IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A .No.-2876/DEL/2013 (ASSESSMENT YEAR 2009-10) DCIT vs K. S. Infosystems Pvt. Ltd. Circle-5(1) 316, IIIrd Floor, LSC, New Delhi Sainik Vihar, Pitampura (APPELLANT) New Delhi-110 034 AABCK5340D (RESPONDENT) Appellant by Sh. Umesh Chandra Dubey, SR. DR Respondent by Sh. K. P. Garg, Adv Date of Hearing 10.10.2016 Date of Pronouncement 14.10.2016 ORDER PER SUCHITRA KAMBLE, JM This appeal is filed against order dated 25/02/2013 passed by CIT(A) -VIII, New Delhi 2. grounds of appeal are as under:- 1. On facts and in circumstances of case, learned CIT(A) deleted disallowance of commission to tune of Rs. 60,08,192/- ignoring fact that assessee could not prove genuineness of expenditure claimed as it could not substantiate any rendering services in lieu of which commission was paid or give any justification or basis for payment of commission. 2. Ld. CIT(A) erred is not appreciating fact that assessee was into business of commission agent in information technology sector as it received commission income mainly from HCL info systems Ltd. and Escort Ltd., but it claimed to have paid commission to companies engaged in business of manufacturing of M S Ignots. 3. Ld. CIT(A) erred is admitting evidences furnished by assessee without providing opportunity to assessing officer in violation of Rule 46A of I. T. Rules. 4. Ld. CIT(A) erred in accepting genuineness of payment of commission only on basis of details of payment, confirmation of recipient and deduction of TDS without appreciating that no justification whatsoever for payment of commission, nor capacity of recipient for rendering of services in IT field, nor verification of actual rendering of service was placed on record by assessee. 5. appellant craves leave to add, to alter, or amend any grounds of appeal raised above either before or at time of hearing. 3. assessee had debited commission expenses in P&L A/c under head office and administrative expenses. On being asked to furnish details assessee submitted that commission was paid to following persons:- NAME AMOUNT (Rs.) M/s. Arti Engineering Co. 37,50,000/- M/s. Sewa Casting (P) Ltd. 15,00,000/- Mr. Subodh Kumar 7,00,000/- Out of pocket expenses 41,200/- Others 16,992/- assessee was required by Assessing Officer to submit complete details of persons to whom commission had been paid along with nature of services rendered and proof of TDS in form 16A. Assessing Officer has observed that assessee had filed details called for along with copies of form 16A. Assessing Officer has further observed that from perusal of records it was observed that sales of assessee had fallen considerably as compared to earlier years but payment of commission had gone up abnormally. Assessing Officer further observed that percentage of commission of sales was 0.1% during AY 2008- 09 whereas it was 20% during AY 2009-10. In view of above facts Assessing Officer observed that show cause notice was issued to assessee as to why commission should not be disallowed. appellant filed copies of audited accounts along with audit report in cases of M/s. Arti Engineering Co. and M/s. Sewa Casting (P) Ltd. and copy of Form 16A regarding proof of payment of commission to various parties. However, Assessing Officer has further observed that no explanation regarding justification of payment of commission and services for which it had been paid were filed by assessee. Assessing Officer observed that M/s. Arti Engineering Co. and M/s. Sewa Casting (P) Ltd. were engaged in business of manufacturing and trading of M. S. Ingots whereas assessee was engaged in business of trading and general commission agent. Since in opinion of Assessing Officer, there was no co-relation between business carried out by assessee and that carried out by above two companies , Assessing Officer held that probability of any transaction between assessee and other two companies was totally ruled out. Assessing Officer has further observed that M/s. Arti Engineering Co. and M/s. Sewa Casting (P) Ltd. had not shown any income on account of commission in their accounts. In view of above facts Assessing Officer held that payment of commission was not genuine transaction. It has also been held by Assessing Officer that rates at which commission had been shown to have been paid was very high. It has also been held by Assessing Officer that deduction of TDS was nothing but device to give colour of genuineness to transaction which was not genuine. In view of findings, Assessing Officer disallowed deduction claimed by assessee on account of payment of commission of Rs. 60,08.192/-. 4. Aggrieved by this, assessee filed appeal before CIT(A). CIT(A) allowed appeal of assessee by holding that assessee had submitted details of payment of commission which is supported by documentary evidences in form of confirmation from parties who had received commission payment from assessee and copies of form 16A regarding deduction of TDS. receipt of commission has been shown by persons who have received commission from assessee in their income. nature of services rendered along with benefit which assessee had derived from services had also been submitted during assessment proceedings. Assessing Officer has not brought any facts on record to show commission had not been paid and has also not brought any evidences on record to show that expenditure was not related to business of assessee. Revenue is before us. 5. Ld. DR submitted that Assessing Officer has rightly disallowed commission to tune of Rs. 60,08,192/-. CIT(A) failed to look into same. 6. Ld. AR submitted that CIT(A) rightly considered all aspects and taken cognisance of documents and evidences produced before Assessing Officer which Assessing Officer has overlooked. Thus Ld. AR submitted that order of CIT(A) is just and proper. 7. We have perused all records and heard both parties. assessee filed copies of audited accounts along with audit report in cases of M/s. Arti Engineering Co. and M/s. Sewa Casting (P) Ltd. and copy of Form 16A regarding proof of payment of commission to various parties. assessee had submitted details of payment of commission which is supported by documentary evidences in form of confirmation from parties who had received commission payment from assessee and copies of form 16A regarding deduction of TDS. receipt of commission has been shown by persons who have received commission from assessee in their income. nature of services rendered along with benefit which assessee had derived from services had also been submitted during assessment proceedings. Assessing Officer has not brought any facts on record to show commission had not been paid and has also not brought any evidences on record to show that expenditure was not related to business of assessee. 8. In result, appeal is dismissed. order is pronounced in open court on 14th of October, 2016. Sd/- Sd/- (R.S. SYAL) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 14/10/2016 R. Naheed * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Date 1. Draft dictated on .10.2016 PS 2. Draft placed before author .10.2016 PS 3. Draft proposed & placed before .2016 JM/AM second member 4. Draft discussed/approved by JM/AM Second Member. 5. Approved Draft comes to 14.10.2016 PS/PS Sr.PS/PS 6. Kept for pronouncement on PS 7. File sent to Bench Clerk 14.10.2016 PS 8. Date on which file goes to AR 9. Date on which file goes to Head Clerk. 10. Date of dispatch of Order. DCIT Circle-5(1), New Delhi v. K. S. Infosystems Pvt. Ltd