ITO, WARD-6(4), KOLKATA, KOLKATA vs. M/S. WALL STREET CAPITAL MARKET PRIVATE LIMITED, KOLKATA

This appeal by the assessee is against the order of Commissioner of Income Tax (Appeals)-XXXII, Kolkata dated 13.10.2014. Assessment was framed by ITO Ward-1(1), Hooghly u/s 143(3)/147) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 31.12.2008 for assessment year 2006-07. Ground raised by assessee per its appeal reads as under:- “1) For that the Ld. Commissioner of Income Tax (Appeals), XXXII, Kolkata is indulged in speculation, conjecture, surmise and suspicious in confirming the disallowance of expenses of Rs.6,74,081/- made by A.Y. 2006-07 M/s Cellcon vs. ITO Wd-1(1) Hgy. Page 2 the Ld. Income Tax Officer, Warrd-1(1), Hooghly, on the plea of bogus commission and others and added the same to the total income disclosed by the appellant which is illegal, ultra vires and bad in law and as such the said disallowance of expenses may please be allowed in full for the sake of justice.”

Sole issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of Assessing Officer on account of disallowance of expenses of Rs.6,74,081/- on the plea of bogus commission and others.

Briefly, the facts are that the assessee in the present case is a partnership firm and authorized distributor of the company namely “Hutchison Telecom East Pvt. Ltd.” the assessee was appointed for performing various functions within the territory allotted to it for cellular mobile services to the customers of the company as per their directions and guidelines, such as new SIM cards, e-top up, pre-paid cards, service tickets etc., The assessee for the year under consideration filed its return of income on 30.10.2006 declaring total income of Rs.4,66,260/- from the source of business. Subsequently, the case was processed u/s. 143(1) of the Act and thereafter it was re-opened u/s. 148 of the Act. Accordingly, the notice u/s 143(2)/142(1) of the Act was issued upon the assessee. The assessment was completed u/s 147 r.w.s. 143(3) of the Act at a total income of Rs.23,00,180/- after making certain additions / disallowances to the total income of the assessee. The assessee, for the year under consideration has claimed commission expense as detailed below:- 1 Babai Box, Khalpar, Gar Baganane, Sheoraphuli, Hooghly 89,565/- 712 222 2 Manoj Cell Phone Services, Netaji Subhas Road, Rishra, 84,640/- Hooghly 3 S.R. Industries, Khalisani, Bramin Para, Chandannagar, 1,11,050/- Hooghly 4 Shivani Electronics Centre, N.I. Haat, Sayarer More, 71,475/- Hooghly 5 Universal Marketing, Chawk Bazar, Bandel, Hooghly 62,951/- A.Y. 2006-07 M/s Cellcon vs. ITO Wd-1(1) Hgy. Page 3 6 Web Soft. Batala, Seramore, Near Police Station, Hooghly 86,155/- 7 Bright Infotech, Hoooghly Ghastation Road, Hooghly 4,385/- 8 Cell Point, Pipulpati, Chinsura, Hooghly 1,63,860/- Notice u/s. 133(6) of the Act were issued by AO during the course of assessment proceedings to the above stated parties for the confirmation but there was no compliance. Accordingly, AO directed the assessee to produce the aforesaid parties for confirmation of the commission expense. However, the assessee failed to do so and submitted that it has no means to produce the aforesaid parties for the purpose of confirmation. Accordingly, AO deputed one Inspector of Income Tax to verify the parties with regard to details of aforesaid expense. The Inspector in turn submitted that there was no documentary evidence available with the aforesaid parties in respect of commission expense claimed by assessee. Thus, AO disallowed the commission for Rs.6,74,081/- as bogus commission and added to the total income of assessee.

Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that the aforesaid commission was paid through banking channel and therefore genuineness of the parties cannot be doubted. However, Ld. CIT(A) disregarded the claim of assessee by observing as under:- “The submissions of the assessee are considered but cannot be accepted as evidence of the genuineness of the commission paid. The assessee has produced no agreement for commission payment, no confirmation of account, no details of assessment history of the recipients, no copy of any Bill/Voucher raised by the so called recipients etc. in short, all the assessee’s arguments are to the effect that since it has paid certain sums, the AO should have accepted the payment as genuine. This approach impugned order unacceptable. The AO has a right to verify all the claims made by the assessee. since in the present case, the assessee has adduced no evidence to prove that the so called commission was wholly and substantially paid for the purpose of it business, the addition of Rs.6,74,081/- is confirmed.”

We have heard rival contentions and gone through the entire material available on record. Facts have been narrated in details above. Section 37(1) prescribes as under:

In the result, assessee’s appeal stands dismissed.