SHRI SAHIL SURENDRA SAHARIA,KOLKATA vs. ITO, WARD - 1(3), DIBRUGARH

IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI BENCH “E” COURT AT KOLKATA Before Shri S.S.Godara, Judicial Member and Dr. A.L.Saini, Accountant Member ITA No.56/Gau/2018 Assessment Year :2010-11

Shri Sahil Surendra V/s. Income Tax Officer Saharia, Flat No.5, Door Ward-1(3), Dibrugarh No.3, 7th floor, Wood Street, Kolkata-700016 [PAN No.AXIPS 7338 G] .. अपीलाथ� /Appellant ��यथ�/Respondent

None अपीलाथ� क� ओर से/By Appellant Shri Amitava Sen, JCIT-DR ��यथ� क� ओर से/By Respondent 11-12-2019 सुनवाई क� तार�ख/Date of Hearing 18-12-2019 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R PER BEMCH:- This Revenue’s appeal for assessment year 2012-13 arises against the Commissioner of Income Tax (Appeals)-1 Guwahati’s order dated 29.09.2016 passed in case No.02/2016-17 involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Case called twice. None appears at the assessee’s behest. Case file suggests that the assessee had never put in appearance right from 25.10.2018 onwards. We thus proceed ex parte against the assessee.

ITA No.56/Gau/2018 Assessment Year: 2010-11 Shri Sahil Surendra Sahariar Vs. ITO Wd-1(3), DBR Page 2 reverse both the lower authorities’ action disallowing the alleged commission payment of ₹70 lac both in course of assessment and affirmed in the CIT(A)’s order under challenge. The lower appellate discussion to this effect reads as under:- “5. Ground Nos. 3 & 4: These two grounds are directed against disallowance of expense claimed amounting to Rs. 70,00,000/-. 5.1 Appellant was declaring income from salary, interest and commission from LIC. During the year, he procured Insurance Policy for UC in respect of Shri Pawan Kumar Ruia for which he was given Commission of Rs. 93,28,721.55. From that amount, assessee deducted Rs.70,00,000/- as payment made to M/s Godwari Electro Contractor Pvt. Ltd. (GEC in short) as fee for Commission/Technical Services. The assessee was asked to explain the allowability of expenses claimed. He failed to furnish specific details of services rendered by M/s GEC Pvt Ltd. The AO adduced the following argument to disallow the claim made by assessee: "1. For selling of life insurance policies, on agent requires personal and marketing skill but not technical expertise or know-how. The Life Insurance Commission of India, after appointment of agents provides all technical and logistic support by way of trainings to its agents. And therefore, UCI agent is not required to obtain any technical and professional service from other agencies for procuring insurance policies. 2. A company is an artificial juridical person and therefore a company, which is not doing business in the field of insurance, cannot approach and influence a person for insurance policy. 3. There is no written agreement with M/s Godowari Electro Contractor Pvt. Ltd. and understanding between the two parties is oral and mutual understanding only. The assessee failed to furnish details of services received and correspondences made in procuring insurance policies and thereby fal1ed to prove that the expense claimed was made wholly and exclusively jar business purpose. Mere payment of fee/commission through account payee cheque after deduction of ms, does not absolve the assessee from discharging his burden with regard to proving business purpose of such payment. After considering the above facts, I have found that there is complete black out on the nature of services rendered by recipient company and no material placed on record nor the assessee could draw my attention to any material which would demonstrate without doubt the nature of services rendered by the recipient company except bill and money receipt' hove found that payment of fee/commission to M/s Godwori Electro Contractors Pvt Ltd. is not an expense wholly and exclusively for the purpose of business and there/ore, not allowable expense under the provision section 37(1). It is merely on arrangement to reduce the taxable income by claiming false expenditure. I therefore, disallow the expense amounting to Rs. 70,00,000/- claimed under head Commission/fee for technical services paid for procuring high value policies/assignments and add back to the total income of the assessee"

ITA No.56/Gau/2018 Assessment Year: 2010-11 Shri Sahil Surendra Sahariar Vs. ITO Wd-1(3), DBR Page 3 5.2 In appeal the A/R vehemently disputed the decision taken by the AD. The fact of assessee doing agency business of lie was reiterated. It was stated that appellant was able to procure high value insurance policy of Rs. 40 crore in the name of Shri Pawan Kumar Ruia for lie. For that, it received commission of Rs.93,28,721.55 from LIC. Assessee, it was stated, could get the policy due to the help of GEC Ltd. For the service rendered, assessee made payment of Rs. 70,00,000/- to GEC Pvt Ltd. It was stated that policies were often procured through professional contacts. Had GEC Pvt. Ltd. not helped assessee in getting the policy for lie, the same would have gone to other agents. AIR stated that the payment was genuine and that it was made through banking channel. Tax was duly deducted. The payee party had confirmed receipt of the same. The GEC Ltd. was not related to assessee and that there is nothing in record to indicate that the sum of Rs.70,00,000/- was routed back to assessee. Reliance was placed for following Judgments: (i) DClT Vs. AG. GovindarajuJu [2012] 108 ITR 888 (Madj (ii) Shahzada Nand & Sans Vs. CIT (1977) 108 ITR 358 (Se) (iii) CIT Vs. Coimbatore Salem Transport Pvt. Ltd. (1966) 61 ITR 480 (Mad) (iv) Aluminium Corpn. Ltd. Vs. CIT (1972) 86 TTR 11 (SC) (v) Swastic Textiles Co .(P) Ltd. Vs. CIT (1984) 150 ITR 155 (Guj) (vi) Jamshedpur Motor Accessories Stores Vs. CIT (1974) 95 JTR 664 (Pat) (vii) . CIT Vs. ASK. Rathinasamy Nadar (1995) 212 ITR 527 (Mad) (viii) Lokshminarain Modonlal Vs. CIT (1972) 86 TTR 439 (SC) and (ix) Dr.G.G.Joshi Vs. CIT (1944) 209 ITR 324 (Guj). 5.3 I have carefully considered the matter. Assessee had not given any fact regarding actual service tendered by GEC Ltd. In absence of any evidence of concrete service being rendered by the party, it is not possible to agree with the argument that Rs. 70,00,000/- was bona fide paid to the party. Assessee also had not given any evidence to show that GEC Pvt. Ltd. had expertise in matter of procuring insurance business. If GEC Pvt. Ltd. had actually brought the insurance policy of Mr. Ruia to assessee, GEC Pvt, also must be having evidence of its business or personal contacts with Mr. Ruia. A business expense of Rs. 70,00,00/- had been claimed. The said claim has to be supported by evidence. It should sound reasonable by common human logic. Mere paper evidence of payment being made by cheque and tax being deducted will not serve the purpose. Nature of exact service being provided by the party with concrete evidence has to be furnished. Assessee had not come up with any evidence in this regard. Unless there is some sort of proof that GEC Pvt. Ltd. had actually procured the business for assessee, the claim cannot be entertained. To be entitled to Rs.70,00,000/- GEC Pvt. Ltd. must be having evidence of actually doing some effective work in procuring the business for assessee. Appellant relied on slew of case laws. But immediate concern is factual evidence. Case laws relied upon are of no help to assessee unless there are facts to buttress the contention made. Since assessee's contention is not supported by any underlying facts, the ground taken has to be dismissed only. Ground Nos. 3 and 4 are dismissed.” 3. It is clear from a perusal of the above extracted detailed discussion that the assessee has neither been able to prove the nexus of the impugned alleged commission payment with corresponding insurance commission income nor there is any agreement between himself and the payee entity M/s Godwari Electro Contractor Pvt. Ltd. There is further no indication that the said

ITA No.56/Gau/2018 Assessment Year: 2010-11 Shri Sahil Surendra Sahariar Vs. ITO Wd-1(3), DBR Page 4 payee was ever engaged commission activities. We therefore see no reason to interfere with the CIT(A)’s action under challenge affirming the impugned disallowance. 6. This assessee’s appeal is dismissed. Order pronounced in the open court 18/12/2019 Sd/- Sd/- (A.L.Saini) (S.S.Godara) (Accountant Member) Judicial Member) Kolkata, *Dkp �दनांकः- 18/12/2019 कोलकाता/। आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-Shri Sahil Surendra Saharia, Flat No.5, Door No.3, 7th Floor Wood Street, Kolkata-16 2. ��यथ� /Respondent-Income Tax Officer, Ward-1(3), Dibrugarh 3. संबं*धत आयकर आयु-त / Concerned CIT Guwahati 4. आयकर आयु-त- अपील / CIT (A) Guwahati 5. 0वभागीय �3त3न*ध, आयकर अपील�य अ*धकरण, / DR, ITAT, Guwahati 6. गाड7 फाइल / Guard file. By order/आदेश से, /True Copy/ Sr. Private Secretary, Head of Office/DDO आयकर अपील�य अ*धकरण, गूवाहाठ� ।