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2020 (6) TMI 604 - ITAT KOLKATARevision u/s 263 - Assessee failed to substantiate the necessity of payment of large amount of commission in a business of sale of Electric Goods, as well as failed to produce evidence of rendering service - also transpired from record that details of the parties to whom commission were paid were not produced by the assessee - AO Chose to disallow on adhoc basis @ 20% of the expenditure claimed as commission payments - HELD THAT:- A perusal of the assessment order and the details filed by the assessee before the AO, in reply to the queries raised by the Assessing Officer during the assessment proceedings demonstrate that this is not a case of lack of enquiry as stated by the ld. Pr. CIT in the last paragraph of his order. This statement is factually incorrect. AO has called for information on the claim of deduction of expenditure made by the assessee and in response thereto, the assessee has filed voluminous details. Payments were made on receipt of claim bills through banking channels. Tax was also deducted at source from these payments. The bills raised by the commission agents along with the list of electric items sold by them based on which the commission was claimed was placed before the AO as well as the ld. Pr. CIT. This is also a fact that the assessee has been paying and claiming as a deduction commission paid to agents, for all the previous Assessment Years as well as for the subsequent Assessment Years. It is common knowledge that in this segment of business, the competition is severe and requires special measures to boost sales. The payment of commission has been accepted as genuine by the revenue in the earlier years as well as in the subsequent Assessment Years. AO has taken a possible view that the expenditure in question claimed by the assessee as commission payment, is allowable in part. This cannot be a case of lack of enquiry or non-application of mind. The issue whether third party enquiries have to be made or not during the course of investigation, is the prerogative of the AO, as he is the investigator. The type, nature and extent of investigation is the prerogative of the Assessing Officer. Pr. CIT, cannot, in our view, invoke his power u/s 263 for revising an order passed u/s 143(3) of the Act for the reason that in his view, the investigation/enquiry should be conducted in a particular manner or to a particular extent. Inadequate enquiry cannot be a ground of revision. we have to necessarily hold that the exercise of revisionary power by the ld. Pr. CIT, u/s 263 of the Act, is bad in law. - Decided in favour of assessee.
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