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2012 (10) TMI 1087

ommission is stated to have been paid. - ITA No.5549/Mum/2010 - Dated:- 12-10-2012 - SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI B.R.JAIN (ACCOUNTANT MEMBER) Appellant by : Shri G.S.Pikale Respondent by: Shri V.Krishnamoorthy ORDER Per B.R.Mittal, JM: The assessee has filed this appeal for assessment year 1996-97 against order dated 5.4.2010 of ld CIT(A) -5, Mumbai on following grounds; 1. That the Hon ble CIT(A) has erred in law and facts of the case in not appreciating that the dealing with M/s. Radhika Synthetics Limited fetched the company a profit margin of ₹ 45,61,005 and after the payment of commission of ₹ 35,86,519 to M/s. Spectrum synthetics Ltd (who introduced M/s. Radhika Synthetics Limited to the company) the company earned a net profit of approximating ₹ 10 lacs, thereby CIT(A) has erred in not directing the AO to delete the additions of expenses amounting to ₹ 35,86,519 paid to M/s. Spectrum synthetics Pvt Ltd., on account of services rendered to the Co in dealings with M/s. Radhika Synthetics Limited. 2. That the Hon ble CIT(A) has erred in not directing the AO to issue summons to M/s. Radhika Synthetics who were under the proceedings of the De .....

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T(A) is justified to confirm the action of the AO in making the addition relating to dealings with M/s. Radhika Synthetics Ltd., on account of which assessee claimed to have paid brokerage/commission of ₹ 35,86,519 to M/s. Spectrum Synthetics Pvt Ltd. 4. This issue is arising pursuant to assessment order passed by AO u/s.254 of the Act on 28.1.2009. 5. The relevant facts are that assessee claimed towards brokerage and commission paid amounting to ₹ 35,86,519 to M/s. M/s. Spectrum Synthetics Pvt Ltd on sale and purchase of yarn/fabrics. The AO stated that said commission and brokerages were made only to sister concern belonging to assessee s group concern and is not genuine or reasonable. AO, while passing the original assessment order under section 143(3) of the Act, asked the assessee to adduce evidence regarding the nature of services rendered by M/s. Spectrum Synthetics Pvt Ltd. alongwith confirmation from the said party together with name, address, income tax assessment particulars, etc. However, assessee stated that above named company had been attached by the Hon ble High Court of Bombay and as the directors of the said company are absconding, assessee required ti .....

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to whom the commission is stated to have paid like account copy, particulars of address, etc. Appellant s contention is that it had paid commission only in respect of sales to a party not related to it and also that it is not in a position to produce any information from the party to whom commission has been paid only because that party is before a Court Receiver and that none of the party s promoters are available. AR s submission is that the lower authorities have been more prejudiced and mislead by the fact that the party to whom commission and brokerage have been paid is a sister concern which fact is not correct, based on the sworn affidavit filed before us. According to us, the assessee s claim that the party to whom the sales have been made in respect of which only commission is claimed to have been paid is not a sister concern and also that the party to whom commission and brokerage have been paid being under recovery proceedings, it is not in a position to furnish required information before the lower authorities, are claims which have to be considered in the proper perspective by the lower authorities,. We are of the opinion that since these facts have a bearing on the re .....

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bsequent appeal, the CIT(A) vide order dated 8.11.2001 has upheld the conclusion drawn by the AC by observing that despite being given specific opportunity to the appellant for filing confirmation of the said party on the basis of books which were stated to be in the possession of the Court Receiver. In absence of such confirmation, he analysed the facts of the case at length upheld the action of the AO by stating that onus u/s 37(1) which was on the appellant was not discharged by it. Before the ITAT, it was stated that the payments were made to parties which were not its sister concerns. The Hon ble ITAT set aside the issue with a direction to the appellant to state all the relevant facts for proper examination by the AO. However, as stated in the assessment order, the appellant has not been able to prove the business expediency behind the said payment though onus u/s 37(1) lay on it. The appellant has also not been able to establish that it did not have any relationship with Spectrum Synthetics who were paid commission. The appellant has failed to adduce evidence any regarding the nature of services rendered by Spectrum Synthetics Pvt. Ltd. along with confirmation from the said .....

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revent the proceedings on technical issue that the proceedings had become time barred and, accordingly, no effect to the order of the Tribunal could be given. It is observed that assessee has not produced any documents before authorities below nor any document is placed before us to show that payments were made by the assessee towards brokerage and commission to M/s. Spectrum Synthetics P Ltd. for the services rendered by it to assessee. In the absence of any documents on record, and considering that case pertains to A.Y. 1996-97 and also considering the fact that when the matter was restored by the Tribunal to the AO with clear direction to reconsider the claim of the assessee afresh and assessee failed to furnish any documents before the authorities below, we do not find any merit in the contentions of ld A.R to restore the matter again to AO for fresh consideration and that too when no documents are on record to support the claim of the assessee. Therefore, we hold that ld CIT(A) is justified to confirm the action of AO to disallow the claim of the assessee on payment of brokerage and commission of ₹ 35,86,519 as claimed by the assessee. Moreover, the Tribunal in its earli .....

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