TMI Blog2016 (11) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to proving business purpose of the payments - Decided against assessee - I.T.A. No. 1667/HYD/2012 - - - Dated:- 28-9-2016 - Smt. P. Madhavi Devi, Judicial Member And Shri B. Ramakotaiah, Accountant Member For Assessee : Shri V. Raghavendra Rao, AR For Revenue : Shri A. Sitharama Rao, DR ORDER Per B. Ramakotaiah, A. M. This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-IV, Hyderabad dated 31-07-2012. The only issue in this appeal is with reference to disallowance of commission payment of ₹ 25,05,885/- paid to one Smt. B. Bhagyalaxmi during the year. 2. Brief facts of the case are that, assessee is engaged in screening, grading, processing and trading of mineral and hiring of machinery. As in earlier year 2008-09, assessee claimed commission payment but to one person Smt. B. Bhagyalaxmi of ₹ 25,05,885/- as against the commission of ₹ 2,30,73,945/- paid in AY. 2008-09 to various persons including Smt. Bhagyalaxmi. In line with the earlier year, the Assessing Officer (AO) noted that assessee could not justify the above commission payment by furnishing various information. AO also issued a show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or circumstantial evidence also in support of such claim. The appellant therefore, had grossly failed to discharge the onus of establishing its claim with evidence. Accordingly, it could be said that the facts and circumstances of the appellant's case are not such as could be establish that the claimed expenditure of commission had been laid out or expended wholly and exclusively for the purpose of the appellant's business during the year. Accordingly, the entire commission payment claimed in the A.Y. 2008-09 was disallowed holding that the same or any part thereof could not be said as properly deductible u/s. 37 of the Act. 6.9. It is seen that the facts obtaining in the A.Y. 2009-10 are identical. Even in this year, the appellant has not been able to produce any documentary evidence to substantiate the scope of services, nor has it furnished any evidence to prove that such services were indeed rendered by Srnt. B. Bhagyalaxmi. No primary or secondary evidence has also been submitted to support the claim and the appellant has therefore again failed to discharge the onus of establishing its claim with any verifiable evidence. 6.10 On the other hand,' it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax (Appeals) erred in upholding the disallowance of Commission payment of ₹ 25,05,885. 3. The learned Commissioner of Income Tax (Appeals) erred in considering the fact that, the commission was incurred wholly and exclusively for the purpose of the business . Ground Nos. 1 4 are general in nature. 5. In the course of present proceedings, assessee filed additional evidence in the form of copy of IT returns of Smt. B. Bhagyalaxmi along with computation of incomes and Balance Sheet and Ledger account copy of assessee and contra account in the books of Smt. B. Bhagyalaxmi. Assessee also prayed for Additional Grounds of Appeal, which are as under: Additional Grounds of Appeal: 1. Learned CIT(A) has erred in not noticing that the facts for assessment year 2009-10 are different from those for the assessment year 2008-09 and in mechanically applying the order of the Hon'ble ITAT for assessment year 2008-09. 2. Learned A.O has erred in presuming that there was more than one agent (Para 8. 15th line of assessment order) whereas there is only one agent Smt. Bhagyalakshmi in respect of who commission payment has been made. 3. Learned A.O has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present case it is an admitted fact that there is no written agreement between the assessee and the recipients of the 5 commission agents. Even if there is no written agreement, the assessee could claim deduction for the expenses provided if it is established with documentary and cogent evidence that such expenditure was incurred for the purpose of its business. Now in the assessee's case there is even an iota of evidence regarding render of any services to the assessee to procure business to the assessee. The assessee could not even produce any correspondence between the parties which could have served as a contemporaneous circumstantial evidence. The assessee is not able to correlate the commission payments with reference to the sale. Though the assessee made a claim that the commission agents collectively introduced the parties there is no correspondence between the commission agents. As seen from paras 6.2 and 6.3 of the CIT(A)'s order, the statements given by the assessee are contradictory in nature. The parties herein have not given any evidence about the names of persons who were recommended by them . 7. Being so, it cannot be presumed that the parties wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of which the commission agents procured customers for the assessee for which they were entitled to receive commission. The understanding between the parties was an oral understanding and it was doubtful that such an oral understanding could have been arrived at without any longstanding relationship having been established between the assessee and the commission agents involving such huge amounts of money over a period of time. Further, the assessee is unable to furnish the details of customers introduced by each agent and also the exact working of commission payment made to each of the agents. Mere payment of commission through account payee cheque after deduction of TDS does not absolve the assessee from discharging its burden with regard to proving business purpose of the payments . 8.1. Nothing was brought on record to counter the findings of authorities and also the findings of the ITAT in earlier year. Even though Ld. Counsel tried to make out a case that facts in this case are different, We do not find any difference in the sense, the same statement, the same agreement and the same sort of details are being furnished in support of the claim which was already an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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