K.S. Commodities Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 4998/DEL/2016

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 6195 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 21-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NAINA SOIN KAPIL
• Keywords: Business expenditure; Principle of natural justice
• Section: 143(3); 201; 37

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K.N.CHARY, JUDICIAL MEMBER ITA NO. 4998/DEL/2016 (ASSESSMENT YEAR: 2012 - 13 ) KS COMMODITIES PVT LTD, 719, INDIRA PRAKASH BUILDING, 21, BARAKHAMBA ROAD, NEW DELHI PAN: AABCK2584P VS. DCIT, CIRCLE - 14(2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GAURAV JAIN, ADV MS MANISHA SHARMA, ADV REVENUE BY: MS. NAINA SOIN KAPIL, SR. DR DATE OF HEARING 19/08 / 201 9 DATE OF PRONOUNCEMENT 1 8 / 11 / 2019 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS APPEAL IS PREFERRED BY THE ASSESSEE, KS COMMODITIES PRIVATE LIMITED [ APPELLANT ] , AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 5, NEW DELHI [ THE LD CIT A] DATED 11/7/2016 RAISING THE SOLITARY GROUND OF APPEAL ON ACCOUNT OF CONFIRMATION OF DISALLOWANCE OF RS. 4989000/ OUT OF THE COMMISSION PAID BY THE APPELLANT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE COMMISSIONER OF INCOME - TAX (APPEALS) [IN SHORT CIT(A)] HAS ERRED ON THE FACTS AND CIRCUMSTANCES AND IN LAW IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER AGGREGATING RS.49,89,000/ - IN THE ASSESSMENT ORDER DATED 26.03.2015 PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (THE ACT). 2. THAT THE ID. CIT(A) HAS ERRED ON FACTS & CIRCUMSTANCES AND IN LAW IN UPHOLDING THE ADDITION OF RS. 49,89,000/ - ON ACCOUNT OF DISALLOWANCE OF COMMISSIO N PAID THE APPELLANT DURING AY 2012 - 13. 3. THAT THE ID. CIT(A) HAS ERRED ON FACTS & CIRCUMSTANCES IN LAW IN CONFIRMING THE SAID DISALLOWANCE OF BONAFIDE BUSINESS EXPENDITURE OF COMMISSION INCURRED DURING THE REGULAR COURSE OF BUSINESS DEDUCTIBLE UNDER SECT ION 37 OF THE ACT. PAGE | 2 4. WITHOUT PREJUDICE, THE CIT(A) HAS ERRED CONFIRMING THE ADDITION THAT WAS MADE WITHOUT CONFRONTING OR AFFORDING ADEQUATE OPPORTUNITY TO THE APPELLANT TO REBUT THE SAME, IN GROSS VIOLATION PF PRINCIPLES OF NATURAL JUSTICE. 4.1. THAT THE CIT (A) HAS ERRED IN FACTS AND IN LAW IN UPHOLDING THE ACTION OF ASSESSING OFFICER, WHERE HE, IN THE ABSENCE OF ANY EVIDENCE TO ESTABLISH CONTRARY TO THE CLAIM OF APPELLANT, DISREGARDED THE EVIDENCES PRODUCED DURING ASSESSMENT TO PROVE THE GENUINENESS OF TRANSACTION THAT INTERALIA INCLUDED THE CONFIRMATION FROM THE COMMISSION RECEIVER. 3. THE BRIEF FACTS OF THE CASE SHOW THAT THE ASSESSEE IS A COMPANY CARRYING ON THE BUSINESS OF TR ADING AND COMMISSION AGENCIES. IT FILED ITS RETURN OF INCOME ON 16/ 0 8/2012 DECLARING TOTAL INCOME OF RS. 11480300/ - . THE ASSESSMENT WAS COMPLETED U/S 143 (3) OF THE ACT AT TOTAL INCOME OF RS. 1 , 66 , 52 , 080/ . THE LEARNED ASSESSING OFFICER HAS MADE THREE DISALLOWANCES IN THE ASSESSMENT PROCEEDINGS OUT OF WHICH THE ONLY DISPUTE BEF ORE US IS DISALLOWANCE OF COMMISSION EXPENSES OF RS. 4 989000/ . 4. THE BRIEF FACTS OF THE ABOVE DISALLOWANCE SHOWS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS PAID A COMMISSION TO M/S. VIDHYA SHREE BUILDCON PRIVATE LIMITED OF RS. 4 989000/ - . ASSESSEE SUBMITTED INVOICES IN SUPPORT OF CLAIM. H OWEVER , LEARNED ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO JUSTIFY CLAIM OF THOSE EXPENSES AS ACCORDING TO HIM THOSE EXPENSES WERE NOT GENUINE AND IT WAS EXCESSIVE AND UNREASONABLE. 5. THE ASSESSEE SUBMITTED MODUS OPERANDI AND SALE AND PROCUREMENT METHODOLOGY OF EACH COMMODITIES STATING THAT EACH OF THE COMMODITIES ARE TRADED DIFFERENTLY . IT HAS THEREFORE DISTINCT CHAR ACTERISTICS AND MARKETS. THEREFORE COMMISSION PAID ON SALE OF ONE COMMODITY CANNOT BE COMPARED WITH OTHER COMMODITY. I T WAS SUBMITTED THAT THE RATE OF COMMISSION ON COMMODITIES LIKE SOYA AND SUGAR ARE DIFFERENT FROM MAIZE . IT WAS FURTHER SUBMITTED THAT ABOVE COMMISSION HAS BEEN RECORDED ON THE BASIS OF THE CONTRACT CONFIRMATION NOTE AND INVOICES RECEIVED FROM THE RECIPIENT WHO HAS ARRANGED BUYERS FOR THE ASSESSEE FOR MAIZE. EXPLAINING THE MODUS OPERANDI OF COMMISSION AND EXPORTS THAT A CONFIRMATION NO TE IS EXECUTED AND ACCEPTED COPIES OF THE TERMS IS DULY SIGNED AND GIVEN TO THE ASSESSEE BY COMMISSION AGENT FOR MAKING EXPORT BY THE ASSESSEE AND THE COMMISSION AGENT RAISES THE INVOICE. THEREFORE, THERE CANNOT BE COUNTER SIGNATURE OF THE ASSESSEE ON IT AS THE PAYMENT OF THE COMMISSION CONCLUDES THE TRANSACTION. PAGE | 3 IT WAS FURTHER SUBMITTED THAT THE ASSESSEE COMPANY FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING AND HENCE EXPENSES ARE RECORDED AS AND WHEN THEY BECOME DUE ON RECEIPT OF THE INVOICES. WITH RESPECT TO THE REFERENCE OF SAME CONFIRMATION NOTE MENTIONED IN ALL INVOICES , IT WAS SUBMITTED THAT IT MAY BE DUE TO INADVERTENT ERROR ON COMPUTER HOWEVER EACH CONTRACT IS CORRECTLY MENTIONED ALONG WITH THE RATES AND QUANTITY OF THE MATERIAL. EACH INVOICES ALSO A CCOMPANIED BY THE CONFIRMATION NOTE WHICH MENTIONS ALL THE DETAILS CORRECTLY. WITH RESPECT TO THE NON APPLICABILITY OF THE SER V ICE TAX IT WAS SUBMITTED THAT AS MAIZE BEING AGRICULTURAL PRODUCE , SERVICE TAX IS NOT LEVIABLE ON THE SAME. WITH RESPECT TO THE PAYMENT IN THE MONTH OF MARCH, IT WAS SUBMITTED THAT PAYMENT FOR THE AGGREGATE COMMISSION HAS BEEN MADE IN THE MONTH OF MARCH AS PER THE MUTUAL UNDERSTANDING AND AVAILABILITY OF FUNDS. IT WAS FURTHER STATED THAT SUCH AN UNDERSTANDING COULD BE A PURELY A COMMERCIAL DECISION BETWEEN TWO CONTRACTING PARTIES. 6. THE LEARNED ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE. HE FOUND THAT ASSESSEE HAS MADE PAYMENT OF COMMISSION FOR EXPORT OF 6652 METRIC TON OF YELLOW MAIZE WHICH IS INR 674 / - PER METRIC TON AND WORKS OUT TO 6.32% OF THE SALE VALUE . OTHER COMMODITIES WHICH HAVE BEEN SOLD BY THE ASSESSEE ARE SUGAR AND SOYA ON WHICH THE ASSESSEE HAS PAID COMMISSION AT THE RATE OF INR 120 / - PER METRIC TON OF 0.42 PERCENTAGE OF THE SALE VALUE WHICH CLEARLY MEANS THAT THE RATE OF COMMISSION ON SALE OF MAIZE IS EXCESSIVE AND UNREASONABLE AS COMPARED TO THE COMMISSION OF SALE OF OTHER COMMODITIES SOLD BY THE ASSESSEE. HE FURTHER COMPARED THE COMMISS ION PAID ON SALE OF MAIZE AND TABULATED THEM AT PAGE NO. 3 OF THE ASSESSMENT ORDER. HE NOTED THAT THE ASSESSEE HAS PAID COMMISSION AT THE RATE OF RS. 30 PER METRIC TON TO MR. MAHESH NAGPAL IN THE MONTH OF MAY AND JUNE 2011 WHEREAS IN THE MONTH OF MARCH 20 12 ASSESSEE HAS PAID TO VIDHYASHREE BUILDCON PRIVATE LIMITED COMMISSION OF RS. 750 PER METRIC TON. THEREFORE , HE NOTED THAT FOR THE SALE OF SAME COMMODITY ASSESSEE IS PAYING COMMISSION TO ONE PARTY AT THE RATE OF RS. 30 PER METRIC TON AND TO THE OTHER PAR TY IN QUESTION AT THE RATE OF RS. 750/ - PER METRIC WHICH IS HIGHLY EXCESSIVE AND UNREASONABLE ON THE FACE OF IT. HE FURTHER STATED THAT THE GENUINENESS OF THE BILLS WAS QUESTIONED , WHICH COULD NOT BE SATISFACTORILY EXPLAINED BY THE PAGE | 4 ASSESSEE. ACCORDINGLY, HE DISALLOWED A SUM OF RS. 4 989000/ OUT OF THE COMMISSION EXPENDITURE. 7. THE ASSESSEE AGGRIEVED WITH THE ORDER OF THE LEARNED ASSESSING OFFICER PREFERRED AN APPEAL BEFORE THE LEARNED CIT ( A) WHO CONFIRMED THE ABOVE DISALLOWANCE. THEREFORE, ASSESSEE IS IN APPEAL BEFORE US. 8. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THE FACTS OF THE CASE AND STATED THAT DISALLOWANCE HAS BEEN MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT ( A) FOR THE SIMPLE REASON THAT COMMISSION WAS FOUND TO BE EXCESSIVE AND THE GENUINENESS OF THE SAME WAS DOUBTED. HE REFERRED TO THE REASON OF THE LEARNED ASSESSING OFFICER THAT COMMISSION HAS BEEN PAID TO THE ABOVE ENTITY AT RS. 750 PER METRIC TON WHEREAS TH E SALE PRICE OF THE MAIZE AS PER THE CONFIRMATION NOTE FLUCTUATES BETWEEN RS. 2 58 PER METRIC TON TO RS 2 85 PER METRIC TON WHICH DOES NOT COMMENSURATE . IN RESPONSE TO THIS HE SUBMITTED THAT AS PER THE CONFIRMATION NOTE THE RATE OF COMMISSION IS SPECIFI ED AT INR 7 50 PER METRIC TON WHEREAS THE RATE OF EXPORT OF MAIZE IS SPECIFIED IN US DOLLAR AND NOT IN INDIAN RUPEES ACCORDINGLY THE COMMISSION PAID IS LOWER THAN THE SALE PRICE FOR EXPORT OF MAIZE AND THE APPELLANT HAS NOT SUFFERED ANY LOSS BECAUSE OF THE COMMISSION PAID ON EXPORT TRANSACTIONS. WITH RESPECT TO THE DISPARITY IN THE AMOUNT OF COMMISSION PAID TO VIDHYASHREE BUILDCON PVT LTD AND MAHESH AGARWAL ON EXPORT OF MAIZE , HE SUBMITTED THAT NO COMMISSION HAS BEEN PAID TO ANY OTHER PARTY ON EXPORT OF MA IZE AS STATED BY THE LEARNED ASSESSING OFFICER. THE ASSESSEE HAS PAID COMMISSION TO MAHESH AGARWAL AT INR 3 0 PER METRIC TON BUT THE SAME WAS IN VIEW OF DOMESTIC PURCHASE OF MAIZE WHICH IS NOT COMPARABLE WITH THE COMMISSION PAID ON EXPORT OF MAIZE TO BANG LADESH. HE FURTHER REFERRED TO THE COPY OF THE ACCOUNT OF THE RECIPIENT OF THE COMMISSION MR. MAHESH AGARWAL ALONG WITH HIS BILLS. WITH RESPECT TO THE ALLEGATION THAT ASSESSEE HAS SUFFERED LOSSES IN THIS TRANSACTION, HE SUBMITTED THAT THE APPELLANT HAS E ARNED AVERAGE GROSS PROFIT RATIO OF 8.02% ON TRANSACTION ON EXPORT OF MAIZE THROUGH VIDHYASHREE BUILDCON PRIVATE LIMITED. WITH RESPECT TO THE ALLEGATION OF THE EXCESSIVE AND UNREASONABLENESS OF COMMISSION P AID ON EXPORT OF SUGAR AND SOYA BEEN , HE STATED T HAT APPELLANT IS PRIMARILY ENGAGED IN TRADING OF SUGAR AND SOYA BEEN . THE MAIZE PURCHASED BY THE APPELLANT DURING THE YEAR WAS EXPORTED TO ONLY PAGE | 5 SINGLE COUNTRY BANGLADESH TO THAT PARTY AND THESE WERE THE ONLY TRANSACTIONS OF EXPORT ENTERED THROUGH COMMISSI ON AGENT AND NO OTHER TRANSACTION OF EXPORT EITHER THROUGH COMMISSION AGENT OR OTHERWISE WERE UNDERTAKEN DURING THE YEAR. THEREFORE, HE SUBMITTED THAT COMMISSION ON EXPORT OF MAIZE CANNOT BE COMPARED TO THE EXPORT OF DIFFERENT COMMODITIES. WITH RESPECT T O THE DISCREPANCY IN THE AMOUNT OF COMMISSION AS RECORDED IN THE AUDITED FINANCIAL STATEMENT AND THE LEDGER ACCOUNT , HE SUBMITTED THAT TOTAL BROKERAGE RECORDED IN THE PROFIT AND LOSS ACCOUNT IS INR 1 0998699/ WHICH IS PERTAINING TO TWO DIFFERENT LEDGERS WITH RESPECT TO GENERAL COMMISSION AND BROKERAGE PAID FOR SUGAR DIVISION AND THEREFORE THERE IS NO DISCREPANCY IN THE AMOUNT OF COMMISSION OR BROKERAGE RECORDED IN THE PROFIT AND LOSS ACCOUNT AND THE LEDGER ACCOUNTS PRODUCED BEFORE THE LEARNED ASSESSING OF FICER. WITH RESPECT TO THE DATE OF CONFIRMATION NOTE STATED IN THE INVOICES, HE SUBMITTED THAT THE COMMISSION WAS PAID FOR EXPORT ORDERS SECURED BY VIDHYASHREE BUILDCON AND EACH PAYMENT WAS SUPPORTED BY CORRESPONDING CONFIRMATION NOTES. THE SAME DATE OF CONFIRMATION ORDER ON EACH INVOICE WAS MERELY A TYPOGRAPHICAL ERROR HOWEVER, OTHER PARTICULAR SUCH AS QUANTITY AND RATE OF COMMODITY WERE CORRECTLY STATED IN THE INVOICES. HE FURTHER REFERRED TO THE ALLEGATION OF THE LEARNED ASSESSING OFFICER THAT THE REC IPIENT OF COMMISSION WAS APPARENTLY ENGAGED IN THE BUSINESS OF CONSTRUCTION AND NOT IN THE AGRICULTURAL COMMODITIES AND ASSESSEE HAS NOT PRODUCED ANY EVIDENCE SHOWING THAT THE COMMISSION HAS BEEN OFFERED TO TAX BY THAT RECIPIENT OR TAX DEDUCTION AT SOURCE THERE FROM HAS BEEN MADE BY THE ASSESSEE, HE SUBMITTED THAT COMMISSION INCOME WAS DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE RECIPIENT WHO ALSO OFFERED THE SAME TO TAXATION. HE FURTHER STATED THAT TAX DEDUCTIONS AT SOURCE ARE ALSO MADE BY THE ASSESSEE AND THE CONFIRMATION HAS BEEN OBTAINED FROM THE BROKER. MERELY BECAUSE THE COMMISSION AGENT IS ENGAGED IN ANY OTHER ACTIVITY, IT COULD NOT BE SAID THAT THE AGENT HAD NOT RENDERED ANY SERVICES TO THE ASSESSEE COMPANY. FOR THIS PROPOSITION, HE RELIED UPON THE DECISION OF THE COORDINATE BENCH IN 125 ITD 309. HE FURTHER STATED THAT THE ALLEGATION OF THE LEARNED ASSESSING OFFICER IS WITHOUT ANY BASIS THAT NO PROOF OF SERVICE ACTUALLY HAS BEEN RENDERED BY THE RECIPIENT OF THE BROKERAGE, HE SUBM ITTED THAT SERVICE PROVIDED IS DULY SUPPORTED BY THE CONFIRMATION NOTES EXCHANGED PAGE | 6 BETWEEN THE PARTIES AND INVOICES RAISED BY THE BROKER. THE PAYMENT WAS MADE AFTER DEDUCTING TAX AT SOURCE THROUGH REGULAR BANKING CHANNELS AND THERE COULD NOT BE ANY FURTHER EVIDENCE TO PROVE THE INTRODUCTION OF THE PARTIES. HE FURTHER STATED THAT THE TRANSACTION IS PERTAINING TO MONTH OF MAY, JUNE, JULY; AUGUST BUT PAYMENT AND ACCOUNTING ENTRIES WERE RECORDED IN THE MONTH OF MARCH WAS MAIN CONCERN OF THE LEARNED ASSESSING OFFICER. IN RESPONSE TO THAT, HE SUBMITTED THAT THE PAYMENT OF COMMISSION IN MARCH WAS PURELY COMMERCIAL DECISION REACHED BETWEEN THE PARTIES BASED ON MUTUAL UNDERSTANDING AND AVAILABILITY OF FUNDS IN THE HANDS OF THE APPELLANT. THE TRANSACTIONS WERE RE CORDED IN THE BOOKS WHEN THE APPELLANT AGREED TO MAKE PAYMENT TO THE RECIPIENT. THE AFORESAID WAS A COMMERCIAL DECISION BETWEEN THE PARTIES WHICH CANNOT BE DICTATED BY THE REVENUE. HE FURTHER REFERRED TO A COMPARATIVE GROSS PROFIT CHART ON EXPORT OF MADE THEREIN IT IS STATED THAT ASSESSEE HAS NOT INCURRED ANY LOSSES IN ANY OF THE TRANSACTION BUT HAS EARNED GROSS PROFIT IN ALL THE FOUR TRANSACTIONS. HE FURTHER REFERRED TO THE PAGE NUMBER 53 54 OF THE PAPER BOOK WHERE THE CONFIRMATIONS OF THE RECIPIENT O F THE BROKERAGE ARE PLACED. HE FURTHER REFERRED TO THE PAGE NUMBER 80 OF THE PAPER BOOK TO SHOW THAT THE TAX WAS DEDUCTED AT SOURCE ON SUCH PAYMENT. THE PAGE NUMBER 81 WAS ALSO REFERRED TO WITH RESPECT TO THE PAYMENT BY THE BANKING CHANNEL TO THE RECIPIE NT OF THE INCOME. AT PAGE NUMBER 91 96 OF THE PAPER BOOK, HE REFERRED TO THE RETURN OF INCOME AND THE PROFIT AND LOSS ACCOUNT OF THE RECIPIENT OF THE INCOME TO SHOW THAT IT HAS BEEN RECORDED AS THE INCOME OF THE BROKER. IN VIEW OF THIS, HE SUBMITTED TH AT THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT A DESERVES TO BE DELETED. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND REFERRED TO PAGE NUMBER 96 OF THE PA PER BOOK TO SHOW THAT VIDHYASHREE BUILDCON PRIVATE LIMITED DID NOT HAVE ANY INCOME OR ACTIVITIES TO PERFORM SUCH SERVICES. HE SUBMITTED THAT AS ON 31/03/2012 ONLY OPERATING INCOME OF RS. 4 989000 WAS SHOWN BY THE RECIPIENT OF THE INCOME WHICH IS THE BROKER AGE INCOME RECEIVED FROM THE ASSESSEE. HE FURTHER STATED THAT OTHER INCOME IS MERELY AN INTEREST INCOME OF INR 1 487208. HE FURTHER REFERRED TO THE P ROFIT AND LOSS ACCOUNT AND SHOWN THAT PAGE | 7 IT HAS SHOWN VERY MEAGER EXPENDITURE WHICH ITSELF SUGGEST THAT SUCH KIND OF SERVICES CANNOT BE RENDERED TO THE ASSESSEE BY THE BROKER. THEREFORE, HE SUBMITTED THAT ASSESSEE HAS FAILED TO SHOW THAT ANY SERVICES HAVE BEEN RENDERED BY SUCH COMPANY. HE STATED THAT EVEN OTHERWISE THERE IS NO REFERENCE THAT WHICH CLIENTS WERE CONTACTED BY THE BROKER TO WHOM THE MAIZE IS EXPORTED. HE THEREFORE SUBMITTED THAT THE TOTAL TRANSACTION OF THE COMMISSION PAYMENT FOR THE REASONS GIVEN BY THE LEARNED ASSESSING OFFICER AND THE LEARNED CIT A CLEARLY SHOWS THAT THE PAYMENT MADE BY THE A SSESSEE IS COMPLETELY BOGUS AND EXCESSIVE. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION. THE FACTS HAVE ALREADY BEEN STATED ADEQUATELY IN THE YEAR PARAGRAPHS. THE ONLY ISSUE IS ABOUT THE ALLOWABILITY OF COMMISSION EXPENDITURE PAID BY THE ASSESSEE OF R S. 4989000/ - BY ASSESSEE TO M/S. VIDHYA SHREE BUILDCON PVT. LTD FOR FOUR CONSIGNMENTS OF EXPORT OF MAIZE IN THE MONTH OF MAY 2011 AND AUGUST 2011 . IN THE PRESENT CASE THE CONTENTIONS OF THE ASSESSEE ARE THAT PAYMENT HAVE BEEN MADE THROUGH CHEQUE, SUPPORTE D BY THE INVOICES, PROOF OF EARNING THE PROFITS ON THE TRANSACTION, NO SUCH COMPARABLE TRANSACTION WITH ANY OTHER PARTY FOR EXPORT OF SIMILAR PRODUCT, THEREFORE, THE SAME IS ALLOWABLE. THE LD ASSESSING OFFICER DOUBTED THE REASONABLENESS, GENUINENESS OF THE TRANSACTION. WITH RESPECT TO THE GENUINENESS OF THE TRANSACTION THE LD CIT ( A) HAS NOTED THAT AT NO STAGE THE APPELLANT HAS BEEN ABLE TO PROVIDE EVIDENCES TO SHOW THAT SERVICES HAVE ACTUALLY BEEN RENDERED. EVEN BEFORE US NO SUCH EVIDENCES HAVE BEEN PLACED. IF THE ASSESSEE HAS PAID COMMISSION TO THE ABOVE PARTY FOR SECURING EXPORT ORDERS, THE ASSESSEE COULD HAVE PLACED BEFORE US THAT WHICH ARE THE PARTIES INTRODUCED BY THE AGENT TO THE ASSESSEE, HOW THE RATES ARE AGREED UPON, WITH WHOM NEGOTIATIONS TOOK PLACE ETC. MERELY PLACING THE CONFIRMATION OF THE RECIPIENT OF THE INCOME DOES N OT SHOW THAT SERVICES HAVE BEEN RENDERED BY THE COMMISSION AGENT. THE PAYMENT BY CHEQUES, COPIES OF THE INVOICES, BANK STATEMENT OF THE COMMISSION AGENT, DETAILS OF TAX DEDUCTION AT SOURCE ON SUCH PAYMENT ARE ALL WILL BE IN ORDER BUT UNLESS THE RENDITION O F THE SERVICES BY THE COMMISSION AGENT IS PROVED, SAME CANNOT BE ALLOWED AS DEDUCTIBLE EXPENDITURE. FURTHER, THE AUDITED BALANCE SHEET OF THE BROKER WHICH HAS BEEN DOWNLOADED BY ASSESSEE FROM PUBLIC DOMAIN PLACED AT PAGE NOS. 92 TO 104 OF THE PAPER BOOK AL SO DOES NOT PAGE | 8 INSPIRE US TO APPRECIATE IT THAT VIDHYASHERRE BUILDCON PVT. LTD HAS A CAPABILITY OF SECURING EXPORT ORDERS OF MAIZE, WHICH ASSESSEE HAS NEVER EXPORTED EARLIER ON COMMISSION BASIS. THE COMPANY HAS ONLY REVENUE FROM OPERATION IS THE COMMISSION IN COME RECEIVED FROM THE ASSESSEE. ITS SHAREHOLDERS ARE ONE MRS. VAISHALI JAIN AND TWO COMPANIES WHO DOES NOT HAVE ANY EXPOSURE TO COMMODITY TRADING. THE COMPANY HAS THE BALANCE - SHEET SIZE OF EQUITY CAPITAL AND RESERVE OF RS. 5 CRORES AND SHORT TERM BORROWIN GS OF RS. 18.60 CRORES OUT OF WHICH RS. 15.23 CRORES IS UNSECURED LOAN AND RS 3.37 CRORES OF SHARE APPLICATION MONEY PENDING ALLOTMENT. IT HAS FIXED ASSETS MAINLY VEHICLES. IT HAS GIVEN UNSECURED LOANS TO VARIOUS PARTIES OF RS. 20.27 CRORES. IT HAS ALSO AP PLIES IN SHARE APPLICATION MONEY OF OTHER COMPANIES OF RS. 2.25 CRORES. LOOKING AT THE PROFIT AND LOSS ACCOUNT IT HAS EARNED INTEREST INCOME OF RS. 14.87 LAKHS IT IS NOT FROM BANK BUT FROM VARIOUS ADVANCES GIVEN. THE ASSESSEE HAS PAID MEAGER SALARY OF RS. 1.47 LAKH AND OTHER EXPENSES ALSO DO NOT SHOW ANY SUBSTANCE IN THE COMPANY TO EARN THE REVENUE IN THE FORM OF COMMISSION OF RS. 4989000/ - FROM THE ASSESSEE. EVEN BEFORE US NO EVIDENCE WERE LEAD TO SHOW THAT THE DIRECTORS OF THE COMPANY MR. PANKAJ JAIN AND MRS. VAISHALI JAIN ARE CAPABLE OF OBTAINING SUCH A HUGE ORDERS OF EXPORT OF MAIZE FOR ASSESSEE. THEIR BIODATA OR THEIR CREDENTIALS WERE ALSO NOT SHOWN THAT THEY HAVE ANY EXPERIENCE IN THE COMMODITY MARKET. FURTHER, THERE IS NO CONFIRMATION FROM THE IMPORTE RS OF THE BANGLADESH TO SHOW THAT THE ASSESSEE ENGAGED THE ABOVE BROKER FOR EXPORT OF MAIZE. THE ASSESSEE DID NOT PRODUCE ON ITS OWN WHEN THE RENDITIONS OF THE SERVICES ARE IN DOUBT. THE DIRECTORS OF THE BROKER COMPANY TO ESTABLISH THAT THEY KNOW THE IMPOR TERS IN BANGLADESH OR THEY HAVE AN EXPERIENCE OF COMMODITY MARKET. COMING TO THE LEDGER ACCOUNT OF THE ABOVE BROKER IT IS APPARENT THAT THE BILLS OF VIDHYASHREE BUILDCON WERE BOOKED IN THE MONTH OF MARCH WHEN THE EXPORT HAS TAKEN PLACE EARLIER. THOUGH, TH E PAYMENT MAY BE AT THE CONVENIENCE OF THE PARTIES OR AT THE TIME OF AVAILABILITY OF FUNDS BUT THE BOOKING THE BILLS AFTER SUBSTANTIAL DELAY PROVES THAT THESE EXPENDITURE ARE NOT GENUINE. THE CONFIRMATION NOTES AND THE INVOICES OF BROKERAGE AND CONFIRMATIO N NOTE DO NOT PROVE THAT SERVICES HAVE BEEN RENDERED. IN VIEW OF THIS WE CONQUER WITH THE VIEWS OF THE LOWER AUTHORITIES THAT ASSESSEE HAS FAILED TO SHOW THE GENUINENESS OF THE PAGE | 9 COMMISSION PAYMENT OF RS. 4989000/ - TO M/S. VIDHYASHREE BUILDCON. THUS, WE CONF IRM THE ORDERS OF THE LOWER AUTHORITIES AND DISMISS GROUND NO. 1 TO 4 OF THE APPEAL. 11. ACCORDINGLY, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 8 / 11 / 2019 . - SD/ - - SD/ - ( K.N.CHARY ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 8 / 11 / 2019 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI