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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
PER D. KARUNAKARA RAO, AM:
This is the appeal filed by the assessee against the order of CIT(A)-
2, Thane, dated 31-03-2016 for the A.Y. 2012-13.
Grounds raised by the assessee are extracted here as under :
“1. The Ld.CIT(A) has erred in law and on facts in sustaining disallowance for commission expenses of Rs.8,95,599/- paid to various parties under the head commission expenses.
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The Ld.CIT(A) has erred in law and on facts by not considering that expenses were incurred wholly and exclusively for the purposes of business and also decision of jurisdiction ITAT and Supreme Court, while sustaining disallowance for commission expenses of Rs.8,95,599/- paid to various parties. 3. The Ld.CIT(A) has erred in law and on facts in confirming impugned disallowance of Rs.8,95,599/- without due consideration of ground realties of nature of Business of assessee, by making general observation to his order. The appellant craves leave to add/alter any of the ground of appeal any time on or before the final hearing of appeal.”
From the above, it is evident that the only issue for adjudication by
us relates to sustaining of disallowance of commission expenses to the
tune of Rs.8,95,599/-.
Relevant facts of the case include that the assessee is an individual
and is engaged in Land Brokerage Commission Agent. Assessee claimed
total sum of Rs.37,90,599/- as commission paid to 10 of his sub-
brokers. As per the discussion given by the AO in Para No.6 and its sub-
paragraphs, the AO disallowed the entire claim of commission
expenditure. AO held that the assessee failed to satisfy the conditions
specified in section 68 of the Act.
During the First Appellate proceedings, the CIT(A) considered the
evidences furnished by the assessee and noted that the major payment of
commission of Rs.28,95,000/- was paid to Mr. Mangesh Dalvi out of
Rs.37,90,599/-. CIT(A) allowed the same and confirmed the balance sum
of Rs.8,95,599/-. While doing so, the CIT(A) gave the following finding
and the contents of Para No.10.2 of his order is extracted here as under :
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“10.2 From the above details, it is seen that the commission of Rs.8,95,599/-, paid to the above persons, which appears to be not genuine person, who could have rendered the services for getting commission. Accordingly, the Ld. AR was requested to justify the genuineness of the above payments, by furnishing credible documents. In compliance, the Ld. AT could not substantiated the basis of payment of above amounts. The Ld. AR could not file any credible documents, to establish the genuineness of the above payments. In compliance, it is stated that the appellant has nothing to substantiate the above claim. In view of these facts, vide order sheet nothing dated 30/3/16, it is stated that the disallowance to this extent, is not pressed. Accordingly, the disallowance of commission expense, to the extent of Rs.8,95,599/-, is liable to be sustained.”
Aggrieved with the same, the assessee filed the appeal before the
Tribunal challenging the impugned order of the CIT(A) with the grounds
referred above.
Before us, at the outset, Ld. Counsel for the assessee brought our
attention to the correspondence and the written submissions and
submitted that the assessee never gave the consent for offering the said
amount of Rs.8,95,599/- or not pressing the claim. The fact about
asking for the copy of the order sheet was also demonstrated. Further,
he submitted that this issue may be remanded to the file of CIT(A) for
fresh adjudication on the said disallowance involving 8 persons who
received the commission from the assessee. Further, Ld. Counsel for the
assessee drew our attention to the following additional ground filed by
him and submitted that the entire commission paid by the assessee is
genuine and therefore, the claim is required to be allowed in favour of the
assessee, in principle . The said additional ground is extracted as under:
“The Ld.CIT(A) on the facts and in law has erred in sustaining the disallowance of Rs.8,95,599/- in respect of commission paid to the following 08 parties with the remarks that the Ld. Authorised
4 ITA No.1208/PUN/2016 Shri Dattatray Shankar Masurkar
Representative of the assessee has stated that the appellant has nothing to substantiate this claim and in view of these facts vide order sheet nothing dated 30-03-2016 it is stated that the disallowances to this extent is not pressed.”
From the above, it is evident that the additional ground relates to
the fact relating to the non-pressing of the claim of commission payment
to the extent of Rs.8,95,599/-. Further, the paper book contains the
evidences in the form of confirmation letters involving said 8 persons who
received the commission.
Ld. DR for the Revenue relied on the order of the CIT(A).
On hearing both the sides, we find the issue relates to the
genuineness of expenditure qua rendering of services by the sub-brokers.
There are confirmation letters filed by the 8 of the sub-brokers. Further,
nothing is brought to our notice by the Revenue giving the reasons for
justifying the decision of the CIT(A) against the with reference to
Rs.8,95,599/-. Assessee is not satisfied with the way the evidences are
appreciated by the AO/CIT(A). Considering the same, we are of the
opinion that the decision of the CIT(A) given in the para 10.2, needs
reconsideration of the facts. Further, it is in the interest of justice that
the issue should be adjudicated on merits. Ld. Counsel for the assessee
vehemently argued stating that the assessee never gave his consent for
not pressing the issue. Therefore, on admitting the additional ground,
we are of the opinion that the matter should be remanded to the file of
CIT(A) for fresh adjudication after considering the
documents/confirmation letters filed by the said brokers/commission
agents and decide the issue as per the law. It goes without saying that
5 ITA No.1208/PUN/2016 Shri Dattatray Shankar Masurkar
the CIT(A) shall afford reasonable opportunity of being heard to the assessee in accordance with the set principles of natural justice. Accordingly, the grounds/additional ground raised by the assessee are
allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical
purposes.
Order pronounced on 06th day of August, 2018.
Sd/- Sd/- (िवकास अव�थी िवकास अव�थी िवकास अव�थी /VIKAS AWASTHY) (डी िवकास अव�थी डी डी. क�णाकरा राव डी क�णाकरा राव क�णाकरा राव/D. KARUNAKARA RAO) क�णाकरा राव �याियक सद�य �याियक सद�य/JUDICIAL MEMBER लेखा सद�य �याियक सद�य �याियक सद�य लेखा सद�य लेखा सद�य/ACCOUNTANT MEMBER लेखा सद�य
पुणे / Pune; �दनांक / Dated : 06th August, 2018. Satish
आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत
अपीलाथ� / The Appellant. 2. ��यथ� / The Respondent. 3. The CIT (Appeals)-2, Thane 4. The Pr. CIT-2, Thane िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “बी बी बी” ब�च, बी 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.