TMI Blog2018 (10) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the A.O. There is no allegation of illegal payments, much less evidence. The disallowance was made on mere surmises. Hence we are inclined to allow the claim of the assessee. - decided in favour of assessee. - I.T.A .No. 1203/DEL/2011 - - - Dated:- 15-10-2018 - SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Dr. R. M. Mehta, CA For The Respondent : Smt. Naina Soin Kapil, SR. DR. ORDER PER SUCHITRA KAMBLE, JM This appeal has been filed by the assessee against the order dated 30/12/2010 passed by CIT(A) , Ghaziabad for Assessment Year 2005-06. 2. The grounds of appeal are as under:- 1. The CIT (Appeals) erred both on facts and in law in upholding the disallowance of ₹ 15,16,345/- in respect of Commission and incentive made by the AO. 2. The CIT (Appeals) while upholding the disallowance impugned, did not consider the detailed submissions supported by evidence and case law made by the appellant but chose to follow the order of his predecessor contrary to the settled legal position that principles of res judicata do not apply to tax proceedings. 3. The assessee is a P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) partly allowed the appeal of the assessee. 5. The Ld. AR submitted that the assessee is challenging disallowance of commission and incentive paid at ₹ 15,16,345/- in the present appeal. The Ld. AR submitted that the Assessing Officer as well as the CIT(A) ignored the material on record as well. The Ld. AR submitted that it is a settled law that res-judicata does not apply to tax proceedings more so when the earlier order is not of the assessee, but that of another assessee. The Assessing Officer as well as the CIT(A) confirmed the disallowance without taking cognizance of the evidence produced by the assessee during the assessment proceedings and also not taken into account the correct legal position. The assessee has given all the relevant evidence before the CIT(A) which was forwarded to the Assessing Officer for a remand report, but the Assessing Officer never filed any remand report. The Ld. AR submitted that the CIT(A) instead of drawing an interference against the Assessing Officer proceeded to uphold the disallowance by mere reference to the order of his predecessor in another case. The Ld. AR submitted that there is no bar in law to appoint agents to deal with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that dealing with government undertaking does not justify/require this type of expenses. The First Appellate Authority called for a remand report. The Assessing Officer reiterated that the assessee never furnished PAN number of the parties receiving commission during the assessment proceedings. He further observed that the issue is not whether the parties receiving the commission had disclosed the same in the return of income but whether the claim is justified specifically as it is ;for the purpose of procuring orders from a government concern. The First Appellate Authority followed the ofder of his predecessor for the Assessment 'Year 2002-03 and upheld the disallowance. On a query from the Bench the Ld. Counsel submitted that this addition has not been challenged previously by the assessee during the Assessment Year 2003-04, for the reason that the amount was small. A perusal of the order of the Ld. Commissioner of Income Tax (Appeals) for the Assessment Year 2003-04 demonstrates that the disallowance was upheld on the ground that commission of 3% paid for handling and getting order from M/s Coal India Ltd. and to pursue the realization of payments, was not justified at any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of ₹ 22.8 lakhs, ₹ 16.37 lakhs was paid to M/s Combined Associates and in this case a certificate u/s 197(1). of the Act was issued by the Revenue. The party is identified and the fact that a certificate u/s 197(1) is given shows that the A.O. of M/s Combined Associates is satisfied with the genuineness of the expenditure claimed by M/s Combined Associates. These aspects have not been commented upon by the Assessing Officer in the remand proceedings. The Ld. Commissioner of Income Tax (Appeals) has also ignored the same. 15.Coming to the case law on the matter in the case of CIT vs. Bharath Medical Stores, tlie-Hon ble Court held as follows: Likewise, there are findings by the Tribunal that the expenditure on payment of commission vas for advancing the purpose of the assesses A business and the services of the agents procured by the assessee firm, in fact, helped in persuading the institutions to place orders with the IDPL and arrange acceptance of supplies made by the IDPL. Accordingly,. a categorical finding has been recorded that the agents were instrumental in getting all the terms of the contract between IDPL .and the assessee firm complied w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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