Dy. Commissioner of Income Tax-II, Kanpur V. M/s Syntans & Colloids, Kanpur

ITA 624/LKW/2013

• Counselvise Citation: 62423714 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 12-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PRADEEP MEHROTRA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.624/LKW/2013 ASSESSMENT YEAR:2010-11 DCIT-II KANPUR V. M/S SYNTANS & COLLOIDS C-18, UDYOG KUNJ, PANKI SITE-V, KANPUR TAN/PAN:ABGFS6240R (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. AMIT NIGAM, D.R. RESPONDENT BY: SHRI. PRADEEP MEHROTRA, ADVOCATE DATE OF HEARING: 18 06 2015 DATE OF PRONOUNCEMENT: 26 06 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) DELETING THE ADDITION OF RS.24,15,036/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION ON SALE IGNORING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER THAT SUCH EXPENDITURE IS NOT EXCLUSIVELY FOR THE BUSINESS PURPOSES. 2. THE LD. D.R. HAS INVITED OUR ATTENTION TO THE ORDER OF THE ASSESSING OFFICER WITH THE SUBMISSION THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS DEBITED A SUM OF RS.24,15,036/- UNDER THE HEAD COMMISSION ON SALE AND ACCORDINGLY THE ASSESSEE WAS ASKED TO EXPLAIN/JUSTIFY THE PAYMENT OF COMMISSION. THE ASSESSEE DID NOT FURNISH ANY DETAIL WITH DOCUMENTARY EVIDENCE REGARDING THE SERVICES RENDERED BY THE PERSONS TO WHOM COMMISSION WAS PAID. THE ASSESSEE WAS FURTHER ASKED TO FURNISH THE :- 2 -: COPIES OF AGREEMENTS OR APPOINTMENT LETTER OF THE COMMISSION AGENT AND IN RESPONSE THERETO ASSESSEE HAS FILED COPIES OF THE APPOINTMENT LETTERS BUT THE APPOINTMENT LETTERS WERE PREPARED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS PER DATE OF ISSUANCE OF THE LETTER. BESIDES, NO OTHER EVIDENCE WAS PLACED TO JUSTIFY THE PAYMENT OF COMMISSION FOR BUSINESS PURPOSES. THE ASSESSING OFFICER HAS ACCORDINGLY HELD THAT SINCE THE COMMISSION WAS NOT PAID FOR THE BUSINESS PURPOSES OF THE ASSESSEE, THIS EXPENDITURE IS BOGUS EXPENDITURE AND DISALLOWED THE SAME RESULTING INTO AN ADDITION OF RS.24,15,036/-. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), BUT NO EVIDENCE WAS FILED WITH REGARD TO THE SERVICES RENDERED BY THE COMMISSION AGENT, BUT THE LD. CIT(A) HAS ALLOWED THE PAYMENT OF COMMISSION HAVING OBSERVED THAT IT IS PROVED BEYOND DOUBT THAT THE PAYMENT OF COMMISSION HAS BEEN MADE FOR THE SERVICES RENDERED BY THESE PARTIES. 4. DURING THE COURSE OF HEARING, THE LD. D.R. HAS CONTENDED THAT EVEN BEFORE THE LD. CIT(A) NO EVIDENCE WAS FILED FOR THE SERVICES RENDERED BY THE COMMISSION AGENTS, BUT THE LD. CIT(A) HAS ALLOWED THE EXPENDITURE. 5. THE LD. COUNSEL FOR THE ASSESSEE, BESIDES PLACING RELIANCE UPON THE ORDER OF THE LD. CIT(A), HAS CONTENDED THAT ALL THE DETAILS WERE FURNISHED BEFORE THE LOWER AUTHORITIES. 6. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS AND THE EVIDENCE FILED BEFORE US, WE FIND THAT EXCEPT THE APPOINTMENT LETTERS, NO OTHER EVIDENCE WAS FILED BEFORE THE LOWER AUTHORITIES TO JUSTIFY THE PAYMENT OF COMMISSION. EVEN FROM THE PERUSAL OF APPOINTMENT LETTERS, WE FIND THAT THESE LETTERS WERE PREPARED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WHENEVER A PERSON IS APPOINTED AS COMMISSION AGENT, AN AGREEMENT OR APPOINTMENT LETTER IS ISSUED AT THE TIME OF APPOINTMENT, BUT NOTHING WAS PLACED ON RECORD TO ESTABLISH THAT PROPER COMMISSION AGENT WAS APPOINTED TO PROMOTE THE SALES :- 3 -: OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT HE HAS DEDUCTED TDS ON THE PAYMENT, THEREFORE, THE PAYMENT OF COMMISSION SHOULD BE ALLOWED. WE FIND NO FORCE IN THIS ARGUMENT, AS THE PAYMENT OF COMMISSION IS NOT SACROSANCT AND THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THAT THE COMMISSION WAS PAID FOR THE SERVICES RENDERED BY THE COMMISSION AGENT FOR THE ASSESSEE. IF THE ASSESSEE IS NOT ABLE TO PROVE THAT THE ALLEGED SERVICES WERE RENDERED BY THE COMMISSION AGENT FOR THE ASSESSEE, THE EXPENDITURE CLAIMED BY IT CANNOT BE ALLOWED. IN THE INSTANT CASE, WE DO NOT FIND ANY EVIDENCE ON RECORD WHEREFROM IT CAN BE INFERRED THAT THE COMMISSION AGENTS HAVE EVER RENDERED ANY SERVICE FOR THE ASSESSEE. MERE PAYMENT WOULD NOT SUFFICE TO PROVE THE GENUINENESS OF THE PAYMENT OF COMMISSION. ON A CAREFUL PERUSAL OF THE ORDER OF THE LD. CIT(A), WE FIND THAT THE LD. CIT(A) HAS NOT EXAMINED THE NATURE OF SERVICES RENDERED BY THE COMMISSION AGENT. IN FEW LINES, THE LD. CIT(A) HAS ALLOWED THE COMMISSION PAYMENT, HAVING OBSERVED THAT IT IS PROVED BEYOND DOUBT THAT THE PAYMENT OF COMMISSION HAS BEEN MADE FOR THE SERVICES RENDERED BY THE PARTIES. SINCE THE FINDING OF THE LD. CIT(A) IS WITHOUT ANY BASIS, WE ARE NOT INCLINED TO APPROVE THE SAME. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. 7. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:26 TH JUNE, 2015 JJ:1806 COPY FORWARDED TO: :- 4 -: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR