$ * IN HIGH COURT OF DELHI AT NEW DELHI R-105. + ITA 8/2003 COMMISSIONER OF INCOME TAX ..... Petitioner Through: Mr. Rohit Madan, Senior Standing counsel with Mr. Akash Vajpai, Advocate. versus VEENA KOHLI ..... Respondent CORAM: HON'BLE DR. JUSTICE S.MURALIDHAR HON'BLE MR. JUSTICE VIBHU BAKHRU ORDER % 24.09.2015 1. appeal by Revenue under Section 260A of Income Tax Act, 1961 ( Act ) is directed against order dated 5th July, 2002 passed by Income Tax Appellate Tribunal ( ITAT ) in ITA No.602/Del/1997 for Assessment Year ( AY ) 1992-93. 2. On 24th February 2005 while admitting appeal Court framed following question of law: Whether in facts and in circumstances of case, Tribunal was correct, both on facts and in law, in allowing deductions claimed by assessee amounting to Rs.8,00,000/- on account of commission ITA No.8/2003 Page 1 of 5 paid to M/s UNIPLUS INDIA LTD.? 3. Assessee was proprietor of three concerns and also partner with her husband in another firm. Assessee s return of income for AY in question declaring income of Rs.4,17,101 was picked up for scrutiny and she was issued notice under Section 143(2) of Act. 4. During course of assessment proceedings from P&L account of M/s Kohli Graphic Systems, it was noticed that Assessee had paid commission of Rs. 8,00,000 to M/s Uniplas India Ltd. ( UIL ) and she was asked to explain reasons for paying such huge amount as commission. Assessee gave details of such payment purportedly made over period of nearly two months between 4th May 1991 and 27th June 1991 in seven instalments. Assessee filed seven letters and seven debit notes purportedly sent by UIL for proving that commission had been paid to UIL for providing leads of potential customers. According to Assessee each of seven orders had been procured by UIL for her. 5. Assessing Officer ( AO ) found that no finder services had in fact been rendered by UIL and that evidence produced appeared to be fabricated and forged. He held that sum of Rs.8,00,000 was not business ITA No.8/2003 Page 2 of 5 expenditure and disallowed it. 6. Assessee then challenged above order of AO before Commissioner of Income Tax (Appeals) [CIT (A)]. CIT (A) by order dated 29th November 1996 dismissed appeal of Assessee and upheld finding of AO that no iota of service had been rendered by UIL to Assessee for obtaining orders from Government of Punjab or any of other parties. In para 9.1 of order, CIT (A) observed that UIL was manufacturer of plastic storage and pipes and did not have any experience in line of business in which Assessee was engaged. CIT (A) concluded that Assessee had simply come up with story of employing commission agent in order to reduce Assessee s own tax liability. CIT (A) also observed that when Inspector was sent to UIL, it was found that there was general despatch register maintained but it did not bear out alleged correspondence exchanged between UIL and Assessee. Further, there was denial by Government of Punjab that UIL ever approached them for orders to be placed on Assessee. Likewise, six parties whose letters were furnished also denied having been approached by UIL for placing orders on Assessee. ITA No.8/2003 Page 3 of 5 7. In impugned order ITAT simply held that all amounts were for business expediency and assessee had discharged burden. services of M/s UIL were must in such transaction and that UIL had indeed rendered finder services. 8. Having heard Mr. Rohit Madan, learned Senior Standing counsel for Revenue and having perused orders on record, Court is unable to find any justification for ITAT to have overlooked factual findings of AO and CIT (A) which showed that story made up by Assessee of engaging services of UIL for procuring orders from Government of Punjab and other parties, was not substantiated. ITAT surmised that There must have been something in bottom that assessee was able to procure order and able to sell machine of Rs. 5.35 lakhs at sum of Rs. 13.76 lakhs . This was phototypesetting machine procured by controller of printing and stationery, Government of Punjab. It is inconceivable that for making profit in sum of Rs.8 lakhs, Assessee would agree to pay Rs.5 lakhs as commission. order of ITAT fails to discuss elaborate reasons given both by AO and CIT (A) for concluding that no finder services were shown to have been rendered by UIL to Assessee. ITA No.8/2003 Page 4 of 5 9. only conclusion that Court can draw from reading of impugned order of ITAT is that it completely overlooked evidence on record and came to conclusion that can only be termed as perverse. Court is, therefore, unable to sustain impugned order of ITAT. 10. Accordingly, question framed is answered in negative i.e. in favour of Revenue and against Assessee. order of AO and CIT (A) on issue are restored. 11. appeal is allowed, but in circumstances, with no orders as to costs. S.MURALIDHAR, J VIBHU BAKHRU, J SEPTEMBER 24, 2015 mg ITA No.8/2003 Page 5 of 5 COMMISSIONER OF INCOME TAX v. VEENA KOHLI