TMI Blog2015 (12) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... firming the addition made by AO and accordingly, we delete the disallowance of commission paid to above mentioned parties. Decided in favour of assessee. - I.T.A No. 1701/Kol/2014 - - - Dated:- 9-10-2015 - Shri Mahavir Singh, JM Shri M. Balaganesh, AM For The Appellant: Shri Soumitra Chowdhury, Advocate For The Respondent: Shri Sanjay Mukherjee, JCIT ORDER Per Shri Mahavir Singh, JM: This appeal by assessee is arising out of order of CIT(A)-Asansol in Appeal No. 224/CIT(A)/Asl/Cir-3/Asl/12-13 dated 17.06.2014. Assessment was framed by ACIT, Cir-3, Asansol u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) for AY 2010-11 vide its order dated 18.01.2013. 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming/restricting the addition made by AO at ₹ 64,35,828/- out of total addition of ₹ 74,35,828/-. For this, assessee has raised following two grounds: 1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in restricting the addition to the extent of ₹ 64,35,828/- out of the total addition of ₹ 74,35,828/- made by the AO on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions with new parties whereas in this case the commission is paid for procuring order from old parties or existing clients. According to him, there is no logic and it is completely against practice of the market. According to AO, there is no fixed formula or standard rule to pay commission because the commission is paid to family members. The AO brought out the percentage of commission in respect to Smt. Vinita Kumar Agarwal @ 14.06%, Smt. Saroj Devi Agarwal @ 12.07%, Puja Sales Corporation @ 15.10%, Vikash Kumar Agarwal @ 14.38%, Vinay Kumar Agarwal @ 13.74% and to Vivek Kumar Agarwal @ 13.74%. Accordingly, he disallowed total commission of ₹ 74,35,828/- by holding the same as bogus by observing as under: The circumstantial evidences discussed in the forging paragraphs establish the fact that the commission expenditure is a bogus expenditure and not incurred wholly and exclusively for the purpose of assessee s business. So total commission of ₹ 74,35,828.00 debited to profit loss account is hereby disallowed and added to total income of the assessee. 4. Aggrieved, assessee preferred appeal before CIT(A), who also confirmed the action of AO that the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid aggregating to ₹ 38,35,828/- were returned unserved. The claim of appellant is that payment was made by cheque/RTGS, they are income tax assesses and filing returns of income. Their financial statements were produced before me. 15. The Assessing Officer wrote to all 5 cases asking for details. 4 were returned by postal authorities as 'Not Known' and one 'Move/Not Known'. This was intimated to assessee by Assessing Officer. The onus was as assessee to prove that payment was wholly and exclusively for business purpose. The nature of service rendered is still not proven. Unless nature of service is not proved, it cannot be said that the debited as commission expense is wholly and exclusively for business. As a matter of fact, the payment is made without TDS since these companies obtained certificate under section 197 of Income Tax Act, 1961. 16. Going by detailed reasons recorded by Assessing Officer, I find that the genuineness of payment and purpose of payment is not established to satisfaction of Assessing Officer. Accordingly I uphold the disallowance made in respect of claimed payments to the five companies. Aggrieved, now assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mt. Vinita Kumari Agarwal, who is the daughter of the assessee. She has been paid a commission of ₹ 5 lac for procuring orders and she has particularly obtained orders from Bokaro Steel and other parties situated at Orissa on behalf of assessee. (ii) Smt. Saroj Devi Agarwal, who is wife of the assessee and she has been paid a commission of ₹ 7 lac for procurement of orders. (iii) Ashok Kumar Agarwal, HUF, whose proprietorship business is run under the name and style of M/s. Puja Sales Corporation and he deals in same items in which assessee deals. He has been paid commission of ₹ 9 lacs against procurement of sale and supply of order of electrical items. (iv) Shri Vikash Kr. Agarwal is son of the assessee and he has been paid commission of ₹ 5 lacs for procuring sale orders from the parties situated at Orissa on behalf of the assessee. (v) Shri Vinay Kr. Agarwal, again who is son of the assessee has been paid commission for procurement of orders on behalf of assessee. He was paid a commission of ₹ 5 lacs. (vi) similarly, Shri Viveka Kr. Agarwal, who is son of the assessee runs a proprietary concern under the name and style of Priti Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied the details of commission paid and TDS challan is fully disclosed in the TDS return filed. All these persons are working in favour of the firm and very efficiently effect the growth of firms business turnover. Again the commission paid to these persons are according to market rate nothing more is paid than market rate. But on showing and submitting the reference of the Act and other supporting papers, the Ld. Assessing Officer was very harsh and on one man rule behaviour has ignored the fact and disallowed the commission paid to the above parties. The Ld. Assessing Officer was totally wrong on disallowing the commission paid to the aforesaid persons. As such the proportionate disallowance of commission paid of ₹ 13,56,630/- by the Ld. Assessing Officer is totally absurd and bad in eyes of law. The assessee seeks natural justice from your honour as the provision of section 38(1) does not apply here. Thus the assessee seeks natural justice from your honour for which he shall be obliged. 6. Before me, full details of Income Tax payment by the recipients was filed. I find that they had disclosed the same and the sum has nearly suffered tax at maximum margi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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