TaxTMI 
TaxTMI 
2016 (11) TMI 286
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....stify the above commission payment by furnishing various information. AO also issued a show cause notice in which he has referred to the statement recorded from Smt. B. Bhagyalaxmi, in the course of assessment proceedings for the AY. 2008-09. He also listed out the reasons for disallowing the commission as under: (i) There are no written agreement with the parties to whom commission was paid; (ii) There is no written correspondence with these parties regarding the customers introduced by them and sales effected; (iii) The assessee cannot identify party wise list of customers introduced by the said parties. It was giving a vague reply that all the customers were collectively introduced; (iv) The assessee could not specify tonnage details of sales effected through each of the commission agent; (v) The assessee claimed that all its customers were introduced by all the agents, whereas the list of customers furnished by Smt. Bhagyalaxmi was inconsistent with the claim; (vi) In a nutshell, the assessee could not produce any documentary evidence in support of the services rendered and could not also produce the basis for commission. ....
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.... to discharge the onus of establishing its claim with any verifiable evidence. 6.10 On the other hand,' it is seen that in their decision in the appellant's appeal in ITA No. 2117/Hyd/2011 for the A.Y. 2008-09 dtd. 18.5.2012, the Hon'ble ITAT have also opined that it is a settled law that the, burden of proof is on the assessee to establish that any expenditure is incurred wholly and exclusively for the purpose of business. They noticed that in the appellant's case there was no written agreement with the recipients. They observed that even if there was no written agreement, the appellant could have claimed deduction provided it established such claim with documentary and cogent evidence. However, in the appellant's case there was not even an iota of evidence regarding rendering of any services for procurement of business, nor could the appellant produce any correspondence between the parties as could have served as a contemporaneous circumstantial evidence. The Hon'ble ITAT also took note of the fact that there was no evidence to the effect that the recipient parties even knew the parties to whom the sales were made. They held that the judgments rel....
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....der) whereas there is only one agent Smt. Bhagyalakshmi in respect of who commission payment has been made. 3. Learned A.O has also erred in stating that the list of customers was not produced ignoring that Smt. Bhagyalakshmi stated in her statement 'List enclosed' in answer to Q.5. Without prejudice to the above grounds, 4. Orders of Learned CIT(A) & A.O have resulted in double assessment of the income returned by Smt. Bhagyalakshmi. Income returned was Rs. 11,56,470/- and tax paid thereon by way of TDS was Rs. 2,83,917/-. Disallowance ought to have been restricted to Rs. 13,49,415/- (Rs. 25,05,885/- - Rs. 11,56,470/-)". 6. Ld. Counsel submitted that the facts in this year are different from earlier year in the sense that there is only one commission payment and so relying on the other year's order is not correct. It was submitted that referring to the statement recorded during the proceedings, the said Bhagyalaxmi has confirmed the amount and has introduced the middle-men. Therefore payment of commission is a business necessity. 7. Ld. DR however, reiterated the orders of AO and CIT(A) and submitted that on similar facts in assessee's own ....
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....ce about the names of persons who were recommended by them". 7. Being so, it cannot be presumed that the parties whom the assessee made any sales were through these parties to whom the commission has been paid. As there is no evidence whatsoever to support the claim of the assessee that these impugned recipients of the payments rendered any service for which commission has been paid when they did not even know them. Therefore, it cannot be said that the assessee has discharged the onus to prove that the commission was paid wholly and exclusively for the purpose of assessee's business. The assessee relied on various judgements which cannot be applied to the assessee's case as these judgements are on their own facts. The question whether the assessee has established that the expenditure was incurred wholly and exclusively for the purpose of business is essentially a question of fact to be decided on merit of each case. 8. From the statements of the so called commission agents further inferences can be drawn that none of the commission agents is able to provide definitive list of customers, quantity of sales effected, and working of commission. In fact M/s. R....