SANJAY KALSI,NEW DELHI V. ACIT, CIRLCE- 54(1), NEW DELHI

ITA 4445/DEL/2019

AI Insights

The case involves Sanjay Kalsi, the appellant, who appealed against the order of the CIT(A) which upheld the 100% disallowance of Rs. 25,42,175, a commission paid to various parties under section 37(1) of the Income Tax Act, 1961. The primary contention was that the lower authorities did not adequately consider the evidence provided and that the decision was made hastily without proper examination of the documents. The Tribunal referenced a previous case involving the same assessee for a different assessment year, where similar additions were deleted, and found merit in the assessee's arguments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23010 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Other Referred Cases: ITA No. 5197/Del/2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANISTA
• Assessee Lawyers: NIDHI MAHAJAN
• Keywords: TDS
• Section: 143(3); 131; 133(6); 37(1)

Judgement Text

" 1 ITA No. 4445/del/2019 Sanjay Kalsi Vs. ACIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘B’ NEW DELHI BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No. 4445/Del/2019 (A.Y. 2013-14) Sanjay Kalsi A-56/B, Lajpat Nagar-II, New Delhi PAN: AAFPK9177M Vs. ACIT Circle- 54(1) E-2 Block, Civic Centre, Delhi Appellant Respondent Assessee by Ms. Nidhi Mahajan, CA Revenue by Sh. Rajesh Kumar Dhanista, Sr. DR Date of Hearing 29/01/2025 Date of Pronouncement 12/02/2025 ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Assessee against the order of the Commissioner of Income Tax Appeals-35 Delhi [‘Ld. CIT (A)’ for short] dated 16/01/2019 for the Assessment Year 2013-14. 2. The Grounds of Appeal are as under:- “1. The Hon'ble Appellate Commissioner erred in sustaining/upholding the 100% disallowance of amounting Rs. 25.42.175/- made by Ld. Assessing Officer in the Commission paid to the parties U/s 37(1) of the Income Tax Act, 1961. Being aggrieved by the order based on prima facie and passed in haste, appellant preferred appeal on the following grounds: 2 ITA No. 4445/del/2019 Sanjay Kalsi Vs. ACIT i. No attention/weightage was given to the relevant documents/evidences produced, those compiled to meet the requirements of sec. 37(1) neither by Ld. AO nor by Hon. CTT (A). ii. The order passed in haste without giving opportunity to produce the documentary evidences which were illegible in the eyes of Hon. CIT (A). iii. The decision was taken on prima facie on the basis of statements on oath u/s 131 which were recorded on 07.03.2014 for the A.Y. 2011-12; though the same were not pertained to the period under consideration that is A.Y. 2013-14. iv. The decision was taken in haste that appellant could not produce any one of the parties to whom commission was given. Though no notice u/s 131 to summon such parties were issued yet sufficient time was there to call them for statement. 2. The appellant craves leave to add, amend alter vary/and or withdrawn any or all the above Ground of Appeal at the time of hearing. 3. The Assessee filed return of income declaring the income at Rs. 64,90,470/-. The case of the Assessee was selected or scrutiny and assessment order came to be passed u/s 143(3) of the Income Tax Act, 1961 (‘Act’ for short) by determining the total income of the Assessee at Rs. 93,99,910/- as against the returned income of Rs. 64,90,470/-. Aggrieved by the assessment order, the Assessee preferred an Appeal before the CIT(A). The Ld. CIT(A) vide order dated 16/01/2019, partly allowed the Appeal of the Assessee, wherein upheld the 100% 3 ITA No. 4445/del/2019 Sanjay Kalsi Vs. ACIT disallowance of amounting to Rs. 25,42,175/- made u/s 37(1) of the Act being the commission paid to the parties. Aggrieved by the order of the Ld. CIT(A), the Assessee preferred present Appeal on the grounds mentioned above. 4. The Ld. Counsel for the Assessee vehemently submitted that the Lower Authorities have not given any attention to the documents/evidence produced by the Assessee. The decisions have been taken in a haste manner, wherein the Assessee could not produce any parties to whom the commission has been given and no notice u/s 131 of the Act to summon such parties were given by the A.O. The Ld. Assessee's Representative has also relied on the order of the Co-ordinate Bench of the Tribunal in ITA No. 5197/Del/2017 dated 06/03/2018, in Assessee’s own case for Assessment Year 2011-12 and submitted that similar additions have been deleted by the Tribunal, thus sought for allowing the Appeal. 5. Per contra, the Ld. Departmental Representative submitted that, there is no agreement between the Assessee and the commission receivers, the Assessee has not produced any bill issued by the recipient of the commission or any evidence/receipt of the payment, the Assessee has only produced the evidence that the payment have been routed 4 ITA No. 4445/del/2019 Sanjay Kalsi Vs. ACIT through banking channel, which will not prove the genuineness of the payment. Further submitted that the order of the Tribunal for Assessment Year 2011-12 being a SMC Bench, the same is not binding to the Bench, therefore, sought for dismissal of the Appeal. 6. We have heard both the parties and perused the material available on record. During the assessment proceedings, the Assessee has filed names and address of the persons to whom the commission have been paid and also filed the copy of the accounts and confirmationof all the parties. The A.O. issued notice u/s 133(6) of the Act and some of them have filed the reply. The parties who have been examined have also confirmed that they have rendered the service to the Assessee for which they have earned commission. Further in Assessee’s own case for Assessment Year 2011-12, the Co-ordinate bench of the Tribunal has deleted the addition in ITA No. 5197/Del/2017 in following manners:- “5. I have heard the rival contentions and perused the facts of the case. There is no dispute that the assessee has filed the names, addresses of the persons to whom the commissions have been paid. The assessee has submitted the Permanent Account Number, commission paid and TDS deducted and there is no dispute to the same. The assessee has produced the confirmations from all the parties for having received the commission. The assessee has produced few parties for examination by the AO which were examined. Most of the parties were served with the notice of the AO and who have replied and confirmed to have received the commission. The parties examined have also confirmed to have 5 ITA No. 4445/del/2019 Sanjay Kalsi Vs. ACIT rendered services to the assessee for which they have earned the commission. If some parties have not been produced by the assessee, the assessee cannot be paralized for the same. It is the duty of the AO to summon such parties u/s 131 of the Act, which power vest with the AO and not with the party. In such circumstances and facts of the case, no addition or any enhancement can be made by the AO or the ld. CIT(A) and additions and enhancements so made are directed to be deleted. Thus ground no.1 of the assessee is allowed.” 7. Considering the fact that the Assessee has produced the confirmation of all the parties for having received the commission and some of the parties have also confirmed to have rendered the services to the Assessee for which they have earned commission. If some of the parties have not been produced by the Assessee, the A.O. cannot be make the addition as it is the duty of the A.O. to summon such parties u/s 131 of the Act and the A.O. made no such efforts.Though the above referred order of the Tribunal in Assessee’s own case for Assessment Year 2011-12 is of the SMC Bench, ongoing through the merit of the case, we agree with the ratio laid down thereon.Considering the above facts and circumstances, we find merit in Ground No. 2 of the Assessee, accordingly, we delete the disallowance of Rs. 25,42,175/-made by the A.O. which has been confirmed by the Ld. CIT(A). 6 ITA No. 4445/del/2019 Sanjay Kalsi Vs. ACIT 8. In the result, the Appeal of the Assessee is allowed. Order pronounced in the open court on 12th February, 2025 Sd/- Sd/- (AVDHESH KUMAR MISHRA) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 12.02.2025 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "