TMI Blog2018 (11) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A)’s remarks “does not appear genuine”, itself shows that even the Ld. CIT(A) was not sure that such expense was non-genuine. Moreover, the Ld CIT(A) had not brought on record any evidence/ material to show that such expenses were not genuine. - Decided in favour of assessee. - ITA No. 1837/DEL/2015 - - - Dated:- 29-10-2018 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Assessee : Sh. C.S. Anand, Adv. For The Department : Smt. Ranu Mukharjee, Sr. Dr. ORDER PER H.S. SIDHU, JM This appeal filed by the Assessee is directed against the Order dated 27.2.2015 of the Ld. CIT(A)-4, New Delhi relevant to assessment year 2010-11 on the following grounds:- 1. That the Ld. CIT(A) had illegally assumed jurisdiction to make addition / disallowance in the hands of the assessee, by doubting the genuineness of the commission paid by the assessee to M/s Sumiti Alloys (P) Ltd. particularly when (i) the AO had not made any addition / disallowance on account of commission paid by the assessee to M/s Sumiti Alloys (P) Ltd. and (ii) the adhoc disallowance made by the AO @ 5% was deleted by the Ld. CIT(A). 2. That the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 27.2.2015 has enhanced the disallowance of commission on sales in respect of sales claimed to have been made through M/s Sumiti Alloys (P) Ltd. He further held that since the AO had already made disallowance of ₹ 6,32,948/-, the net enhancement made amounts to ₹ 84,39,945/- and statistically disallowed the appeal of the Assessee. Aggrieved with the impugned order of the Ld. CIT(A), assessee is in appeal before the Tribunal. 3. Ld. Counsel for the Assessee submitted that Ld. CIT(A) had illegally assumed jurisdiction to make addition / disallowance in the hands of the assessee, by doubting the genuineness of the commission paid by the assessee to M/s Sumiti Alloys (P) Ltd. particularly when (i) the AO had not made any addition / disallowance on account of commission paid by the assessee to M/s Sumiti Alloys (P) Ltd. and (ii) the adhoc disallowance made by the AO @ 5% was deleted by the Ld. CIT(A). He further submitted that the addition / disallowance made by the Ld. CIT(A), without issuing any specific notice to the assessee, is unsustainable. It was further submitted that on the facts of the case and under the law, the entire expenses incurred and claimed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld CIT(A). The Ld CIT(A) had passed the appellate order for A.Y. 2009-10 on 07.05.2013, through which he had deleted the disallowance of ₹ 13,95,103/-. During the course of appellate proceedings for A.Y. 2010-11, the assessee had furnished photocopy of the appellate order dt. 07.05.2013 for A.Y. 2009-10 to the Ld. CIT(A). The Ld. CIT(A) had deleted the disallowance made by the A.O. for A.Y. 2011-12, but at the same time he had made addition /disallowance of ₹ 90,72,893/- representing the gross amount of commission charged by M/s Sumiti Alloys (P) Ltd. Prior to doing so, the Ld. CIT(A) had not issued notice to the assessee requiring it to show cause as to why it s income, as determined by the A.O., may not be enhanced. We are of the considered view that as per sub section (2) of section 251, the Commissioner Appeals cannot not enhance an assessment unless the appellant has had a reasonable opportunity of showing cause against such enhancement. Hence, the action of the Ld. CIT(A), making enhancement of income as determined by the A.O., is illegal. This view is fortified by the following decisions:- - Gedore Tools Pvt. Ltd. Vs. CIT Hon ble Delhi High Court 238 ITR 268 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an intermediary party with regard facilitation of sales to Government Departments, is suspicious as it is not envisaged by the GFR . In para 6.5 of the appellate order, the Ld. CIT(A) had mentioned that under the circumstances, it cannot be held that such commission on sales paid to M/s Sumiti Alloys with regard sales made to the above Govt. Authority was wholly exclusively for business purpose and therefore, such commission cannot be allowed u/s 37(1) . In this context, it is noted that in F.Y. 2008-09, the assessee had decided to take services of M/s Sumiti Alloys (P) Ltd., while agreeing to be charged @ 6% of the sales (domestic and export) made by it. Accordingly, the assessee had paid commission of ₹ 1,51,09,628/- for F.Y. 2008-09 and ₹ 82,25,651/- for F.Y. 2009- 10, to M/s Sumiti Alloys Pvt. Ltd. Even it is settled law that Revenue cannot prescribe what expenditure should an assessee incur and under what circumstances. This view is fortified by the decision of Hon ble Supreme Court in the case of CIT Vs. Dhanrajgiiji Raja Narasingirji [91 ITR 544], wherein it was held it was for the assessee to decide how best to protect his own interest . We further note t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6% of ₹ 4,97,95,361/- 82,25,651 7. We further note that in para 6.6 of the appellate order, the Ld. CIT(A) had touched the issue relating to commission on export sales, and recorded However keeping in view the fact that the said Sumiti Alloys (P) Ltd. is based at Ghaziabad and there is no evidence in support of its experience/connections for enabling export sales, commission on export sales also does not appear genuine, in the light of the finding of enquiry made above, which shows that the said partly had colluded with appellant in fraudulently providing entry for commission payment . In this context, it is noted that the Ld CIT(A) remarks does not appear genuine , itself shows that even the Ld. CIT(A) was not sure that such expense was non-genuine. Moreover, the Ld CIT(A) had not brought on record any evidence/ material to show that such expenses were not genuine. 8. In the background of the aforesaid discussions and respectfully following the precedents, we quash the order of the Ld. CIT(A) on legal ground as well as on merit. Hence, the addition in dispute is hereby deleted. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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