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2020 (10) TMI 1183 - AT - Income TaxRevision u/s 263 - payment of commission to the related and unrelated parties - whether the order of the AO is erroneous and prejudicial to the interest of revenue? - HELD THAT:- Notice alongwith questionnaire was replied by the assessee regarding payment of commission alongwith required confirmations which shows that the commission payment has been made after deducting TDS @ 10% and it is not a case of Pr. CIT that payment of commission has been made by the assessee without making any TDS. This show cause notice and questionnaire issued by the AO and replied filed by the assessee alongwith relevant documents shows that the AO also made enquiry on the issue on payment of commission and TDS thereon and thereafter allowed the claim of the assessee pertaining to payment of commission. Therefore, it cannot be alleged that the AO has not made any enquiry before allowing payment of commission to the related and unrelated parties. In reply to show cause notice u/s. 263 of the Act, the assessee categorically explained that the assessee earns commission from different companies on procuring order from Government Health Departments & Hospital & Municipal Corporation and the assessee being individual cannot move from one place to another place for enhancement of business. Different persons received commission against work brought by them and these commission agents against receipt of commission provides services not only to procure orders but also see that proper delivery of goods are made in time and also look after that payments are received from the consignee in time. These facts have not been negated by the ld. Pr. CIT in any manner, thus, we hold that the payment of commission has direct nexus with the services rendered by the recipient of commission and it was paid against their contribution in the enhancement of business of assessee. Thus, it was to be held that the commission has been paid for the business purpose and the AO was right in allowing the same after due verification and examination through proper enquiry. Introduction of capital - AO show caused the assessee regarding eight amounts including amount i.e. introduction of capital by the assessee and from the copy of bank statements, which shows that the assessee introduced capital by way of transfer through cheques on 27.3.2014 on 15.11.2013, to the firm Gandhi Agencies, which shows that ₹ 15 lakhs was introduced through banking channels. So far as which was introduced in cash is concerned, from the copy of balance sheet of the assessee as on 31.3.2013, it is clear that the assessee has cash in hand more than ₹ 8 lakhs, which was brought forward from financial year 2013-14 and apart from this, the assessee also received gifts from his daughter and mother. From the copy of saving bank statement, we also notice that the assessee also withdrew ₹ 1 lakh on 31.12.2013 and the amount of cash in hand was amount withdrawn from the bank and amount of gifts is more than ₹ 13 lakhs which self-explained the source of ₹ 13 lakhs introduced in cash to the capital account by the assessee during the relevant period. Therefore, acceptance of explanation of the assessee by the AO in this regard is also justified, proper and reasonable, which cannot be held as erroneous and prejudicial to the interest of the revenue in absence of any other adverse materials brought on record during proceedings u/s. 263 of the Act. AO had conducted sufficient and adequate enquiry on all three issues and it is not a case of no enquiry or insufficient enquiry. - Decided in favour of assessee.
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