Sh. Balasubramaniun Alagiri, New Delhi V. ACIT, New Delhi

ITA 5662/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3439 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 20-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Section: 133(6); 131

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.:- 5662/DEL /2014 ASSESSMENT YEAR: 2010-11 BALASUBRAMANIUM ALAGIRI, CC/18A, DDA LIG FLATS, HARI NAGAR, NEW DELHI PAN AABPA9497L VS. A CIT CIRCLE-27(1) NEW DELHI. (APPELLANT) (RESPONDENT) O R D E R PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASS ESSEE AGAINST THE ORDER DATED 13.8.2014 PASSED BY THE LD. CIT(A) XXIV, NEW DELHI FOR ASSESSMENT YEAR 2010-11 WHEREIN, VIDE THE IMPUGNED ORDER, THE LD. CIT ASSESSEE BY: NONE DEPARTMENT BY: SHRI ARUN KUMAR YADAV , SR. DR DATE OF HEARING 27/11 /2017 DATE OF PRONOUNCEMENT 21/02/2018 ITA NO. 5662/DEL/2014 BALASUBRAMANIU N ALAGIRI VS. ACIT 2 (A) HAS CONFIRMED DISALLOWANCE MADE ON ACCOUNT OF C OMMISSION EXPENSES TO RS. 18,55,000/-. 2. BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED DECLARING INCOME AT RS. 34,67,890/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY ON THE BASIS OF CASS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSE SSEE HAD CLAIMED COMMISSION PAID AMOUNTING TO RS. 22,10,000/- UNDER THE HEAD DIRECT EXPENSES THE PAYMENTS WHICH HAD BEEN MADE TO VARIOU S PARTIES INCLUDING THE SPOUSE OF THE ASSESSEE SMT. V MAKELA. NOTICE U/S 133(6) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE A CT) WERE ISSUED BY THE AO TO ALL THE PARTIES WHO HAD BEEN PAID COMMISS ION DURING THE YEAR BUT NO REPLY WAS RECEIVED FROM ANY OF THE PARTIES. SUBSEQUENTLY, SUMMONS U/S 131 OF THE ACT WERE ISSUED TO THE PARTI ES FOR EXAMINATION UNDER OATH. HOWEVER, IN MOST CASES THE NOTICES RETU RNED BACK UN-SERVED AND NONE ATTENDED EXCEPT SMT. V MAKELA, THE SPOUSE OF THE ASSESSEE. THE ASSESSEE WAS AGAIN GIVEN AN OPPORTUNITY TO PROD UCE THE PERSONS TO WHOM THE NOTICES WERE ISSUED BUT THE ASSESSEE WAS N OT ABLE TO PRODUCE THE PERSONS. THEREFORE, THE AO WAS OF THE VIEW THAT THE COMMISSION PAYMENTS MADE WERE NOT GENUINE. THE AO PROCEEDED TO DISALLOW CLAIM OF COMMISSION OF RS. 15 LACS AND ADDED THE SAME TO THE INCOME OF THE ITA NO. 5662/DEL/2014 BALASUBRAMANIU N ALAGIRI VS. ACIT 3 ASSESSEE. THE AO ALSO ADDED BACK 50% OF THE COMMISS ION PAID TO SMT. V. MAKELA AND DISALLOWED RS. 3,55,000/- TO THE INCO ME OF THE ASSESSEE. ON APPEAL THE LD. CIT (A) CONFIRMED THE DISALLOWANC E. NOW THE ASSESSEE HAS APPROACHED THE ITAT AND HENCE CHALLENGED THE UP HOLDING OF DISALLOWANCE BY THE LD. CIT (A). 3. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE AND NO APPLICATION FOR ADJOURNMENT WAS ALSO RECEIVED ON BEHALF OF THE ASSESSEE. HOWEVER, LOOKING INTO THE FACTS OF THE CASE WE DEEM IT FIT T O PROCEED EX PARTE QUA THE ASSESSEE/APPELLANT. 4. THE LD. SR. DR PLACED RELIANCE ON THE CON CURRENT FINDINGS OF BOTH THE LOWER AUTHORITIES AND READ OUT EXTENSIVELY FROM THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE LD. CIT (A) AND SUBMITT ED THAT THE ASSESSEE HAD FAILED TO PRODUCE THE PERSONS FOR EXAMINATION S O AS TO SUBSTANTIATE THE PAYMENT OF COMMISSION TO THEM. IT WAS SUBMITTED THAT THE ASSESSEES APPEAL DESERVES TO BE DISMISSED. 5. WE HAVE HEARD THE LD. SR. DR AND HAVE AL SO PERUSED THE IMPUGNED ORDERS. A PERUSAL OF THE ORDER OF THE LD. CIT (A) SHOWS THAT HE HAS NOTED THAT DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE ASSESSEE HAS FILED PARTY-WISE DETAILS OF COMMISSION PAID, CONFIRMATION ITA NO. 5662/DEL/2014 BALASUBRAMANIU N ALAGIRI VS. ACIT 4 FROM THESE PARTIES, COPIES OF ITR AND COPIES OF BAN K STATEMENT/PASS BOOK ETC. LD. CIT(A) HAS ALSO NOTED THAT THE ASSES SEE HAD FILED CONFIRMATION FROM THESE PARTIES AND THAT TDS @ 10% WAS DULY DEDUCTED AND DEPOSITED AS PER PROVISIONS OF SECTION 194H OF THE ACT. THE ONLY GROUND FOR DISALLOWANCE OF RS. 15 LACS WAS THAT THE PERSONS DID NOT APPEAR BEFORE THE AO FOR BEING EXAMINED BY THE AO I N RESPONSE TO SUMMONS U/S 131 OF THE ACT. WE ALSO FIND FROM THE P ERUSAL OF THE IMPUGNED ORDER THAT THE COMMISSION PAYMENTS WERE MA DE THROUGH ACCOUNT PAYEE CHEQUES AND FURTHER ALL THE PERSONS R ECEIVING COMMISSION WERE INCOME TAX ASSESSEES AND THEIR PAN NUMBERS WER E ALSO DULY FURNISHED BEFORE THE AO. WE ALSO FIND THAT THE AO H AS NOWHERE DISPUTED THE CORRECTNESS OF THE PAN NUMBER OR RECORDED ANY F INDING THAT THE TRANSACTIONS IN DISPUTE WERE BOGUS. WE ALSO NOTE TH AT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE DULY AUDITED AND THE AUDITOR HAS NOT MADE ANY OBSERVATION REGARDING THE ISSUE IN DISPUTE . WHILE CONFIRMING THE DISALLOWANCE THE LD. CIT (A) HAS NOTED THAT IN RESPECT OF THE TWO COMMISSION AGENTS NAMELY MS. PARVINDER KAUR AND HER HUSBAND SHRI WAZIR SINGH, NO EVIDENCE REGARDING THE PERFORMANCE OF SERVICE WAS FURNISHED BY THE ASSESSEE DURING THE TIME OF ASSESS MENT AND FURTHER NO EVIDENCE REGARDING THEIR QUALIFICATION AND EXPERIEN CE IN THE FIELD OF ITA NO. 5662/DEL/2014 BALASUBRAMANIU N ALAGIRI VS. ACIT 5 MARKETING WAS FURNISHED. THE LD. CIT (A) HAS ALSO N OTED THAT THREE OTHER COMMISSION AGENTS NAMELY MEENA GUPTA, MAYA GUPTA AN D ATUL GUPTA WERE RELATED TO EACH OTHER AND LIVING IN THE SAME F LAT I.E. FLAT NO. 231, PRIRUSS PARK APARTMENT, PLOT NO. 33, SECTOR 6, DWAR KA AND NO EVIDENCE OF NATURE OF SERVICES, THEIR QUALIFICATION AND EXPE RIENCE IN THE FIELD OF MARKETING ETC. WAS FURNISHED BY THE ASSESSEE FOR JUS TIFYING THE PAYMENT OF COMMISSION. SIMILARLY, EVIDENCES REGARDING THE S ERVICES RENDERED BY SHRI SANJEEV GUPTA & SONS (HUF) AND SALONI GUPTA WER E NEVER FURNISHED. THEREAFTER, THE LD. CIT (A) HAS PROCEEDE D TO UPHOLD THE DISALLOWANCE OF RS. 15 LACS. SIMILARLY, IN THE CASE OF DISALLOWANCE OF COMMISSION PAID TO MRS. V. MAKELA, THE WIFE OF THE ASSESSEE, THE LD. CIT (A) HAS NOTED THAT NO EVIDENCE REGARDING TECHNICAL AND PROFESSIONAL QUALIFICATION WAS FURNISHED BY THE ASSESSEE. HOWEVE R, A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO HAS MADE THE DIS ALLOWANCE ONLY FOR THE REASON THAT THE PARTIES DID NOT APPEAR BEFORE T HE AO IN RESPONSE TO THE SUMMONS ISSUED U/S 131 OF THE ACT. THE AO HAS N OT GIVEN ANY FINDING REGARDING THE PERSONS BEING ASKED ABOUT THE EDUCATIONAL QUALIFICATIONS AND EXPERIENCE OF THE PERSONS TO WHO M THE COMMISSION HAS BEEN PAID. IT IS ALSO APPARENT FROM THE ASSESSM ENT ORDER THAT THE AO HAS NOT ASKED THE ASSESSEE TO PROVIDE PROOF OF REND ERING OF SERVICES IN ITA NO. 5662/DEL/2014 BALASUBRAMANIU N ALAGIRI VS. ACIT 6 THE CASE OF THE PARTIES OTHER THAN THE ASSESEES WI FE. IT IS ONLY IN THE CASE OF ASSESSEES WIFE SMT. V. MAKELA THAT THE AO HAS NOTED THAT SHE COULD NOT SUBSTANTIATE THE WORK AS CLAIMED TO BE PE RFORMED BY HER. THEREFORE, IT IS VERY MUCH APPARENT THAT IN RESPECT OF OTHER PARTIES THE AO HAD NOT REQUIRED THE ASSESSEE TO FURNISH DETAILS LIKE EDUCATIONAL QUALIFICATIONS AND AS WELL AS PROOF OF SERVICES HAV ING BEING RENDERED BY THEM AND THE LD. CIT (A) HAS CONFIRMED THIS DISALLO WANCE WITHOUT APPRECIATING THE FACTS THAT THESE ISSUES WERE NOT E XAMINED BY THE AO AT ALL. THEREFORE, WHILE WE DO AGREE THAT THE FINDINGS OF THE LD. CIT (A) THAT THE COMMISSION PAID TO THE WIFE OF THE ASSESSEE NEE DS TO BE DISALLOWED AS THE ASSESSEES WIFE COULD NOT SUBSTANTIATE THE R ENDERING OF SERVICES IN THE STATEMENT RECORDED U/S 131 OF THE ACT, WE ARE O F THE CONSIDERED OPINION THAT IN RESPECT OF OTHER PARTIES THE ACTION OF LD. CIT (A) IN UPHOLDING THE DISALLOWANCE OF RS. 15 LACS LACKS SO UND BASIS AND IN THE INTEREST OF JUSTICE THIS ISSUE SHOULD BE RE-EXAMINED BY THE AO. ACCORDINGLY WE UPHOLD THE LD. CIT(A)S ACTION IN UP HOLDING THE DISALLOWANCE OF RS. 3,55,000/- IN RESPECT OF COMMIS SION PAID TO THE WIFE OF THE ASSESSEE BUT FOR THE BALANCE RS. 15 LACS, WE DEEM IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE AO TO EXAMI NE THE CLAIM OF THE ASSESSEE IN LIGHT OF THE EDUCATIONAL QUALIFICATIONS AND EXPERIENCE AS WELL ITA NO. 5662/DEL/2014 BALASUBRAMANIU N ALAGIRI VS. ACIT 7 AS PROOF OF RENDERING OF SERVICES IN RESPECT OF WHI CH THE COMMISSION IS CLAIMED TO HAVE BEEN PAID AFTER GIVING APPROPRIATE OPPORTUNITY TO THE ASSESSEE TO PRESENT HIS CASE. WE ALSO DIRECT THE AS SESSEE TO FULLY CO- OPERATE WITH THE AO FOR A QUICK DISPOSAL OF THE ISS UE FAILING WHICH THE AO SHALL BE AT LIBERTY TO DECIDE THE ISSUE BASED ON FA CTS AVAILABLE ON RECORD AND IN ACCORDANCE WITH LAW. 6. IN THE RESULT THE ASSESSEES APPEAL STANDS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21.2.2018. SD/- SD/- (B.P. JAIN) (SU DHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21.02.2018 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI