TMI Blog2017 (1) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income, then no disallowance should be made. Accordingly the AO is directed to verify the same and take remedial measures after giving a reasonable opportunity of being heard to the assessee. The assessee is also directed to produce the relevant documents before the AO. - ITA No. 4891/Mum/2012 - - - Dated:- 12-1-2017 - Mahavir Singh (Judicial Member) And N. K. Pradhan (Accountant Member) For the Assessee : B. S. Bist, DR For the Revenue : Sanjiv M. Shah, AR ORDER N. K. Pradhan (Accountant Member) This is an appeal filed by the revenue. The relevant assessment year 2009-10. The appeal is directed against the order of the Commissioner (Appeals) 35, Mumbai and arises out of the order under section 143(3) of the Income Tax Act, 1961 (the Act ). 2. The grounds of appeal filed by the revenue read as under: i. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of ₹ 29,92,009/- to the Gross Profit made by the A.O. without appreciating the fact that the assessee failed to maintain any stock register and that the A.O. was correct in rejecting the books of account for them being inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same to 3% in F.Y. 2007-08 and then substantially increased the rate of commission to 4%. The AO took into consideration the fact that the nature of business of assessee has remained the same and payment commission has been made to persons closely related to the assessee and some portion of such commission is outstanding on the last day of the financial year. The AO disallowed the excess commission paid @1% in comparison to F.Y. 2005-06 and thereby added ₹ 7,42,521/-. 3.2 On perusal of the P L account, the AO noticed that the assessee had debited interest payment of ₹ 29,65,253/-. After going through the details filed by the assessee, the AO noticed that the assessee had shown payment of interest to number of parties but had not made TDS on the interest paid of ₹ 3,87,384/-. In response to a query raised by the AO, the assessee submitted that it has not made TDS as the parties have furnished declaration in Form No. 15G/15H. The AO, then asked the assessee to furnish the details of persons for whom he is not made TDS along with the copy of return of income. The AO noticed that the assessee has not filed any details regarding the following parties: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the commission rate with the earlier years. Even though, the major portion of the commission was remaining unpaid at the end of the year, the assessee paid the same in the subsequent year. Therefore, the learned CIT(A) directed the AO to delete the addition of ₹ 7,42,521/- made on account of excess commission. 4.2 The learned CIT(A) observed that the assessee obtained Form No. 15G/15H from the depositors. When the assessee obtained Form No. 15G/15H from the depositors, there is not liability to make TDS as per section 197A. If there is any default regarding submission of Form No. 15G/15H with the department, the AO can initiate penalty proceedings u/s 272A, but no disallowance u/s 40(a)(ia) can be made. The learned CIT(A) further observed that the assessee has wrongly accepted Form No. 15G/15H in respect of interest payment of ₹ 1,36,882/- paid to Shri Bipin P. Shah. Therefore, he directed the AO to delete the addition of ₹ 2,50,502/- (Rs. 3,87,384/- minus ₹ 1,36,882/-) made on account of interest without TDS. 5. Before us, the learned DR supported the order passed by the AO. The learned counsel of the assessee supported the order passed by the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no. 1 as raised by the revenue is dismissed. 6.1 In respect of ground of appeal similar to 2nd ground in the instant case, the Tribunal has held as under: After considering the rival contention of the parties and on perusal of the impugned material on record, we find that AO has made an ad-hoc disallowance on this score on the ground that firstly, there is enhancement of rate of commission from 2.5% to the rate of 3.25%; secondly, some of the commission agents are also the relatives of the assessee. Such a basis drawn by the AO for making the disallowance cannot be sustained for the reason that, the Ld. CIT(A) has clarified that overall rate of commission paid is @ 3% on the total turnover and not 3.25% and the commission has been paid uniformly to all the parties including the relatives. Out of 11 party, only 2 are relatives, therefore, it cannot be held that any unreasonable payment have been made to the relatives as compared to the outsiders. Such an ad-hoc disallowance of payment of commission made by the AO cannot be sustained and finding of the CIT(A) is thus, affirmed. Accordingly, ground no. 2 of the revenue is dismissed. 6.2 In respect of ground of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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