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TMI Blog2014 (5) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... activities carried out by them for which they receive commission - They were also not able to produce the books of accounts - No proper books or agreements was provided in ascertaining the commission payment nor it could be proved that they have knowledge / experience in providing such services - the onus is on the assessee to link up the commission payment made to various parties with the particular transactions - AO was justified in disallowing the commission payments – Decided against Assessee. Other expenses – Held that:- CIT(A) has adjudicated the issue granting part relief to the assessee - assessee has claimed that he has submitted voluminous details and submissions before the CIT(A) which have not been properly adjudicated – it is true that the CIT(A) has not properly considered the submissions of the assessee – thus, the matter related to the claim of expenditure by the assessee except for the claim of commission expenses is remitted back to the AO – Decided in favour of Assessee. - I.T.A. No. 5794/DEL/2010, I.T.A. No. 6008/DEL/2010 - - - Dated:- 25-4-2014 - Shri R. P. Tolani And Shri Shamim Yahya,JJ. For the Petitioner : Sh. R. K. Sehgal, CA For the Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdered in the assessment order ignoring various evidences found during assessment proceedings which conclusively prove that no services were provided and not giving any finding on such evidences. 3. On the facts and the circumstances of the case, the Ld. Commissioner of Income-tax (Appeals) has erred on facts and in law in allowing following expenses disregarding the provisions of section 57 of the I.T. Act which provide that only expenses incurred wholly and exclusively for the purpose of earning income assessed under section 56 can be allowed: (i) Director's remuneration of Rs.2, 16,000/- (ii) Administration and other expenses of Rs. 1,47,165/- (iii) Salary expense of Rs. 5,87,000/- claimed to have been paid through cheque based upon evidence of bank statement (iv) Sent of Rs. 1,32,OOO/- based upon evidence of bank statement. 4. On the facts and the circumstances of the case, the Ld. Commissioner of Income-tax (Appeals) has erred on facts and in law in allowing the expenses mentioned above ignoring the judgment of the Hon'ble Supreme Court in the case of L.M. Chhabda and Sons vs. CIT (65 ITR 638), Kerala High Court in S.P.V. Bank Ltd vs. CIT (126 ITR 773 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year, he claimed to have earned salary of Rs. 1,08,000/- from the assessee company. The Assessing Officer had issued summons under section 131 to both the directors of the assessee company during the relevant previous year KShri Amit Kumar Aggarwal and Shri Rajinder Adhikari. Out of the two, only Shri Amit Kumar Aggarwal appeared and his statement was recorded under section 131. Shri Amit Aggarwal has stated in his statement that there were two clients of the assessee company during the relevant previous year from whom they earned commission M/s Bhayana Builders Pvt. Ltd. and M/s Sarthak Metals Pvt. Ltd. He was also asked about the names of parties to whom goods were sold on behalf of these companies. In response to this specific question, he stated that he did not remember the names of these parties. He also stated that they had agreement with M/s Bhayana Builders to procure order on their behalf for sale of imported tiles. They also procured orders for sale of wire by M/s Sarthak Metals Pvt. Ltd. The information obtained from M/s Sarthak Metals Marketing Pvt. Ltd. u/s 133(6) of the Act showed that the assessee company had raised bills for commission to this company for sales ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mobile cards. There was no agreement for rent expense claimed by the assessee and it was all shown to have been paid in cash. For most of the expenses, the assessee produced self made vouchers. Therefore, all the expenses claimed by the assessee were disallowed. Income was thus assessed at an amount of Rs. 37,09,000/-. 6. Against the above order the assessee appealed before the Ld. CIT(A). Ld. CIT(A) considered the submissions of the assessee and the order of the AO and held as under:- i) The Assessing Officer has treated the business Income under the head 'income from other sources' by stating that the appellant company did not provide any services to M/s Sarthak Metals Marketing Pvt. Ltd. and M/s. Bhayana Builders Pvt. Ltd. He has referred to the statement of Shri Amit Kumar Aggarwal and has mentioned that Shri Aggarwal could not give the specific details of the services provided by the appellant to above said companies. A perusal of the statement of Shri Amit Kumar Aggarwal (Annexure 'F' of the assessment order) shows that he has stated before the Assessing Officer that the commission was received from these two parties, however, he could not remember the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders Pvt. Ltd and M/s Sarthak Metals Marketing Pvt. Ltd. The onus is on the assessee to link up the commission payments made to various parties with the particular transaction. In the absence of the same, I find that the Assessing Officer was justified in disallowing these commission payments. (iii) As regards disallowance of Rs. 2,16,000/- on account of director's remuneration and Rs.1 ,47,165/- for Admn. and Other expenses, the Assessing Officer has not pointed out any specific discrepancy. The Assessing Officer has himself mentioned that Admn. other expenses of Rs. 1,47,165/- consisted solely of repair and maintenance expenses on three dates. A copy of said account and voucher and bills were admittedly produced before the Assessing Officer. He has not raised any objection to these evidences. In such circumstances, I find that the Assessing Officer was not justified in making the disallowance without any basis or material. (iv) regards salary of Rs. 24,04,200/-, the Assessing Officer has mentioned that one Shri Anirudh Singhal has stated to have received salary of Rs. 1,80,000/-. However, Rs. 1,00,000/- was returned vide cheque NO. 347550 on 20.3.2007 to Shri Bhikari, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atements. 7. Against the above order the Assessee and Revenue are in cross appeals before us. 8. We have heard both the counsel and perused the records. Ld. DR in his submission placed reliance upon the order of the AO. He claimed that Ld. CIT(A) should have given opportunity to the AO to canvass his case pursuant to the submissions of the assessee before the Ld. CIT(A). 8.1 Ld. Counsel of the assessee submitted that on the other hand relied upon the order of the Ld. CIT(A) as far as treatment of income from commission from M/s Sarthak Metals Marketing and Bhayana Builders is concerned. In this regard, he also submitted before us the order of the Ld. CIT(A) in the case of these two parties. In these orders, the Ld. CIT(A) has allowed the expenditure claimed by them which was treated as commission by the assessee. Ld. Counsel of the assessee pointed out that the order of the Ld. CIT(A) in the above two parties was passed after taking into cognizance the AO s observation in the case of the present assessee. As regards the claim of expenditure, Ld. Counsel of the assessee contended that Ld. CIT(A) has not properly adjudicated the issue and has not dealt with the details of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.) has provided services to M/s Bhayana Builders P Ltd. In this regard, following from the appellate order of the CIT(A) in the case of Bhayana Builders P Ltd. dated 27.2.2012 can be gainfully refer here: The undersigned has seen the assessment record. Orders from as many as 12 parties were arranged by M/s Brainstreet Marketing P Ltd. for the appellant details as to these parties is available at (pg. 37 of PB). This list pertains to Calculations of Agency Commission to be paid to Brain Street Marketing P Ltd. Below this list, there is a nothing Kind Atten. :- Mr. Nitin Bhayana, Director. We have recevied the above orders through Brainstreet please approve the payment of their commission Rs. 75 per sq.mtr. This is signed as on 2.6.2006. There are two invoices (pg. 35 36 of PB) issued by M/s Brainstreet Marketing Pvt Ltd. showing commission charges of Rs. 9,50,00,000/- and Rs. 9,35,000/-. Service Tax @ 12% and education cess @ 2% has been charged on each of the aforesaid amounts. Then there is confirmation (pg. 34 of the PB) of accounts showing payments to M/s Brainstreet Marketing Pvt. Ltd. after deducting TDS of Rs. 59,818/- and Rs. 58,874/- at the time of crediting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tters filed by them that these persons have given the general replies to the specific queries and were not able substantiate as to what were the specific activities carried out by them for which they receive commission. They were also not able to produce the books of accounts. No proper books or agreements was provided in ascertaining the commission payment nor it could be proved that they have knowledge / experience in providing such services. In these circumstances, the Ld. CIT(A) held that the onus is on the assessee to link up the commission payment made to various parties with the particular transactions. In the absence of the same, Ld. CIT(A) held that AO was justified in disallowing these commission payments. From the above discussion, we find that the assessee has failed to justify the commission expenses paid. Ld. CIT(A) has passed reasonable order in this regard, which does not need any interference on our part. Accordingly, we uphold the same. 13. Other expenses We find that with regard to disallowance of the other expenses incurred by the assessee, the AO has observed that since the true nature of income received by the assessee has not been explained by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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