TMI Blog2013 (10) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been paid - Assessing Officer permitted allowance of 1% as commission and there is no any reason for the appellate authority to have increased the said commission to 2.5% - Such an approach has been made purely based on surmises – Decided in favor of Revenue. - ITA. No. 1451 of 2009 - - - Dated:- 22-10-2013 - Dr. Manjula Chellur And A. M. Shaffique,JJ. JUDGMENT Shaffique,J. This appeal is filed against the order of the Income tax Appellate Tribunal, Cochin Bench in I.T.A.No.508/COCH/98 dated 13/09/2002. The respondent is the assessee and the issue involved is with reference to assessment year 1995-96. The assessment was completed on 27/03/1998 determining the total income at Rs.19,75,350/-. 2. While arriving at the total income, the Assessing Officer disallowed the commission payment to the extent of 4,03,853/- to agents and two relatives of the assessee by restricting such commission to 1% of the total turnover. The Assessing Officer has also made addition of Rs.11,91,600/- being credit in the account of the assessee as not proved to be genuine. 3. An appeal was filed by the assessee before the Commissioner of Income Tax (Appeals). The appellate authority i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it was found that the aforesaid amount i.e. Rs.1,26,600/- was stated as income of the assessee under the head 'other sources'. 7. In respect of four other creditors as well, the assessing officer found that they have not signed the confirmation letters. It was observed that the confirmation letters signed by the assessee in the name of such persons were not genuine and were fabricated. Therefore, the Assessing Officer found that the loan credits from four persons totalling Rs.50,000/- are unproved and was assessed as income under the head other sources. In respect of another person also, an amount of Rs.15,000/- was shown as outstanding in his name which was also treated as unproved. The assessee has shown a further credit of Rs.5,50,000/- on 27/10/1994 and Rs.4,50,000/- on 03/11/1994. Though the assessee was requested to produce evidence of the person who had given such amounts, according to the Assessing Officer the assessee did not produce any evidence in respect of the said creditor Mr.C.C.Thampi. When another opportunity was granted, the assessee requested for two months time. The Assessing Officer did not accept the same in the absence of any evidence. 8. In regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious amounts. Hence there was no reason to doubt their statements and accordingly the said amount of Rs.50,000/- was deleted. 11. In regard to addition of Rs.10 lakhs, it is found that the assessee had produced before the Assessing Officer copy of the bank account of Nedungadi bank Ltd. wherein, on 27/10/1994 and 03/11/1994 two sums of Rs.5,50,000/- and Rs.4,50,000/- were deposited to the account of the assessee by bank clearing. These amounts were paid by Sri.C.C.Thampi through his bank account in Federal Bank Ltd. The appellant produced a confirmation letter also from the loan creditor. Hence the addition of the said amount was also deleted. 12. Though the Revenue preferred an appeal before the Tribunal for the same reasons, the Tribunal had confirmed the directions issued by the Commissioner of Income tax (Appeals) and accordingly dismissed the appeal. 13. The learned counsel appearing for the Revenue relied upon the judgment of the Supreme Court in Commissioner of Income Tax v. P.Mohanakala [(2007) 291 ITR 278 (SC)] for the proposition that in the cases where the explanation offered by the assessee about the nature and source of the sums found credited in the books is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to advance money and the genuineness of the transaction. If these three conditions are satisfied, it would be for the department to disprove the same. Another judgment relied upon is Commissioner of Income Tax v. R.S.Sibal [(2004) 269 ITR 429]. This is a judgment of the Division Bench of the Delhi High Court. It is held that if both the lower appellate authorities have recorded a categorical finding that by producing the documents, the assessee had discharged the onus which lay on him with regard to the genuineness of the gifts, the inference drawn would be on the appreciation of the evidence and facts. It will not give rise to any question of law much less a substantial question of law. It is argued that the findings by the appellate authorities are based on appreciation of evidence and therefore, no substantial question of law arises for consideration in the matter. 17. On a perusal of the assessment order as well as the orders passed by the appellate authorities, in regard to the deletion made by the appellate authorities with reference to the credit shown in the accounts to an extent of Rs.11,60,000/-, the evidence clearly indicated that the persons who appeared before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argued on the basis of the judgment in Mohanakala's case that payment through cheques sent from abroad by itself will not prove that the transaction was genuine, having regard to the fact that the appellate authority as well as the Tribunal had accepted the said finding, we do not think that non- compliance of Rule 46A of the Rules by itself would amount to a substantial question of law as even otherwise the appellate authority was convinced about the genuineness of the transaction. 19. In regard to the disallowance of the commission paid, we do not find any material on record, verified or relied upon by the appellate authority to increase the commission from 1% to 2.5%. The assessing authority had permitted commission in the absence of any other evidence to prove the same at 1% of the total turnover taking into account the commission paid by similar agencies. The assessing authority had found that normally the commission would come only to 0.5% of the total turnover. The appellate authority found that the commission would be in excess of 1% taking into account the fact that the assessee had to promote a new company's product. It is not in dispute that none of the vouchers produc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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