Sita Ram Keshrai, Varanasi V. DCIT, Circle - 01, Varanasi

ITA 42/VNS/2020

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8910 (ITAT-VARANASI)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-10-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 11-02-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ARVIND SHUKLA
• Keywords: Business income; Business expenditure; Rectification of order; Search and seizure; Fair market value; Assessment record; Capital expenditure
• Section: 37; 154; 143(3); 142(1); 37(1); 143(2)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH, VARANASI (Through Virtual Hearing) BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No. 42/VNS/2020 Assessment Year: 2014-15 Mr. Sita Ram Keshrai, B-37/171-AS, Birdopur, Mahmoorganj, Varanasi-221010, U.P. v. Deputy Commissioner of Income Tax, Circle-1, Varanasi, U.P. PAN:ADAPK7310G (Appellant) (Respondent) Assessee by: Shri Arvind Shukla, Adv. & Sh. Asim Zafar, Adv. Revenue by: Shri A.K. Singh, Sr. DR Date of hearing: 13.10.2022 Date of pronouncement: 04 .11.2022 O R D E R PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by assessee, being ITA No.42/VNS/2020, is directed against the appellate order dated 29.11.2019 passed by learned Commissioner of Income Tax(Appeals), Varanasi(hereinafter called "the CIT(A)”) in Appeal No. 10329/CIT(A)/VNS/2016-17/370, for assessment year (ay): 2014-15, the appellate proceedings had arisen before Learned CIT(A)from assessment order dated 30.11.2016 passed by learned Assessing Officer (hereinafter called “the AO”) under Section 143(3)of the Income-tax Act, 1961 (hereinafter called “the Act”). We have heard both the parties in Virtual Court through Virtual hearing mode. 2. The grounds of appeal raised by assessee in memo of appeal filed with Income Tax Appellate Tribunal, Varanasi (hereinafter called “the tribunal”), reads as under: “1. Because the learned CIT(Appeals) has erred in law as well as on facts in not allowing the total commission of Rs. 4,00,289/- paid @0.5% of total sales to Mrs. Priyanka Keshri and restricting it to Rs. 15,000/- per month by treating it as not relating to business and excessive. ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 2 2. Because the learned CIT(A) has erred in law as well as on facts in treating commission paid @0.5 as excessive and on the same facts has allowed commission @1% for the subsequent period paid to another executive employed in her place. 3. Because the learned CIT(A)has erred in as well as on facts in sustaining the Ad-hoc disallowance of Rs. 2,94,000/-“ 3. The brief facts of the case are that the assesse filed his return of income with Revenue on 27.11.2014 ,declaring total income of Rs. 58,79,070/- . The assessee is engaged in the business of wholesale trading of LPG appliances, Kitchen ware, Household Appliances and allied items . The return of income was selected by Revenue for framing scrutiny assessment through CASS ,and statutory notices u/s 143(2) and 142(1) were issued by AO to the assessee, which were claimed by AO to have been duly served on the assessee. During the course of assessment proceedings, the AO observed that the assessee has for the first time claimed to have paid Commission to Marketing Executives to the tune of Rs. 14.36 Lacs during the financial year 2013-14. However, prior to the impugned assessment year, the AO observed that no such commission was paid to anyone and it is for the first time the same was claimed by the assessee as business expense. On further scrutiny, the AO observed that the assessee has paid commission to his daughter-in-law to the tune of @0.5% of the turnover , for the first half of the financial year , and for the second half of the year, the assessee has paid commission to his son Mr. Vivek Kumar @ 1.0% on the turnover. The AO further observed that the daughter-in-law was removed by assessee on the plea that she kept engaged in domestic affairs.The AO observed that these expenses are colorable device to minimize the tax liability of the assessee. The AO further observed that none of the employee of the assessee was getting more than Rs. 10,000/- per month . The AO after considering totality of the circumstances, allowed expense to the tune of Rs. 15,000/- per month for services rendered by daughter-in-law and son for ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 3 business of the assessee. The AO thus, allowed expenses to the tune of Rs. 1,80,000/- ( Rs. 15,000/- per month * 12 months) for the year under consideration and disallowed remaining expenses claimed by assessee to the tune of Rs. 12,56,000/-(Rs. 14,36,000/- - Rs. 1,80,000/- ) by invoking provisions of Section 40A(2)(a) of the 1961 Act and the said sum of Rs. 12,56,000/- stood added to the income of the assessee. 3b. Further, the AO observed that the assessee has also paid commission to various middlemen at different gas agencies of different places to the tune of Rs. 14.06 Lacs during the financial year 2013-14, as against commission of Rs. 6.02lacs paid during the immediately preceding year. It was observed by the AO that assessee has claimed that there is an increase in turnover of the assessee which stood at Rs. 1839.19 lacs during the impugned assessment year ,as compared to turnover of Rs. 1008.17Lacs in the immediately preceding financial year 2012-13. The AO observed that the assessee has claimed that this huge increase in turnover and net profit was possible only due to incurring of commission expenses. The AO observed that the assessee has claimed that increase in commission is commensurate with increase in turnover and net profits. The AO, however ,also observed that the assessee has not filed any confirmation from any middlemen to whom commission was claimed to have been paid, and the AO disallowed commission to the tune of 0.16% of the turnover viz. Rs. 1839.19lacs , and hence consequently an amount of Rs. 2.94 lacs stood disallowed which was added by AO to the income of the assessee. The assessee had filed return of income declaring income of Rs. 58,79,070/- , while the AO assessed the total income of the assessee at Rs. 61,73,070/- for the impugned assessment vide assessment order dated 30 th November, 2016 passed under Section 143(3) of the Act. ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 4 3c. The AO while perusing the assessment records realized that the additions proposed by the AO to the tune of Rs. 12,56,000/- , on account of disallowance of commission paid to the Marketing Executives were not added to the income of the assessee while passing assessment order dated 30.11.2016 and is thus the mistake apparent from records, and to rectify said mistake after giving an opportunity of heard to the assessee, the AO passed rectification order under Section 143(3) read with Section 154 of the Act, dated 5 th February, 2018 , and the assessed income of the assessee was computed by AO at Rs. 74,29,070/- 4. Aggrieved by assessment order dated 30.11.2016 passed by the AO u/s 143(3) of the 1961 Act, the assessee filed first appeal with learned CIT(A) . The assessee submitted before ld. CIT(A) that he is a old person aged about 67 years, and to look after his business he appointed his daughter-in-law, Smt. Priyanka Keshrai on 01.04.2013 as Marketing Executive, and total sales commission of Rs. 4,00,289/- was paid to her for services rendered as Marketing Executive cum Manager.It was submitted that Smt. Priyanka Keshari resigned the job on the plea of non adherence to proper business time, and therefore, the assessee appointed his son Shri Vivek Keshari for the job to whom commission of Rs. 10,35,531/- was paid. The assessee explained that Shri Vivek Keshari was earlier carrying on his own business as proprietary concern and he closed down his business on 30.09.2013 and joined the business of the appellant as Marketing cum Sales Executive with effect from 01.10.2013. The assessee explained before ld. CIT(A) that due to efforts of Shri Vivek Keshari, the business of the assessee grew very much and turnover as well net profit increased by 82.43% and 58.13% respectively as compared to the immediately preceding assessment year. It was further submitted by the assessee before ld. CIT(A) that Smt.Priyanka Keshari is not ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 5 relative within the meaning of section 40A(2)(a) , while Sri Vivek Keshari is relative within the meaning of Section 40A(2)(b) of the 1961 Act, but keeping in view that he has vast experience of 19 years in the field of similar type of business and it was due to his efforts that the business of the assessee grew substantially. It was further explained by assessee before ld. CIT(A) that ShriVivek Keshari has taxable income in the tax bracket of 30% even if commission income is not taken into account and that Shri Vivek Keshari has paid tax @30% in his individual hand on his income by including commission income and there is no loss to Revenue on account of payment commission to Shri Vivek Keshari. 4b. The Ld. CIT(A) considered the contentions of the assessee, and observed that so far as commission paid to Smt. Priyanka Keshari (daughter-in-law of the assessee ), the details of qualification and work done by Smt. Priayanka Keshari is not submitted by the assessee during assessment proceedings as well during appellate proceedings before ld. CIT(A).The ld. CIT(A) observed that she was removed from the post of Marketing Executive because she was not able to devote much time to the business of the assessee. The ld. CIT(A) observed that no evidence has been submitted by the assessee about the work done by Smt. Priyanka Keshari. The ld. CIT(A) sustained the order of the AO on this issue , wherein the commission expenses @ Rs. 15,000/- per month for the period from 01.04.2013 to 30.09.2013 aggregating to Rs. 90,000/- were allowed by ld. CIT(A) as was earlier allowed by AO, while the balance amount of commission claimed to have been paid by assessee to Smt. Priyanka Keshari to the tune of Rs. 3,10,289/- as disallowed by the AO stood confirmed by ld. CIT(A). So far as commission paid by assessee to his son Shri Vivek Keshari is concerned, the ld. CIT(A) observed that the assessee has been able to prove ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 6 that Shri Vivek Keshari has experience in running the business of similar nature as that of the assessee and that he has closed his business to join his father’s business . The ld. CIT(A) observed that the business of the assessee grew substantially after Shri Vivek Keshari joined the business as Marketing Executive . Thus, learned CIT(A) allowed the entire commission paid by the assessee to Shri Vivek Keshari , as business and disallowance as was made by the AO stood deleted by ld. CIT(A). So far as relief granted by ld. CIT(A) is concerned with respect to Commission Paid by assessee to his son Shri Vivek Keshari , this issue has raised finality as it could not be shown by ld. DR that Revenue has filed any appeal with tribunal against the appellate order passed by ld. CIT(A) granting aforesaid relief to the assessee. 4cSo far as commission paid by assessee to middlemen at different gas agencies of different places , amounting to Rs. 14,06,000/- during the financial year 2013-14, as compared to Rs. 6,02,000/- paid during the immediately preceding financial year 2012-13, out of which the AO had disallowed Rs. 2,94,000/- being 0.16% of the turnover of Rs. 1839.19 Lacs , for the year under consideration. The assessee submitted before ld. CIT(A) that the details of commission payment was submitted before AO, but the same was not believed by the AO who made ad-hoc disallowance of Rs. 2,94,000/- . The ld. CIT(A) observed that no such details has been furnished by the assessee in the paper book filed during appellate proceedings before him as well as before the AO. The ld. CIT(A) observed that the turnover of the assessee has increased by 54.8% compared to immediately preceding year, while the commission expenses increased by 132% , which is abnormally high compared to increase in turnover. The ld.CIT(A) further observed that the entire commission has been shown to be paid in cash and no confirmation ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 7 with respect to payment to person has been filed either before the AO or during the course of appellate proceedings before the CIT(A). The ld. CIT(A) confirmed the disallowance of Marketing Commission to the tune of Rs. 2,94,000/- as reasonable and accordingly, the disallowance as was made by AO was confirmed by Ld. CIT(A), vide appellate order dated 29.11.2019 passed by ld. CIT(A). 5. Aggrieved by the appellate order dated 29.11.2019 passed by ld. CIT(A), the assessee has filed second appeal before the tribunal, agitating two issues , firstly disallowance of commission paid to Marketing Executive namely Mrs. Priyanka Keshari(daughter-in-law of the assessee) to the tune of Rs. 3,10,289/- and secondly disallowance of Commission Expenses paid to the Middlemen at different gas agencies of different places to the tune of Rs. 2,94,000/- .The Learned counsel for the assessee opened arguments before the tribunal . It was explained that the assessee is in the business of wholesale trading business of LPG appliances, Kitchen ware, Household Appliances and allied items . It was submitted by ld. Counsel for the assessee before Division bench that the commission was paid to the employee of the assessee namely Mrs. Priyanka Keshari (daughter in law of the assessee). It was submitted that she was working at the shop of the assessee as Marketing executive from 01.04.2013 to 30.09.2013 . It was submitted that commission @0.5% of the turnover was paid to her. It was submitted that she worked for a period of six months from 01.04.2013 to 30.09.2013, and thereafter she left the job due to domestic reasons. It was submitted that thereafter son of the assessee namely Mr. Vivek Keshari was appointed with effect from 01.10.2013 as Marketing Executive of the assessee. It was submitted that in the year under consideration turnover of the assessee as well net income increased vis-à-vis ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 8 preceding year. The ld. Counsel for the assessee submitted that ld. CIT(A) allowed commission paid by assessee to his son, but so far as commission paid to daughter-in-law , the ld. CIT(A) restricted the allowability of commission expenses to Rs. 15,000/- per month as was earlier allowed by the AO . The ld. Counsel for the assessee submitted that daughter-in-law is not covered under the definition of relative so far as Section 40A(2) read with Section 2(41) of the 1961 Act. Our attention was drawn to paper book/page 1-4 filed by the assesse, wherein the income-tax return(e-filing acknowledgement number 260585710250714 dated 25.07.2014) filed by Smt. Priyanka Keshari for the impugned assessment year is placed, and it was submitted that the entire commission income of Rs. 4,00,289/- received by Mrs. Priyanka Keshari from the assessee (properietory concern S R Enterprises ) is included in the income offered for taxation, and due taxes paid to government. 5b. So far as commission paid to middlemen at different gas agencies of different places, as was disallowed to the tune of Rs. 2,94,000/- by AO as confirmed by ld. CIT(A) , the ld. Counsel for the assessee submitted that commission was paid to various middlemen at different gas agencies of different places . The ld. Counsel for the assessee submitted that turnover of the assessee increased substantially. It was explained that the assessee is in the business of wholesale trading business of LPG appliances, Kitchen ware, Household Appliances and allied items. It was also submitted that the entire commission was paid to middlemen in cash . Our attention was drawn to ledger account filed by the assessee which is placed on record which reflects that the commission was paid in cash be assessee on two days in a year viz. 30 th September, 2013 and 31 st March, 2014 . It was submitted that there was ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 9 no working as to how commission expenses were computed and paid , was submitted before the AO as well as before ld. CIT(A) . 5aa. The Learned Sr. DR, on the other hand submitted that there are two issues in this appeal, first is the disallowance by AO of commission paid to his daughter in law, which was duly confirmed by ld. CIT(A), and secondly the disallowance of commission paid to middlemen at various gas agencies of different places.Our attention was drawn by ld. Sr. DR to the orders of authorities below. On the first issue, the ld. Sr. DR at the outset submitted before Division Bench that in the preceding year no such commission was paid to any Marketing Executive , and it is only in the year under consideration, the assessee has paid commission to his daughter-in-law whom the assessee claimed to be employed with him as Marketing Executive. Thus, it was submitted that this is the first year, when the assessee has claimed to have paid commission to his daughter-in-law . It was submitted that the said daughter-in-law namely Smt. Priyanka Keshari was removed on account of engaged in domestic affairs, as she was not able to devote time . It was submitted that she claimed to have worked for six months, from 01.04.2013 till 30.09.2013. It was submitted by ld. Sr. DR that the AO allowed the commission paid to Mrs. Priyanka Keshari (daughter-in-law of the assessee) to the tune of Rs. 15,000/- per month for the aforesaid period from 01.04.2013 to 30.09.2013 , while balance commission expenses claimed to the tune of Rs. 3,10,289/- claimed to be paid to Mrs. Priyanka Keshari was disallowed by AO which stood confirmed by ld. CIT(A). It was submitted that onus is on the assessee to prove that the expenses were incurred wholly and exclusively for the purposes of business of the assessee, and our attention was ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 10 drawn to Section 37(1) of the 1961 Act. . The ld. Sr. DR prayed that the aforesaid disallowance be confirmed/ upheld by tribunal. 5ab. So far as commission paid to Middlemen at various gas agencies of different places, which stood disallowed by the AO to the tune of Rs. 2,94,000/- which disallowance later stood confirmed by ld. CIT(A) , the ld. Sr. DR drew our attention to assessment order as well appellate order passed by ld. CIT(A). It was submitted that in the earlier year, the assessee had claimed commission @ 0.6% of the turnover paid to middlemen at various gas agencies at different place, but this year the assessee claimed commission @ 0.76% of the turnover. It was submitted that the AO disallowed commission expenses @0.16% of turnover being in excess of preceding year commission expenses allowed by Revenue, and the disallowance amounted to Rs. 2,94,000/- . The ld. Sr. DR drew our attention to the ledger accounts filed by the assessee and submitted that entire commission was paid in cash . The ld. Sr. DR would make prayers for confirming the appellate order passed by ld. CIT(A) 5aaa. In the rejoinder, the learned counsel for the assessee submitted that Smt. Priyanka Keshari has duly paid taxes on the commission income received from the assessee and paid tax at the slab rate of 20%/30% and it cannot be said that any benefit by way of low tax is derived by Smt. Priyanka Keshari. It was submitted that ld. CIT(A) allowed commission @1% of turnover so far as Mr. Vivek Keshari(son of the assessee) is concerned , but allowed commission @ Rs. 15000/- per month so far as Mrs. Priyanka Keshari(daughter-in-law of the assessee) is concerned while she only claimed commission @ 0.5% of turnover . It was also submitted by ld. Counsel for the assessee that the assessee is very old aged person , and he employed Mrs. Priyanka ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 11 Keshari(daughter-in-law of assessee) and Mr. Vivek Keshari(son of the assessee) as Marketing Executive. It was submitted that turnover increased as well net profit has also gone up in this year as compared to preceding year. It was submitted that Section 40A(2)(b) has no applicability so far as Smt. Priyanka Keshari(daughter-in-law) is concerned as she does not fall in the definition of Relative as defined u/s 2(41) of the 1961 Act. So far as other commission paid to various middlemen at various gas agencies at different places, it was submitted that commission has been paid for increase in sales , and there is no reason why 0.16% of commission was disallowed. It was submitted that ledger accounts are submitted and vouchers can be verified. 6. We have considered rival contentions and perused the material on record. We have observed that the assessee is in the business of wholesale trading of LPG appliances, Kitchen ware, Household Appliances and allied items. The assessee filed his return of income with Revenue declaring total income of Rs. 58,79,070/- , on 27.11.2014. The said return of income was selected by Revenue for framing scrutiny assessment u/s 143(3) read with Section 143(2) of the 1961 Act , through CASS. The AO issued statutory notices u/s 143(2) and 142(1) to the assessee, which were claimed by AO to have been duly served on the assessee. During course of assessment proceedings, the AO observed that the assessee has , for the first time, claimed Commission paid to his daughter-in-law Mrs. Priyanka Keshari as well to his son Mr. Vivek Keshari, who were claimed by the assessee to be working as Marketing Executive’s in the assessee’s business . The assessee claimed that his turnover and profitability increased during the year compared to immediately preceding year , owing to commission paid to aforesaid Marketing Executives. Mrs. Priyanka Keshari , daughter-in-law was claimed by assessee to have ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 12 acted as Marketing Executive from 01.04.2013 to 30.09.2013 but since owing to her engagement with domestic work she was not able to devote time, she resigned from her position, and the assessee claimed to have appointed his son Mr. Vivek Keshari as Marketing Executive, effective from 01.10.2013. The AO invoked provisions of Section 40A(2) of the 1961 Act and restricted the allowability of commission expenses to Rs. 15,000/- per month , while the rest of commission expenses were disallowed with respect to both Mrs. Priyanka Keshari and Mr. Vivek Keshari. The matter reached ld. CIT(A) at the behest of the assessee, and the ld. CIT(A) based on evidence/material on record allowed the entire commission paid by assessee to his son, Mr. Vivek Keshari , as ld. CIT(A) observed that Mr. Vivek Keshari has experience in the similar field of almost 19 years and further that he closed his business and joined his father’s business, effective from 1.10.2013 . The ld. CIT(A) further observed that business turnover as well profitability of the assessee’s business increased after Mr. Vivek Keshari(son of the assessee) joined assessee as Marketing Executive. The relief granted by ld. CIT(A) to this extent has attained finality, as it could not be shown that Revenue has filed second appeal with tribunal against aforesaid relief granted by ld. CIT(A). So far as commission paid by assessee to his daughter-in-law Mrs. Priyaka Keshari is concerned, the ld. CIT(A) dismissed the appeal of the assessee and confirmed the order of the AO, on the grounds that there is no evidence on record as to the qualification of the daughter-in-law Mrs. Priyanka Keshari as well there is no evidence on record to the effect of actual work being done by her for the business of the assessee. Even before us , no evidence is filed by the assessee to substantiate her qualifications as well experience in handling of business affairs , as well no evidence is submitted to the effect of actual rendering of services and doing of ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 13 any work for the business of the assessee by Smt. Priyanka Keshari. As can be seen , the AO invoked Section 40A(2) , but ld. CIT(A) invoked Section 37(1) of the 1961 Act . Section 37(1) mandates that the expenditure (not being expenditure in the nature described in Section 30 to 36 ) should be incurred wholly and exclusively for the purposes of business before being allowed as deduction while computing business income , and further the said expenditure should not be personal expenditure nor capital expenditure. The primary onus is on the assessee to bring on record cogent evidences to substantiate that the expenses claimed as business expenses were incurred wholly and exclusively for the purposes of the business of the assessee, and these expenses so claimed are neither personal expenses nor capital expenses. Section 40A starts with non obtsante clause in section 40A(1) and stipulate that the provision of this Section shall have effect notwithstanding anything to the contrary contained in any other provisions of the 1961 Act relating to the computation of the income under the head “Profits and gains of business or profession. Section 37(1) requires that the expenses shall be allowable as business expenses if the expense is incurred wholly and exclusively for the purposes of business of the assessee. Section 37 was in statute since 1961, while Section 40A was inserted by Finance Act, 1968, w.e.f. 01.04.1968. Thus, when Section 40A was inserted , Section 37(1) was very much there in the statute, and if both are harmoniously read there is no dichotomy between both the Sections, rather at the first threshold level, the expenses which are covered by Section 37 should clear the hurdle/conditions as imposed by Section 37(1) that it should be incurred wholly and exclusively for the purposes and it should not be personal expenditure nor capital expenditure. Thus, firstly when conditions as imposed u/s 37(1) are met , then if the ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 14 expenditure falls under Section 40A(2)(a) and the payments are made to persons specified in Section 40A(2)(b), then it will be further restricted to fair market value of the goods, services or facilities or the legitimate needs of the business or profession of the assessee or the benefits derived by or accruing to him therefrom, so much of the expenditure which in the opinion of AO is excessive or unreasonable having regard to fair market value shall not be allowed. Thus, to consider the expenses being allowable u/s 40A(2), it is precondition that all conditions as stipulated u/s 37 are met, if the expense falls u/s 37. Even before us, no evidence is filed by assessee to substantiate that she actually rendered services or did any work as Marketing Executive for the assessee’s business, from 01.04.2013 to 30.09.2013. Merely stating that she included the said commission in her income-tax return is not sufficient. Further, merely because part of the expenses are allowed by authorities below(may be erroneously) will not create any vested right in favour of the assessee that the entire expenses should be allowed. The assessee has to first discharge its onus u/s 37(1) and then the burden shifts to Revenue to rebut the same with cogent/credible evidence. The assessee in the instant case , failed to discharge even its primary onus , as is required u/s 37(1) of the 1961 Act. Thus, in the absence of any evidence to the effect of actual rendering of services and work done by Mrs . Priyanka Keshari(daughter-in-law of the assessee) as Marketing Executive of the assessee’s business, we are afraid the same cannot be allowed as business expenses. We are in agreement with the appellate order passed by ld. CIT(A) on this issue and decline to interfere with the same. We order accordingly. 6b. On the second issue , with respect to disallowance of commission paid by assessee to middlemen of different gas agencies of different places, we have ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 15 observed that the assessee is again not able to discharge its primary onus as is required u/s 37(1) of the 1961 Act. The complete details of the middlemen along with their names , addresses, PAN etc. , to whom commission is paid is not furnished by the assessee , before lower authorities as well before us . The assessee has also not furnished any working details of commission to explain how and manner in which the commission expenses are worked out by the assessee, before lower authorities as well before us. The entire commission expenses are claimed to have been paid in cash. The turnover of the assessee is Rs. 1839.19 lacs during the year under consideration , and the assessee’s business is based at Varanasi which is fully supported by banking facilities, but reasons and necessity of paying entire commission in cash instead of through banking channel, is not explained by the assessee. The authorities below partly allowed commission paid by assessee to middlemen of different gas agencies based on the past history of the earlier year. For us, to interfere with the decision of ld. CIT(A), the assessee was required to bring on record cogent/credible evidences to substantiate its claim, but no such cogent/credible evidences is filed, except ledger account wherein the entire commission is claimed to have been paid in cash to large number of persons , only on two days in the entire year, viz. 30.09.2013 and 31.03.2014, which is against preponderance of probabilities, and no reasons and justification of making payment to such a large number of persons in cash and that too only on two days in the year is explained by the assessee, with further lack of evidences as to the details and complete particular of the middlemen such as name , address, PAN etc. to whom commission is paid and with no computational details as to how these commission are worked out, make assessee case for claim of commission expenses as business expense worse, as ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 16 the assessee failed to discharge its onus as is mandated u/s 37(1) that the aforesaid commission expenses were incurred wholly and exclusively for the purposes of business of assessee. Merely because part of the commission expenses were allowed by lower authorities will not create any vested right in favour of the assessee as to allowability of the entire claim of deductibility of commission expenses, unless the assessee discharges its onus as is mandated under the provisions of the 1961 Act, which in the instant case the assessee failed to discharge even its primary onus u/s 37(1) of the 1961 Act. Thus, the assessee fails on this issue also, and we decline to interfere with the appellate order passed by ld. CIT(A). We order accordingly. 7. Thus, the appeal filed by assessee in ITA no. 42/Vns/2020 for ay: 2014- 15 is dismissed. Order pronounced on 04.11.2022 at Allahabad, U.P , in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 Sd/- Sd/- [VIJAY PAL RAO] [RAMIT KOCHAR] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 04/11/2022 Place: Allahabad/Varanasi, U.P. KD Azmi Copy forwarded to: 1. Appellant –Mr. Sita Ram Keshari ,B-37/171-AS, Birdopur, Mahmoorganj, Varanasi-221010, U.P. 2. Respondent –The Deputy Commissioner of Income Tax, Circle-1, Varanasi, U.P. 3. The ld. Sr.DR, ITAT, Varanasi, U.P. 4. The ld. CIT, Varanasi,U.P. ITA No.42/VNS/2020 Assessment Year: 2014-15 Sita Ram Keshrai v. DCIT, Circle-1, Varanasi 17 5. The CIT(A), Varanasi, U.P. 6. The Guard File. Sr. P.S.