TMI Blog2016 (2) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... judgement of Hon’ble Rajasthan High Court in the case of Anuj Kumar Varshney and other vs. ITO(supra) is delivered, after giving adequate opportunity of being heard to the assessee. Addition of commission payment - Held that:- In respect of 17 parties who have complied with the summons, tax has been deducted at source and they have also reported the commission receipts in their return of income, we donot see a rationale basis which prompted the AO to disallow the commission payment. More so, where the matter is covered in favour of the assessee by earlier orders of the Coordinate Bench which has been referred to by the ld CIT(A). We accordingly upheld the deletion of additions of commission payments to these 17 parties. In respect of other 4 parties, it is noted that Shri Sudhir Jain has already complied with the summons and further assessee has filed additional evidence before the Bench. The additional evidence is accepted and the matter is set-aside to the file of the AO in respect of these 4 parties to examine the same afresh considering the additional evidence after giving proper opportunity to the assessee. Addition of travelling expenses including foreign travelling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irming the trading addition to the extent of ₹ 6,63,915/- by applying the g.p.rate of 25.5% as against the G.P. rate of 25.06% declared by the assessee. (ii) The ld. CIT(A) has erred on facts and in law in confirming the disallowance of ₹ 1,44,276/- out of the commission paid to the four parties/agents @ 20% of the total commission of ₹ 7,21,380/- paid to them. 2. Regarding ground no. 1 of the revenue and cross objection no. 1 of the assessee, the brief facts of the case are that the assessee firm is engaged in the business of trading, manufacturing and export of handicrafts, gold, silver jewellery, precious, semi precious and cut stones. During the year, it declared gross profit of ₹ 3,78,67,-74/- on turnover of ₹ 15,11,01,916/- giving a G.P. rate of 25.06% as against gross profit of ₹ 5,62,44,327/- on turnover of ₹ 22,48,51,068/- giving a G.P. rate of 25.01% in last year. The AO stated in his order that purchases of ₹ 1,01,00,729/- made from 4 parties as mentioned at page 3 of the assessment order are not verifiable and are bogus in nature and has been introduced in the books of accounts to reduce its gross profits. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation or that summons were return unserved, purchases made from these parties cannot be held to be non-genuine. The Hon ble ITAT Jaipur Bench in assessee s own case, on the same facts, in A.Y. 2004-05 to A.Y.2008-09 wherein the addition was made by AO by disallowing 25% of the alleged unverifiable purchases has reduced such addition by applying G.P. rate considering the past history. Therefore, when Hon ble ITAT has consistently determined the income of the assessee by applying a G.P. rate and the facts for the year under consideration is same as in earlier years, the CIT(A) has rightly deleted the trading addition made by the AO by disallowing 25% of the alleged unverifiable purchases. The Hon ble ITAT Jaipur Bench, Jaipur vide order dated 22.10.2014 in case of Anuj Kumar Varshney vs. ITO (2014) 41CCVH 15 held that disallowance of 15% of unverifiable purchases is reasonable. In holding so, the Bench relied on the Rajasthan High Court judgement in the case of Venus Arts Gems vs. ITO (2014)369 ITR 161. It may be noted in this case , the assessee carrying on the business of manufacturing of silver and metal beads etc. declared G.P. rate of 8.79% as against G.P rate of 11.4% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial available on record. We found force in the arguments of the Ld AR that when the department has accepted the sales made by M/s Clarity Gold Pvt. Ltd which is assessed to tax, how the purchases made by the assessee from the same party can be held to be unverifiable/non-genuine more particularly when the party has given the confirmation for the transaction. We accordingly agree with the contention of the assessee and the AO is directed to allow the said claim after verifying the assessment records of M/s Clarity Gold Pvt Ltd. Further, the matter in respect of unverifiable purchases in case of Anuj Kumar Varshney vs. ITO (supra) as referred by the ld AR has since been referred and pending adjudication before the Hon ble Rajasthan High Court. Given the consistent stand taken by this Bench, we are inclined to set aside the issues raised in this appeal in respect of unverifiable purchases from the remaining three parties (other than M/s Clarity Gold) and restore the matter to the file of AO to decide the same afresh after the judgement of Hon ble Rajasthan High Court in the case of Anuj Kumar Varshney and other vs. ITO(supra) is delivered, after giving adequate opportunity of bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission. These 17 parties have also filed their income tax returns wherein the commission income is declared. In 11 cases, commission income declared in the return is matching with commission paid by the assessee. In 6 cases, commission income declared in their return is less than the commission paid which is for the reason that these persons may have claimed certain expenses against the commission receipts. In respect of 4 parties who did not comply with the summon, the AO did not took any action against them even when summons were served on them. Out of these 4 persons, Shri Sudhir Jain to whom commission of ₹ 1,24,1790/- is paid has complied with the summon u/s 131 by filing letter dated 13.12.2011 but it was not considered by the AO. The AO has also not given any opportunity to the assessee to adduce the evidence in respect of these 4 persons. The assesses has now obtained copy of ITR return, Balance Sheet, P L a/c confirmation from these four parties and vide letter dated 17.04.2013 has requested the Hon ble Bench to admit the same as additional evidence under Rule 29 of ITAT Rules for imparting substantial justice. Considering the evidence produce, no disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ense, expenses amounting to ₹ 13,41,519/- was incurred on trip undertaken to USA to participate in Las Vega Jewellery Show cum exhibition. Mr. Vikas Kaul accompanied in this trip. He is a tourist guide and having visa of USA. Therefore, he was taken to Las Vegas Jewellery show to assist the assessee in the jewellery show cum exhibition held there Thus the expenditure incurred on the guide is for the purpose of the business. So far as visit of Neeta Dadda is concerned, she is partner in the firm and looking after the business. There is no expenditure of other family members. 4.2 We have heard the rival contentions and pursued the material on record. The assessee has provided the necessary explanation in respect of travel of tourist guide Vikas Kaul and Neeta Dadda who is a partner in the firm. Further, it is noted that on similar facts, the disallowance was deleted by ld CIT(A) for AY 2008- 09 against which the department has not filed any appeal. Keeping in mind the nature of the business of the assessee and the explanation provided by the assessee, we see not reason to interfere with the order of ld CIT(A) who has deleted the disallowance of ₹ 1 lacs towards foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X
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