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TMI Blog2016 (5) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... tion amounting to Rs. 3,55,76,533/-. The Learned AO observed that out of this receipt, a sum of Rs. 3,52,57,708/- was received by the assessee from M/s Sri Girija Prasanna Cotton Mills Ltd. The assessee submitted copy of the agreement dated 10.3.2009 between Sri Girija Prasanna Cotton Mills Ltd and the assessee. The said company was the owner of the land at Moujagarh Shyamnagar P.S.Jagatdal having total area of 10.315 acres. The said land was requisitioned under the West Bengal Land (Requisition & Acquisition) Act 1948 for construction of ESIC Hospital on 30.05.1979 and award was made on 11.3.1998. Aggrieved by this award, the company filed reference peititon to Land Acquisition Collector. It was also mentioned that the company appointed Shri Swarup Kumar Saha (assessee herein) , to represent its case in the Land Acquisition Court upto Hon'ble High Court and Supreme Court at the cost of the second party. The company agreed to pay 30% commission of the total enhanced compensation to the assessee. Final compensation awarded to the company was Rs. 11,75,25,964/- and out of this, Rs. 3,52,57,708/- was paid to the assessee as commission on 22.3.2011. After deducting tax at source of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15/2005 was preferred for attachment of the Collector's P/L Account for payment of the compensation award. During these 6 years the assessee incurred all expenses relating to appointment of Advocates and different people as required for conducting the case and paid the necessary fees, charges, incidental expenses of the said case. Beign further aggrieved by the judgement and decree dated 31.5.2004 of the Land Acquisition Court at Barasat, the State of West Bengal preferred an appeal in the Hon'ble High Court at Calcutta against which a Cross Appeal being FAT No. 382 of 2005 and CAN No. 3009 of 2005 was preferred by the assessee on behalf of his clients Girija Prasanna Cotton Mills Ltd. Later the Hon'ble Calcutta High Court passed an order dated 18.5.2005 wherein it was directed to pay an amount to the claimant by the Government of West Bengal. 2.2.1. The assessee further placed a copy of agreement dated 24.4.2009 between him and M/s Girija Prasanna Cotton Mills Ltd. The operative portion of the agreement as reproduced in the Learned CIT(A) order is as under:- 1. The First Party hereby appoint the Second Party Dated 13.03.2009 to conduct the reference case before the L.A. Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was 28AA 057957. Whereas the copy of agreement supplied during the appellate proceedings was dated 24.4.2009 and Sl.No. of the Stamp Paper was 27 AA 895798. Thus , the Learned CIT(A) observed that there are two exactly similar worded agreements on record of two different dates. In both the agreements there is no signature of witnesses. The Learned CIT(A) by giving due cognizance to this anomaly concluded that the assessee had not produced any evidences to support the claim of legal proceedings being carried on for years to gether and assessee's engagement in the same. Accordingly he found that the basis of receipt of Rs. 3.52 crores from M/s Girija Prasanna Cotton Mills Ltd by the assessee becomes doubtful. He also observed that the commission paid by the said company @ 30% of enhanced compensation is too excessive and not heard off as paid in genuine land acquisition cases. The Learned CIT(A) summarized the events and found that the assessee has offered Rs. 3,55,76,533/- as consultancy charges received from M/s Girija Prasanna Cotton Mills Ltd and against it, debited various expenses to the tune of Rs. 3,34,50,908/- to earn this income and offered the profit for taxation to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein). The assessee is directed to file the necessary documents and evidences before the Learned AO in this regard. Accordingly, the ground no. 1 raised by the assessee is allowed for statistical purposes. 3. The next ground to be decided in this appeal is as to whether the Learned AO is justified in disallowing a sum of Rs. 1,20,00,000/- towards commission expenditure incurred on three parties in the facts and circumstances of the case. 3.1. The assessee incurred commission expenditure to be paid to the following three parties :- Mr.Subhash Sahu 40,00,000 Tax deducted Rs. 4,00,000 Mr.Subrata Biswas 40,00,000 Tax deducted Rs. 4,00,000 Mr.Satyabrata Biswas 40,00,000 Tax deducted Rs. 4,00,000 Apart from this, the assessee also incurred commission expenditure to be paid to Mr.Sakti Prasad Chakraborty - Rs. 2,78,000/- (Tax deducted Rs. 27,800/-) ; Mr.Debayan Bera - Rs. 9,00,000/- (Tax deducted Rs. 90,000/-) and Mr.Nirmal Chandra Ojha - Rs. 6,60,000/- (Tax deducted Rs. 66,000/-) , which were accepted as genuine by the Learned AO and allowed as deduction. With regard to the claim of deduction towards commission expenditure of Rs. 1,20,00,000/- in respect of three par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by him before 31.3.2011 in his books of accounts and instead reflected the entire amount of commission of Rs. 40,00,000/- as payable at the end of the financial year. It was further observed that the assessee claimed to deducted tax at source as per the TDS certificates dated 22.5.2011 filed by the assessee with regard to these three parties , the following sums were deducted as tax at source:- Name Amount credited Tax deducted Amount payable should be Sri Subhas Sahu 40,00,000 4,00,000 36,00,000 Sri Subrata Biswas 40,00,000 4,11,415 35,88,585 Sri Satyabrata Biswas 40,00,000 4,00,000 36,00,000 3.1.2. The Learned CIT(A) observed that the assessee had manipulated his books of accounts by showing the wrong figure of Rs. 40,00,000/- each as amounts payable in his books of accounts. He accordingly concluded that the asesssee had wrongly shown that TDS was deducted but whereas no tax has been deducted on this expenditure. Based on these observations, he found that the books of accounts are not all reliable and liable to be rejected. He further observed from the income tax returns of Asst Years 2011-12 , 2012-13 and 2013-14 of the assessee that the commission w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission payments to Mr.Sakti Prasad Chakraborty - Rs. 2,78,000/- (Tax deducted Rs. 27,800/- ) ; Mr.Debayan Bera - Rs. 9,00,000/- (Tax deducted Rs. 90,000/-) and Mr.Nirmal Chandra Ojha - Rs. 6,60,000/- (Tax deducted Rs. 66,000/-) , as genuine, ought to have allowed the commission expenditure of Rs. 1,20,00,000/- as genuine as the same has been subjected to TDS. In response to this, the Learned DR argued that the fact of deduction of tax at source itself is in dispute as could be seen from the Learned CIT(A) order and argued that the assessee had merely used the names of his relatives to divert his taxable income to their hands and they in turn had shown meager taxable income in their respective returns after claiming bogus expenditure. He vehemently supported the order of the Learned CIT(A) in this regard. 3.3. We have heard the rival submissions. From the detailed order passed by the Learned CIT(A) and examination carried out by him, in the facts and circumstances, the assessee had not proved the genuineness of the transactions of commission expenditure together with the nature of services rendered by those 3 parties except self serving letter of engagement given by him to them. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- and his son Sri Avishek Saha to the tune of Rs. 40,00,000/- on his behalf and claimed that the genuinity of the salary payment is proved beyond doubt. He also placed independent affidavits from his wife and son before the Learned CIT(A). The Learned CIT(A), however, did not give weightage to those affidavits as according to him the same were only self-serving and did not contain date wise details of payments made on behalf of the assessee. Accordingly he rejected those affidavits and did not admit even as an additional evidence. He also held that the contents in the affidavits are false in view of the fact that had the salaries been paid by his wife and son on behalf of the assessee, then the same should have been reflected in the books of accounts of the assessee and salary outstanding as on 31.3.2011 would have come down by Rs. 80,00,000/- as against Rs. 96,50,000/- . Moreover he also found that the list containing the names of 65 persons mentions that the salary is payable as on 31.3.2011. Hence the contents of the affidavits are proved wrong by the entries in the books of the assessee and the details filed by the assessee. It was further observed that these payments wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his, the Learned DR argued that the fact of deduction of tax at source itself is in dispute as could be seen from the Learned CIT(A) order and argued that the assessee had merely used the names of his relatives to divert his taxable income to their hands and they in turn had shown meager taxable income in their respective returns after claiming bogus expenditure. He vehemently supported the order of the Learned CIT(A) in this regard. 4.5. We have heard the rival submissions. We find that the Learned AR places heavy reliance on the decision of the Hon'ble Allahabad High Court (supra) in respect of the affidavits and not acting on the same. We find that the Learned CITA had rejected the affidavits filed by the wife and son of the assessee as they were only self serving and did not contain date wise details of payments made on behalf of the assessee. We find that the said affidavits did not even contain the basic fact as to whether the wife and son of the assessee were assessed to income tax and the details of their PAN together with income tax particulars were absent conspicuously. When a person files an affidavit stating that he / she has incurred Rs. 40,00,000/- on behalf of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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