TMI Blog2018 (10) TMI 1177X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions so raised by the ld AR are therefore not commented upon and are thus kept open. We deem it appropriate to remand these two matters relating to commission back to the file of the Assessing Officer who shall examine the matter a fresh taking into consideration the above discussion after giving reasonable opportunity to the assessee. - decided in favour of assessee for statistical purposes. - ITA. No. 1030/JP/2017 - - - Dated:- 15-10-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri R.S. Poonia (C.A.) For The Revenue : Shri J.C. Kulhari (JCIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-3, Jaipur dated 12.10.2017 for the Assessment Year 2012-13 wherein the assessee has taken the followings ground of appeal:- 1. Under the facts circumstances of the case and in law, the Ld. CIT(Appeal) erred to confirming the order of Ld. AO by disallowing of ₹ 4,80,240/- in respect of commission paid on purchases, resultantly addition of ₹ 4,80,240/- need to be deleted. 2. Under the facts circumstances of the case and in law, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to satisfy that these payments were genuine and reasonable for its business. It was further held by the AO that these expenses were credited to the recipient on the last day of accounting year i.e. 31.03.2012 and not actually paid to them. Accordingly, commission on purchase and commission on sales were disallowed treating them as unreasonable and excessive and added to the returned income of the assessee. 4. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the said addition made by the Assessing. Now, the assessee is in appeal before us 5. Before us, the ld AR submitted that during the year under consideration, assessee paid commission to Mr. Sanjay Gupta of ₹ 4,80,240/- in consideration of service rendered by him to business at agreed rate. It was submitted that most of purchases were made by Mr. Sanjay Gupta as he was having active involvement in business. He has contributed in purchase of 2824.96 MT. out of total purchases of 2906.93 MT. As per agreed terms, commission was credited in the account of Mr. Sanjay Gupta at the end of the year after deduction of TDS @ 10%. Mr. Sanjay Gupta is regular income tax pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that commission is a remuneration for their full time engagement in the business. It proves that commission is an adjustment entry only. The A/R of the appellant failed to file any evidence which established that the commission payment to Mr. Sanjay Gupta and Smt. Annu Gupta is genuine. The A/R of the appellant neither filed any agreement nor filed any evidence and terms and condition on which the purchases and sales made. The onus on the appellant to establish the commission payment but in that the appellant failed. The appellant also not produced Shri Sanjay Gupta and Smt. Annu Gupta before the Assessing Officer to examine the issue of commission. The A/R of the appellant taken the argument that the commission paid to Shri Sanjay Gupta in the A.Y. 2013-14 accepted by the Assessing Officer. This argument had no value because the A/R of the appellant failed to file any evidence which established that what type of service rendered by him and he also not submitted the details that how Mr. Sanjay Gupta s service benefited to firm. The facts of the each year are different it is also worthwhile that these expenses were credited to the recipient on the last day of account year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he commission so credited by the assessee in the account of Shri Sanjay Gupta. It appears that specially going by the opening and closing balances, the amount of low withdrawals vis- -vis the commission and the fact that interest on borrowings has also been credited to the account of Shri Sanjay Gupta that the commission on purchases which is credited to his account is not actually paid to him and the same is being accumulated and shown as outstanding at the year end. The said outstanding amount is then shown as borrowing by the assessee from Shri Sanjay Gupta and interest on such borrowings have also been credited to the account of Shri Sanjay Gupta. The scenario, which therefore emerges is that for the involvement of Shri Sanjay Gupta in the assessee s business on full time basis, he has not been actually paid either the commission or the interest on the borrowings and the said accumulated commission and earnings thereon remain invested in the assessee s proprietorship concern. Towards the close of the financial year, accounting entries are passed showing the commission and interest expenditure and the same are claimed as expenditure in the profit/loss account and subsequently, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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