Agrawal Accurate Printech Pvt Ltd., Kanpur V. CIT, Kanpur

ITA 423/LKW/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8012 (ITAT-LUCKNOW)
• Duration Of Justice: 3 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-08-2014
• Assessment Year: misc
• Appeal Filed On: 06-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Keywords: Business expenditure; Onus to prove
• Section: 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 423/LKW/2011 ASSESSMENT YEAR: 2001 - 02 AGRAWAL ACCURATE PRINTECH PVT. LTD. 36/51, CHETA I MOHAL KANPUR V. INCOME TAX OFFICER 4(2) KANPUR PAN: AADCA1802C (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI. ALOK MITRA, D.R. DATE OF HEARING: 20 0 8 2014 DATE OF PRONOUNCEMENT: 25 0 8 2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) ON VARIOUS GROUNDS, BUT LATER ON THE GROUNDS OF APPEAL WERE REVISED AND THE SAME WERE TAKEN ON RECORD. ACCORDINGLY AS PER REVISED GROUNDS, THE ORDER OF T HE LD. CIT(A) IS ASSAILED ON THREE GROUNDS, WHICH ARE EXTRACTED HEREUNDER: - 1 . BECAUSE THE CIT (APPEALS) HAS ERRED ON FACTS AND IN LAW IN ARBITRARILY CONFIRMING THE DISALLOWANCE OF RS.47,126/ - MADE BY THE AO OUT OF VEHICLE RUNNING EXPENSES, WHICH EXPENSES HAV ING BEEN INCURRED FOR THE PURPOSES OF BUSINESS, ARE ALLOWABLE BUSINESS EXPENDITURE. 2 . BECAUSE THE CIT (APPEALS) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS. 13,135/ - OUT OF TOTAL CLAIM OF RS.27,983 / - OUT OF TRAVELLING EXPENSES, WHICH EXPENS ES HAVING PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : BEING INCURRED FOR THE PURPOSES OF BUSINESS, ARE ALL ALLOWABLE BUSINESS EXPENDITURE. 3 . BECAUSE THE CIT (APPEALS) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS. 5,88,640/ - BEING COMMISSION PAID TO DIFFERENT PERSONS WHOLLY AND EXCLUSIV ELY FOR THE PURPOSES OF BUSINESS ON THE GROUND THAT THE SAME HAS NOT BEEN INCURRED FOR PURPOSES OF BUSINESS. 4 . BECAUSE THE CIT (APPEALS) HAS FAILED TO APPRECIATE THE NATURE OF BUSINESS AND IN SPITE OF THE PARTIES HAVING BEEN EXAMINED AND THE RECEIPT OF PAYME NT BEING CONFIRMED BY THE RECIPIENTS AND HAS THEREBY ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION MERELY ON SUSPICION AND DISBELIEF. 2 . APROPOS GROUND NOS. 1 AND 2, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND THE ASSESSING OFFICER HAS MADE AD HOC DISALLOWANCE OF RS. 47,126/ - OUT OF VEHICLE RUNNING EXPENSES AND RS.13,135/ - OUT OF TRAVELLING EXPENSES. IN THE CASE OF A COMPANY, NO DISALLOWANCE CAN BE MADE ON ACCOUNT OF PERSONAL USE OR NON - BUSINESS PURP OSE UNLESS AND UNTIL THE SOME EVIDENCE IS BROUGHT ON RECORD. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS: - 1 . DHIRAJ LAL GIRDHARI LAL VS . CIT, 26 ITR 736 (SC) . 2 . DHAKESHWARI COTTON SPINNING & WEAVING MILLS LTD. VS. CIT , 26 ITR 775 (SC ). 3 . LA LCHAND BHAGAT AMBICA RAM VS CIT, 37 ITR 288 (SC) . 4 . UMA CHARAN SHAW VS CIT, 37 ITR 271 (SC) . 5 . OMAR SALAI MOHD SAIT , 37 ITR 151 (SC) . PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : 6 . CIT VS CASIO INDIA LTD. , 3 35 ITR 196 (DELHI) . 7 . SAYAJI ENGG. WORKS LTD. VS CIT, 253 ITR 749 (GUJ) . 3 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES AND THE JUDGMENTS REFERRED TO BY THE ASSESSEE, WE FIND THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND THE DISALLOWANCES WERE MADE ON ACCOUNT OF PERSONAL USE O R NON - BUSINE SS PURPOSES OF THE VEHICLES AND TRAVELLING EXPENSES WITHOUT BRINGING ANYTHING ON RECORD ON AD HOC BASIS, WHICH ARE NOT SUSTAINABLE IN THE EYES OF LAW, AS THE DISALLOWANCE CAN BE MADE ON THE BASIS OF SOME MATERIAL. DISALLOWANCE ON AD HOC BASIS IN THE CASE OF A PRIVATE LIMITED COMPANY IS NOT APPRECIATED, AS THERE IS NO ELEMENT OF PERSONAL USE OF THE VEHICLE IN THE CASE OF A PRIVATE LIMITED COMPANY. WE, THEREFORE, FIND NO MERIT IN THE DISALLOWANCE CONFIRMED BY THE LD. CIT(A). ACCORDINGLY WE SET ASIDE HIS OR DER IN THIS REGARD AND DELETE THE ADDITION S . 4 . GROUND NO.3 RELATES TO ADDITION OF RS.5,88,640/ - BEING COMMISSION PAID TO DIFFERENT PERSONS. IN THIS REGARD, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT COMMISSION WAS PAID TO DIFFERENT PERSONS FOR THE SERV ICES RENDERED IN OBTAIN ING ORDERS FROM THE GO VERNMENT DEPARTMENT S AND ALSO IN COLLECTING PAYMENTS. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT THE LD. CIT(A) HAS CALLED A REMAND REPORT FROM THE ASSESSING OFFICER AND DURING THE REMAND PROCE EDINGS, THESE PERSONS HAVE APPEARED BEFORE HIM AND ADMITTED RECEIPT OF PAYMENT OF COMMISSION. THEREFORE, ONCE RECEIPT OF COMMISSION WAS CONFIRMED BY THE COMMISSION AGENTS, THE SAME SHOULD HAVE BEEN ALLOWED. 5 . THE LD. D.R., ON THE OTHER HAND, HAS SUBMITTED T HAT GENUINENESS OF PAYMENT OF COMMISSION WAS NOT DISPUTED. THE DISPUTE WAS RAISED WITH REGARD TO THE SERVICES RENDERED BY THESE COMMISSION AGENTS. IT WAS FURTHER CONTENDED THAT ASSESSEE IS ENGAGED IN SUPPLY OF STATIONERY PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : MATERIALS, FOR WHICH COMMISSION A GENT S ARE NOT REQUIRED. THE ASSESSING OFFICER HAS ASKED THE COMMISSION AGENTS TO FURNISH THE NAME OF THE PERSONS FROM WHOM THEY OBTAINED THE CONTRACT FOR SUPPLY OF STATIONERY MATERIALS OR COLLECTED PAYMENTS, BUT THE COMMISSIONS AGENTS COULD NOT FURNISH TH E NAME OF THE CONCERNED PARTIES. SINCE THE COMMISSION AGENTS COULD NOT FURNISH THE NAME OF THE PERSONS/PARTIES FROM WHOM THEY OBTAINED CONTRACT OR COLLECTED PAYMENT, ASSESSEE HAD NOT DISCHARGE D ITS PRIMARY ONUS WITH REGARD TO THE SERVICES RENDERED FOR THE PURPOSE OF HIS BUSINESS. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND WE FIND THAT DURING THE COURSE OF HEARING OF THE APPEAL , THE LD. COUNSEL FOR THE ASSESSEE HAS CALLED REMAND REPORT FROM THE ASSESSIN G OFFICER WITH REGARD TO THE SERVICES RENDERED BY THE COMMISSION AGENTS AND IN COMPLIANCE THERETO, THE ASSESSING OFFICER HAS SUMMONED THE COMMISSION AGENTS AND RECORDED THEIR STATEMENTS. IN THE REMAND REPORT, THE ASSESSING OFFICER HAS STATED THAT COMMISSI ON AGENTS COULD NOT FURNISH THE DETAILS OF THE PERSONS FROM WHOM THEY HAVE OBTAINED THE ORDERS OR PAYMENT. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EXTRACTED HEREUNDER: - 3.2 GROUND OF APPEAL NOS. 3 IS AGAINST THE ADDITION OF RS.5,88,640/ - BEING DI SALLOWANCE OF COMMISSION PAID. AS PER THE APPELLANT, THE DISALLOWANCE WAS ARBITRARILY MADE, WHEREAS THERE WAS NOTHING ON THE RECORD TO SHOW THAT SUCH EXPENSES WERE NOT INCURRED. SOME OF THE RECIPIENTS WERE EXAMINED BY THE A.O. U/S 131 DIRECTLY AND ALL OF T HEM CONFIRMED THE RECEIPT OF THE COMMISSION. AS PER THE CONTENTION OF THE APPELLANT THE PURPOSE WAS TO EXPLORE NEW BUSINESS WHICH WAS NOT FEASIBLE WITHOUT TAKING THE HELP OF OTHERS, WHICH WAS EVIDENT TAKING INTO CONSIDERATION OF SALE VOLUME AND INCREASE IN THE BUSINESS ALSO. DURING THE COURSE OF APPELLATE PROCEEDINGS VIDE THIS OFFICE LETTER DATED 28.11.2005, THE A.O. WAS REQUIRED TO CONDUCT INQUIRIES IN PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : OTHER CASES ALSO AS THE APPELLANT CLAIMED THAT INQUIRIES WERE CONDUCTED ONLY IN RESPECT OF THE WORK RELAT ED TO LIC AND HE WAS NOT GIVEN A COPY OF THE LETTER OF THE LIC SO THAT HE COULD PUT UP HIS DEFENCE. THE A.O. CONDUCTED ENQUIRIES IN COMPLIANCE TO CIT(APPEALS) - II. KANPUR' LETTER DATED 28.11.2005 AND THE PARTIES WERE GIVEN, SUMMONS OR NOTICES U/S 133(6) OF I.T. ACT. 1961. THE A.O. VIDE LETTER DATED 17.11.2009 HAS SUBMITTED REMAND REPORT THE CONTENTS OF WHICH ARE SUMMARIZED AS UNDER: - (1). M/S MEHROTRA ENTERPRISES, : RS. 18,640/ - 22/A/1, PREETAM NAGAR, SALEM SARAI, ALLAHABAD THE SAID FI RM VIDE HIS LETTER DATED 01.05.2006 HAS CONFIRMED THE RECEIPT OF COMMISSION TO HELP THE COMPANY IN TAKING DIRECT SUPPLIES TO VARIOUS DEPARTMENT AND ARRANGING THEIR PAYMENTS. THEY ALSO FILED A COPY OF ACCOUNT IN THE BOOKS OF M/S AGARWAL ACCURATE PRINTECH (P ) LTD. - SHOWING COMMISSION OF RS.17,356/ - ONLY WHEREAS IT WAS CLAIMED RS.18,640/ - . THE SAID PARTY HAS ALSO NOT MENTIONED THE DEPARTMENT FROM WHERE HE PROCURED THE ORDERS. PERUSAL OF ENVELOPE THROUGH WHICH THE ABOVE REPLY HAS REACHED THIS OFFICE SHOWS THE S AME WRITING, INK AND WHITE ENVELOP. ONE INTERESTED PERSON HAS MADE THE REPLY AND SEND THE SAME TO THE DEPARTMENT. THIS HAS NOT REACHED THE OFFICE THROUGH THE POSTAL AUTHORITIES. IN VIEW OF THESE CIRCUMSTANCES, THE COMMISSION TO THE TUNE OFRS.18,640/ - MAY N OT BE CONSIDERED AS GENUINE. THE A.O. HAS RIGHTLY ADDED THE SAME. (2). SHRI V.N. SINGH, 21/4A - 2A, MARMU HOUSING : RS. 79,493/ - COLONY, RANCHI. A LETTER DATED 10.05.2006 WAS SENT TO THE SAID PARTY. A REPLY DATED 23.05.2006 HAS BEEN REC EIVED ON 29.05.2006 CONFIRMING THE COMMISSION OF RS.79,493/ - . HE IS ASSESSED TO TAX AT RANCHI AT PAN - AGKPS0166P. PERUSAL OF ENVELOP THROUGH THE SAID REPLY HAS REACHED THE OFFICE APPEARS TO BE MANAGED AND NO GENUINE. THIS IS OBSERVED PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : THAT THE SAID ENVELOP IS PREPARED BY ONE PERSON AT ONE PLACE AND BY THE SAME INK THE APPEARANCE IS SELF EXPLANATORY. IN VIEW OF ABOVE OBSERVATION THIS PAYMENT OF COMMISSION IS MANAGED AND APPEARS TO BE NON GENUINE. (3) . M/S SAR ENTERPRISES, : RS.17,552/ - 21/4A - 2A . GROUND FLOOR, MALDALIYA, VARANASI THE FIRM IS ASSESSED TO TAX AT VARANASI. THE SAID FIRM HAS CONFIRMED THAT THEY ARE PROCURING THE ORDERS FROM GOVERNMENT SECTOR LIKE E.G. RAILWAY, MUGHAL SARAI, BSB/L ETC. THE SAID PARTY HAS ALSO ENCLOSED THI', CO PY OF ACCOUNT OF M/S AGARWAL ACCURATE PRINTECH (P)LTD. IN HIS BOOKS IN WHICH NE HAS DEBITED THE COMMISSION ACCOUNT BY RS. 17,5527 - WHICH SHOWS THAT HE HAS RECEIVED COMMISSION FROM M/S AGARWAL ACCURATE PRINTECH ,(P)LTD. (4). SHRIMAHINDRASMGH, : R S. 5,890/ - S/O SHRI SATYA GURU SINGH, DUDA GHAT,GORAKHPUR. LETTER DATED 26.04.2006 AND 10.05.2006 WERE SENT TO THE SAID PARTY. BOTH THE LETTER HAVE RETURNED BACK UNSERVED. THEREFORE, THE GENUINENESS OF COMMISSION PAYMENT TO ABOVE PARTY IS UNPROVED. THE ADDITION MADE BY A.O. SEEMS TO BE JUSTIFIED. (5). SHRI ANIL KR.SRIVASTAVA, : RS, 25,928/ - PT. SHRIDHAR SHUKLA MARG, TARIN BAHADUR GANJ,NEAR VESPA WORKSHOP, SHAHJAHANPUR. THE ABOVE PARTY VIDE HIS LETTER DATED 20.05.2006 HAS STATED THAT DURING THE YEAR 2000 - 01 (A.Y. 2001 - 02) HE PURCHASED THE COMPUTER STATIONERY FROM M/S AGARWAL ACCURATE PRINTECH (P)LTD. AND THEN SOLD IT FOR WHICH HE USED TO PAY IT CASH AND DRAFT. ON THIS BASIS EARNING OF COMMISSION FROM M /S AGARWAL ACCURATE PRINTECH (P) LTD. DOES NOT ARISE. HENCE IT WAS RIGHTLY DISALLOWED. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : (6). SHRI RAVI MALHOTRA, : RS. 7,980/ - D - 58712 - 80 A - 1, LAHOTIA, VARANASI A LETTER DATED 26.04.2006 WAS SENT TO THE SAID PARTY BUT RETURNED BACK (UNSERVED). AGAIN A LETTER DATED 10.05.2006, WAS SENT WHICH HAS BEEN ALSO RETURNED BACK. THUS, THE ABOVE PARTY IS UN - GENUINE AND THE ADDITION WAS RIGHTLY MADE. (7). SHRI CHANCHAL AGARWAL, : RS. 38,309/ - 16668, BRAHMPUTRA APARTMENTS, SECTOR - 29, NOIDA THE SAID PARTY VIDE HIS LETTER DATED 5.5.2006 HAS CONFIRMED THE RECEIPT OF PAYMENT FOR PROCURING THE ORDERS, ARRANGING SUPPLIES AND FOLLOWED UP FOR PAYMENT ALTHOUGH HE IS NOT ASSESSED TO TAX. HERE IN THIS CASE ALSO, IT IS SEEN THAT TH E ENVELOP IS SAME, THE WRITING IS SAME AND THE INK IS ALSO THE SAME AS IN OTHER CASES REPORTED ABOVE. THIS COMMISSION IS ALSO APPEARS TO BE NON GENUINE. (8). SHRI RAJIVTRIPATHI, : RS.1,15,346/ - 16668, BRAHMPUTRA APARTMENTS, SECTOR - 29, NOIDA MR. TRIPATHI VIDE HIS LETTER DATED 4.5.2006 HAS CONFIRMED THE RECEIPT OF COMMISSION FOR PROCURING ORDERS SUPPLY AND PAYMENT. IT IS VERY INTERESTING TO NOTE THAT HE HAS ACCEPTED TO HAVE RECEIVED COMMISSION OF RS.1,15,346/ - BUT HE IS NOT FILING H IS RETURN OF INCOME. IT IS UNBELIEVABLE THAT A PERSON RECEIVING COMMISSION AT RS.1,15,346/ - DURING THE YEAR UNDER CONSIDERATION IS NOT LIABLE TO BE ASSESSED TO TAX. THE CONFIRMATION APPEARS TO BE ARRANGED AND DOUBTFUL. THE ENVELOP, WRITING AND INK IS SELF EXPLANATORY THRO UGH WHICH THE REPLY OF SHRI TRIPATHI HAS BEEN RECEIVED IN THIS OFFICE. THIS HAS NOT BEEN RECEIPTS FROM POSTAL AUTHORITIES. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 8 - : (9). SHRI ARVIND SHARMA, : RS.89,827/ - 118/26, KAUSHALPURI, KANPUR. HIS STATEMENT WA S RECORDED ON 12.01.2006 IN WHICH HE ADMITTED THAT HE HAS RECEIVED AS COMMISSION FROM M/S AGARWAL ACCURATE PRINTECH (P)LTD. THROUGH CHEQUE. HE IS PRESENTLY WORKING FOR SUPPLY OF RECHARGE COUPON FROM WHICH HE IS EARNING RS.24 - 25 THOUSAND PER YEAR (NOW THE Q UESTION ARISES WHEN HE WAS GETTING COMMISSION OF RS.89,727/ - THEN WHY TIE HAS GIVEN UP THE SAID JOB OF COMMISSION. HE HAS ALSO NOT FILED HIS RETURN OF INCOME. THE COMMISSION PAYMENT APPEARS TO BE ARRANGED AND FAKE. (10). SHRI S.K. AGNIHOTRI, : R S.1,19,066/ - 118/26, KAUSHALPURI, KANPUR. SHRI AGNIHOTRI HAS STATED IN HIS STATEMENT RECORDED ON 13.01.2006 THAT HE SUPPLIED THE COMPUTER STATIONERY TO SOME PRIVATE COMPANY AND BANKS FOR WHICH HE EARNED COMMISSION OF RS.25 - 30 THOUSANDS PER ANNUM. HE IS NOT ASSESSED TO TAX ALTHOUGH HE HAS EARNED COMMISSION OF RS.1,19,066/ - BY CHEQUE AND CREDITED IN HIS ACCOUNT ON 6.4.2001. PERUSAL OF COPY OF BANK ENTRIES REVEALED THAT SUM OF RS.50,000/ - WAS WITHDRAWN ON 15.04.2001 BY CHEQUE NO.274341. FURTHER AN AMOUNT OF RS.1,00,000/ - WAS WITHDRAWN BY CHEQUE NO.274342 ON 22.06.2003. IT IS VERY SURPRISING THAT A MAN EARNING RS. 25 - 30 THOUSAND PER ANNUM HAS NOT MADE ANY DRAWING TO MEET HIS LIVELIHOOD. SHRI AGNIHOTRI'S ADDRESS IS THE SAM E AS THE ADDRESS OF THE COMPANY. THIS CLEARLY SHOWS THAT HE, IS A MAN OF THE ASSESSEE AND THE ACCOUNT OF SHRI AGNIHOTRI HAS BEEN OPENED TO INFLATE THE EXPENSES, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE COMMISSION PAID TO AGNIHOTRI IS N OT RELIABLE AND HAS RIGHTLY BEEN DISALLOWED BY THE A.O. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 9 - : (11). SMT. SANTOSH KAPOOR : RS. 70,709/ - 36/5, RAM DAS KAHATA, GILLIS BAZAR, KANPUR. SHE HAS STATED IN HER STATEMENT RECORDED ON 12.01.2006 THAT SHE IS A HOU SEHOLD LADY AND DENIED ANY SOURCE OF INCOME. HOWEVER, SHE ADMITTED THAT HER HUSBAND SHRI SAROJ KAPOOR WAS WORKING WITH M/S AGARWAL ACCURATE PRINTECH (P)LTD. FOR WHICH HE EARNED COMMISSION BUT THE CHEQUE WAS DEPOSITED IN HER ACCOUNT FOR WHICH SHE DID NOTHIN G. IT WAS ALSO NOTICED FROM THE COPY OF BANK ACCOUNT THAT RS. 70,709/ - WAS DEPOSITED IN BANK BY CHEQUE AND THE SAME WAS WITHDRAWN THROUGH CHEQUE NO.98664 ON VERY NEXT DAY. FURTHER RS.70,000/ - WAS DEPOSITED AND SAME WAS ALSO WITHDRAWN FROM THE SAID BANK. TH E BANK ENTRIES SHOWS THAT THE ABOVE PERSON IS THE MAN OF M/S AGARWAL ACCURATE PRINTECH (P)LTD. THESE ARE ACCOMMODATION LENTRIES BUT NOTHING ELSE. THE COMMISSION IS NOT GENUINE AND THE A.O. HAS RIGHTLY DISALLOWED THE SAME. (12). THE LIC HAS CONFIRMED VIDE HIS LETTER DATED 19.05.2005 THAT THE STATIONERY AMOUNTING TO RS.24,300/ - WAS PURCHASED DURING THE YEAR DIRECTLY FROM M/S AGARWAL ACCURATE PRINTECH (P)LTD., KANPUR. THERE IS NO QUESTION OF COMMISSION PAYMENT. THE APPELLANT'S REJOINDER WAS FILED ON 09.02.20 11. THE SUMMED UP PORTION IS REPRODUCED AS UNDER: - '..... IN VIEW OF THE ABOVE: SUBMISSION, WE SUM UP THE THINGS AS UNDER : - 1). THAT THE PAYMENT OF COMMISSION TO 8 PERSONS, NAMED IN PARA II OF OUR SUBMISSION, WAS CONFIRMED BY THEM AND THE PAYMENT IS PROVE D TO THE EXTENT OF RS.5,48,942/ - AND, IN THESE CASES, (HE BURDEN OF PROOF IS SUFFICIENTLY DISCHARGED BY THE ASSESSES OUR VIEW IS BACKED BY THE PROVISIONS OF SEC.58 OF THE INDIAN EVIDENCE ACT, 1972. NO EVIDENCE TO THE CONTRARY, SO AS TO SHOW SUCH PAYMENT IS NOT MADE, COULD BE BROUGHT ON THE RECORDS BY THE ID. ASSESSING OFFICER. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 10 - : 2. THAT THE NON - SERVICE OF THE NOTICES OF - TWO OF THE PARTIES, MENTIONED IN PARA III OF OUR SUBMISSION, IS NOT A SUFFICIENT PROOF THAT THE SAME HAS NOT BEEN PAID, ESPECIALLY WHEN THE A SESSEE HAS MADE AVAILABLE ALL THE RELEVANT DETAILS IN THIS RESPECT FROM HIS END. COGNIZANCE SHOULD ALSO BE GIVEN TO THE FACTS THAT THE NOTICES WERE SENT AFTER 5 YEARS HAVE PASSED TO THE TRANSACTION AND THE AMOUNT INVOLVED IS VERY SMALL. 3. THAT ONLY ONE PA RTY DENIED THE COMMISSION AND IT IS QUITE POSSIBLE THAT HE HAD TAKEN THE SAME AS HIS INCOME IN THE NEXT FINANCIAL YEAR WHEN IT WAS RECEIVED BY HIM. IT IS ALSO BEING SUBMITTED THAT THE RELATIONS WITH THE PERSON IS NOT GOOD WITH THE PARTY WHICH PREVENTED T HE ASSESSEE FROM COMMUNICATING WITH THE PARTY. 4. THAT, IN VIEW OF THE PROVISION OF SEC. 58 OF THE INDIAN EVIDENCE ACT, THE BURDEN OF PROOF, IN RESPECT OF 10 OUT OF 11 PAYEES, HAS BEEN SUCCESSFULLY DISCHARGED BY THE ASSESSEE, 5. THAT THERE IS NO EVIDENCE O N THE RECORD TO SHOW THAT THE COMMISSION IS NOT BEEN PAID BY THE ASSESSEE. THERE MUST BE SOME EVIDENCE TO PROVE THAT THE COMMISSION WAS NOT GIVEN. 6. THAT THE ASSESSING OFFICER, WHO EARLIER DISALLOWED THE EXPENDITURE, WILL NEVER SAY THAT TIE WAS WRONG, BU T WILL TRY TO JUSTIFY HIS ACT, EVEN WHEN THERE IS NO EVIDENTIAL SUPPORT TO HIS CONTENTION. YOUR HONOUR IS REQUESTED TO PERUSE THE FACTS OF THE CASE AT YOUR OWN AND AFTER CONSIDERING THE CIRCUMSTANTIAL FACTS AND LAW; DO THE JUSTICE.....' THE FACTS OF THE CA SE, SUBMISSIONS MADE BY THE APPELLANT AS WELL AS REMAND REPORT OF THE A.O. AND THE REJOINDER OF THE - APPELLANT HAVE BEEN CONSIDERED CAREFULLY. IT IS OBSERVED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS GATHERED BY THE A.O. THAT THE APPELLANT HAD PAID COMMISSION TO 11 DIFFERENT PERSONS/PARTIES TOTALING TO RS.5,88,640/ - . IT WAS FURTHER GATHERED BY THE A.O. THAT MOST OF COMMISSION AGENTS WERE NOT ASSESSED TO TAX. THE A.O. MADE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 11 - : ENQUIRIES FROM L.I.C. TO VERIFY THE STATEMENT OF ONE SH. ARVIND SHARRNA W HO DEPOSED TO HAVE BEEN PURSUING ORDERS FROM L.I.C. HOWEVER, ON VERIFICATION FROM L.I.C. IT WAS GATHERED THAT NO THIRD PARTY WAS INVOLVED IN PROCURING ORDERS AND RECEIVING PAYMENTS ON BEHALF OF THE APPELLANT FOR SUPPLIES MADE. FURTHER, THE APPELLANT COMPA NY HAD DIRECTLY MADE SUPPLIES TO THE INCOME TAX DEPARTMENT AND NO THIRD PARTY WAS FOUND INVOLVED. IN THE REMAND REPORT ALSO THE A.O. VIDE LETTER DATED 17 - 11 - 2009 HAS REPORTED THAT ENQUIRES WERE CONDUCTED IN RESPECT OF OTHER COMMISSION AGENTS ALSO. IT HAS B EEN REPORTED THAT IN MOST OF THE CASES THE ENVELOPES CONTAINING REPLIES FROM THE VARIOUS COMMISSION AGENTS WERE WRITTEN BY ONE AND THE SAME PERSON AND SUCH REPLIES WERE NOT SENT THROUGH POST BUT WERE RATHER SUBMITTED BY HAND. THUS THE A.O. HAS DRAWN ADVERS E INFERENCE AGAINST THE APPELLANT THAT SUCH REPLIES WERE SUBMITTED BY THE APPELLANT ITSELF AND THE NAMES OF THE COMMISSION AGENTS HAVE USED IN SUCH REPLIES. IT HAS FURTHER BEEN REPORTED THAT SOME ENVELOPES CONTAINING ENQUIRY LETTERS WERE RECEIVED BACK IN H IS OFFICE UN - SERVED. IN THE STATEMENT RECORDED, ONE SMT. SANTOSH KAPOOR WHO HAD RECEIVED COMMISSION AT RS.70,709/ - , DEPOSED THAT SHE WAS A HOUSEWIFE AND DENIED ANY OTHER SOURCE OF EARNING. HOWEVER, SHE ADMITTED THAT HER HUSBAND SH. SAROJ KAPOOR WAS WORKI NG WITH THE APPELLANT COMPANY ON HER BEHALF AND THUS THE PAYMENT OF COMMISSION RECEIVED THROUGH CHEQUE WAS DEPOSITED IN HER BANK ACCOUNT. HOWEVER, ON EXAMINATION OF HER BANK ACCOUNT, IT WAS GATHERED BY THE A.O. THAT THE AMOUNT OF RS.70,709/ - RECEIVED THROU GH CHEQUE WAS WITHDRAWN ON THE VERY NEXT DAY. THE APPELLANT HAS UTTERLY FAILED TO ESTABLISH THAT THE PERSONS TO WHOM COMMISSION HAS BEEN SHOWN AS PAID ARE ASSESSED TO TAX AND THEY HAVE SHOWN THE COMMISSION SO RECEIVED FROM THE APPELLANT COMPANY IN THEIR RE TURNS. IN THE REJOINDER THE APPELLANT IN RESPECT OF HANDWRITING ON THE ENVELOPES HI S CONTENDED THAT SOME OF THE PARTIES WERE PERSUADED AND THEIR CONFIRMATIONS WERE COLLECTED BY IT. HOWEVER, IT IS STRANGE TO NOTE THAT THE APPELLANT HAS TO PURSUE THESE PART IES FOR GETTING CONFIRMATIONS WHEREAS SUCH PERSONS WERE ALLEGEDLY RECEIVING PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 12 - : COMMISSION FROM THE APPELLANT COMPANY. IN THE GIVEN FACTS AND CIRCUMSTANCES IT IS CLEAR THAT THE IMPUGNED SUM DOES NOT REPRESENT GENUINE COMMISSION, BUT RATHER THEY REPRESENT CONCO CTED/SHAM TRANSACTION MERELY WITH THE PURPOSE OF INFLATING EXPENSES TO REDUCE INCIDENCE OF TAX. BUT TO REITERATE, THE DOCUMENTARY EVIDENCE LIKE CONFIRMATION LETTERS, COPY OF BANK ACCOUNTS AS WELL AS COPIES OF ACCOUNTS OF PERSONS/PARTIES OF THE ENTRY GIVER - LOOSE THEIR VALUE, AS THEY HAVE BEEN CREATED ON PAPER TO LEND THE SEMBLANCE OF GENUINENESS TO TRANSACTION. THE BOTTOM LINE IS THAT THE ENTRY OF THE TRANSACTION IS NOT GENUINE. IN VIEW OF THE ABOVE FACTS, IT IS HELD THAT THE A.O. WAS FULLY JUSTIFIED IN DI SALLOWING THE COMMISSION AMOUNTING TO RS.5,88,640/ - AND THEREBY MAKING ADDITION. THE SAME IS HEREBY CONFIRMED. GROUND OF APPEAL NO.3 IS DISMISSED. 7 . DURING THE COURSE OF HEARING OF THE APPEAL, A SPECIFIC QUERY WAS RAISED FROM THE LD. COUNSEL FOR THE ASSESS EE TO FURNISH THE DETAILS OF THE PERSONS FROM WHOM THESE COMMISSION AGENTS HA VE OBTAINED THE ORDERS OR COLLECTED PAYMENTS, BUT IT COULD NOT BE FURNISHED AND IN THE ABSENCE OF COMPLETE DETAILS, THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT COMMISS ION WAS PAID TO THE COMMISSION AGENTS OF THE ASSESSEE CANNOT BE ACCEPTED. SINCE THE LD. CIT(A) HAS EXAMINED ALL THESE ASPECTS IN HIS ORDER IN DETAIL , WE FIND NO INFIRMITY THEREIN. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) IN THIS REGARD. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.8.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25 TH AUGUST , 2014 JJ: 2008 PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 13 - : COPY FORWARDED TO: 1 . APPELLANT 2 . R ESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )