TMI Blog2015 (3) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... was denied by the A.O. on the ground that the same is untenable and unacceptable. In absence of any contrary material placed on record by the Revenue to show that the cross examination of Mr. K.K. Gupta was provided to the assessee, we respectfully following the ratio of precedents of the earlier years and keeping in view that the assessee in his submissions dtd. 19-12-2008 stated that he is showing profit ranging between 40 to 45% on the purchases has not been uncontroverted by the Revenue even at this stage and also keeping in view the books of accounts have not been rejected, we are of the view that the ld. CIT(A) was not justified in sustaining the addition of commission of ₹ 2,51,698/- and accordingly we delete the same. The grounds taken by the assessee are, therefore, allowed. we uphold the order of the CIT(A) sustaining the commission payment at the rate of 0.25% instead of 2%. - Decided against revenue. Disallowance of depreciation on plant and machinery - CIT(A) deleted disallowance - Held that:- It is not the case of the Revenue that the plant and machinery were not installed at the assessee’s business premises or the same were not used for the purpose of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings, it was detected that the assessee-company had entered into transaction with a concern managed by one, Shri Praveen Jain and other concern managed by Shri Krishna Kumar Gupta. During the year, the Assessing Officer (AO) noted that the assessee had made purchases of ₹ 66,62,95,692 and has made sale of ₹ 69,66,58,158, which were arranged by these parties. The AO noted that as in the earlier year, it was found that these persons were providing accommodation entries, and therefore, commission paid for obtaining these accommodation entries was estimated at 2% of the sales and accordingly, addition was made on account of unexplained expenditure u/s 69C. In this year also, the AO estimated the commission payment of 2% on ₹ 66,66,58,158 which worked out to ₹ 1,39,33,163, which has been added as unexplained expenditure. The learned CIT(A) after noting down the assessee s submission, found that the issue is exactly similar to disallowance of commission, which had arisen in assessee s own case right from assessment year 2004-2005 to assessment year 2007-2008. In the earlier years, the addition on account of commission was sustained at the rate of 0.25% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veen Jain confirmed that the transactions never resulted into any delivery of goods and also no transaction expenses were debited in the books. It is apparent that the appellant had entered into transaction with the said Shri Praveen Jain and said Shri Praveen Jain confessed that these concerns have neither taken any physical delivery of goods in case of the purchases from the appellant, nor given delivery in the case of sales. 2.6.4. Almost similar issue regarding disallowance of commission had arisen in the case of the appellant for A.Y. 2004-05 to 2006-07 also. 2.6.5 In that case my Ld, Predecessor, vide his appellate order dated 14--03-2011 held that (para 2.5 on page 13): I have carefully and dispassionately considered the facts and circumstances of the case. I have already held that during the course of investigation, one Mr. K K.Gupta confessed before the Investigation Wing of the Department that he was in the business of providing bogus bills / accommodation bills and for the said parties he used to charge commission @0.25% of the aggregate value of the bogus bills. On the basis of such confessional statement given by him, the Department conducted Survey Operatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must have charged commission from the appellant. It was seen in the earlier years that Shri K.K. Gupta who had provided accommodation entries had confessed to charging commission 0.25%. 4. Before us, the learned Counsel submitted that, against the said order of the CIT(A), department has not filed any appeal before the Tribunal. In fact the assessee had preferred an appeal before the Tribunal against the confirmation of commission payment at the rate of 0.25%. The Tribunal had even deleted the said commission payment because the said parties were not cross-examined and assessee has brought on record that no actual transactions have taken place from these persons. However, in this year, the assessee has not preferred any appeal before the Tribunal, therefore, the payment of commission at the rate of 0.25% should be affirmed. 5. On the other hand, learned Departmental Representative, strongly relied upon the order of the AO. 6. After considering the relevant facts, submissions of the parties and also the material placed on record, we find that similar issue of commission payment to these parties had been subject matter of dispute right from the assessment year 2004-2005 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided to the assessee, we respectfully following the ratio of the above decision and keeping in view that the assessee in his submissions dtd. 19-12-2008 stated that he is showing profit ranging between 40 to 45% on the purchases has not been uncontroverted by the Revenue even at this stage and also keeping in view the books of accounts have not been rejected, we are of the view that the ld. CIT(A) was not justified in sustaining the addition of commission of ₹ 2,51,698/- and accordingly we delete the same. The grounds taken by the assessee are, therefore, allowed. 7. In view of the aforesaid facts and precedents of the earlier years and also that the assessee is not in appeal before us, we uphold the order of the CIT(A) sustaining the commission payment at the rate of 0.25% instead of 2%. Accordingly, ground No.1 as raised by the Revenue is dismissed. 8. So far as the issue relating to ground No.2, the learned Counsel submitted that this issue is squarely covered by the decision of the Tribunal in assessee s own case right from assessment year 2004-2005 to 2006- 2007. 9. In the assessment order, the AO noted that the assessee has claimed depreciation of ₹ 66, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natory. It was further stated that necessary documents related to the purchase of assets are already filed before the A.O. It was further stated that the above assets have not been installed in the assessee s centre and the details of its inspection report and verification report was already filed. It was, therefore, submitted that the above assets are being used for business purposes, therefore, the depreciation be allowed. However, the A.O. keeping in view the statement of Mr. Gupta while holding that the veracity of the cost of capital goods disclosed by the assessee in the books cannot be accepted, disallowed 35% of the depreciation on the plant and machinery on adhoc basis. On appeal, the ld. CIT(A), however, deleted the disallowance made by the A.O. 34. At the time of hearing the ld. D.R. supports the order of the A.O. 35. On the other hand, the ld. counsel for the assessee relied on the order of the ld. CIT(A). 36. We have carefully considered the submissions of both parties and perused the material available on record. We find that the facts are not in dispute inasmuch as it is also not in dispute that the assessee has installed the above plant and machinery in its busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and relied upon the evidence of the C.A.s duly pointed out for scrutiny of the records and books of accounts. The books of accounts of the appellant for five years were duly scrutinized and the C.As. has observed that the affairs of the appellant company were not carried out in a manner prejudicial to the interest of the members and creditors, was also the public interest. Honorable Bombay High Court made the captioned Company Petition No. 405 of 2006 and 406 of 2006 absolute in terms of prayer, clause (a) to (i). In view of the above, it is held that the adhoc disallowance of 35% of the depreciation made by the A.O. is contrary to the facts on record of the Honorable Bombay High Court. Therefore, adhoc disallowance of 35% of the depreciation in A.Ys 2005-06 and 2006-07 are not sustainable and hence not sustained. Ground No.2 of A.Y. 2005-06 and Ground No.2 of A.Y. 2006-07 are allowed. Issue No.4 - adhoc disallowance of depreciation decided in favour of the appellant in AYs 2005-06 2006- 07. 37. In absence of any distinguishing feature brought on record by the Revenue against the finding of the ld. CIT(A) and keeping in view that it is not the case of the Revenue that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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