SHRI MAHESH CHAND GUPTA, Jaipur V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-5, Jaipur

ITA 609/JPR/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7685 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 03-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA
• Assessee Lawyers: MADHUKAR GARG
• Keywords: Rule of consistency; TDS
• Section: 264; 72; 13

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 609 & 627/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 & 2014-15 SHRI MAHESH CHAND GUPTA PROP. M/S RAJASTHAN SMALL SCALE COTTAGE INDUSTRIES, JAGAT SIROMANI ROAD, AMER ROAD, JAIPUR. CUKE VS. THE ACIT, CIRCLE-5, JAIPUR. TOLFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACEPG 9938 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MADHUKAR GARG (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K.C. GUPTA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 04/12/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 27/01/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINS T THE RESPECTIVE ORDERS OF LD. CIT(A)-II, JAIPUR DATED 20 .03.2018 FOR THE ASSESSMENT YEARS 2013-14 & 2014-15 RESPECTIVELY. SI NCE COMMON ISSUES ARE INVOLVED, BOTH THE APPEALS WERE HEARD TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDER. ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 2 ITA NO. 609/JP/2018 2. FOR THE PURPOSE OF PRESENT DISCUSSIONS, WITH TH E CONSENT OF BOTH THE PARTIES, WE TAKE UP ASSESSEE APPEAL IN ITA NO. 609 /JP/2018 FOR A.Y 2013-14. IN ITS APPEAL, THE ASSESSEE HAS RAISE D AS MANY AS EIGHT GROUNDS WHICH EFFECTIVELY RELATES TO SUSTENANCE OF DISALLOWANCE OF COMMISSION EXPENSES CLAIMED BY THE ASSESSEE. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS CARRYING ON BUSINESS IN NAME OF RAJASTHAN SMALL SCALE COTTAGE I NDUSTRIES AND IS DERIVING INCOME FROM SALE OF HANDICRAFT, CARPETS AN D OTHER SIMILAR ITEMS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN AND CLAIMED SA LES COMMISSION OF RS. 2,08,66,037/-. AS PER THE ASSESSING OFFICER, TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF SELLING HANDICRAFTS, JEWELLERY O THER ITEMS TO TOURISTS AND HENCE SUPPOSEDLY PAYS COMMISSION TO TOUR OPERAT ORS, GUIDES ETC. FOR BRINGING THE TOURISTS TO THE SHOWROOM/SHOP. IN ORDE R THE VERIFY THE COMMISSION EXPENSES, THE ASSESSEE WAS ISSUED A SHOW CAUSE NOTICE TO PROVIDE DETAILS OF RATE AND METHODOLOGY OF HOW COMM ISSION PAYMENTS ARE MADE AND A CORRELATION OF SALE AMOUNT AND COMMI SSION PAID FOR THE MONTH OF AUGUST WAS CALLED FOR ALONG WITH VOUCHERS OF SALE FOR TEST CHECK VERIFICATION. IN RESPONSE, THE ASSESSEE SUBMITTED T HAT HE IS IN THE HANDICRAFT BUSINESS AND ITS BUSINESS IS DEPENDENT O N THE TOURISTS WHO ARE COMING TO VISIT ASSESSEES PREMISES. IT IS A WELL K NOWN TRADE PRACTICE IN HANDICRAFT BUSINESS THAT REASONABLE PERCENTAGE OF C OMMISSION IS TO BE PAID TO AGENTS IN THE FORM OF TAXI DRIVERS, GUIDES, AUTO DRIVERS ETC. FURTHER, IT WAS SUBMITTED THAT THE PAYMENT OF COMMI SSION IS BEING MADE ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 3 AT 20% OF SALE BILLS AND THE SAME HAS BEEN MADE SIN CE LAST NUMBER OF YEARS. FURTHER, DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSEE WAS ASKED TO SUBMIT THE LEDGER OF COMMISSI ON EXPENSES AND ON PERUSAL OF THE ENTRIES IN THE LEDGER SO SUBMITTED B Y THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS PA ID COMMISSION ON AS MANY AS 4,342 TIMES TO DIFFERENT TAXI DRIVERS/GUIDE S AND ALL THESE PAYMENTS OF COMMISSION ARE BETWEEN RS. 4,700 TO 4,9 99/-AND NOT A SINGLE PAYMENT IS EXCEEDING RS. 5,000/- WHICH IS TH E LIMIT FOR DEDUCTION OF TDS U/S 194H OF THE ACT. FURTHER, THE ASSESSEE WAS ASKED TO PRODUCE ALL THE COMMISSION VOUCHERS WHICH WERE SUBMITTED BY HIM AND ON PERUSAL OF THE SAME, IT WAS OBSERVED BY THE ASSESSI NG OFFICER THAT THE VOUCHERS CONTAIN THE DATE OF TRANSACTION, ONLY THE FIRST NAME OF THE DRIVER/GUIDE/AGENT, THE VEHICLE NUMBER, CASH MEMO N UMBER OF SALE AND A SO CALLED SIGNATURE OF THE AGENT. THE VOUCHERS O F FIRST WEEK OF AUGUST, SEPTEMBER AND OCTOBER WERE EXAMINED IN DETAIL BY TH E ASSESSING OFFICER AND THE VEHICLE NUMBER WRITTEN ON THEM WERE MATCHED WITH THE NATIONAL DATABASE OF VEHICLES AVAILABLE ON VAHAN.NIC IN WHIC H COLLECTS DATA OF REGISTRATION OF THE VEHICLES IN A NATIONAL REPOSITO RY. BASED ON SAID EXAMINATION OF 264 ENTRIES PERTAINING TO THE FIRST WEEK OF AUGUST, SEPTEMBER AND OCTOBER, THE ASSESSING OFFICER OBSERV ED THAT IN RESPECT OF 8 ENTRIES, VEHICLES HAVE BEEN PURCHASED AND REGISTE RED AFTER THE DATE OF TRANSACTION OR 3.03% OF THE TOTAL COMMISSION ENTRIE S AND THESE VEHICLES CAN IN NO CIRCUMSTANCES HAVE VISITED ASSESSEES SHO WROOM AND THEIR NUMBERS HAVE BEEN ENTERED ONLY TO PROVIDE FALSE PAR TICULARS TO CONCEAL INCOME. HENCE, OUT OF TOTAL COMMISSION EXPENSES CL AIMED BY THE ASSESSEE, 3.03% WAS DISALLOWED AMOUNTING TO RS. 6,3 2,241/-. IT WAS FURTHER OBSERVED BY THE AO THAT OUT OF REMAINING 25 6 ENTRIES, 178 ENTRIES ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 4 ARE OF NON-EXISTENT/NON REGISTERED VEHICLE I.E. 67. 42% OF THE TOTAL ENTRIES AND 49 OR 18.56% HAVE THEIR FITNESS LEVELS EXPIRED. EVEN AFTER CONSIDERATION, THE POSSIBILITY OF CERTAIN VEHICLES PLYING EVEN AFTER EXPIRED FITNESS LEVELS, OR THE DRIVER/AGENT HAVING PROVIDED INCOMPLETE DETAILS OF VEHICLES NUMBER, OR WRONG RECORD BY MISTAKE IN A HU RRY, OR ANY OTHER CONTINGENCY, IT IS HIGHLY IMPROBABLE THAT AROUND 86 % OF THE ENTRIES ARE INCORRECT IN SOME MANNER OR THE OTHER. IT WAS ACCOR DINGLY HELD BY THE AO THAT THE COMMISSION EXPENSES ARE UNSUBSTANTIATED, U NVERIFIABLE, AND AFTER EXHAUSTIVE ATTEMPTS AT VERIFICATION FOUND TO BE HIGHLY IMPROBABLE IF NOT INCORRECT. HENCE, AT LEAST 8% OF THE ENTRIES OV ER AND ABOVE THE DISALLOWANCE CONSIDERED ABOVE MUST BE MADE OF THE TOTAL COMMISSION EXPENSES OR A TOTAL OF RS. 16,69,283/-. ACCORDINGL Y, ADDITION OF RS 23,01,524 WAS DISALLOWED TOWARDS COMMISSION EXPE NSES AND ADDED TO THE TOTAL INCOME IN THE HANDS OF THE ASSESSEE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). IT WAS SUBMITTED BY THE ASSESSEE T HAT HE WAS NOT PROVIDED APPROPRIATE OPPORTUNITY BY THE AO TO REBUT THE EVIDENCES COLLECTED BY THE AO. THE LD CIT(A) AFTER ALLOWING THE ASSESSEE THE NECESSARY OPPORTUNITY TO REBUT THE FINDINGS OF THE AO AND AFTER CALLING FOR THE REMAND REPORT ON THE SUBMISSIONS SO FILED BY TH E ASSESSEE HAS SUSTAINED THE DISALLOWANCE SO MADE BY THE AO. THE C ONTENTION OF THE ASSESSEE THAT IN THE PAST ALSO, SIMILAR DISALLOWANC ES MADE HAVE BEEN RESTRICTED BY THE TRIBUNAL AND RULES OF CONSISTENCY SHOULD BE FOLLOWED WAS ALSO NOT ACCEPTED BY THE LD CIT(A). AGAINST THE SAID FINDINGS, THE ASSESSEE IS IN APPEAL BEFORE US AND THE FINDINGS OF THE LD CIT(A) WHICH ARE UNDER CHALLENGE READ AS UNDER: ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 5 3.3.1 IN THE PRESENT PROCEEDINGS, THE AR SUBMITTED THAT NO OPPORTUNITY WAS GIVEN TO THE APPELLANT TO REBUT THE EVIDENCES COLLECTED BY THE AO. IT WAS FURTHER SUBMITTED THAT PAYMENT OF COMMISSIONS TO VARIOUS AGENTS, TAXI DRIVERS & GUIDE S IS A REGULAR FEATURE OF THE APPELLANTS LINE OF BUSINESS, IN THE PAST ALSO DISALLOWANCE OF 8% OF COMMISSION WAS MADE WHICH HAS BEEN RESTRICTED BY THE APPELLATE AUTHORITIES. IT WAS FUR THER STATED THAT IN THIS LINE OF BUSINESS ANY PERSON WHO BRINGS IN CUST OMERS TO THE SAID PREMISES TAKES COMMISSION AND USUALLY THE SAME IS PAID AT 20% OF THE BILL AMOUNT. IT WAS FURTHER SUBMITTED TH AT IN THE PAST ALSO SIMILAR DISALLOWANCES MADE HAVE BEEN RESTRICTE D AND RULES OF CONSISTENCY SHOULD BE FOLLOWED. 3.3.2 IT IS SEEN THAT THE AO HAD PROCEEDED TO EXAMI NE THE EXPENDITURE AND THE APPELLANT HAD PRODUCED THE VOUC HERS AS THE EVIDENCE FOR THESE PAYMENTS. AS OBSERVED AND NOTED BY THE AO, THESE VOUCHERS DO NOT CONTAIN VITAL DETAILS LIKE NA ME, ADDRESS, PAN, TELEPHONE NO. OR ANY OTHER DETAILS THROUGH WHI CH THE RECIPIENT COULD BE IDENTIFIED. FURTHER, THE AR DURI NG ASSESSMENT PROCEEDINGS EXPRESSED INABILITY TO PRODUCE THESE EN TITIES FOR ANY VERIFICATION OF THE TRANSACTIONS OR EVEN THEIR EXIS TENCE. IN SUCH A CASE THE AO HAS MADE AN EFFORT TO VERIFY FROM THE O NLY VERIFIABLE DETAIL AVAILABLE ON THE VOUCHER WHICH IS THE VEHICL E NUMBER. THE RESULTS OF HER VERIFICATIONS ARE ENUMERATED ABOVE. 3.3.3 AS REGARDS ARS SUBMISSIONS REGARDING THE FACT THAT HE HAS NOT BEEN PROVIDED THE OPPORTUNITY TO REBUT THE EVID ENCE COLLECTED BY THE AO, IN I THE PRESENT PROCEEDINGS, THIS OPPORTUNITY WAS PROVIDED TO THE AR AND THE DETAILS COLLECTED BY THE AO WERE PROVIDED AS WELL AS AMPLE TIME TO REBUT THE SAME. T HE AR HAS SUBMITTED A CHART WHEREBY HE POINTED OUT CERTAIN ER RORS IN THE OBSERVATIONS OF AO AND IN SOME CASES HE PROVIDED A DIFFERENT NUMBER SAYING THAT THE SAME HAD BEEN INCORRECTLY PI CKED UP BY THE AO. THE AR IN THE RECONCILIATION CHART MAINLY T OOK THE PLEA THAT THE LESS EDUCATED DRIVERS COULD NOT GIVE THE CORREC T VEHICLE NO. AND ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 6 THE VEHICLES WERE SOMETIMES IN THE PARKING SO THE N UMBER COULD NOT VERIFIED. AFTER THE CONCILIATION BY THE AR, THE SAME WAS FORWARDED TO THE AO FOR HIS COMMENTS AND ASKED TO V ERIFY SL. NO. 72,76,82,85 & 95 BECAUSE THESE CARS WERE CLAIME D AS PURCHASED & REGISTERED IN 2013. EVEN AFTER SUCH ELA BORATE RECONCILIATIONS WHEREIN IN SOME CASES PARTS OF THE NUMBER WERE SAID TO BE INCORRECT EVEN THOUGH PICKED UP FROM THE SAME VOUCHER, UNDERTAKEN BY THE AR, THERE WERE VEHICLES WHICH COU LD NOT BE FOUND AND APPEARED AS FICTITIOUS ENTRIES. THE REMAN D REPORT OF THE AO WHEREIN FROM THE LIST SUBMITTED BY THE AR AF TER RECONCILIATION ONLY FIVE ENTRIES WERE CHOSEN ON TEX T CHECK BASIS AND EVEN IN THEM TWO WERE NOT VERIFIABLE THE REMAND REPORT IS REPRODUCED BELOW:- ` IN THIS CONNECTION AFTER VERIFICATION FROM WEBSI TE: VAHAN. NIC. IN PLEASE FIND DESIRED REPORT AS UNDER: S. NO . S. NO.OF ANNEXURE NO. OF VEHICLE REGISTRATI ON DATE FITNESS DATE OWNER NAME 1. 72 RJ14TA596 VEHICLE NOT FOUND 2. 76 RJ14TA516 VEHICLE NOT FOUND 3. 82 RJ14TA813 10.03.201 12.05.201 SH. AKSHEY BANSAL 4. 95 RJ14TB339 10.05.201 08.04.201 SH. ARVIND SINGH 5. 85 DL1Z1199 08.10.200 08 .10.200 PRANAV TOURS& TRAVELS *AS PER ABOVE PRIMAFACIE VEHICLE NO. AT S. NO. 72 A ND 76 OF ANNEXURE B ARE FICTITIOUS ENTRIES. SUBMITTED FOR KI ND PERUSAL.' 3.3.4 IT IS PERTINENT TO NOTE THAT THE ONUS IS ON T HE APPELLANT TO PROVE THAT THIS EXPENDITURE IS ACTUALLY INCURRED AN D PROVIDE SOME EVIDENCE FOR THE SAME. THE VOUCHERS MAINTAINED DO N OT HELP IN THIS REGARD AS THEY LACK ANY DETAILS WHICH CAN HELP ESTABLISHING EVEN IDENTITY OF THE RECIPIENTS. FURTHER THE PAYMEN TS ARE IN CASH AND OF AN AMOUNT LESS THAN RS 5000. IT IS IMPROBABL E THAT OUT OF 4000 ODD ENTRIES NOT A SINGLE CASE, THE AMOUNT OF C OMMISSION EXCEEDED RS. 5000. FURTHER THE BILLS ARE BEING PURP OSELY KEPT AT ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 7 THIS AMOUNT SO THAT IT REMAINS LESS THAN RS. 5000 A ND TDS DOES NOT HAVE TO BE DEDUCTED. IN THE ABSENCE OF ANY IDEN TIFICATION, PAYMENT BEING COMPLETELY IN CASH AND THE EFFORTS OF AO IN IDENTIFYING THE VEHICLES AS THAT BEING THE ONLY VER IFIABLE DETAILS AVAILABLE ON THE VOUCHERS MAINTAINED BY THE APPELLA NT AND AS DISCUSSED ABOVE CLEARLY SHOWS THAT THE EXPENDITURE COULD NOT BE VERIFIED. THE OPPORTUNITY FOR RECONCILIATION OF VEH ICLE NUMBERS WAS PROVIDED TO THE AR AND ALL REASONS FORWARDED WERE A CCEPTED INCLUDING THAT THE CAR NUMBERS WERE DIFFERENT FROM WHAT THE AO HAD TAKEN. EVEN THEN, IT WAS FOUND THAT SUBSTANTIAL PORTION OF VEHICLE REMAINED UNRECONCILED AND EVEN OUT OF 5 TES T CASES, 2 VEHICLES COULD NOT BEEN IDENTIFIED AS REPORTED IN T HE REMAND REPORT. IN VIEW OF THE ABOVE, IT HAS TO BE CONCLUDE D THAT THE AR HAS COMPLETELY FAILED TO ESTABLISH THE GENUINENESS OF THIS EXPENDITURE. 3.3.5 NOW COMING TO THE CONTENTION OF THE APPELLANT REGARDING PAST HISTORY AND RULE OF CONSISTENCY, THE ISSUE IS COMPLETELY A FACTUAL ISSUE AND WOULD DEPEND ON THE FACTS OF THE CASE IN EVERY YEAR. FURTHER, A CHART SHOWING THE PAST HISTORY FRO M 2008-2009 HAS BEEN FILED WHEREIN IT IS SEEN THAT IN ASSESSMEN T YEARS 2008-09 TO 2013-14, THE AO HAS BEEN DISALLOWING COMMISSION EXPENSES AT 8 %. THE HON'BLE ITAT IN ASST. NO. '08-'09 DISCUSSE D THE ISSUE AND DECIDED AS FOLLOW:- 'WE HAVE THE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN PA ST, SIMILAR ADDITION WERE MADE BY THE ASSESSING OFFICER, WHICH HAS BEEN EITHER DELETED BY THE CIT(A) OR CONFIRMED BY THE CI T(A)BUT THE FINALLY THE COORDINATE BENCH HAD CONFIRMED A LUMP S UM ADDITION OF RS. 50,000/- IN EACH YEAR. THE ID CIT(A) HAS SPE CIFIED THE DEFECTS WITH REFERENCE TO BILLS AND NOT DEDUCTION T DS ON COMMISSION PAYMENT BUT HE IS NOT ALLOWED THE ASSESS EE TO EXPLAIN THE REASON FOR NOT DEDUCTING TDS. THE DISCR EPANCY IS SPECIFIC AND COMMISSION PAYMENT IN THIS LINE OF BUS INESS IS ACCEPTED IN GENERAL AS THE HANDICRAFT EMPORIUMS GEN ERALLY PAY ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 8 THE COMMISSION TO THE GUIDES, TAXI DRIVERS, AUTO DR IVERS. THEY COME FROM OUTSIDE AND HAD DEALING OCCASIONALLY AND IT WAS NOT FAIR TO PAY COMMISSION IN FRONT OF CUSTOMERS. IT IS JUST LIKE A SECRET COMMISSION AND A VERY SHORT DURATION IS AVAI LABLE WITH THE ASSESSEE TO COMPLETE THE FORMALITIES FOR PAYING COMMISSION. THEREFORE, THERE MAY BE DEFECTS IN THE RECEIPT OF COMMISSION PAYMENT IT IS A PART AND PARCEL OF THE B USINESS DEALINGS. THEREFORE, WE CONFIRM THE DISALLOWANCE UN DER THIS HEAD AT RS. 1 LAC OUT OF TOTAL DISALLOWANCE MADE BY THE ASSESSING OFFICER AT RS. 16,54,883/-. ACCORDINGLY, GROUNDS NO. 3 TO 6 OF THE APPEAL ARE PARTLY ALLOWED. ' 3.3.6 IN THE ORDER FOR A.Y. 08-09 THE ITAT HAD OBSE RVED THAT THE SPECIFIC DEFECTS FOUND BY THE CIT(A) HAD NOT BE EN CONFRONTED TO THE SUBSEQUENTLY FROM A.Y. 09-10 TO 1 2-13 SIMILAR ORDERS HAVE BEEN PASSED. IN THE PRESENT CAS E ENOUGH OPPORTUNITIES HAVE BEEN PROVIDED TO THE APPELLANT T O APPRAISE AND MAKE SUBMISSIONS ON THE DEFECTS FOUND. IT IS FA CT THAT THIS EXPENDITURE IS NOT VERIFIABLE. FURTHER IN VIEW OF T HE VERIFICATION CONDUCTED BY THE AO, THE DISALLOWANCE MADE AT 8% OF THE TOTAL COMMISSIONS CLAIMED, IS CONFIRMED. GROUND OF APPEAL IS DISMISSED. 5. DURING THE COURSE OF HEARING, THE LD AR SUBMITTE D THAT THE ASSESSEE HAS SHOWN SALES COMMISSION EXPENSES OF RS. 2,08,66,037. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER HAD COLLECTED DATA FROM THE NATIONAL DATA BASE OF V EHICLE AVAILABLE AT VAHAN.NIC.IN AND ON THE BASIS OF SUCH DETAILS, FOLLOWING INFERE NCES WERE DRAWN: OUT OF TOTAL 72 ENTRIES IN THE FIRST WEEK OF AUGUST , ONLY 20 ARE VEHICLE NUMBERS OF ACTUAL REGISTERED VEHICLES AND 4 VEHICLES ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 9 HAVE BEEN REGISTERED AND PURCHASED AFTER THE DATE O F TRANSACTION. IT HAS ALSO BEEN OBSERVED THAT 11 ENTRIES PERTAINED TO VEHICLES WHOSE FITNESS HAS EXPIRED AND ARE NOT ELIGIBLE FOR PLYING ON THE ROADS. IT HAS BEEN OBSERVED BY HER THAT ONLY 6. 94% CAN BE SAID TO BE EXISTING REGISTERED VEHICLES THAT COU LD HAVE VISITED ASSESSEE'S SHOWROOM. SIMILAR OBSERVATION HA S BEEN MADE BY HER WITH REGARD TO COMMISSION VOUCHER OF FI RST WEEK OF OCTOBER. IN PARA 1.5 OF THE ORDER, IT HAS BEEN MENTIONED THA T ABOVE EXPENSES ARE ENTIRELY UNVERIFIABLE AND AS THE TRANS ACTIONS HAVE BEEN MADE IN CASH, THE GENUINENESS OF THE ABOVE TRA NSACTIONS CANNOT BE ESTABLISHED AND THE ASSESSEE HAS FAILED T O ESTABLISH THE SAME. 6. THE AO HAS, THEREFORE, ARRIVED AT A CONCLUSION T HAT OUT OF THE TOTAL 264 ENTRIES EXAMINED, 8 ENTRIES HAVE VEHICLES PURCHASED AND REGISTERED AFTER THE DATE OF TRANSACTION I.E. 3.03% ENTRIES. ON THE BASIS OF SUCH INFERENCES, THE AO HAS DISALLOWED 3.3 0% OF THE TOTAL COMMISSION PAYMENTS RESULTING IN DISALLOWANCE OF RS .6,32,241/-. IN ADDITION TO THE SAID DISALLOWANCE, THE AO HAD HELD THAT 8% OF THE ENTRIES OVER AND ABOVE THE DISALLOWANCES CONSIDERED MUST BE MADE AND THE AO, THEREFORE, WORKED OUT THE DISALLOWANCE AT RS.16,69,283/-. IN THIS MANNER, THE AO HAD MADE TOT AL DISALLOWANCE OF RS.23,01,524/-. ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 10 7. IT WAS SUBMITTED BY THE LD AR THAT BEFORE THE LE ARNED CIT(A), IT WAS POINTED OUT THAT ENQUIRIES WHICH WERE DONE B Y THE ASSESSING OFFICER WERE NOT BROUGHT TO THE KNOWLEDGE OF THE AS SESSEE NOR ANY SHOW CAUSE NOTICE WAS GIVEN NOR THE ASSESSEE WAS GI VEN ANY OPPORTUNITY TO EXPLAIN THE POSITION. THE LEARNED CI T(A) DURING THE COURSE OF APPELLATE PROCEEDINGS HAD ASKED THE ASSES SEE TO RECONCILE NON-EXISTING VEHICLES MENTIONED BY THE AS SESSING OFFICER IN THE ASSESSMENT ORDER. THE ASSESSEE HAD FILED AN EXPLANATION ALONG WITH COMPLETE DETAILS REGARDING RECONCILIATIO N OF NON-EXISTING VEHICLES AND THE SAID DETAILS ARE PLACED AT PBP NO. 4-10. IT WAS ALSO EXPLAINED THAT MOST OF THE DRIVERS/GUIDES ARE ILLIT ERATE AND SOME TIME, FULL VEHICLE NUMBER IS EITHER NOT MENTIONED B Y THEM OR IS NOT MENTIONED ON THE VOUCHERS PREPARED BY THE PERSON PR EPARING THE VOUCHERS FOR PAYMENT OF COMMISSION. IT WAS ALSO EXP LAINED WITH REGARD TO THE OBSERVATION THAT THE FITNESS CERTIFIC ATE HAS EXPIRED, EVEN WITHOUT FITNESS CERTIFICATES, THE VEHICLES ARE RUNNING ON THE ROADS AND NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE ON THIS BASIS BECAUSE IF THE DRIVER IS RUNNING THE VEHICLE WITHOUT FITNESS CERTIFICATE, HE WOULD BE LIABLE TO ACTION U NDER RELEVANT LAW. 8. IT WAS FURTHER SUBMITTED THAT THE DRIVER/GUIDE W HO IS BRINGING THE CUSTOMERS TO ASSESSEE'S PREMISES IS GETTING COM MISSION ON THE BASIS OF PURCHASES MADE BY THE CUSTOMERS AND AFTER BILL IS PREPARED, THE GUIDE/DRIVER ASK FOR HIS COMMISSION A ND THE COMMISSION IS PAID TO HIM AND VEHICLE NUMBER ON THE COMMISSION VOUCHER IS NOTED AS MENTIONED BY THE DRIVER/GUIDE. THE DRIVER OF THE VEHICLE/ GUIDE IS IN A HURRY TO LEAVE THE PREMI SES OF THE ASSESSEE AS THE CUSTOMER IS READY TO GO AFTER MAKIN G THE PAYMENT ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 11 AND VERY LITTLE TIME IS AVAILABLE WITH THE ASSESSEE TO VERIFY WHETHER THE VEHICLE NUMBER MENTIONED BY THE DRIVER/GUIDE IS CORRECT OR NOT. IT SOMETIME SO HAPPENS THAT INCOMPLETE NUMBER IS MENTIONED BY THE DRIVER/GUIDE AND MOST OF THE CASES WHERE THE ASSESSING OFFICER HAS MENTIONED THAT NO VEHICLE HAS BEEN FOUN D IS ONLY ON ACCOUNT OF INCOMPLETE NUMBER. ATTENTION IS INVITED TO THE FACT THAT MOST OF THE VEHICLE NUMBERS MENTIONED IN THE ASSESS MENT ORDER DO NOT CONTAIN FULL VEHICLE NUMBER AS ONLY RJ-14 OR RJ-14-T IS MENTIONED. AS THE CUSTOMERS COMING TO THE PREMISES ARE FROM OUT OF JAIPUR, THEY ARE MOSTLY COMING BY TAXIS AND HENC E THE CORRECT NUMBER OF THE TAXI WOULD COMPRISE OF ALPHABET TA, T B, TC ONWARDS. AS THE ASSESSEE HAD RELIED ON THE VEHICLE NUMBER AS MENTIONED BY THE DRIVER/GUIDE AND IN SOME INSTANCES FULL NUMBER HAS NOT BEEN MENTIONED THERE IS VARIATION IN THE NUMBER OF VEHICLE. 9. IT WAS FURTHER SUBMITTED THAT THE LEARNED ASSESS ING OFFICER HAS MENTIONED INCORRECT NUMBER IN CERTAIN CASES E.G . ON PAGE 5 IN ITEM NO.3, THE VEHICLE NUMBER MENTIONED IS DL-14-95 69 WHEREAS THE CORRECT NUMBER IS DL-1Y-9569. SIMILARLY VEHICLE NUMBER IN ITEM NO.22 IS DL-1Y-4372 AND IT SEEMS THAT IN RESPECT OF THE NUMBERS MENTIONED AS DL-14 BY THE ASSESSING OFFICER, HE HAD NOT CORRECTLY MENTIONED THE NUMBER WHICH ARE DL 1Y. IN ITEM NO.42 , THE VEHICLE NUMBER MENTIONED IS RJ-14-TA-1198 WHEREAS THE CORRE CT NUMBER IS RJ-14-TB-1198. SIMILAR IS THE POSITION IN RESPEC T OF VEHICLE NUMBER MENTIONED IN ITEM NO.15 WHICH IS RJ-14-TB AN D RJ-14-TA. THERE ARE ALSO LARGE NUMBER OF SIMILAR OTHER INSTAN CES. ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 12 10. IT WAS FURTHER SUBMITTED THAT AFTER THE DETAILS WERE FURNISHED BEFORE THE LD CIT(A), THE LATTER HAS CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER WHO HAD SUBMITTED HIS RE PORT VIDE LETTER DATED 23.3.2017 AND THE REPORT IS PLACED AT PBP NO. 19. ON PERUSAL OF THE REMAND REPORT, IT WOULD BE OBSERVED THAT OUT OF THE 5 ENTRIES THE ASSESSING OFFICER HAS MENTIONED THAT 3 ENTRIES WERE FOUND CORRECT AND VEHICLES WERE NOT FOUND IN RESPEC T OF 2 ENTRIES. THEREFORE, 60% OF THE ENTRIES WHICH WERE ORIGINALLY TREATED BY THE ASSESSING OFFICER AS INCORRECT WERE FOUND CORRECT A ND ONLY THE VEHICLE NUMBER WAS WRONGLY MENTIONED. 11. IT WAS FURTHER SUBMITTED THAT IN SPITE OF THESE FACTS AND THE REMAND REPORT OF THE ASSESSING OFFICER, THE LEARNED CIT(A) HAS OBSERVED THAT SUBSTANTIAL PORTION OF VEHICLES REMAI NED UNRECONCILED AND EVEN OUT OF 5 TEST CASES, 2 VEHICL ES COULD NOT BE IDENTIFIED AS REPORTED IN THE REMAND REPORT. THE LE ARNED CIT(A) HAS THEREAFTER CONCLUDED THAT IN VIEW OF ABOVE, IT HAS TO BE CONCLUDED THAT THE A/R HAS COMPLETELY FAILED TO EST ABLISH THE GENUINENESS OF THIS EXPENDITURE. 12. IT WAS SUBMITTED THAT WHEN THE ASSESSEE HAD FIL ED COMPLETE DETAILS AND HAS ALSO FILED RECONCILIATION OF VEHICL E NUMBERS AND EVEN IN THE REMAND REPORT, ONLY 2 OUT OF 5 TEST CAS ES CHOSEN BY THE CIT(A) COULD NOT BE IDENTIFIED, IT IS NOT UNDERSTAN DABLE AS TO HOW THE CIT(A) HAS MENTIONED THAT THE A/R HAS COMPLETEL Y FAILED TO ESTABLISH THE GENUINENESS OF THIS EXPENDITURE. ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 13 13. IT WAS FURTHER SUBMITTED THAT THE PAYMENT OF CO MMISSION TO VARIOUS AGENTS, TAXI DRIVERS AND GUIDES IS A REGULA R FEATURE OF ASSESSEE'S LINE OF BUSINESS AND IN THE PAST ALSO, D ISALLOWANCE OF 8% OUT OF COMMISSION PAYMENT WAS MADE WHICH HAS BEE N RESTRICTED BY THE APPELLATE AUTHORITIES. 14. WITH REGARD TO JUSTIFICATION OF COMMISSION PAID , IT WAS SUBMITTED THAT IT IS WELL KNOWN FACT THAT IN CASE O F EMPORIUMS WHICH ARE SITUATED AT OR NEARBY PLACES OF TOURIST INTERES T ANY PERSON WHO BRINGS CUSTOMERS TO THE SAID PREMISES TAKES COMMISS ION AND SO FAR AS ASSESSEE'S LINE OF BUSINESS IS CONCERNED, THE NO RMAL COMMISSION PAID TO DIFFERENT PARTIES IS 20%. IT IS A USUAL PRA CTICE IN ASSESSEE'S LINE OF BUSINESS TO GIVE COMMISSION TO GUIDES, TAXI DRIVERS, AUTO DRIVERS ETC. TO PROCURE THEIR BUSINESS AND THE ASSE SSING OFFICER HAS ALSO ACCEPTED THIS FACT IN PAST YEARS. ALL THE PERS ONS WHO ARE DOING SIMILAR BUSINESS ARE ALSO PAYING COMMISSION @ 20% A ND THE ASSESSEE IS ALSO PAYING COMMISSION 20%. VOUCHERS GIVING COMPLETE DETAILS OF PAYMENT, BILL NUMBER ETC. ARE P REPARED RELATING TO EACH AND EVERY PAYMENT TO THE CORRESPONDING SALE S. THIS VOUCHER IS SIGNED BY THE RECIPIENT AND CONTAINS THE DATE OF BILL, BILL NUMBER, SALE AMOUNT, COMMISSION PAID, DATE OF PAYMENT OF CO MMISSION AND THE SIGNATURE OF THE RECIPIENTS. 15. ATTENTION WAS INVITED TO PBP NO.1 WHICH IS A CH ART WITH REGARD TO DISALLOWANCE OUT OF COMMISSION AND FROM THE PERU SAL OF THE SAME, IT WOULD BE OBSERVED THAT IN ASSESSMENT YEAR 2008-09, THE ASSESSING OFFICER HAS DISALLOWED 8% OUT OF THE COMM ISSION PAID AND THE LEARNED CIT(A) HAS CONFIRMED THE DISALLOWANCE. THE ASSESSEE ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 14 HAD PREFERRED AN APPEAL AGAINST THE SAID ORDER AND THE ITAT, JAIPUR BENCH HAD RESTRICTED THE DISALLOWANCE TO RS.1.00 LA C VIDE THEIR ORDER DATED 15.5.2015. IN ASSESSMENT YEARS 2009-10, 2010 -11 AND 2011- 12, THE ASSESSING OFFICER FOLLOWING THE PAST HISTOR Y HAS DISALLOWED 8% OUT OF THE COMMISSION PAID AND JAIPUR BENCH HAS PASSED AN ORDER FOR ASSESSMENT YEAR 2009-10 TO 2011-12 VIDE O RDER DATED 29.9.2016 AND HAD SUSTAINED THE DISALLOWANCE OF RS. 1.00 LAC IN EACH OF THE ASSESSMENT YEARS. ATTENTION IS FURTHER INVIT ED TO THE FACT THAT IN ASSESSMENT YEAR 2012-13, THE ASSESSING OFFICER H AS AGAIN DISALLOWED 8% OUT OF THE COMMISSION PAID AGAINST WH ICH THE ASSESSEE HAD PREFERRED APPEAL BEFORE THE LEARNED CI T(APPEALS)-II, JAIPUR WHO VIDE ORDER DATED 29.1.2016 HAD RESTRICTE D THE DISALLOWANCE TO RS.1.00 LAC. IT WAS SUBMITTED THAT EVEN THOUGH THE PRINCIPLES OF RES-JUDICATA ARE NOT APPLICABLE TO IN COME TAX PROCEEDINGS BUT IT HAS BEEN HELD IN NUMBER OF CASES THAT THE RULE OF CONSISTENCY SHOULD BE FOLLOWED. 16. PER CONTRA, THE LD. DR IS HEARD WHO HAS TAKEN U S THROUGH THE FINDINGS OF THE LOWER AUTHORITIES AND RELIED ON THE SAID FINDINGS WHICH WE HAVE ALREADY NOTED ABOVE. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS A SETTLED PROPOSITION TH AT WHETHER A PARTICULAR EXPENDITURE IS REQUIRED TO BE INCURRED OR NOT IS TH E DOMAIN AND PREROGATIVE OF THE COMPANYS MANAGEMENT AND NOT THA T OF THE REVENUE. AT THE SAME TIME, THE ASSESSING OFFICER IS WELL WIT HIN HIS JURISDICTION TO VERIFY WHETHER THE EXPENDITURE SO CLAIMED HAS ACTUA LLY BEEN INCURRED FOR THE PURPOSES OF BUSINESS AND WHAT DOCUMENTATION IS SUBMITTED BY THE ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 15 ASSESSEE TO SUBSTANTIATE ITS CLAIM. THE FACTUM OF C OMMISSION PAYMENT IN ASSESSEES LINE OF BUSINESS MAY BE CONSISTENT WITH EARLIER YEARS, HOWEVER, THE EXAMINATION THEREOF IS A FACTUAL EXERCISE AND O UTCOME THEREOF NEED NOT BE GUIDED SOLELY WITH THE OUTCOME AND TREATMENT DONE IN THE EARLIER YEARS. IT IS THEREFORE, INCUMBENT ON PART OF THE A SSESSING OFFICER, WHERE HE INTENDS TO DISALLOW ANY EXPENSES, TO BRING OUT S PECIFIC DEFECT IN THE DOCUMENTATION SO MAINTAINED FOR THE YEAR UNDER EXAM INATION AND SUBMITTED FOR VERIFICATION, AND RECORD A FINDING TH AT A PARTICULAR EXPENSE HAS NOT BEEN INCURRED FOR THE PURPOSES OF BUSINESS OR THE EXPENSE IS BOGUS IN NATURE FOR THE RELEVANT YEAR. IN CASE OF VOLUMINOUS TRANSACTIONS, SOME DEFINED AUDIT METHODOLOGY AND AD EQUATE SAMPLE SIZE MAY BE ADOPTED BY THE AO TO VERIFY THE EXPENSES. IN THE INSTANT CASE, THE ASSESSEE HAS CLAIMED COMMISSION EXPENSES OF RS 2,08,66,037 AND IN SUPPORT OF HIS CLAIM, HAS SUBMITTED THE COMMISSION VOUCHERS AND LEDGERS FOR NECESSARY VERIFICATION OF THE ASSESSING OFFICER . ON EXAMINATION THEREOF, THE ASSESSING OFFICER OBSERVED THAT THERE ARE AS MANY AS FOUR THOUSAND PLUS ENTRIES TOWARDS PAYMENT OF COMMISSION TO VARIOUS TAXI DRIVERS/GUIDES ETC. AND FOR FURTHER DETAILED EXAMIN ATION, HAS SELECTED THE VOUCHERS FOR FIRST WEEK OF AUGUST, SEPTEMBER AND OC TOBER TOTALING 264 ENTRIES REPRESENTING 6% OF TOTAL ENTRIES AND DETAIL S OF VEHICLE MENTIONED THEREIN WERE VERIFIED WITH NATIONAL DATABASE OF REG ISTERED VEHICLES GIVEN OTHER INHERENT CHALLENGES IN CARRYING OUT VERIFICAT ION THROUGH PERSONAL APPEARANCES/CONFIRMATION ETC FROM THE GUIDES/TAXI D RIVERS. IN RESPECT OF 8 ENTRIES, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THESE VEHICLES HAVE BEEN PURCHASED AND REGISTERED AFTER THE DATE O F TRANSACTION AND THESE VEHICLES CAN IN NO CIRCUMSTANCES HAVE VISITED ASSESSEES SHOWROOM AND BASIS THEREOF, 3.03% OF TOTAL COMMISSION EXPENS ES WERE HELD NOT ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 16 ALLOWABLE AND WERE DISALLOWED. IT WAS FURTHER OBSE RVED BY THE AO THAT 178 ENTRIES ARE OF NON-EXISTENT/NON REGISTERED VEHI CLE I.E. 67.42% OF THE TOTAL ENTRIES AND 49 VEHICLES OR 18.56% OF TOTAL VE HICLES HAVE THEIR FITNESS LEVELS EXPIRED AND THUS, APPROX. 86% OF THE ENTRIES ARE INCORRECT IN SOME MANNER OR THE OTHER. BASIS THE SAID FINDINGS, THE AO HELD THAT ATLEAST 8% OF THE TOTAL COMMISSION EXPENSES TOTALING TO RS. 16,69,283/- SHOULD BE FURTHER DISALLOWED, EFFECTIVELY DISALLOWING 11.0 3% OF TOTAL EXPENSES. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE SUBM ITTED BEFORE THE LD CIT(A) THAT THE VEHICLE VERIFICATION WHICH WAS CARR IED OUT BY THE ASSESSING OFFICER WAS NOT CONFRONTED TO HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HE WAS THUS PREVENTED FR OM PROVIDING SUITABLE EXPLANATION/SUBMISSIONS. THE LD CIT(A) AC CEPTED THE SAID CONTENTION OF THE ASSESSEE AND ALLOWED THE ASSESSEE TO FILE HIS EXPLANATION/SUBMISSION. IN HIS SUBMISSIONS, THE AS SESSEE SUBMITTED A RECONCILIATION STATEMENT, IN RESPECT OF NON-EXISTEN T VEHICLES AS POINTED OUT BY THE ASSESSING OFFICER, PROVIDING COMPLETE VE HICLE NUMBERS AND POINTING OUT CERTAIN ERRORS IN THE FINDINGS OF THE AO. ON PERUSAL OF THE SAID RECONCILIATION STATEMENT, THE LD CIT(A) HAS RE CORDED HER FINDINGS AS UNDER: THE AR HAS SUBMITTED A CHART WHEREBY HE POINTED OU T CERTAIN ERRORS IN THE OBSERVATIONS OF AO AND IN SOME CASES HE PROVIDED A DIFFERENT NUMBER SAYING THAT THE SAME HAD BEEN INCO RRECTLY PICKED UP BY THE AO. THE AR IN THE RECONCILIATION CHART MA INLY TOOK THE PLEA THAT THE LESS EDUCATED DRIVERS COULD NOT GIVE THE CORRECT VEHICLE NO. AND THE VEHICLES WERE SOMETIMES IN THE PARKING SO THE NUMBER COULD NOT VERIFIED. AFTER THE CONCILIATION B Y THE AR, THE SAME WAS FORWARDED TO THE AO FOR HIS COMMENTS AND A SKED TO ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 17 VERIFY SL. NO. 72,76,82,85 & 95 BECAUSE THESE CARS WERE CLAIMED AS PURCHASED & REGISTERED IN 2013. EVEN AFTER SUCH ELA BORATE RECONCILIATIONS WHEREIN IN SOME CASES PARTS OF THE NUMBER WERE SAID TO BE INCORRECT EVEN THOUGH PICKED UP FROM THE SAME VOUCHER, UNDERTAKEN BY THE AR, THERE WERE VEHICLES WHICH COU LD NOT BE FOUND AND APPEARED AS FICTITIOUS ENTRIES. THE REMAN D REPORT OF THE AO WHEREIN FROM THE LIST SUBMITTED BY THE AR AF TER RECONCILIATION ONLY FIVE ENTRIES WERE CHOSEN ON TEX T CHECK BASIS AND EVEN IN THEM TWO WERE NOT VERIFIABLE. 18. WE THUS FIND THAT THE LD CIT(A) HAS NOT RECORDE D ANY SPECIFIC ADVERSE FINDINGS ON PERUSAL OF THE RECONCILIATION S TATEMENT EXCEPT IN RESPECT OF TWO VEHICLES, WHERE SHE HAS RELIED ON TH E FINDINGS OF THE AO IN THE REMAND REPORT, AND HELD THAT VEHICLES ARE NOT FOUND REGISTERED AND PRIMA FACIE, THE ENTRIES ARE FICTITI OUS IN NATURE. THEREFORE, BASIS NON-VERIFICATION OF TWO ENTRIES OU T OF TOTAL 264 ENTRIES EXAMINED BY THE ASSESSING OFFICER WHICH REPRESENT L ESS THAN 1% OF THE SAMPLE SIZE, IT WOULD BE FACTUALLY INCORRECT TO HOLD THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE WHOLE OF HIS CL AIM OF COMMISSION EXPENDITURE. AS WE HAVE HELD ABOVE, IN CASE OF VOLU MINOUS TRANSACTIONS, SOME DEFINED AUDIT METHODOLOGY AND AD EQUATE SAMPLE SIZE MAY BE ADOPTED TO VERIFY THE EXPENSES AND BEING A F ACTUAL MATTER, IT CAN VARY FROM YEAR TO YEAR. THEREFORE, ONCE THE SAMPLE SIZE HAS BEEN SELECTED BY THE ASSESSING OFFICER AND WHICH HAS BEE N ACCEPTED BY THE LD CIT(A), THE FINDINGS ON EXAMINATION OF SUCH SAMP LE SIZE SHOULD BE CORRELATED AND COULD REASONABLY BE HELD REPRESENTAT IVE ONLY PROPORTIONALITY AND NOT OF THE WHOLE DATA UNDER EXA MINATION. IN THE ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 18 INSTANT CASE, BASIS THE SAMPLE SIZE OF LESS THAN 1% WHICH REMAINS UNVERIFIED, IT IS INCORRECT TO HOLD THAT 100% OF CL AIM OF COMMISSION EXPENDITURE REMAINS UNSUBSTANTIATED. WE THEREFORE D EEM IT APPROPRIATE TO RESTRICT THE DISALLOWANCE OF COMMISS ION EXPENDITURE TO THE EXTENT OF 1% OF RS 2,08,66,037 WHICH COMES TO R S 208,660/- WHICH REMAINS UNSUBSTANTIATED AND THE REMAINING ADD ITION IS HEREBY DIRECTED TO BE DELETED. ITA NO. 627/JP/2018 19. FOR A.Y 2014-15, THE LD AR SUBMITTED THAT THE A SSESSEE IS DERIVING INCOME FROM EXPORT AND SALE OF HANDICRAFT ITEMS AND CARPETS ETC. AND HAD DECLARED INCOME OF RS.1,45,50, 610/- DURING THE YEAR UNDER ASSESSMENT. THE ASSESSEE HAD DEBITED SAL ES COMMISSION AMOUNTING TO RS.3,21,66,062/- OUT OF WHICH TAX WAS DEDUCTED AT SOURCE ON COMMISSION OF RS.1,21,88,438/- AND REMAIN ING AMOUNT OF SALES COMMISSION TO THE EXTENT OF RS.1,99,77,624/- WAS PAID IN CASH TO DIFFERENT TAXI DRIVERS/GUIDES WHO WERE BRINGING CUSTOMERS TO ASSESSEE'S PREMISES. THE ASSESSING OFFICER UNDER TH E HEAD 'DISALLOWANCE OF COMMISSION' IN PARA 1.2 PAGE 3 HAS MENTIONED THAT 55 VOUCHERS FOR PAYMENT OF COMMISSION WERE SELECTED ON TEST CHECK BASIS AND SAME WERE CHECKED ON THE WEBSITE VAHAN.NIC.IN AND IN THE PROCESS ONE VOUCHER DATED 19.3.2014 FOR VEHICLE NO. DL-132117 WAS FOR NON-EXISTING VEHICLE. THE ASSESSING OFFICER HAS WORKED OUT THE BOGUS VOUCHER AT 1.82% (1 OUT OF 55) AND HE REJECTE D THE EXPLANATION OF THE ASSESSEE AND MADE DISALLOWANCE O F RS.3,63,593/- BEING 1.83% OF THE COMMISSION PAID. FURTHER, IN PAR A 1.6 OF ASSESSMENT ORDER, IT WAS ALSO MENTIONED THAT THE EX PENSES TO THE ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 19 EXTENT OF RS.1,99,77,624/- WERE UNSUBSTANTIATED/UNV ERIFIED AND POSSIBILITY OF ARTIFICIALLY ACCELERATION OF EXPENDI TURE IN P & L ACCOUNT TO REDUCE THE NET PROFIT CANNOT BE RULED OUT AND TH EREFORE, TO SAFEGUARD THE REVENUE FROM ANY LEAKAGE, HE DISALLOW ED 8% OUT OF THE REMAINING AMOUNT OF RS.1,96,14,031/- WORKING OU T DISALLOWANCE AT RS.15,69,122/-. 20. BEFORE THE LEARNED CIT(A), IT WAS EXPLAINED THA T ONLY ONE VOUCHER WAS FOUND DEFECTIVE WITH REGARD TO VEHICLE NO. DL-132117 AND IT WAS POINTED OUT THAT THERE IS ONLY A SLIGHT MISTAKE IN THE VOUCHER AND THE MISTAKE IS THAT AFTER DL-13, THE DI GIT C HAS BEEN OMITTED BEING WRITTEN ON THE COMMISSION SLIP. IT WA S POINTED OUT THAT THIS WAS ONLY A CLERICAL MISTAKE ON THE PART OF THE STAFF AS THE VOUCHERS ARE PREPARED IN A HURRY AND SOME TIME ONE OR TWO DIGIT OF THE VEHICLE IS WRONGLY WRITTEN DUE TO PAUCITY OF TI ME. FURTHER, IT WAS ALSO POINTED OUT THAT LOOKING TO THE VOUCHERS EXAMI NED, THE MISTAKE IN ONE VOUCHER WAS NEGLIGIBLE. 21. WITH REGARD TO THE DISALLOWANCE CALCULATED AT 8 % OF THE BALANCE COMMISSION, THE ASSESSEE HAS EXPLAINED THE POSITION AND HAS ALSO POINTED OUT THAT THE PAST HISTORY WHEREIN THE MATTER HAS BEEN DECIDED BY THE JAIPUR TRIBUNAL FROM ASSESSMENT YEAR 2008-09 TO 2012-13 BUT THE LEARNED CIT(A) DID NOT ACCEPT TH E CONTENTION OF THE ASSESSEE AND SUSTAINED THE DISALLOWANCE. 22. IN THE ABOVE FACTUAL BACKGROUND, IT WAS SUBMITT ED THAT THERE WAS NO JUSTIFICATION ON THE PART OF THE LEARNED CIT (A) TO CONFIRM THE DISALLOWANCE OF RS.3,63,593/- AS WELL AS DISALL OWANCE OF ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 20 RS.15,69,122/- BEING 8% OF THE REMAINING COMMISSION . ATTENTION IS INVITED TO THE FACT THAT THE DRIVER/GUIDE WHO IS BR INGING THE CUSTOMERS TO ASSESSEE'S PREMISES IS GETTING COMMISS ION ON THE BASIS OF PURCHASES MADE BY THE CUSTOMERS AND AFTER BILL IS PREPARED THE GUIDE/DRIVER ASK FOR HIS COMMISSION AN D THE COMMISSION IS PAID TO HIM AND VEHICLE NUMBER ON THE COMMISSION VOUCHER IS NOTED AS MENTIONED BY THE DRIVER/GUIDE. THE DRIVER OF THE VEHICLE/ GUIDE IS IN A HURRY TO LEAVE THE PREMI SES OF THE ASSESSEE AS THE CUSTOMER IS READY TO GO AFTER MAKIN G THE PAYMENT AND VERY LITTLE TIME IS AVAILABLE WITH THE ASSESSEE TO VERIFY WHETHER THE VEHICLE NUMBER MENTIONED BY THE DRIVER/GUIDE IS CORRECT OR NOT. IT SOMETIME SO HAPPENS THAT INCOMPLETE NUMBER IS MENTIONED BY THE DRIVER/GUIDE AND MOST OF THE CASES WHERE THE ASSESSING OFFICER HAS MENTIONED THAT NO VEHICLE HAS BEEN FOUN D IS ONLY ON ACCOUNT OF INCOMPLETE NUMBER. 23. IT WAS FURTHER SUBMITTED THAT THE PAYMENT OF CO MMISSION TO VARIOUS AGENTS, TAXI DRIVERS AND GUIDES IS A REGULA R FEATURE OF ASSESSEE'S LINE OF BUSINESS AND IN THE PAST ALSO DI SALLOWANCE OF 8% OUT OF COMMISSION PAYMENT WAS MADE WHICH HAS BEEN R ESTRICTED BY THE APPELLATE AUTHORITIES. 24. THE LD DR IS HEARD WHO HAS RELIED ON THE FINDI NGS OF THE LOWER AUTHORITIES. 25. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD CIT(A) HA S FOLLOWED AND RELIED ON HER FINDINGS FOR A.Y 2013-14 AND FURTHER HELD THAT IN THIS ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 21 YEAR, ONE ENTRY OUT OF TOTAL 55 ENTRIES EXAMINED BY THE ASSESSING OFFICER REMAIN UNSUBSTANTIATED AND THEREFORE, THE A SSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE WHOLE OF THE CO MMISSION EXPENDITURE. IN HIS SUBMISSION, THE ASSESSEE HAS SU BMITTED THAT IN RESPECT OF ONE ENTRY SO POINTED OUT BY THE ASSESSIN G OFFICER AND REFERRED TO BY THE LD CIT(A), THERE WAS A CLERICAL MISTAKE WHERE IN THE VOUCHER, THE VEHICLE NUMBER HAS WRONGLY BEEN WRITTE N AS DL-132117 INSTEAD OF DL-13C-2117 AND BESIDES THAT, THERE IS N O OTHER SPECIFIC DEFECT POINTED OUT BY THE AO. FOLLOWING OUR FINDIN GS AND REASONING GIVEN FOR AY 2013-14, WE FIND THAT IN ABSENCE OF AN Y SPECIFIC FINDING BY THE ASSESSING OFFICER EXCEPT IN RESPECT OF ONE E NTRY WHERE THE VEHICLE NUMBER HAS BEEN WRONGLY WRITTEN BY THE ASSE SSEE, A MISTAKE ADMITTED BY THE ASSESSEE AND NOT DISPUTED BY THE RE VENUE, THE WHOLE OF COMMISSION EXPENDITURE CANNOT BE DISALLOWED. IN THE RESULT, THE ADDITION SO MADE IS DIRECTED TO BE DELETED. 26. IN THE RESULT, BOTH THE APPEALS ARE DISPOSED OF F IN LIGHT OF ABOVE DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 27/01/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27/01/2020. *SANTOSH ITA NO. 609 & 627/JP/2018 SHRI MAHESH CHAND GUPTA VS. ACIT 22 VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI MAHESH CHAND GUPTA, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-5, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 609 & 627/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR