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Income Tax Appellate Tribunal, DELHI ‘D’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI KULDIP SINGH
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the
ld. CIT(A)-16, New Delhi dated 03.02.2016 pertaining to A.Y 2011-12.
The assessee is aggrieved by the following additions/
disallowances:
i) Rs. 18,83,198/- on account of commission expenses;
ii) Rs. 30,80,000/- on account of unsecured loan; and
iii) Rs. 7,27,226/- on account of interest paid on unsecured loan.
During the course of scrutiny assessment proceedings, the
Assessing Officer noticed that the assessee has debited Rs. 23,83,198/-
to his profit and loss account on account of commission paid. The
assessee was asked to furnish the list of payees alongwith their
addresses. On the given addresses, the Assessing Officer issued letters
u/s 133(6) of the Income tax Act, 1961 [hereinafter referred to as 'The
Act' for short] and directed the payees to furnish the following
information:
“1. Copy of account of the above noted person in your books of account for the year ending 31-03-2011, duly confirmed by you.
Full details of services provided by you to the above noted person.
Details of clients arranged by you for the above noted person.
Copy of sale orders procured by you for the above noted person.
Copy of agreement entered in to by you with the above noted person and with the parties whom the sales were made by the above noted person through you.
Copy of the correspondence made by you with the above noted person and the clients arranged by you for the above noted person,
Details of the basis of commission charged by you from the above noted person.
Whether you have provided similar services to other parties, if yes details of the same.
Copy of the acknowledgement of your return of income for the A.Y. 2011-12 and the copy of your statement of income for the above noted A.Y.
Copy of your bank account depicting the transactions made with the above noted during the F.Y. 2010-11."
The following details were not furnished:
i) Full details of services provided by you to the above noted person.
ii) Details of clients arranged by you for the above noted person.
iii) Copy of sale orders procured by you for the above noted person.
iv) Copy of agreement entered in to by you with the above noted person and with the parties whom the sales were made by the above noted person through you.
v) Copy of the correspondence made by you with the above noted person and the clients arranged by you for the above noted person.
vi) Details of the basis of commission charged by you from the above noted person.
vii) Whether you have provided similar services to other parties, if yes details of the same.
On not receiving complete details, the Assessing Officer further
issued summons calling for details mentioned elsewhere. The Assessing
Officer observed that none of the persons complied with the summons.
The Assessing Officer formed a belief that the payment of commission is
not proved and, accordingly, allowed expenditure of Rs.3 lakhs only and
made addition of Rs.18,83,198/-.
The assessee carried the matter before the CITA but without any
success.
Before us, the learned counsel for the assessee stated that the
assessee has furnished complete details along with confirmations of the
payees. It is the say of the learned counsel that all payments are
supported by invoices of the commission agents and, therefore, no
disallowance should be made.
Per contra, the ld. DR strongly supported the findings of the CITA.
We have given careful consideration to the orders of the authorities
below and have also considered the relevant documentary evidences
brought to our notice. No doubt, payments are supported by invoices and
confirmations but the moot point is that no evidence has been submitted
for rendition of services by the payees. It is true that in earlier assessment
years, similar commissions were allowed to some parties and also in
subsequent assessment year. But the question remains as to whether in
the year under consideration there was any rendition of services by the
payees. Merely because the payees have shown commission income in their
respective return of incomes and transactions have been done through
banking channels would not suffice, as rendition of services have to be
proved.
Considering the facts of the earlier assessment years and subsequent
assessment years, where similar commission has been allowed, we are of
the considered view that in those years the assessee must have
established/proved the rendition of services. Considering the facts in
totality, in our considered opinion, 50% of the commission disallowed by
the Assessing Officer needs to be allowed. We, accordingly, restrict the
disallowance to Rs.9,40,000/- and direct the Assessing Officer to delete
the balance. Ground No. 1 is partly allowed.
Ground No. 2 relates to addition on account of unsecured loans
received from the following parties:
i. Sapebelle Trader Linkers Pvt Ltd ii. Ishwar Das Gupta iii. Shri Binod Choudhary
The assessee was asked to explain the genuineness of the loans
taken from the aforementioned parties in light of section 68 of the Act.
The assessee filed confirmations, copy of ledger account and income tax
returns of the aforementioned parties. The Assessing Officer issued
summons to the parties calling for confirmations and source. The Assessing
Officer observed that the summons were not complied with. The Assessing
Officer formed a belief that the loans are not genuine and, accordingly,
made addition.
The assessee carried the matter before the ld. CIT(A) but without any
success.
Before us, the learned counsel for the assessee drew our attention
to the documentary evidences to prove the genuineness of the
transactions. It is the say of the learned counsel of the assessee that in
case of Sapebelle Trader Linkers Pvt Ltd and Ishwar Das Gupta, the loans
have been repaid in subsequent years and in the case of Vinod Choudhary,
the learned counsel relied upon his submissions made before the ld. CITA.
The ld. DR strongly supported the findings of the Assessing Officer
and vehemently stated that the assessee has not discharged the initial
burden cast upon him by provisions of Section 68 of the Act.
We have given thoughtful consideration to the orders of the
authorities below and have also considered the relevant documentary
evidences brought on record in the form of paper book.
Sapebelle Trader Linkers Pvt Ltd
On perusal of confirmation of account, we find that in this case
there was an opening credit balance of Rs. 39.58 lakhs which means that
this creditor is coming from the earlier A.Y. Therefore, its identity cannot
be questioned in the year under consideration. Out of the opening
balance, Rs. 20 lakhs was repaid on 15.04.2010. Thereafter, the loans of
Rs.25 lakhs, 20 lakhs and Rs.15 lakhs were taken. Rs.10 lakhs was
repaid on 3.02.2000 and closing balance at the end of the year was
Rs.75.26 lakhs. Copies of income tax returns and statement of accounts of
this company are also placed in the paper book and have been duly
considered by us.
The bank statements of this company are also at pages 2 to 23 of
the paper book. The bank statement of this company shows transactions in
crores. Therefore, it can be safely concluded that this company has
sufficient credit worthiness to give the impugned loan. Considering the
fact that there was opening balance and part of loan has been repaid
during the year and full loan has been repaid in subsequent year, we are of
the considered view that the appellant has discharged the initial onus cast
upon him by provisions of section 68 of the Act. Therefore, no addition is
called for in the case of Sapebelle Traders Linkers Pvt Ltd. The Assessing
Officer is directed to delete the impugned addition.
Ishwar Dass Gupta
The Assessing Officer and the ld CITA proceeded by examining the
documents, treating Shri Ishwar Das Gupta as an individual, whereas the
documents referred to and relied upon by AR show that Shri Ishwar Das
Gupta is HUF. The income tax return is also that of HUF and bank
statement is also that of HUF. Since the facts are not clearly coming out
from the orders of the authorities below, we restore this addition to the
file of the Assessing Officer. The Assessing Officer is directed to examine
this transaction afresh in light of the statement made by the ld. counsel
for the assessee that the loan has been taken from Shri Ishwar Das Gupta,
HUF. The assessee is directed to furnish necessary evidences before the
Assessing Officer and the Assessing Officer is directed to examine the same
after giving reasonable opportunity of being heard to the assessee. This
addition is allowed for statistical purposes.
Shri Binod Choudhary
The ld. counsel for the assessee has heavily relied upon the
submissions made before the CIT(A), which means that he has nothing
more to add to what has been already stated before the lower authorities.
We find that the assessee has only filed copy of ledger account of Shri
Binod Choudhary in the books of Delhi Sugar Company which has not been
confirmed by Shri Binod Choudhary though the PAN is mentioned there. No
other evidence has been brought to our notice. Therefore, we do not find
any merit in the submissions of the learned counsel which have been duly
considered by the CIT(A) during the first appellate proceedings. Addition
on account of loan from Shri Binod Choudhary is, accordingly, confirmed.
Ground Nos. 2 and 3 taken together are partly allowed.
Next addition relates to interest paid on unsecured loan considered
hereinabove. Qua our findings given hereinabove, we direct the Assessing
Officer to allow interest payment to Sapebelle Traders Linkers Pvt Ltd
keeping in abeyance the allowance of interest in respect of Ishwar Das
Gupta after deciding the issue as per our directions given hereinabove and
disallow the interest paid to Shri Binod Choudhary. Ground No 4 is
accordingly decided.
In the result the appeal of the assessee in ITA No.
1693/DEL/2016 is allowed in part for statistical purposes.
The order is pronounced in the open court on 19.01.2021.
Sd/- Sd/- [KULDIP SINGH] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : January, 2021
VL/