Shri Samir Trikamlal Prajapati, Ahmedabad V. The Income Tax Officer, Ward-3, Mehsana

ITA 882/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7941 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 13-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: U S BHATI; ABHIMANYU SINGH BHATI
• Keywords: Rule of consistency; Capital expenditure
• Section: 143(3); 37

Judgement Text

, ,LK ,LK,LK ,LK- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD L LL LOZJH OZJH OZJH OZJH OLHE OLHE OLHE OLHE VGEN VGEN VGEN VGEN] YS[KK LNL; , ] YS[KK LNL; , ] YS[KK LNL; , ] YS[KK LNL; ,OA OAOA OA EGKOHJ EGKOHJ EGKOHJ EGKOHJ IZLKN IZLKN IZLKN IZLKN] U; ] U;] U; ] U;KF KFKF KF;D ;D;D ;D LNL; DS LE{KA LNL; DS LE{KA LNL; DS LE{KA LNL; DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 882/AHD/2015 ( / ASSESSMENT YEAR : 2011-12) SHRI SAMIR TRIKAMLAL PRAJAPATI, C/O VIJAY METAL & ENGG. CORPORATION, BLOCK NO.C/6, KARTIK COMPLEX, MELAMAIL COMPOUND, MAHENDRA MILL, KALOL 382 721 / VS. THE ITO, WARD 3, MEHSANA ./ ./ PAN/GIR NO. : ABIPP 7876 N ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI U. S. BHATI & ABHIMANYU SINGH BHATI, A.R. / RESPONDENT BY : SHRI UMA SHANKAR PRASAD, SR. D.R. / DATE OF HEARING 14 /06/2018 !'# / DATE OF PRONOUNCEMENT 03 /07 /2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-GANDHINAGAR, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)/GNR/452/2013-14 DATED 09/01/2015 A RISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE I NCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 07/02/2014 RELEVANT TO ASSESSMENT YEAR (AY) 2011-12. ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 2 - 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1.0 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS) ERRED IN LAW AND ON FACTS IN PARTLY CONFIRMING THE ASSESSMEN T ORDER. 2.0 THE LEARNED COMMISSIONER OF INCOME-TAX (APP EALS) ERRED IN LAW AND ON FACTS IN DISALLOWING THE PAYMENT OF COMM ISSION ON SALES AMOUNTING TO RS.33,62,000/-. 3.0 THE LEARNED COMMISSIONER OF INCOME-TAX (APPE ALS) HAS FURTHER ERRED IN LAW AND ON FACTS IN INVOKING PROVISIONS OF SECTION 40A(2)(B) OF THE INCOME TAX ACT, 1961 IN RESPECT OF COMMISSION PAYMENTS AND UPHOLDING THAT SHRI VIKRANT PRAJAPATI IS A RELATIVE OF THE APPELLANT. 4.0 THE APPELLANT MAY BE ALLOWED TO ADD, AMEND, ALT ER OR RAISE ADDITIONAL GROUNDS OF APPEAL. 3. THE INTERCONNECTED ISSUE RAISED BY THE ASSESSEE IN ITS ALL THE GROUNDS OF APPEAL IS THAT LEARNED CIT(A) ERRED IN C ONFIRMING THE ORDER OF AO BY SUSTAINING THE DISALLOWANCE OF RS. 3 3,62,000/- ON ACCOUNT OF PAYMENT OF COMMISSION ON SALES. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE TRADING BUSINESS OF MACHINERY PARTS AND CONSUMABLE STORES UNDER THE NAME AND STYLE OF M/S. VIJAY METAL & ENGINEERING CORPORATION. THE ASSESSEE DURING THE YEAR HAS INCUR RED COMMISSION EXPENSES ON SALES FOR RS.33,62,000/- ONLY. THE RELE VANT DETAILS OF THE COMMISSION EXPENSES STAND AS UNDER: SR. NO. NAME OF THE PARTY RELATIONSHIP SERVICE RENDERED AMOUNT RS. RATE OF COMMISSION 1. VIKRANT P. PRAJAPATI RELATIVE - 22,00,000 50% OF PROFIT ON SALE OF GOODS 2. DIPIKA S. PRAJAPATI WIFE - 7,00,000 57% OF PROFI T ON THE SALE OF GOODS 3. PAYAL B PATEL - - 4,62,000 43% OF PROFIT ON SALE OF ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 3 - GOODS TOTAL 33,62,000 THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS IN H IS REPLY DATED 24 TH JANUARY 2014 JUSTIFIED THAT THE COMMISSION WAS PAI D AGAINST THE SERVICES RENDERED BY THE PAYEES. ACCORDINGLY, IT WA S POSSIBLE TO ACHIEVE THE TURNOVER OF RS.1,66,44,062/- DURING THE YEAR. IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR, THE TUR NOVER OF THE ASSESSEE WAS RS.1,29,56,552/- AND EXPENSE OF COMMIS SION AGAINST SUCH TURNOVER WAS CLAIMED FOR RS.14,00,000/- ONLY. HOWEVER, THE TURNOVER DURING THE YEAR INCREASED TO RS.1,66,44,06 2/-, WHICH RESULTED IN AN INCREASE IN THE GROSS PROFIT FROM RS .50,64,883/- TO RS. 55,50,976/- ONLY. THE ASSESSEE BEING AN INDIVIDUAL WAS NOT IN A POSIT ION TO ACHIEVE SUCH HUGE TURNOVER AND HANDLING ITS BUSINESS ACTIVI TIES RIGHT FROM THE BEGINNING, I.E. OBTAINING ORDERS, TAKING STEPS TILL THE EXECUTION OF WORK TO THE LEVEL OF CLIENTS SATISFACTION AND COLL ECTING THE PAYMENTS OF BILLS. THEREFORE, THE SERVICES OF COMMISSION AGE NTS WERE HIRED FOR HIS BUSINESS ACTIVITIES. THE DETAILS OF THE COMMISS ION PAID TO INDIVIDUAL PARTIES STAND AS UNDER: COMMISSION TO VIKRANT P. PRAJAPATI :- I. THE ASSESSEE WAS AVAILING THE SERVICES FROM VIKRANT P. PRAJAPATI IN RELATION TO SUPPLY, ERECTION, TECHNICA L GUIDANCE SERVICES, AND PROCUREMENT AS WELL AS THE EXECUTION OF CLIENTS ORDER. II. SHRI VIKRANT P. PRAJAPATI USED TO PROVIDE THE SERVI CES WITH THE HELP OF HIS PERSONNEL INVOLVED IN THE EXECUTION OF WORKS. ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 4 - III. THERE IS NO RELATIONSHIP BETWEEN THE ASSESSEE AND S HRI VIKRANT P. PRAJAPATI THEREFORE; THERE IS NO QUESTIO N OF INVOKING THE PROVISION OF SECTION 40A(2)(B) OF THE ACT. IV. SHRI VIKRANT P. PRAJAPATI HAD HELPED THE ASSESSEE F INANCIALLY AS AND WHEN THERE WAS THE NEED OF THE FUND TO THE A SSESSEE. V. THE COMMISSION WAS PAID TO SHRI VIKRANT P. PRAJAPAT I ON A REGULAR BASIS AND AFTER DEDUCTING TDS. VI. SHRI VIKRANT P. PRAJAPATI HAS DULY CONFIRMED THE SE RVICES RENDERED TO THE ASSESSEE VIDE HIS LETTER DATED 12-1 2-2012. VII. THE AMOUNT OF COMMISSION OF INCOME RECEIVED BY SHRI VIKRANT P. PRAJAPATI WAS DULY DISCLOSED IN HIS INCO ME TAX RETURN. COMMISSION PAYMENT TO PAYALBEN B. PATEL:- THE COMMISSION WAS PAID AFTER DEDUCTING THE TDS BY THE ASSESSEE. THE PAYALBEN B. PATEL TO THE EFFECT OF SE RVICE RENDERED BY HER TO THE ASSESSEE HAS FURNISHED THE CONFIRMATION LETTER. COMMISSION TO DIPIKABEN S. PRAJAPATI:- THE COMMISSION WAS PAID TO DIPIKABEN S. PRAJAPATI THROUGHOUT THE YEAR AND AFTER DEDUCTING THE TDS. TH E PAYEE HAS CONFIRMED THE SERVICES RENDERED BY HER TO THE A SSESSEE. HOWEVER, THE AO DURING THE ASSESSMENT PROCEEDINGS O BSERVED THAT I. THE ASSESSEE WAS SUPPLYING GOODS TO THE STATE GOVER NMENT ORGANIZATIONS, AND THERE WAS NO NEED TO PAY SUCH HU GE MONEY BY WAY OF COMMISSION EXPENSES. II. THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF THE S ERVICES RENDERED BY THESE PARTIES TO THE ASSESSEE. ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 5 - III. THE MERE PAYMENT TO THE COMMISSION AGENT CANNOT JUS TIFY THE BUSINESS EXPEDIENCY FOR THE COMMISSION EXPENSES UNLESS THE SAME IS SUPPORTED WITH THE EVIDENCE SUGG ESTING THAT IT WAS PAID FOR THE BUSINESS PURPOSES. IV. AS THE GOODS WERE SOLD TO THE GOVERNMENT ORGANIZAT ION, THERE WAS NO DOUBT FOR THE RECOVERY OF MONEY FROM S UCH ORGANIZATION. IN VIEW OF ABOVE, THE AO DISREGARDED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ADDITION OF RS.33,62,000/- AND AD DED TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LEARN ED CIT(A). THE SUBMISSION OF THE ASSESSEE BEFORE THE LEARNED CIT(A ) ARE LISTED AS UNDER: I. THE ASSESSEE WAS AN AUTHORIZED DEALER FOR THE ENTIR E STATE OF GUJARAT OF ALFA LAVAL INDIA LIMITED, A UNI T OF ALFA LAVAL WORLDWIDE ORGANIZATION HAVING 28 MAJOR PRODUCTION UNITS CONSISTING OF 15 IN EUROPE, 8 IN A SIA, 4 IN U.S AND 1 IN LATIN AMERICA. M/S. ALFA LAVAL INDI A LIMITED IS ONE OF THE PIONEERS IN THE APPLICATION O F THE HEAT EXCHANGE TECHNOLOGY. II. THE ASSESSEE EARNS COMMISSION INCOME FROM ALFA LAVA L INDIA LIMITED AS AND WHEN HE MAKES SALES ON BEHALF OF THE COMPANY. BUT WHERE THE ASSESSEE PROCURES ORDERS FROM THE BUYERS, THEN HE PURCHASES THE GOODS FROM A LFA LAVAL INDIA LIMITED AND ACCORDINGLY EARNS A PROFIT ON THE SALE OF SUCH EQUIPMENT IN ADDITION TO THE COMMISSIO N INCOME. III. THE ASSESSEE IS ALSO DEALING WITH OTHER SUPPLIERS O F MACHINERY FROM WHERE HE EARNS A COMMISSION AS WELL AS PROFIT ON SALES. ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 6 - IV. THE BUSINESS OF THE ASSESSEE IS SPREAD THROUGHOUT T HE STATE OF GUJARAT; THEREFORE, INITIALLY, THE COMMISS ION AGENTS WERE DEPLOYED IN THE F.Y.2009-10. SUBSEQUENT LY, IN THE YEAR UNDER CONSIDERATION ONE MORE COMMISSION AGENT NAMELY PAYALBEN B. PATEL WAS ADDED IN THE BUSINESS OF THE ASSESSEE. V. SHRI VIKRANT P. PRAJAPATI WAS NOT RELATIVE OF THE A SSESSEE. HE HAD VAST EXPERIENCE AND CONTACTS IN THE FIELD OF HEAT EXCHANGERS BUSINESS. HE WAS ALSO DOING THE BUSINESS OF MACHINERY PARTS AND CONSUMABLE STORES UNDER THE NAM E AND STYLE OF M/S SAMIR ENGINEERING COMPANY. HE ALSO EMPLOYED STAFFS FOR HIS BUSINESS. HE WAS COMPETENT ENOUGH TO LOOK AFTER THE REQUIREMENTS OF THE POWER PLANT AND ELECTRICITY COMPANIES. HIS STAFF WAS ALSO AVAIL ABLE WITH THE ASSESSEE. VI. SIMILARLY, OTHER TWO LADIES WERE ENTRUSTED WITH TH E JOB OF LIAISONING WITH VARIOUS AGENCIES TO ENSURE TIMEL Y SUPPLY OF MACHINERY PARTS FROM THE SUPPLIER TO THE COMPANIES. VII. THEY WERE ARRANGING TRANSPORT FACILITIES FOR PROPER LY DELIVERY OF THE GOODS. THEY WERE ALSO LOOKING AFTER THE PROPER INSTALLATION, EXECUTION AND AFTER SALE SERVI CES FROM THE SUPPLIER AS WELL AS REALIZATION OF THE SAL E PROCEEDS. III. FROM THE COMBINED EFFORTS OF THE ASSESSEE AND COMMISSION AGENTS, THE TURNOVER OF THE BUSINESS HAS INCREASED MANIFOLDS. THE ASSESSEE IN SUPPORT OF HIS CLAIM FILED A CHART SHOWING THE TURNOVER VIZ-A-VIZ PROFIT AND OTHER EXPENSES INCURRED BY HIM, WHICH IS REPRODUCED AS UNDER: ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 7 - S.NO. PARTICULARS F.YR. 2008-09 F.YR. 2009-10 F.YR. 2010-11 1 TURNOVER (IN RS.) 44,62,016 1,29,56,552 1,66,44,062 2 GROSS PROFIT 14,31,678 50,64,883 55,50,976 3 COMMISSION PAYMENT 0 14,00,000 33,62,000 4 NO. OF AGENTS 0 2 3 5 EXPENSES OF SALARY AND WAGES 15,12,000 15,60,000 15,69,600 FROM THE ABOVE, THE ASSESSEE JUSTIFIED THAT HE WAS ABLE TO ACHIEVE A SIZABLE TURNOVER OF RS.166.44 LACS FROM 44.62 LAC S IN TWO YEARS. IV. THE OBSERVATIONS OF THE AO THAT THE ASSESSEE H AS MADE THE PAYMENT OF COMMISSION TO THE PARTIES MORE THAN 50% OF THE PROFIT ON THE SALE IS BASED ON THE WRONG ASSUMPTION OF FACTS. THE ASSESSEE WAS NOT ONLY EARNING COMMISSION INCOME, BU T ALSO HE WAS EARNING A PROFIT ON PURCHASE AND SALE OF GOODS. THE ASSESSEE HAS SHARED COMMISSION EARNED BY HIM WITH SHRI VIKRA NT P. PRAJAPATI TO THE TUNE OF 50% AS SHRI VIKRANT P. PRA JAPATI WAS PHYSICALLY AND FINANCIALLY INVOLVED IN THE DEAL SIN CE THE BEGINNING. THE ASSESSEE FURTHER SUBMITTED THAT THE AMOUNT OF C OMMISSION PAID WAS LESS THAN 50% OF THE SALES IN THE CASE WHE RE IT EARNED A PROFIT ON THE SALE OF GOODS. THE ASSESSEE IN SUPPOR T OF HIS CLAIM PREPARED A CHART DEPICTING THE AMOUNT OF COMMISSION EXPENSES VIZ-A-VIZ SALES ACHIEVED THROUGH THE AGENT AS DETA ILED UNDER: SR. NO COMMISSION AGENT INVOICE NO & INVOICE AMOUNT COMMIS SION TO REMARKS ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 8 - DATE AGENTS 1 SHRI VIKRANT PRAJAPATI COMMISSION WAS RECD. FROM ALFA LAVAL FOR SECURING ORDERS FROM GUJARAT STATE ELECTRICITY CORP. LTD. (GSECL, KLTPS) R 01 & R 02 COMMISSION OF RS.15,00,000 PAID BY ALFA LAVAL 7,50,000 SHRI VIKRANT AND PHYSICALLY AND FINANCIALLY INVOLVED IN THIS DEAL SINCE THE BEGINNING 2 SHRI VIKRANT PRAJAPATI SALE OF GSECL, KLTPS R 05 80,93,320 14,50,000 ABOUT 18% COMMISSION PAID 3 SMT. PAYALBEN B. PATEL SALE OF GMDC, NANI CHHER, TAL. LAKHPAT R 03 & R 04 52,18,394 4,62,000 ABOUT 9% 4 SMT DIPIKABEN S. PRAJAPATI SALE OF GSECL, DHUVARAN R 07 & T 01 25,37,160 7,00,000 ABOUT 27.50% ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 9 - V. ALL THE COMMISSION AGENTS HAVE DULY FURNISHED TH E CONFIRMATION FOR THE AMOUNT RECEIVED FROM THE ASSES SEE, AND THE SAME WAS OFFERED TO TAX. ALL THE COMMISSIONS WE RE PAID AFTER DEDUCTING THE TDS UNDER THE RELEVANT PROVISIO NS. THE COMMISSION AGENTS WERE APPOINTED BY THE ASSESSE E FOR OBTAINING ORDERS FROM GOVERNMENT AGENCIES AND THERE AFTER DELIVERING, INSTALLING AND EXECUTING THE SAME. SUBS EQUENTLY, THESE COMMISSION AGENTS WERE PROVIDING AFTER SALES SERVICE AS WELL AS REALIZATION OF PAYMENTS FROM THE PARTIES. H OWEVER, LEARNED CIT(A) DISREGARDED THE CONTENTION OF THE AS SESSEE AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER: AFTER CONSIDERING THE ENTIRE FACTS, IT IS SEEN THA T APPELLANT HAS PAID COMMISSION TO SHRI VIKRANT P. PRAJAPATI, DIPIK A S. PRAJAPATI WHO ARE RELATIVE OF THE APPELLANT. ON EXA MINATION OF DETAILS PRODUCED, IT IS SEEN THAT IN THE CASE OF SH RI VIKRANT PRAJAPATI, COMMISSION OF RS.15 LAC WAS RECEIVED BY THE APPELLANT FROM ALFA LAVAL, OUT OF WHICH 50% I.E. RS ,7,50,000/- WAS PAID TO SHRI VIKRANT PRAJAPATI, WHO IS RELATIVE OF THE APPELLANT. IT IS NOTICED THAT SHRI VIKRANT PRAJAPAT I HAD NO SUCH EDUCATIONAL QUALIFICATION I.E. SPECIALIZATION OF MA RKETING, APPELLANT HAS NOT BROUGHT ON RECORD OF THE UNDERSIG NED ANY SPECIAL QUALIFICATION WHICH COULD HAVE INCREASED TH E SALES OF THE APPELLANT WITH THE HELP OF SHRI VIKRANT PRAJAPA TI. THE ONUS WAS ON THE APPELLANT TO PROVE BEFORE THE AO REGARDI NG THE GENUINENESS OF COMMISSION PAID. APPELLANT HAS NOT B ROUGHT ON RECORD OF THE UNDERSIGNED ANY NEW EVIDENCES TO PROV E THAT THE COMMISSION PAYMENT OF 50% WAS GENUINE AND WAS FOR T HE SERVICES RENDERED BY SHRI VIKRANT PRAJAPATI. NO DET AILS OF SERVICES RENDERED BY SHRI VIKRANT PRAJAPATI WAS PUT FORTH. ALL THE DETAILS PRODUCED BEFORE ME DURING THE APPELLATE PROCEEDINGS HAD ALREADY BEEN GONE THROUGH BY THE AO AND NOTHING NEW HAS BEEN BROUGHT. SIMILAR IS THE CASE, WITH REGARD TO THE COMMISSION PAID OF RS.14,50,000/- OUT OF COM MISSION RECEIVED OF RS.80,93,320/- WHICH WORKS OUT TO 18% O F ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 10 - COMMISSION. NO NEW EVIDENCES HAS BEEN BROUGHT DURIN G THE COURSE OF APPELLATE PROCEEDINGS. THEREFORE, THE ACT ION OF THE AO IS UPHELD AND DISALLOWANCE MADE OF COMMISSION PAID TO SHRI VIKRANT PRAJAPATI IS CONFIRMED. FURTHER WITH REGARD TO THE COMMISSION PAID TO SMT. PAYALBEN B. PATE OF RS.4,62,000/- @ 9% OF INVOICE AM OUNT OF RS.52,18,394/-, APPELLANT HAS AGAIN NOT BROUGHT ANY NEW EVIDENCES OTHER THAN WHAT WAS PRODUCED BEFORE THE A O AND SCRUTINIZED BY HIM. NO DETAILS LIKE EDUCATIONAL QUA LIFICATIONS AND SERVICES RENDERED BY SMT. PAYALBEN TO EFFECT SA LES HAS BEEN BROUGHT BEFORE ME DURING THE APPELLATE PROCEEDINGS. THE DETAILS PRODUCED HAVE ALREADY BEEN VERIFIED BY THE AO. NO NEW EVIDENCES HAVE BEEN PRODUCED BEFORE ME DURING THE A PPELLATE PROCEEDINGS. THEREFORE, THE ACTION OF THE AO IN MAK ING DISALLOWANCE OF RS.4,62,000/- IS HELD JUSTIFIED AND IS CONFIRMED. AGAIN IN THE CASE OF SMT. DIPIKABEN S. PRAJAPATI WH O HAS BEEN PAID RS.7 LAC AS COMMISSION ON TOTAL SALE EFFE CTED OF RS.25,37,160/- , NO NEW EVIDENCES HAS BEEN BROUGHT DURING THE APPELLATE PROCEEDINGS. THE DETAILS OF HER EDUCATION AL QUALIFICATION OR SERVICES RENDERED BY HER TO THE AP PELLANT IS NOT PUT FORTH. THEREFORE, IN ABSENCE OF ANY NEW DOCUMEN TARY EVIDENCES, OTHER THAN WHAT WAS PRODUCED BEFORE IS A O IS PRODUCED DURING THE APPELLATE PROCEEDINGS. CLAIM OF THE APPELLANT CANNOT BE ENTERTAINED WITHOUT ANY DOCUMEN TARY EVIDENCES. THE ONUS WAS ON THE APPELLANT TO PROVE I TS CLAIM OF MAKING PAYMENT @ 27.5%, WHICH IT HAS TOTALLY FAILED. THEREFORE, THE ACTION OF THE AO IN MAKING SUCH DISA LLOWANCE IS HELD JUSTIFIED AND IS HEREBY CONFIRMED. TO SUM UP THE ISSUE, THE ONLY CONCLUSION THAT CAN B E DRAWN FROM THE ABOVE OBSERVATION IS THAT THE COMMIS SION PAYMENTS MADE BY THE APPELLANT COMES UNDER THE PURV IEW OF SECTION 40A(2)(B) OF THE ACT AND APPELLANT HAS NOT PROVED BY ANY INSTANCES/EVIDENCES THAT THE COMMISSION RECEIPT S ARE FOR TECHNICAL OR KNOWLEDGEABLE PERSONS IN THEIR FIELD. ON THE OTHER SIDE, THE SERVICES ARE REQUIRED TO BE DONE BY HIGHL Y TECHNICAL PERSON TO PROCURE ORDERS ON WHICH COMMISSION IS TO BE PAID. APPELLANT HAS ALSO FAILED TO ESTABLISH THE SERVICES RENDERED BY ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 11 - THE COMMISSION RECIPIENTS BY ANY CORRESPONDENCES, T RAVEL MADE, DETAILS OF COMMISSION RECEIPTS/PAYMENTS, CONF IRMATIONS ETC. IN ABSENCE OF SUCH FACTS, THE CLAIM OF THE APP ELLANT CANNOT BE ALLOWED. APPELLANT HAS ALSO RELIED ON VARIOUS RULINGS OF ITA T INCLUDING A DECISION OF GUJARAT HIGH COURT IN THE C ASE OF SWASTIC TEXTILE CO. PVT LTD VS CIT IN WHICH THE ISS UE IN QUESTION WAS REGARDING CLAIM OF DEDUCTION U/S 80I, AS SUCH T HE RELIANCE IS MISPLACED BY THE APPELLANT. SIMILARLY, OTHER CAS E LAWS RELIED UPON BY THE APPELLANT IS CLEARLY DISTINGUISHABLE AN D CANNOT BE ACCEPTED. IN TOTALITY, THE ACTION OF THE AO IN DISALLOWING COMMISSION ON SALES PAID BY THE APPELLANT AMOUNTING TO RS.33,62,000/- IS HEREBY HELD JUSTIFIED AND THE CLA IM OF THE APPELLANT REJECTED. BEING AGGRIEVED BY THE ORDER OF LEARNED CIT(A) ASSE SSEE IS IN THE SECOND APPEAL BEFORE US. LEARNED AR BEFORE US SUBMITTED A PAPER BOOK WHICH I S RUNNING FROM PAGES 1 TO 45 AND ALSO SUBMITTED AS UNDER: 1. THE APPELLANT IS A COMMERCE GRADUATE AND ENGAGE D IN THE BUSINESS OF MACHINERY PARTS FOR QUITE SOME TIME. DU RING THE FINANCIAL YEAR 2009-10 HE SECURED ORDERS FROM VARIOUS GOVERNM ENT POWER PLANTS/COMPANIES TO SUPPLY 'HEAT EXCHANGERS', BEING HIGHLY TECHNICAL AND WITH HIGH PROFIT MARGIN. BEING AN INDIVIDUAL NO T TECHNICALLY SOUND, IT WAS DIFFICULT FOR HIM TO PROPERLY SERVE, COVER AND REMAIN IN TOUCH WITH POWER PLANTS AND COMPANIES (CUSTOMERS) S PREAD THROUGHOUT THE STATE OF GUJARAT. AS SECURING CONTIN UOUS ORDERS FOR 'HEAT EXCHANGERS' FROM GOVERNMENT COMPANIES WAS NOT LIKELY, THEREFORE INSTEAD OF 'RECRUITING' PERMANENT STAFF O N HIS ROLL, THE APPELLANT HAD PREFERRED TO APPOINT TRUSTED COMMISSI ON AGENTS AS PER THE REQUIREMENT OF HIS BUSINESS. A PERSON, WHO IS T ECHNICALLY SOUND WAS MAINLY REQUIRED TO HELP HIM IN TECHNICAL ASPECT S VIZ DESIGN, PROCUREMENT OF MACHINERY, ERECTION AND TIMELY SERVI CES ETC. BESIDES, ANOTHER PERSON FOR THE PURPOSE OF LIAISON AND FOLLO W UP WORK VIZ. ENSURING TIMELY DELIVERY OF MACHINES, ERECTION, REA LIZATION OF ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 12 - PAYMENTS ETC. ACCORDINGLY, THE APPELLANT HAD APPOIN TED INITIALLY TWO AGENTS, SHRI VIKRANT PRAJAPATI (TO LOOK AFTER TECHN ICAL ASPECTS), WHO IS NOT A RELATIVE WITHIN MEANING OF SECTION 2(41) AND SMT. DIPIKA S. PRAJAPATI, WIFE OF THE APPELLANT, TO LOOK AFTER LIA ISON AND FOLLOW UP WORK. AS NUMBER OF ORDERS FOR SUPPLY FROM POWER PLA NTS/COMPANIES HAD INCREASED DURING THE FINANCIAL YEAR 2010-11 (RE LEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION), HE APPOINTED ANOTHER LADY SMT. PAYALBEN B. PATEL FOR LIAISON AND FOLLOW UP WO RK. 2. THE NATURE OF SERVICES RENDERED BY THE COMMISSI ON AGENTS WERE EXPLAINED BY THE APPELLANT IN DETAIL VIDE LETTER DA TED 27.01.2014 (PAGE NO. 43 TO 45 OF THE PAPER BOOK) ADDRESSED TO THE LD. A.O. THE COPIES OF RELEVANT BILLS ISSUED TO POWER PLANTS/COM PANIES CONTAINING THE NAMES, ADDRESSES, CONTACT DETAILS, PARTICULARS OF ITEMS AND AMOUNT WERE ALSO PLACED BEFORE THE LD. A.O. THE ABO VE COMMISSION WAS PAID THROUGH ACCOUNT PAYEE CHEQUES AND AFTER DE DUCTING TDS. THE TDS WAS ALSO DEPOSITED WITH THE GOVERNMENT. MOR EOVER, CONFIRMATION OF RECEIPT OF COMMISSION BY ALL THE TH REE AGENTS EXPLAINING THEIR ROLE WERE ALSO FILED BEFORE THE LO WER AUTHORITIES (PAGE NO. 17 TO 19 OF THE PAPER BOOK) ALONG-WITH CO PIES OF THEIR RETURNS OF INCOME ACCOMPANIED WITH COMPUTATION INDI CATING THE FACT THAT COMMISSION INCOME HAD BEEN OFFERED FOR TAXATIO N BY THE PAYEES. THE BOOKS OF ACCOUNT OF THE APPELLANT WERE DULY AUD ITED UNDER THE PROVISIONS OF SECTION 44AB OF THE INCOME TAX ACT, 1 961 AND THE ID. A.O. HAD NOT REJECTED THE SAME. THUS, THE APPELLANT HAD DISCHARGED ONUS' CASTED ON HIM. THE LD. A.O. WITHOUT CONDUCTI NG ANY ENQUIRY OR CONTROVERTING THE EVIDENCES PLACED BEFORE HIM MEREL Y ON THE BASIS OF CONJECTURE AND SURMISE HELD THAT COMMISSION PAYMENT WAS 'CONCOCTED' BECAUSE COMMISSION WAS NOT ALLOWABLE UN LESS IT IS ESTABLISHED THAT IT WAS PAID FOR SERVICES OTHER THA N SERVICES RELATED TO SUPPLY OF GOODS TO GOVERNMENT AGENCIES AND PAYMENTS GOVERNMENT IS GUARANTEED AND DISPROPORTIONATE COMMISSIONS WAS PAI D ETC. 3. THE LD. CIT(A) HAD UPHELD THE FINDING OF THE LD . A.O. AFTER EMPHASIZING THAT SHRI VIKRANT PRAJAPATI IS 'RELATIV E' OF THE APPELLANT, WITHOUT BRINGING ON ANY EVIDENCE OR MATERIAL ON REC ORD THOUGH THE APPELLANT HAD SPECIFICALLY DENIED THE ABOVE FACT BO TH BEFORE THE LD. A.O. AND HIM. HE ALSO POINTED OUT THAT NO DETAILS R EGARDING EDUCATIONAL 'QUALIFICATION' OF COMMISSION AGENTS AN D DOCUMENTARY EVIDENCES REGARDING RENDERING OF SERVICES WERE PLAC ED ON RECORD. ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 13 - 4. BOTH THE LOWER AUTHORITIES HAD FAILED TO CONSID ER THE FACT THAT IN BUSINESS WORLD IT ALWAYS NOT POSSIBLE TO HAVE DOCUM ENTARY EVIDENCE ON RECORD, KINDLY SE JUDGEMENTS IN THE CASE OF CIT V/S BHARAT MEDICAL STORE 308 ITR 373 (P&H), COPY OF ABOVE JUDGEMENT IS FILED ON 07.06.2018]. HOWEVER, IF THEY HARBOR ANY DOUBT REGA RDING THE RENDERING OF SERVICE THEY OUGHT TO HAVE CONDUCTED N ECESSARY ENQUIRE EITHER WITH AGENTS OR POWER PLANTS/COMPANIES AS COM PLETE DETAILS WERE FURNISHED AND ONUS IS DISCHARGED BY THE APPELL ANT [CIT V/S SIDDHARTH TRADE LINKS P. LIMITED 206 TAXMAN 442 (DE L)]. THE LD. A.O. AS WELL AS THE LD. CIT(A) HAD ALSO IGNORED THE FACT THAT THE ID. A.O. HIMSELF HAD ALLOWED AFTER DETAILED SCRUTINY U/S 143 (3) THE COMMISSION PAYMENT MADE BY THE APPELLANT DURING THE F.YR.2009-10 TO SHRI VIKRAR PRAJAPATI AND SMT. DIPIKA PRAJAPATI. IN ABOVE CONNECTION, A COPY OF THE ASSESSMENT ORDER FOR THE A.YR.2010-11 DATED 31.12.2012 WAS PLACED ON RECORD (KINDLY SEE PAGE NO . 27 TO 29 OF THE PAPER BOOK). RULE OF CONSISTENCY DEMANDS ALLOWANCE C COMMISSION PAYMENT TO ABOVE TWO PERSONS AS NO NEW ADVERSE FACT WAS BROUGHT O RECORD. 5. THE PAYMENT OF COMMISSION WAS AS PER 'BUSINESS E XPEDIENCY' BECAUSE COMMISSION WAS PAYABLE ONLY ON WHEN QUANTUM OF 'SALES' INCREASED SUBSTANTIALLY. BY MAKING PAYMENT OF 'COMM ISSION', THE APPELLANT COULD STEM EXPENDITURE UNDER THE HEAD 'SA LARY & WAGES' TO RS.15 LACS, WHILE HIS TURNOVER HAD QUADRUPLED FROM RS.44.62 LACS TO RS.166.44 LACS IN SPAN OF MERE TWO YEARS. HE HAD AL SO REPORTED MORE GROSS PROFIT AFTER EVEN MAKING PAYMENT OF COMMISSIO N. IT IS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF J. K. WOO LLEN MANUFACTURER V/S CIT 72 ITR 612 (S.C) THAT REASONABLENESS OF CO MMISSION HAS TO BE DECIDED FROM THE POINT OF VIEW O BUSINESSM AN. FURTHER, IF THE AMOUNT OF RS.33,62,000/- IS NOT DEDUCTIBLE 35 ' COMMISSION' THE SAME IS OTHERWISE ALLOWABLE U/S 37 OF THE INCOME TA X ACT, 1961 BEING NOT A CAPITAL EXPENDITURE OR PERSONAL EXPENSES AND LAID OUT FOR THE PURPOSE OF BUSINESS. THE HON'BLE ITAT, NEW DELHI HA S ALLOWED THE PAYMENT OF COMMISSION IN THE CASE OF JCIT V/S VINIT EE ELECTRONICS PRIVATE LIMITED (2012) 34 CCH 120 DEL TRIB (COPY OF JUDGEMENT IS ENCLOSED HEREWITH), WHERE ALMOST SIMILAR FACTS WERE OBTAINED ON THE FOLLOWING BASIS :- 11. THE AR RELIED ON THE JUDGMENT OF HON'BLE KARNA TAKA HIGH COURT IN THE CASE OF RITZ HOTELS LTD. VS CIT 1 94 ITR ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 14 - 614(KAR) WHEREIN THEIR LORDSHIPS HELD THAT THE COMM ISSION PAYABLE BY THE ASSESSEE THEREIN WAS ADJUSTED TO A S UBSEQUENT YEAR BY MEANS OF A RESOLUTION PASSED BY THE BOARD O F DIRECTORS OF THE ASSESSEE COMPANY AND DISALLOWANCE OF THE COM MISSION MADE BY THE ASSESSING OFFICER WAS DELETED BY THE HO N'BLE HIGH COURT AND HELD THAT THE BURDEN LAY ON THE REVENUE T O ESTABLISH THAT NO SERVICES WERE RENDERED. IN THE PRESENT CASE , THE ASSESSING OFFICER COULD HAVE MADE INQUIRY FROM THE PARTIES ON THE NAMES AND ADDRESSES SUBMITTED BY THE ASSESSEE A ND DETAILS OF PAYMENT MADE THROUGH ACCOUNT PAYEE CHEQUE BUT NO EFFORTS HAD BEEN MADE BY THE ASSESSING OFFICER. 12. THE ASSESSEE'S REPRESENTATIVE ALSO DREW OUR ATT ENTION TOWARDS JUDGMENT OF COORDINATE ITAT BENCH AT INDORE IN THE CASE OF ACIT VS SHREE SAJJAN MILLS LTD. 302 ITR (AT ) 088 (IND) WHEREIN THE THIRD MEMBER BENCH HELD THAT THE ASSESS EE THEREIN HAD PLACED ALL DETAILS WITH REGARD TO COMMI SSION PAYMENTS INCLUDING DETAILS OF SALES MADE TO VARIOUS PARTIES BEFORE THE ASSESSING OFFICER. WITHOUT MAKING ANY IN QUIRY THAT SUCH PAYMENTS ARE BOGUS, IT WAS NOT OPEN TO THE ASS ESSING OFFICER TO MAKE A DISALLOWANCE OF THE COMMISSION PA ID BY THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSING OFFICE R DID NOT MAKE ANY INQUIRY TO SUBSTANTIATE THE FACT THAT THE COMMI SSION PAYMENT CLAIMED BY THE ASSESSEE WAS BOGUS. 13. IN VIEW OF ABOVE, WE OBSERVE THAT THE ASSESSING OFFICER MADE DISALLOWANCE ON COMMISSION PAYMENT OF SALES ON THE BASIS OF A SUPERFICIAL APPROACH SUPPORTED BY SURMIS ES AND CONJECTURES WITHOUT MAKING ANY DUE INQUIRY IN REGAR D TO THE GENUINENESS OF THE PARTIES AND SERVICES RENDERED BY THE RECIPIENTS OF COMMISSION TO THE ASSESSEE IN LIEU OF COMMISSION. WE ALSO OBSERVE THAT THE ASSESSING OFFICER DID NOT CONSIDER ALL MATERIAL AND THE EVIDENCE PLACED BEFORE HIM BY THE ASSESSEE. PER CONTRA, WE OBSERVE THAT THE ID. COMMISSIONER OF INCOME TAX(A) FOLLOWED A DUE PROCEDURE AND ADMITTED THE AD DITIONAL EVIDENCE FOLLOWING RULE 46A OF THE RULES AND AFTER AFFORDING DUE OPPORTUNITY TO THE ASSESSING OFFICER TO CONFRON T THE SAME. HE CALLED A REMAND REPORT AND ALSO GAVE OPPORTUNITY TO THE ASSESSEE TO SUBMIT ITS REJOINDER TO THE REMAND REPO RT. ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 15 - 14. WE ALSO OBSERVE THAT THE ID. COMMISSIONER OF IN COME TAX(A) RIGHTLY FOLLOWED THE RULE OF CONSISTENCY WHI CH WAS EARLIER FOLLOWED BY THE ASSESSING OFFICER IN THE PR ECEDING YEARS OF ASSESSMENT ALLOWING THE PAYMENT OF COMMISSION BY THE ASSESSEE ON SALES. LD. COMMISSIONER OF INCOME TAX(A ) RIGHTLY HELD THAT IN THE ABSENCE OF ANY MATERIAL TO SUBSTAN TIATE THAT THE PAYMENT OF COMMISSION AS CLAIMED BY THE ASSESSE E ARE BOGUS, THE DISALLOWANCE CANNOT BE MADE AND SUSTAINE D. THEREFORE, HE RIGHTLY DELETED THE DISALLOWANCE ON J UST AND PROPER GROUNDS. WE ARE UNABLE TO SEE ANY INFIRMITY OR PERVERSITY IN THE IMPUGNED ORDER. THEREFORE, WE HAV E NO REASON TO INTERFERE IN THE SAME. 6. COPIES OF JUDGEMENTS WHICH WERE ALREADY PLACED ON RECORD ARE AS UNDER: (A) SWASTIK TEXTILE CO. P. LTD V/S CIT 150 ITR 155 (GUJ) (B) CIT V/S BHARAT MEDICAL STORE 308 ITR 373 (P&H) (C) ITO V/S NAVAL TECHNOPLAST IN DUSTRIES LTD (ITA NO.3004/AHD/2008 DT.29.04.2011) (D) BULK EXPLOSIVES V/S DCIT ( ITA NO. 1216/DEL/20 11 DT. 28.06.2013) AND (E) JT. CIT V/S VINITEE ELECTRONICS PVT. LTD. (ITA NO.2835/DEL/2011 DT. 31.07.2012) 7. AS PER THE DIRECTION OF THE HON'BLE BENCH, WE A RE ENCLOSING HEREWITH A COPY OF PAN AND PASSPORT OF SHRI VIKRANT PRAJAPATI (BESIDES RATION CARD OF FATHER OF THE APPELLANT) CL EARLY INDICATING THAT THE NAME OF FATHER OF SHRI VIKRANT PRAJAPATI IS PRA HALADBHAI RAMBHAI PRAJAPATI, WHILE APPELLANT'S FATHER'S NAME IS SHRI TRIKAI REVABHAI PRAJAPATI. IT MEANS THEY ARE NOT RELATIVE IN TERMS OF PROVISIONS OF SEC 2(41) OF THE INCOME TAX ACT, 1961. MOREOVER, A CHAR T CONTAINING THE DETAIL: TURNOVER, COMMISSION PAYMENTS, GROSS PROFIT AND SALARY & WAGES ETC. FOR FIVE YE W.E.F FINANCIAL YEAR 2008-09 TO 2012-13 IS GIVEN HEREUNDER: ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 16 - COMPARTIVE FIGURES OF TURNOVER, COMMISSION AND SALA RY & WAGES (AMOUNT IN LACS) PARTICULARS F. YR. F. YR. F. YR. F. YR. F. YR 2008-09 2009-10 2010-11 2011-12 2012-13 TURNOVER 44.62 129.57 166.44 29.85 51.83 (IN RS.) GROSS PROFIT (IN RS.) 14.31 50.65 55.51 13.36 21.90 COMMISSION PAYMENT 0 14.00 33.62 0 0 (IN RS.) NO. OF AGENTS 0 2 3 0 0 EXPENSES ON SALARY & 15.12 15.60 15.70 10.08 9.00 WAGES (IN RS.) NOTE :- (1) THE APPELLANT HAD FAILED TO SECURE CONT INUOUS SUPPLY ORDERS FROM POWER PLANTS, WHICH RESULTS IN SIGNIFIC ANTLY LOWER TURNOVER FOR THE F.YRS.2011-12 AND 2012 13, AS THE AMOUNT OF SALES DRASTICALLY CAME DOWN RESULTING IN 'NIL' COMMISSION PAYMENT FOR THE ABOVE YEARS AND ALSO LOWER 'SALARY AND WAGES' AMOUN T AS PER COPIES OF BALANCE SHEETS AND PROFITS & LOSS ACCOUNTS ACCOM PANIED WITH COPIES OF RETURNS OF INCOME FOR THE A.YRS.2012-13 & 2013-14. ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 17 - ON THE OTHER HAND, LEARNED DR BEFORE US SUBMITTED T HAT INDEED THE TURNOVER OF THE ASSESSEE HAS INCREASED, BUT THAT IS NOT SUFFICIENT FOR ALLOWING THE COMMISSION EXPENSES. THE ASSESSEE NEED S TO JUSTIFY THAT THE COMMISSION EXPENSES HAVE BEEN INCURRED EXCLUSIV ELY FOR THE BUSINESS. THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY AGREEMEN T WITH THE COMMISSION AGENT TO JUSTIFY THE COMMISSION EXPENSES . THE AGREEMENT FOR THE COMMISSION IS A VERY VITAL DOCUME NT FOR CLAIMING THE COMMISSION EXPENSES. THE ASSESSEE HAS FAILED TO PROVIDE ANY BASIS FOR CO MPUTING THE COMMISSION EXPENSES TO THE AGENTS. NO SATISFACTORY DETAIL HAS BEEN FURNISHED BY THE ASSESSEE JUSTIFYING THE SERVICES R ENDERED BY THE COMMISSION AGENTS. THE LEARNED DR VEHEMENTLY SUPPOR TED THE ORDER OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE RELATES TO THE ELIGIBILITY OF COMMISSION EXPENSES CLAIMED BY THE A SSESSEE IN RELATION TO SALES MADE TO THE GOVERNMENT AGENCIES. THE RELEVANT DISPUTE OF THE REVENUE IS THAT THE ASSESSEE FAILED TO JUSTIFY THE NATURE OF SERVICES RENDERED BY THESE COMMISSION AGENTS TO THE ASSESSEE. THEREFORE, THE ADDITION WAS MADE BY THE AO, WHICH W AS SUBSEQUENTLY CONFIRMED BY THE LEARNED CIT(A). THERE IS NO DISPUTE THAT ALL THE COMMISSION AGENTS HAVE DISCLOSED THE AMOUNT OF COMMISSION IN THEIR INCOME TAX RETURN. TH E COMMISSION WAS PAID BY THE ASSESSEE AFTER DEDUCTING THE TDS UN DER THE RELEVANT PROVISION OF LAW. THERE WAS COMMISSION EXPENSE WHIC H WAS PAID BY THE ASSESSEE TO THREE PARTIES. THE COMMISSION TO EA CH PARTY IS ADJUDICATED AS UNDER: ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 18 - PAYMENT TO VIKRANT P. PRAJAPATI FROM THE PRECEDING DISCUSSION, WE NOTE THAT THE PAY MENT TO VIKRANT P. PRAJAPATI WAS TREATED AS PAYMENT MADE TO THE REL ATIVES OF THE ASSESSEE. HOWEVER, THE ASSESSEE CLAIMED BEFORE US T HAT VIKRANT P. PRAJAPATI IS NOT RELATIVE TO THE ASSESSEE. THE LEAR NED AR FOR THE ASSESSEE IN SUPPORT OF HIS CLAIM FILED A COPY OF PA N, PASSPORT AND RATION CARD OF VIKRANT P. PRAJAPATI, WHICH IS PLACE D ON RECORD. ON PERUSAL OF THE SAME, WE NOTE THAT THE NAME OF THE F ATHER OF VIKRANT P PRAJAPATI IS REFLECTING AS PRAHALADBHAI RAMBHAI PRA JAPATI, WHEREAS THE FATHER NAME OF THE ASSESSEE HAS REFLECTED IN TH E INCOME TAX RETURN SHRI PRAJAPATI TRIKAMLAL. THUS, FROM ABOVE WE OBSER VE THAT THE ASSESSEE AND VIKRANT P. PRAJAPATI ARE NOT THE RELAT IVES AS SPECIFIED U/S 40A(2)(B) OF THE ACT. IN THIS REGARD, THE LEARN ED DR HAS NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE ARGUMENT ADVANCED BY THE LEARNED AR FOR THE ASSESSEE. THUS, WE HOLD THAT SHRI VIKRANT P. PRAJAPATI IS NOT RELATIVE TO THE ASSESSEE. ON PERUSAL OF THE COPY OF THE LEDGER OF VIKRANT P. PRAJAPATI IN THE BOOKS OF THE ASSESSEE, IT WAS OBSERVED THAT ON MANY OCCASIONS THE ASSESSEE HAD TAKEN MONEY FROM THE VIKRANT P. PRAJAP ATI AS EVIDENT FROM THE COPY OF THE LEDGER WHICH IS PLACED ON PAGE S 15 AND 16 OF THE PAPER BOOK. THE ASSESSEE HAS SHOWN CLOSING CREDIT B ALANCE OF RS.10,95,726/- IN ITS BOOKS OF ACCOUNTS. THEREFORE, THERE REMAINS NO AMBIGUITY THAT SHRI VIKRANT P. PRAJAPATI HAS EXTEND ED FINANCIAL SUPPORT TO THE ASSESSEE. HOWEVER, WE NOTE THAT SHRI VIKRANT P. PRAJAPATI RECEIVED A COMMISSION BY THE ASSESSEE FOR TWO ACTIVITIES. IN THE FIRST ACTIVITY, THE ASSESSEE HAS SHARED THE COM MISSION INCOME TO THE TUNE OF 50% OF PROFIT EARNED BY IT. IN THIS REGARD, WE NOTE THAT THERE WAS NO REQUIREME NT OF THE FUND AS FAR AS FOR COMMISSION INCOME EARNED BY THE ASSESSEE BECAUSE AS SUCH THE ASSESSEE HAS NOT MADE ANY PURCHASE AND SALE OF THE GOODS IN ITS BOOKS OF ACCOUNTS IN RELATION TO COMMISSION INCOME. THEREFORE WE ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 19 - ARE OF THE VIEW THAT THERE IS NO QUESTION OF ANY FU ND DEPLOYMENT EITHER BY THE ASSESSEE OR BY SHRI VIKRANT P. PRAJAP ATI. THEREFORE THE ARGUMENT OF THE ASSESSEE THAT THE COMMISSION INCOME WAS SHARED TO THE TUNE OF 50% OF THE PROFIT BECAUSE MONEY WAS INV ESTED BY SHRI VIKRANT P. PRAJAPATI IN THE BUSINESS DOES NOT HOLD GOOD. SIMILARLY, THE ASSESSEE HAD JUST TAKEN THE PLEA BEF ORE US THAT SHRI VIKRANT P. PRAJAPATI INVESTED THE MONEY IN THE BUSI NESS OF THE ASSESSEE BUT FAILED TO PRODUCE ANY CONCRETE DOCUMEN TARY EVIDENCE SUGGESTING THAT THE MONEY WAS ACTIVELY UTILIZED FOR THE BUSINESS. ON PERUSAL OF THE LEDGER COPY OF SHRI VIKRANT P. PRAJA PATI IN THE BOOKS OF THE ASSESSEE, IT WAS OBSERVED THAT IT WAS A RUNNING ACCOUNT I.E. MONEY COMING FROM SHRI VIKRANT P. PRAJAPATI AND MONEY GOI NG TO SHRI VIKRANT P. PRAJAPATI. IN OUR VIEW, THERE SHOULD BE DIRECT EVIDENCE SUGGESTING THE ACTIVE UTILIZATION OF SHRI VIKRANT P . PRAJAPATI MONEY IN THE BUSINESS. WE ALSO NOTE THAT AT THE END OF THE F INANCIAL YEAR, THERE IS A CREDIT BALANCE OF SHRI VIKRANT P. PRAJAPATI IN THE BOOKS OF THE ASSESSEE BECAUSE THE ACCOUNT OF SHRI VIKRANT P. PRA JAPATI WAS CREDITED BY THE COMMISSION AMOUNT OTHERWISE THERE W OULD HAVE BEEN A DEBIT BALANCE. SIMILARLY, WE ALSO NOTE THAT THE ASSESSEE HAS NOT P RODUCED ANY AGREEMENT EITHER WITH THE ALFA LAVAL INDIA LIMITED FROM WHERE THE PURCHASES WERE MADE OR GUJARAT STATE ELECTRICIT Y CORPORATION LIMITED WHERE THE SALES WERE MADE. AS SUCH, THERE I S NO CLARITY ON THE ASPECT OF THE SERVICES FOR WHICH THE ASSESSEE W AS LIABLE TO RENDER EITHER ON BEHALF OF ALFA LAVAL INDIA LIMITED OR GUJ ARAT STATE ELECTRICITY CORPORATION LIMITED FOR THE GOODS PURCH ASED/ SOLD. THESE SERVICES INCLUDE COMMISSIONING, ERECTION INSTALLATI ON, AND AFTER SALE SERVICES. THE CONTROVERSY WHICH REMAINS UNANSWERED BY THE ASSESSEE WHAT SERVICES ASSESSEE WERE LIABLE TO REND ER FOR THE GOODS SOLD BY HIM ON BEHALF OF ALFA LAVAL INDIA LIMITED. THESE SERVICES WERE LIABLE TO BE RENDERED BY THE ASSESSEE TO ALFA LAVAL INDIA LIMITED AS WELL AS TO GUJARAT STATE ELECTRICITY CORPORATION LIMITED. ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 20 - THEREFORE, WE DO NOT FIND FORCE IN THE ARGUMENT OF LEARNED AR THAT MORE AMOUNT OF COMMISSION WAS PAID TO SHRI VIKRANT P. PRAJAPATI BECAUSE HE EXTENDED FINANCIAL SUPPORT TO THE ASSESS EE. WE ALSO NOTE THAT THE ASSESSEE HAS ALSO CLAIMED COM MISSION EXPENSES IN THE IMMEDIATE PROCEEDINGS ASSESSMENT YE AR FOR RS.14,00,000/- AND THE ASSESSMENT ORDER FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 31/12/2012 WITHOUT MAKING ANY DISALLOWANCE OF COMMISSION EXPENSES. THE COPY OF ASSESSMENT ORDE R IS PLACED ON PAGE 27 TO 29 OF THE PAPER BOOK. BUT THE LD. AR BEF ORE US HAS NOT BROUGHT BEFORE US ANYTHING ABOUT THE RATE OF COMMIS SION PAID TO SHRI VIKRANT P. PRAJAPATI IN THE EARLIER YEAR VIZ A VIZ IN THE YEAR UNDER CONSIDERATION. IN OUR VIEW BEFORE COMMENTING ON THE SERVICES RENDE RED BY SHRI VIKRANT P. PRAJAPATI, WHICH ARE PLACED ON PAGES 43 AND 44 OF THE PAPER BOOK, IT IS NECESSARY TO SEE THE AGREEMENT MA DE BETWEEN THE ASSESSEE AND ALFA LAVAL INDIA LIMITED. THE SIMILAR AGREEMENT SHOULD ALSO BE THERE BETWEEN THE ASSESSEE AND GUJARAT STAT E ELECTRICITY CORPORATION LIMITED. THE REFERENCE TO THESE AGREEME NTS IS NECESSARY JUST TO FIND THE SERVICES RENDERED BY SHRI VIKRANT P. PRAJAPATI. THE REFERENCE TO THESE AGREEMENTS ALSO BECOMES IMPORTAN T IN VIEW OF THE FACT THAT THERE IS NO AGREEMENT BETWEEN THE ASSESSE E AND SHRI VIKRANT P. PRAJAPATI. THEREFORE WE FEEL THAT THE IS SUE OF THE COMMISSION TO SHRI VIKRANT P. PRAJAPATI NEEDS TO BE REEXAMINED IN ACCORDANCE WITH THE LAW AND IN THE LIGHT OF ABOVE D ISCUSSION. NOW COMING TO THE COMMISSION PAID TO MRS. PAYALBEN B. PATEL AND DIPIKABEN S. PRAJAPATI, WE NOTE THAT THE LEARNED CO UNSEL FOR THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE SUGGESTING THAT THESE AGENTS WERE ACTIVELY PARTICIPATING IN TH E BUSINESS OF THE ASSESSEE. HOWEVER, IN THE INTEREST OF THE JUSTICE, WE RESTRICT THE DISALLOWANCE OF THE COMMISSION PAID TO DIPIKABEN S. PRAJAPATI TO THE TUNE OF 50% WHEREAS, THE COMMISSION PAID TO PAY ALBEN B. PATEL IS ITA NO.882/AHD/2015 SHRI SAMIR TRIKAMLAL PRAJAPATI VS. ITO A.Y. 2011-12 - 21 - DISALLOWED TO THE TUNE OF 100%. THE REASON FOR REST RICTING THE DISALLOWANCE TO THE TUNE OF 50 % OF THE COMMISSION PAID TO DIPIKABEN S. PRAJAPATI IS THAT THE SIMILAR COMMISSION WAS PAID IN THE EARLIER YEAR WHICH WAS ALLOWED BY THE AO IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT IN VIEW OF A BOVE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL P URPOSES. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 03/07/2018 SD/- SD/- EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; YKS [KK LNL; U;KF;D LNL; YKS [KK LNL; U;KF;D LNL; YKS [KK LNL; U;KF;D LNL; YKS [KK LNL; (MAHAVIR PRASAD) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 03/07/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-GANDHINAGAR, AHMEDABAD. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD