Shri Sahil Surendra Saharia, Kolkata V. ITO, Ward - 1(3), Dibrugarh

ITA 56/GTY/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1175 (ITAT-GUWAHATI)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 12-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMITAVA SEN J
• Keywords: Salary income
• Section: 143(3); 37(1); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI BENCH E COURT AT KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L.SAINI, ACCOUNTANT MEMBER ITA NO. 56 / GAU / 201 8 ASSESSMENT YEAR :2010-11 SHRI SAHIL SURENDRA SAHARIA, FLAT NO.5, DOOR NO.3, 7 TH FLOOR, WOOD STREET, KOLKATA-700016 [ PAN NO.AXIPS 7338 G ] V/S . INCOME TAX OFFICER WARD-1(3), DIBRUGARH /APPELLANT .. / RESPONDENT /BY APPELLANT NONE /BY RESPONDENT SHRI AMITAVA SEN, JCIT-DR /DATE OF HEARING 11-12-2019 /DATE OF PRONOUNCEMENT 18-12-2019 / O R D E R PER BEMCH:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-1 GUWAHATIS O RDER DATED 29.09.2016 PASSED IN CASE NO.02/2016-17 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. CASE CALLED TWICE. NONE APPEARS AT THE ASSESSEES B EHEST. CASE FILE SUGGESTS THAT THE ASSESSEE HAD NEVER PUT IN APPEARA NCE RIGHT FROM 25.10.2018 ONWARDS. WE THUS PROCEED EX PARTE AGAINST THE ASSESSEE. 2. WE HAVE GONE THROUGH THE ASSESSEES PLEADINGS A ND PERUSED THE CASE FILE / RECORD WITH THE ABLE ASSISTANCE COMING FROM THE REVENUE SIDE REPRESENTED BY MR. SEN. THE ASSESSEES SOLE SUBSTAN TIVE GRIEVANCE SEEKS TO ITA NO.56/GAU/2018 ASSESSME NT YEAR: 2010-11 SHRI SAHIL SURENDRA SAHARIAR VS. ITO WD-1(3), D BR PAGE 2 REVERSE BOTH THE LOWER AUTHORITIES ACTION DISALLOW ING THE ALLEGED COMMISSION PAYMENT OF 70 LAC BOTH IN COURSE OF ASSESSMENT AND AFFIRMED IN THE CIT(A)S ORDER UNDER CHALLENGE. THE LOWER APPELLATE DISCUSSI ON TO THIS EFFECT READS AS UNDER:- 5. GROUND NOS. 3 & 4 : THESE TWO GROUNDS ARE DIRECTED AGAINST DISALLOWANCE OF EXPENSE CLAIMED AMOUNTING TO RS. 70,00,000/-. 5.1 APPELLANT WAS DECLARING INCOME FROM SALARY, INT EREST AND COMMISSION FROM LIC. DURING THE YEAR, HE PROCURED INSURANCE POLICY FOR U C IN RESPECT OF SHRI PAWAN KUMAR RUIA FOR WHICH HE WAS GIVEN COMMISSION OF RS. 93,28,721.55. FROM THAT AMOUNT, ASSESSEE DEDUCTED RS.70,00,000/- AS PAYMENT MADE TO M/S GODWARI ELECTRO CONTRACTOR PVT. LTD. (GEC IN SHORT) AS FEE FOR COMMISSION/TECHNICAL SERVICES. THE ASSESSEE WAS ASKED TO EXPLAIN THE ALL OWABILITY OF EXPENSES CLAIMED. HE FAILED TO FURNISH SPECIFIC DETAILS OF SERVICES R ENDERED BY M/S GEC PVT LTD. THE AO ADDUCED THE FOLLOWING ARGUMENT TO DISALLOW THE CLAI M MADE BY ASSESSEE: '1. FOR SELLING OF LIFE INSURANCE POLICIES, ON AGEN T REQUIRES PERSONAL AND MARKETING SKILL BUT NOT TECHNICAL EXPERTISE OR KNOW -HOW. THE LIFE INSURANCE COMMISSION OF INDIA, AFTER APPOINTMENT OF AGENTS PR OVIDES ALL TECHNICAL AND LOGISTIC SUPPORT BY WAY OF TRAININGS TO ITS AGENTS. AND THEREFORE, UCI AGENT IS NOT REQUIRED TO OBTAIN ANY TECHNICAL AND PROFESSION AL SERVICE FROM OTHER AGENCIES FOR PROCURING INSURANCE POLICIES. 2. A COMPANY IS AN ARTIFICIAL JURIDICAL PERSON AND THEREFORE A COMPANY, WHICH IS NOT DOING BUSINESS IN THE FIELD OF INSURANCE, CA NNOT APPROACH AND INFLUENCE A PERSON FOR INSURANCE POLICY. 3. THERE IS NO WRITTEN AGREEMENT WITH M/S GODOWARI ELECTRO CONTRACTOR PVT. LTD. AND UNDERSTANDING BETWEEN THE TWO PARTIES IS O RAL AND MUTUAL UNDERSTANDING ONLY. THE ASSESSEE FAILED TO FURNISH DETAILS OF SERVICES RECEIVED AND CORRESPONDENCES MADE IN PROCURING INSU RANCE POLICIES AND THEREBY FAL1ED TO PROVE THAT THE EXPENSE CLAIMED WA S MADE WHOLLY AND EXCLUSIVELY JAR BUSINESS PURPOSE. MERE PAYMENT OF F EE/COMMISSION THROUGH ACCOUNT PAYEE CHEQUE AFTER DEDUCTION OF MS, DOES NO T ABSOLVE THE ASSESSEE FROM DISCHARGING HIS BURDEN WITH REGARD TO PROVING BUSINESS PURPOSE OF SUCH PAYMENT. AFTER CONSIDERING THE ABOVE FACTS, I HAVE FOUND THA T THERE IS COMPLETE BLACK OUT ON THE NATURE OF SERVICES RENDERED BY RECIPIENT COMPANY AND NO MATERIAL PLACED ON RECORD NOR THE ASSESSEE COULD DRAW MY ATT ENTION TO ANY MATERIAL WHICH WOULD DEMONSTRATE WITHOUT DOUBT THE NATURE OF SERVICES RENDERED BY THE RECIPIENT COMPANY EXCEPT BILL AND MONEY RECEIPT ' HOVE FOUND THAT PAYMENT OF FEE/COMMISSION TO M/S GODWORI ELECTRO CONTRACTOR S PVT LTD. IS NOT AN EXPENSE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF B USINESS AND THERE/ORE, NOT ALLOWABLE EXPENSE UNDER THE PROVISION SECTION 37(1) . IT IS MERELY ON ARRANGEMENT TO REDUCE THE TAXABLE INCOME BY CLAIMIN G FALSE EXPENDITURE. I THEREFORE, DISALLOW THE EXPENSE AMOUNTING TO RS. 70 ,00,000/- CLAIMED UNDER HEAD COMMISSION/FEE FOR TECHNICAL SERVICES PAID FOR PROCURING HIGH VALUE POLICIES/ASSIGNMENTS AND ADD BACK TO THE TOTAL INCO ME OF THE ASSESSEE' ITA NO.56/GAU/2018 ASSESSME NT YEAR: 2010-11 SHRI SAHIL SURENDRA SAHARIAR VS. ITO WD-1(3), D BR PAGE 3 5.2 IN APPEAL THE A/R VEHEMENTLY DISPUTED THE DECIS ION TAKEN BY THE AD. THE FACT OF ASSESSEE DOING AGENCY BUSINESS OF LIE WAS REITERATE D. IT WAS STATED THAT APPELLANT WAS ABLE TO PROCURE HIGH VALUE INSURANCE POLICY OF RS. 40 CRORE IN THE NAME OF SHRI PAWAN KUMAR RUIA FOR LIE. FOR THAT, IT RECEIVED COM MISSION OF RS.93,28,721.55 FROM LIC. ASSESSEE, IT WAS STATED, COULD GET THE POLICY DUE TO THE HELP OF GEC LTD. FOR THE SERVICE RENDERED, ASSESSEE MADE PAYMENT OF RS. 70,0 0,000/- TO GEC PVT LTD. IT WAS STATED THAT POLICIES WERE OFTEN PROCURED THROUGH PR OFESSIONAL CONTACTS. HAD GEC PVT. LTD. NOT HELPED ASSESSEE IN GETTING THE POLICY FOR LIE, THE SAME WOULD HAVE GONE TO OTHER AGENTS. AIR STATED THAT THE PAYMENT WAS GENUI NE AND THAT IT WAS MADE THROUGH BANKING CHANNEL. TAX WAS DULY DEDUCTED. THE PAYEE P ARTY HAD CONFIRMED RECEIPT OF THE SAME. THE GEC LTD. WAS NOT RELATED TO ASSESSEE AND THAT THERE IS NOTHING IN RECORD TO INDICATE THAT THE SUM OF RS.70,00,000/- W AS ROUTED BACK TO ASSESSEE. RELIANCE WAS PLACED FOR FOLLOWING JUDGMENTS: (I) DCLT VS. AG. GOVINDARAJUJU [2012] 108 ITR 888 (MADJ (II) SHAHZADA NAND & SANS VS. CIT (1977) 108 ITR 358 (SE) (III) CIT VS. COIMBATORE SALEM TRANSPORT PVT. LTD . (1966) 61 ITR 480 (MAD) (IV) ALUMINIUM CORPN. LTD. VS. CIT (1972) 86 TTR 11 (SC) (V) SWASTIC TEXTILES CO .(P) LTD. VS. CIT (1984) 150 ITR 155 (GUJ) (VI) JAMSHEDPUR MOTOR ACCESSORIES STORES VS. CIT (1974) 95 JTR 664 (PAT) (VII) . CIT VS. ASK. RATHINASAMY NADAR (1995) 212 ITR 527 (MAD) (VIII) LOKSHMINARAIN MODONLAL VS. CIT (1972) 86 T TR 439 (SC) AND (IX) DR.G.G.JOSHI VS. CIT (1944) 209 ITR 324 (GUJ ). 5.3 I HAVE CAREFULLY CONSIDERED THE MATTER. ASSESSE E HAD NOT GIVEN ANY FACT REGARDING ACTUAL SERVICE TENDERED BY GEC LTD. IN AB SENCE OF ANY EVIDENCE OF CONCRETE SERVICE BEING RENDERED BY THE PARTY, IT IS NOT POSSIBLE TO AGREE WITH THE ARGUMENT THAT RS. 70,00,000/- WAS BONA FIDE PAID TO THE PARTY. ASSESSEE ALSO HAD NOT GIVEN ANY EVIDENCE TO SHOW THAT GEC PVT. LTD. H AD EXPERTISE IN MATTER OF PROCURING INSURANCE BUSINESS. IF GEC PVT. LTD. HAD ACTUALLY BROUGHT THE INSURANCE POLICY OF MR. RUIA TO ASSESSEE, GEC PVT, ALSO MUST BE HAVING EVIDENCE OF ITS BUSINESS OR PERSONAL CONTACTS WITH MR. RUIA. A BUSI NESS EXPENSE OF RS. 70,00,00/- HAD BEEN CLAIMED. THE SAID CLAIM HAS TO BE SUPPORTE D BY EVIDENCE. IT SHOULD SOUND REASONABLE BY COMMON HUMAN LOGIC. MERE PAPER EVIDEN CE OF PAYMENT BEING MADE BY CHEQUE AND TAX BEING DEDUCTED WILL NOT SERVE THE PURPOSE. NATURE OF EXACT SERVICE BEING PROVIDED BY THE PARTY WITH CONCRETE EVIDENCE HAS TO BE FURNISHED. ASSESSEE HAD NOT COME UP WITH ANY EVIDENCE IN THIS REGARD. U NLESS THERE IS SOME SORT OF PROOF THAT GEC PVT. LTD. HAD ACTUALLY PROCURED THE BUSINE SS FOR ASSESSEE, THE CLAIM CANNOT BE ENTERTAINED. TO BE ENTITLED TO RS.70,00,000/- GE C PVT. LTD. MUST BE HAVING EVIDENCE OF ACTUALLY DOING SOME EFFECTIVE WORK IN P ROCURING THE BUSINESS FOR ASSESSEE. APPELLANT RELIED ON SLEW OF CASE LAWS. BU T IMMEDIATE CONCERN IS FACTUAL EVIDENCE. CASE LAWS RELIED UPON ARE OF NO HELP TO A SSESSEE UNLESS THERE ARE FACTS TO BUTTRESS THE CONTENTION MADE. SINCE ASSESSEE'S CONT ENTION IS NOT SUPPORTED BY ANY UNDERLYING FACTS, THE GROUND TAKEN HAS TO BE DISMIS SED ONLY. GROUND NOS. 3 AND 4 ARE DISMISSED . 3. IT IS CLEAR FROM A PERUSAL OF THE ABOVE EXTRACT ED DETAILED DISCUSSION THAT THE ASSESSEE HAS NEITHER BEEN ABLE TO PROVE THE NEX US OF THE IMPUGNED ALLEGED COMMISSION PAYMENT WITH CORRESPONDING INSUR ANCE COMMISSION INCOME NOR THERE IS ANY AGREEMENT BETWEEN HIMSELF A ND THE PAYEE ENTITY M/S GODWARI ELECTRO CONTRACTOR PVT. LTD. THERE IS FURTH ER NO INDICATION THAT THE SAID ITA NO.56/GAU/2018 ASSESSME NT YEAR: 2010-11 SHRI SAHIL SURENDRA SAHARIAR VS. ITO WD-1(3), D BR PAGE 4 PAYEE WAS EVER ENGAGED COMMISSION ACTIVITIES. WE TH EREFORE SEE NO REASON TO INTERFERE WITH THE CIT(A)S ACTION UNDER CHALLEN GE AFFIRMING THE IMPUGNED DISALLOWANCE. 6. THIS ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 18 /12/2019 SD/- SD/- (A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) JUDICIAL MEMBER) KOLKATA, *DKP - 18 / 12 /201 9 / / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SHRI SAHIL SURENDRA SAHARIA, FLAT NO.5, DOOR NO.3, 7 TH FLOOR WOOD STREET, KO LKATA-16 2. /RESPONDENT-INCOME TAX OFFICER, WARD-1(3), DIBRUGA RH 3. * - / CONCERNED CIT GUWAHATI 4. -- / CIT (A) GUWAHATI 5. 0 33*, *, / DR, ITAT, GUWAHATI 6. 7 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO *,