HERITAGE HOLIDAYS P.LTD,NEW DELHI vs. DCIT, CIRCLE-11(1), NEW DELHI
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Income Tax Appellate Tribunal, DELHI BENCH, ‘C’: NEW DELHI
Before: SHRI R.K. PANDA & SHRI N. K. CHOUDHRY
per fact and law after giving due opportunity of being heard to
the assessee. We hold and direct accordingly. Grounds of
appeal no. 2 and 3 are accordingly allowed for statistical
purposes.
Ground of appeal no.4(i), 4(ii) and 4(iii) are as
under:-
4(i) That the learned CIT (Appeal) was not justified in giving the contention that the relevant documents were not placed on the record during the course of appellate proceedings while the appellant moved an application
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u/s 154 giving the reference of pages of relevant documents which were placed on the record during the course of Appellate hearing.
That the learned CIT(Appeal) was not justified in (ii) confirming the disallowance of Rs.13,30,000/- related to the commission paid in the light of submission and documents placed on the record.
(iii) The recipients of commission was produced before A.O. who confirmed the facts that it was an introductory commission for introducing the Chief Whip of Samsung India Electronics Pvt. Ltd. to the directors of the appellant company.”
Facts of the case, in brief, are that the during the
course of assessment proceedings, the AO asked the assessee
to file the details of commission of Rs.13,30,000/- paid to two
persons namely Mr. Mukesh Bathla Rs.8,10,000/- and Ms.
Sangeeta Bathla Rs.5,20,000/-. He also asked the assessee to
explain as to why these commissions were paid and to file the
documentary evidence i.e. bills and invoices in this regard. In
response to the same, the assessee filed two invoices raised by
Mr. Mukesh Batha and Ms. Sangeeta Bathla. In both the
invoices, it was mentioned that the commission has been given
on sale of Samsung India Electronics laptop and printer. The
AO noted that the assessee has paid commission in lieu of sale
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of Samsung Laptop and printer, which is not the business of
the assessee. He therefore asked the assessee to justify the
commission paid to the above two parties and produce the
above two persons for necessary submission and verification.
The assessee produced Mr. Mukesh Bathla whose statement
was recorded by the AO. On being questioned by the AO to
explain the nature and service provided by him, it was stated
by Mr. Bathla that commission was given by the assessee
company as he introduced Mr. Uday from Samsung India to
Mr. Sagar (Director of the assessee company). However, Mr.
Bathla did not elaborate the exact nature of services provided
by him in order to justify the commission received. Further,
when asked about Mr. Uday, Mr. Bathla did not give any
detail/contact no. of Mr. Uday. Subsequently, vide the order
sheet entry dated 14.03.2016 the AR of the assessee was given
the copy of statement of Mr. Bathla and was requested to give
the details of Mr. Uday. However, no such details were filed by
the assessee. In view of this the AO held that the assessee
company could not justify the payment of commission of
Rs.8,10,000 to Mr. Bathla and that this payment of
Rs.8,10,000 was not for the purpose of business expediency
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and is not genuine. Therefore, he disallowed the amount of
Rs.8,10,000 given as commission and added back to the
income of the assessee. Since the assessee could not produce
Ms. Sangeet Bathla as she refused to attend, the AO treated
the commission paid to Ms. Sangeeta Bahtla as bogus and
made addition of Rs.5,20,000/-. Thus, the AO made addition
of Rs.13,30,000/-.
In appeal, the ld. CIT(A) confirmed the addition by
observing as under:-
“6.3 I have considered all the documents and explanation of the appellant, but the same is not tenable. Just because Mr. and Mrs. Bathla have accepted the receipt of the commission and have reflected the same as their income does not transpire and approve the genuineness of the transaction. The primary point that has to be considered for checking the genuineness of the commission transaction, is whether the services were actually rendered by the commission agents or not. One has to see the substance of the transaction and not the form of it. No doubt, even in non-genuine transactions, the assesses do take care of doing all the compliances and deduct TDS and make payments by cheque, however, one has to consider the genuineness on the facts whether in actual any service was rendered or not. 6.4. There are lot of facts and reasonings which substantiate that the said transaction is not genuine: • First of all, why commission is paid to two persons for the same work? There is no reasoning and logic for making the payment to
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two persons for introduction of the same client i.e. M/s Samsung India Electronics Pvt. Ltd. • Further, there is no reasoning and logic submitted before me or either before AO as to how such commission income was computed and why there was a commission of Rs.8,10,000 in the hands of Mr. Mukesh Bathla and why there is a commission of Rs.5,20,000 in the hands of Ms. Sangeeta Bathla. • Non-appearance of Ms. Sangeeta Bathla before the AO and lack of cooperation in the tax proceedings, further proves non-genuineness of the transaction. • No proof of rendering of service, i.e. introduction of the client Samsung with the assessee has been furnished. If Samsung India Electronics Pvt. Ltd. and the assessee were introduced, there must be some email, messages, call details, meeting details. However, nothing of such sort was furnished on record to substantiate that how such introduction took place. • Furthermore, it is interesting to note that Mr. Mukesh Bathla, who is claiming to introduce Mr. Uday from Samsun India, does not have his coordinates and details. 6.5 Before me the appellant submitted that it was difficult at that point in time to furnish the details of Mr. Uday in a short span of time, however, even as on| date, no details were even furnished before me. 6.6 In view of the above, since the appellant has failed to discharge his onus to substantiate rendition of the service on account of which commission was paid, the genuineness of the said expense is not established. Hence the addition amounting to Rs 13,30,000/- ( Rs 8,10,000/- + Rs 5,20,000/-) made by the AO is sustained and upheld. Ground Nos. 1 and 2 are dismissed.”
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Aggrieved with such order, the assessee in appeal
before the Tribunal.
The ld. counsel for the assessee strongly challenged
the order of the Ld. CIT(A) in confirming the addition made by
the AO and sustained by the Ld. CIT(A). He submitted that
when the expenditure has been laid out or expended wholly
and exclusively for the purpose of business and the
expenditure is incurred for commercial expediency, no
disallowance should be made. For the above proposition, he
relied on the decision of the Hon’ble Madras High Court in the
case of PCIT vs Managed Information Services Pvt. Ltd.
reported in 396 ITR 490. He submitted that in the instant
case M/s. Heritage Holidays Private Limited was having no
business with Samsung Electronics India Private Limited in
the earlier years and that "Sh. Uday” the key person of M/s.
Samsung at that time was well known to the couple and they
introduced Sh. Sagar the Director of the assessee company
with Uday (key person of Samsung) in October, 2012 where
the former ( (Mr. Sagar) agrees to pay commission @ 12.5% on
order given by "Samsung”. That since such introduction was
held through Bathla family/spouses, it was held in family
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atmosphere, therefore, they insisted that both of them should
be benefitted. However, initially Sh.Mukesh Bathla was
rewarded with commission in Jan-Feb 2013 on initial business
held with Samsung. Mrs. Sangeeta Bathla corresponded with
assessee company for which Samsung has further placed an
order. Further, she was facilitated with commission. Thus,
she was paid in the month of March, 2013. He accordingly
submitted that the addition made by the AO and sustained by
the Ld. CIT(A) is not justified.
The ld. DR, on the other hand, heavily relied on the
order of the AO and the Ld. CIT(A).
We have heard the rival arguments made by both
the sides, perused the orders of the A.O. and the Ld. CIT(A)
and the paper book filed on behalf of the assessee. We have
also considered the various decisions cited before us. We find
the AO in the instant case made addition of Rs.13,30,000/-
being commission paid to Mr. Mukesh Bathla Rs.8,10,000/-
and Ms. Sangeeta Bathla Rs.5,20,000/- since, the assessee
failed to substantiate with evidence to his satisfaction
regarding the above commission. The ld. CIT(A) sustained the
addition made by the AO, the reasons of which have already
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been reproduced in the preceding paragraph. We do not find
any infirmity in the order of the ld. CIT(A) on this issue. We
find when the AO asked the assessee to substantiate the
commission, the assessee filed letter dated 09.11.2015 and
submitted that the commission has been given on sale of
Samsung Laptop and Printers. The relevant observation of the
AO at para 3.2 of the order reads as under:-
“3.2. In response to the above query the assessee vide the letter dated 09.11.2015 filed two invoices raise by Mr. Mukesh Bathla & Mrs. Sangeeta Bathla. In both the invoices, it was mentioned that the commission has been given on sale of Samsung India Electronics Laptop and printer. It was surprising to see that the assessee paid the commission in lieu of sale of Samsung laptop and printer, which is not the business of the assessee and therefore these payment of commission raised a suspicion on the genuineness of this transaction.” 18. We find subsequently when the AO confronted the
assessee, the assessee filed the bills raised by above two
persons against Samsung. Even the confirmation from the
assessee to the above two parties says the commission on sale.
The assessee is changing the stand for reasons best known to
them. Even though they have received commission for
introducing Mr. Uday of Samsung to the assessee, these two
persons do not have details of Mr. Uday. Further, Ms.
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Sangeeta Bathla refused to appear before the AO. The findings
given by the AO as well as the ld. CIT(A) could not be
controverted by the ld. counsel for the assessee by filing any
other evidence before us so as to take a contrary view than the
view taken by the lower authorities. Merely stating that the
expenditure has been incurred for commercial expediency in
our opinion is not sufficient for allowing the commission of
Rs.13,30,000/-. It is the settled proposition of law that for
claiming of any expenditure as allowable, the onus is always
on the assessee to substantiate with evidence to the
satisfaction of the AO that the same has been incurred wholly
and exclusively for the purposes of business. The assessee in
the instant case has miserably failed to substantiate the same
except by furnishing certain papers which do not substantiate
the allowability . Since, the assessee in the instant case could
not furnish any other documents before us against the
findings of the AO and the Ld. CIT(A), therefore, we uphold the
order of the Ld. CIT(A) on this issue.
So far as the arguments of the ld. counsel for the
assessee that in AY 2012-13, no such addition has been made
is concerned, we find no merit in the said argument.
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Principles of res-judicata do not apply to the Income Tax
proceedings and every year is separate and distinct. In view of
the above discussion, we uphold the order of the ld. CIT(A) and
the grounds raised by the assessee are dismissed.
In the result, the appeal filed by the assessee is
partly allowed for statistical purposes.
Order pronounced in the open court on 29.04.2022.
Sd/- Sd/- [N.K.CHOUDHRY] [R.K.PANDA] JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi; Dated: 29th April, 2022. P.S f{x~{tÜ? f{x~{tÜ? fÜA f{x~{tÜ? f{x~{tÜ? fÜA fÜA P.S fÜA P.S P.S Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi
