEE TO WHOM NOTICES U/S 133 (6) OF THE INC OME-TAX ACT, 1961 (FOR SHORT THE ACT) WERE ISSUED WHO HAVE STATED T O HAVE RECEIVED THE COMMISSION FROM ASSESSEE MORE THAN RS.1,00,000/-. DURING ASSESSMENT PROCEEDINGS, NOTICE U/S 133 (6) OF THE ACT HAS BEEN ISSUED TO 24 PERSONS WHO HAVE FURNISHED CONFIRMATIONS. AO FINDING DISCR EPANCIES IN THE CONFIRMATIONS RECEIVED FROM THE RECIPIENTS OF THE C OMMISSION PROCEEDED TO CONCLUDE THAT THE CONFIRMATIONS/REPLIES HAVE NOT BEEN SIGNED BY THE ORIGINAL RECIPIENTS AND THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE COMMISSION PAID AND THEREBY DISALLOWED THE C LAIM OF COMMISSION TO THE EXTENT OF RS.42,76,991/- TO THE TOTAL INCOME OF THE ASSESSEE. 3. ASSESSEE CARRIED THE MATTER BY WAY OF APPEAL BEF ORE THE LD. CIT (A) WHO HAS CONFIRMED THE ADDITION BY DISMISSING TH E APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIB UNAL BY WAY OF FILING THE PRESENT APPEAL. ITA NO.4091/DEL./2015 3 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UP ON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, DURING THE APPELLATE PROCEEDINGS, REMAND REPORT WAS CALLED AND IT IS ALSO NOT IN DISPUTE THAT AO MA DE ADDITION OF RS.42,76,991/- ON ACCOUNT OF UNVERIFIED COMMISSION DUE TO NUMEROUS DISCREPANCIES IN THE CONFIRMATION/REPLIES RECEIVED. IT IS ALSO NOT IN DISPUTE THAT DURING REMAND PROCEEDINGS, OUT OF 17 C ONTENTIOUS RECIPIENTS OF THE COMMISSION ONLY FOUR, NAMELY, RAKESH GUPTA, MUKESH KUMAR GUPTA HUF, NAVEEN KUMAR SHARMA AND DEEPALI GUPTA WE RE PRODUCED AND THEY HAVE BROUGHT ON RECORD BANK PASS BOOK, ITR , COMPUTATION ETC. IT IS ALSO NOT IN DISPUTE THAT THE LD. CIT (A) HAS DISMISSED THE APPEAL ONLY ON THE GROUND THAT NO AGREEMENT ENTERED INTO B ETWEEN THE ASSESSEE AND SUB-BROKERS HAS BEEN PRODUCED ON RECORD NOR ANY BILLS ISSUED BY THE RECIPIENTS OF THE COMMISSION HAS BEEN PRODUCED. 6. HOWEVER, WE ARE OF THE CONSIDERED VIEW THAT WHEN THE AO HAS MADE A DETAILED ENQUIRY TO PROVE THE GENUINENESS AN D EXISTENCE OF THE RECIPIENTS OF THE COMMISSION BY ISSUING A NOTICE U/ S 133 (6) OF THE ACT AT THAT POINT OF TIME, ASSESSEE HAS FAILED TO DISCHARG E THE ONUS. WHEN THE HUGE COMMISSION IS BEING PAID TO THE VARIOUS PERSON S, ALL OF THEM WERE REQUIRED TO BE PRODUCED BEFORE THE AO. HOWEVER, CO MMISSION PAID TO FOUR PERSONS, NAMELY, RAKESH GUPTA, MUKESH KUMAR GU PTA HUF, ITA NO.4091/DEL./2015 4 NAVEEN KUMAR SHARMA AND DEEPALI GUPTA IS ALLOWABLE BUSINESS EXPENDITURE AND TO THAT EXTENT ORDER OF AO/CIT(A) I S REVERSED. 7. HOWEVER, WE ARE OF THE CONSIDERED VIEW THAT SINC E THE ISSUE IN QUESTION HAS NOT BEEN APPRECIATED IN THE RIGHT PERS PECTIVE DURING THE APPELLATE PROCEEDINGS, THE SAME IS REQUIRED TO BE R EMANDED BACK TO THE AO TO DECIDE AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ASSESSEE SHALL GET THE VERIFICATION, GEN UINENESS AND EXISTENCE OF THE RECIPIENTS OF THE COMMISSION BEFORE AO DONE AND IF SATISFIED, NO DISALLOWANCE SHALL BE MADE. 8. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 23 RD DAY OF OCTOBER, 2018. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 23 RD DAY OF OCTOBER , 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-18, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.