TMI Blog2021 (4) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee proving the claim of commission payments made by the assessee. There is absolutely no reason for the Ld. AO to doubt the veracity of the said transactions. Admittedly none of the commission agents were relatives of the assessee or interested parties with the assessee so as to allege some mala fide on the part of the assessee. Hence, in our considered opinion, there is no case made out by the Ld. AO to treat the commission transactions as ingenuine transactions in these facts and circumstances.. Non - appearance of the said commission agents in person before the Ld. AO would not make the transaction of payment of commission as ingenuine. Hence, we hold that the Ld. CIT(A) had rightly deleted the disallowance of commission made by the Ld. AO The ld. D/R could not distinguish these case law on facts. Hence we find no infirmity in the order of the ld. CIT(A) on the issue of addition of commission payments and uphold the same and dismiss this ground of the revenue for both the Assessment Years. Unsecured loans - Unexplained cash credit U/s. 68 - HELD THAT:- As decided in assessee's own case confirmation and details chart were field before the AO at the time of both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e standard notified under section 145(1) of the act. There was nothing on record to show that the assessing officer come to the conclusion that the books of accounts maintained by the appellate were incorrect, incomplete, unreliable and consequently liable for rejection. The gross profit of the appellate company for the year 2013-14 was 4.30 % as against the gross profit of 4.08% in the preceding year i.e. 2011-12 and it was 4.10% in the year 2014-15. The AO has also separately added ₹ 69,70,413/- as income from other sources which was part of the business receipts. In fact, in the comparative statement filed before the AO as called for by him, the computation of net profit and gross profit have been made by including such income. The AO should have started his computation or the return income and further add all the addition/disallowance made by him in the assessment order. Keeping in view of above, the AO is directed to delete these addition Addition on account of current liabilities - HELD THAT:- The elaborate submissions have been made in the written submissions filed twice and all the details and evidences were filed. No adverse comment has been made in the two rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and violating various principles of law based on which best judgment assessments were to be passed. The Ld. First Appellate Authority called for a remand report. The Assessing Officer submitted the remand report on 9th August, 2017, claiming that the assessee showed no inclination to comply with the statutory notices and hence the assessment was completed U/s. 144 of the Act. He justified the passing of order U/s. 144 of the Act. In the second remand report, called for by the Ld. CIT(A) on the arguments of the assessee that the addition made in the assessment were unjustified, the Assessing Officer at para 4 justifies the additions on the ground that there was no compliance from the assessee on 28/01/2016. Thereafter, the Ld. CIT(A) considered the submissions of the assessee, the material brought on record by the assessee before the Assessing Officer, the past record by way of previous assessment orders as well as the subsequent assessment orders in the assessee's case and granted relief to the assessee. 3. Aggrieved, the revenue is in appeal before us. 4. The grounds of appeal for the Assessment Year 2013-14, reads as follows:- 1. That on the facts and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case the Ld. CIT(A) has erred in allowing commission payment of ₹ 69,20,273/-. 6. Whether on the facts and in circumstances of the case the Ld. CIT(A) has erred in deleting ₹ 1,48,827/- U/s. 14A read with Rule 8D. 7. Whether on the facts and in circumstances of the case the Ld. CIT(A) has erred in deleting ₹ 2,96,05,303/- as net profit @ 2% of gross receipts. 8. Whether on the facts and in circumstances of the case the Ld. CIT(A) has erred in deleting ₹ 69,70,413/- as other income. 9. Whether the appellant craves for leave to add, delete, amend or modify any ground before or at the time of appellate proceedings. 4.2. The grounds of appeal of the cross-objections, reads as follows:- 1. For that on the facts and circumstances of the case the Ld. CIT(A) was justified in deleting all the additions after allowing the AO an opportunity of being head on all the issues raised in the appeal. 2. For that the assessee craves leave to add, alter or amend any ground before or at the time of hearing. 5. The ld. D/R submitted that the assessee had not co-operated during the course of assessment proceedings. He filed photoco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the opportunities granted to him during the course of assessment proceedings as well as in the remand proceedings:- Veto Electropowers [2012] 20 taxmann.com 279 (Jaipur) Rajesh Babubhai Damania [2002] 122 taxman 614 (Guj.) 6. On merits, the Ld. counsel for the assessee took this Bench through the submissions of the assessee, for each of the additions, which are brought out at pages 9 to 10 of the Ld. CIT(A)'s order, for the Assessment Year 2013-14 and the findings of the Ld. CIT(A) on each of these arguments, from pages 10 to 18 of his order. For the Assessment Year 2014-15, the submissions of the assessee and findings of the Ld. CIT(A) are at pages 9 to 27 of his order. He also relied on the order of the Tribunal in the assessee's own case for the Assessment Year 2010-11 and 2011-12 in ITA No. 1266/Kol/2016 and ITA No. 316/Kol/2016, order dt. 09/11/2018 and such another cases, which we would be dealing as and when necessary. He submitted that the Tribunal may dispose off the case on merits after considering the material on record the submissions of the assessee made before the Ld. CIT(A) as well as before the Tribunal and the factual findings of the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not a fit case for being set aside to the file of the Assessing Officer for fresh adjudication, in accordance with law. 12. Now, we consider the additions on merits for both the Assessment Years. 13. Disallowance of commission: The Assessing Officer disallowed the commission payments claimed by the assessee based on the assessment order for the Assessment Year 2011-12. On appeal, the Ld. CIT(A) deleted the additions made in that year. The Kolkata 'A' Bench of the Tribunal in the assessee's own case for the Assessment Year 2010-11 and 2011-12 in ITA Nos. 1266 316/Kol/2016, order dt. 09/11/2018, had considered this issue and had held as follows:- 5. We first take up the issue of disallowance of claim of payment of commission on sales. The Assessing Officer for the Assessment Year 2010-11 has allowed the claim of payment of commission made by the assessee amounting to ₹ 1,14,51,971/-, paid to 11 parties. Only in the case of one party i.e. Sugam Vinimay P. Ltd., the commission paid was disallowed. For the Assessment Year 2011-12, the Assessing Officer chose to disallow the very same claim of the assessee of having incurred expenditure towards s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of ₹ 21,90,181/- is also deleted. 5.1. The Ld. D/R, could not point out any infirmity in these findings of the Ld. CIT(A) hence we uphold the same. For similar reasons for the Assessment Year 2010-11, the disallowance of ₹ 9,05,612/-, made for the sole reason that the party has not been produced before the Assessing Officer, is hereby deleted. The assessee filed all the requisite details referred above in support of the genuineness of the claim and identity of the party. No disallowance can be made merely because the party has not appeared in person before the Assessing Officer. 5.2. The Kolkata 'D' Bench of the Tribunal in ITA No. 141/Kol/2016 CO. No. 11/Kol/2016; Assessment Year 2012-13; Madhusudan Rungta Sons (HUF) vs. ITO at para 6, held as follows:- 6. We have heard the rival submissions. We find that the primary reason for disallowance of this commission by the Ld. AO is due to the fact that the Ld. AO was of the opinion that the assessee had not proved the nature and factum of services rendered by these three commission agents to the assessee. Hence, according to the Ld. AO, the payment of commission, though subjected to deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reat the commission transactions as ingenuine transactions in these facts and circumstances. We hold that mere nonappearance of the said commission agents in person before the Ld. AO would not make the transaction of payment of commission as ingenuine. Hence, we hold that the Ld. CIT(A) had rightly deleted the disallowance of commission made by the Ld. AO. Accordingly, ground Nos. 2 to 4 raised by the Revenue are dismissed. 6. Applying the propositions of law in this case law to the facts of the case, we dismiss the revenue's appeal on this issue for the Assessment Year 2011-12 and allow the ground of appeal of the assessee for the Assessment Year 2010-11. 13.1. The ld. CIT(A) had deleted the addition based on the findings of his predecessor for the Assessment Year 2011-12. The ld. D/R could not distinguish these case law on facts. Hence we find no infirmity in the order of the ld. CIT(A) on the issue of addition of commission payments and uphold the same and dismiss this ground of the revenue for both the Assessment Years. 14. Unsecured loans:- The assessee, in this case had borrowed money both from body corporates, as well as directors and the relatives of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed further to make enquiry or force the attendance of these three parties. It was more essential when the assessment was being completed u/s. 144. When the Assessing Officer did not precede further in spite of the fact that the assessee filed the confirmation letters and other details and the notices were duly served on the parties the addition was not justified in view of the judgment of the Hon'ble Supreme Court in the case of Orissa Corpn. Ltd. reported in 159 ITR 78. The AO himself has accepted the loans from these parties in Asst. Year 2014-15 (although addition has been made but it pertains to director and relatives only) wherein in the ex-parte assessment also the loan from these parties have been accepted. Furthermore, in spite of all the details having been filed along with the written submissions and the AO having been given the opportunity to look into the submissions made the AO has not examined the same and has not adversely commented on the same. I find that the AO added back ₹ 4,93,01,115/- as unexplained cash credit when there is no adverse comments about Beefin commodities limited, Jit Finance Pvt. Ltd., Kandoi Transport Limited and Trust Worthy Vin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that there was increase in unsecured loans from Directors and their relatives and full details were filed before the A.O. even though the same were received by all the directors were having brought forward balances and such loans were duly accepted in earlier years. During the relevant year, all the transactions relating to the loan (whether fresh infusion or repayment of the same) has been done the banking channels. Further, the assessee has been regularly paying interest on the above-mentioned loan. The same is evident from the loan confirmations. Moreover, the assessee had filed the Tax Audit Report before the A.O. from which it is clearly evident that the Directors granted loans in earlier years and the names of the Directors to whom interest was paid was also available in the details of interest and schedule enclosed with the Audited balance sheet. The AO should have enquired the same by making reference or issuing notices to the Directors particularly when the assessment was being completed ex parte. Having not done so the addition was not justified since particularly in the assessment U/s. 144 the AO was duty bound to act reasonably and make enquiries which were necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit purchases made from ITC Limited, amounting to ₹ 2.23 Crores and ₹ 1.83 Crores for the Assessment Year 2013-14, were added. This is highly arbitrary. The Ld. CIT(A) has given the following findings of fact for the Assessment Year 2013-14:- I have considered the submissions of the authorized representative of the appellant as well as the assessment order framed in the light of the materials available on record before the assessing officer during the assessment proceedings. The AR of the appellate has submitted that the AO was wrong in adding back ₹ 3,12,66,706/- as unexplained trades a able when the details of such purchases were filed vide letter date 04.02.2016 The assessee has disputed the addition made by the AO of ₹ 3,12,66,706/- on the ground that Sundry Creditors were not established. There is no dispute over the fact that the list of sundry creditors were filed. The assessee is dealer in paper and all these sundry creditors are appearing from year to year and every year. The sundry creditors named by the AO in the assessment order also appeared in the list of sundry creditors for the A.Y. 2011-12 for, which he himself passed the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnished. However, all the addresses were available with the AO in the assessment year 2011-12 for which he himself completed the assessment on 11.3.2016 and duly accepted all these trades payable. I find that the AO made three assessments of the appellate company in nine days. The assessment order for the asstt year 2014-15 was passed on 09.03.2016, the assessment order for the asstt year 2011-12 was passed on 11.03.2016, the assessment order for asstt year 2013-14 i.e. the year under consideration was passed on 18.03.2016. The accepted the all these trade creditors in the asstt year 2011-12 and 2014-15 (although the addition on account of trade creditors has been made in 2014-15 but no specific party addition has been made and only difference of opening and closing balance has been made) and both these two orders were passed prior to this order. I find from the assessment record that the complete address of these parties were available in these assessment folders. I also failed to understand, when the appellate did not provide address of these four parties than why the AO made addition of entire trade payable amount. The sundry creditors named by the AO in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various issues involved. Keeping in view of above, the AO is directed to delete the addition. This ground of appeal is allowed. For the Assessment Year 2014-15, he held as follows:- I have considered the submissions of the authorized representative of the appellant as well as the assessment order framed in the light of the materials available on record before the assessing officer during the assessment proceedings. The AR of the appellate has submitted that the list of sundry creditors was available in the schedule to the balance sheet which was duly filled before the AO. The details were also filed before the AO, a copy of which is enclosed herewith. The A.O. ought to have verified the names of the creditors from the details already available with him in the balance sheet before completing the assessment U/s. 144. The AO had the assessment records for AY. 2011-12 as well as 2013-14. Further, all these creditors were paper mills whose names and addresses were available in the assessment records for Asstt. Yr. 2011-12 as well as 2013-14 and thus, the A.O. could had easily verified the creditors. The above-mentioned addition was not called for also in view of the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with law. The AO has estimated the net profit at 2% of the turnover and further separately added the other items of income as other income in this process the AO has estimated the business income at 2% at ₹ 2,53,82,407/- and separately added ₹ 1,68,80,801/- as income from other sources which was part of the business receipts and so considered in earlier years. In fact, the in comparative statement filed before the AO as called for by him, the computation of net profit and gross profit have been made by including such income. The net profit and gross profit rate was quite fair and reasonable in comparison to earlier years. But the AO has raised the net profit 3.33% on the turnover of ₹ 1,26,91,20,332/- which is much more than the earlier years. The comparative chart of the net profit of last 3 years have also been filed in the written submissions which has not been controverted by the AO. In fact, the comparative figures were also given to the AO in the course of assessment proceedings and he himself wanted the same. He has not given any reason as to why the earlier years comparative figures were not acceptable to him. Therefore, the AO was not justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative of the appellant as well as the assessment order framed in the light of the materials available on record before assessing officer during the assessment proceedings. The AO while making the addition has mentioned that considering the facts of the case it is apparent that the assessee failed to satisfied the assessing officer about the-correctness or completeness of the accounts of the assessee that whether the method of account provided in section 145(1) has been following by the assessee or income has been computed in accordance with the standard notified under section 145(1) of the act or not. Hence, addition of 2% GP was made. The AO has further added ₹ 69,70,413/- in the final computation of income as last item. The AR of the appellate has submitted that the first addition which has been taken by the assessee i.e., on account of estimate of profit at ₹ 2,96,05,303/-. During the relevant year, the turnover of the assessee was ₹ 1,48,02,65,126/-, the profit declared by the assessee during year was 0.80% which was inclusive of the other income of ₹ 69,70,413/-. The net profit of the assessee on similar method was accepted between the A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was quite fair and reasonable. No addition of any nature in the trading account was called nor made in any earlier year when regular assessment was made. The assessee has already cited judgments in the written submissions. The elaborate submissions have been made in written submissions filed. The issue is covered by the order of Ld. CIT(A) for the assessment year 2011-12 and 2013-14. The Assessing Officer has also not made any adverse comment in the remand report submitted by him. The rate of profit was quite fair and reasonable in comparison to earlier years. Hence, no separate addition was called for since the same was part of the business income for which submissions have been separately made here above. The issue is covered by the order of the CIT[A] for Assessment Year 2011-12 and 2013-14. No adverse comment has been made in the written submissions filed. I find that the AO while making the addition has mentioned that considering the facts of the case it is apparent that the assessee failed to satisfied the assessing officer about the correctness or completeness of the accounts of the assessee that whether the method of accounting provided in section 145( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is evident that the amount of ₹ 11,86,90,207/- can be bifurcated into two parts he ₹ 1,28,09,245/- which is against the advances from customers and ₹ 11,05,01,600/- which is against various other liabilities. As against the outstanding balance of ₹ 1,28,09,245/- it is submitted that the same are the money advanced by various customers with whom the assessee is doing regular business. The A.O. ought to have conducted independent queries from the customers when the details were available with him in the balance sheet filed before him. As regards to the standing balance of ₹ 11,86,90,207/- it is submitted that the said amount represents the Electricity expenses ₹ 17,274/-, Telephone expenses ₹ 7,677/-, Other maintenance charge ₹ 35,532/-, Security deposit against ₹ 11,00,00,000/- warehouse, Salary payable ₹ 1,94,083/- and Others ₹ 2,47,036/-. From the above it is can be seen that a sum of ₹ 5,01,600/- is against the dues which are, obligatory in nature and were even paid in the next year. As far as the security deposit of ₹ 11,00,00,000/- against the warehouse is concerned, the assessee during the relevant y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reating the same as speculation loss. The assessee is an exporter and has to make provision for rate difference of the foreign currency at the time of export and fluctuations afterwards. It was categorically mentioned in the profit and loss account that there was fluctuation on the purchase of goods in respect of foreign currency at the time of placement of order and at the time of actual payment. Such loss on foreign currency was debited the trading account under cost of goods sold and the same was duly certified by the Auditor as the foreign currency loss on purchase of goods therefore in these circumstances it cannot be said to be speculation loss. The AR of the appellate has further placed his reliance on the judgment of the Hon'ble Supreme Court has in the case of Sutlej Cotton Mills Ltd. vs. Commissioner of Income Tax 1979 AIR 5 1979 SCR (1) 976 wherein it was held that the foreign exchange loss arising in the course business was allowable as deduction U/s. 37(1) of the Act. I find that the A.O. in the assessment has nowhere doubted the genuinity of the loss incurred by the assessee. the Assessing Officer has not adversely comment on the same at the time of sending t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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