TMI Blog2021 (9) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. - ITA No. 1890/Del/2020 - - - Dated:- 7-9-2021 - Kul Bharat, Member (J) And Dr. B.R.R. Kumar, Member (A) For the Appellant : Pramod Kr. Jain, CA For the Respondents : Deep Shikha Sharma, Sr. DR ORDER Per Dr. B.R.R. Kumar, Accountant Member The present appeal has been filed by the assessee against the order of ld. PCIT-12, New Delhi dated 04.03.2020. 2. The assessee is engaged in the business of Exporting Trading of Aluminum Foil and Service proving to its foreign clients in China for exporting their bulk drug to customer in India and filed return of income on 27.08.2015 declaring total income of ₹ 17,09,730/-. The case has been assessed u/s. 143(3) vide order dated 19.12.2017 making disallowance of 40% of the Diwali expenses and interest on late deposit of service tax. 3. The case has been reviewed in accordance with the provisions of Section 263. 4. The ld. PCIT made the following observations: 1. The assesses has also claimed payment of China Tax of ₹ 5,74,183/-. The AO has not made any enquiry about the nature of China Tax whether the same is like TDS or Service Tax etc. Without specifying the nature of China Tax, AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties and perused the material available on record. 9. From the records, we find, a. With regard to China Tax- The assessee has replied vide letter dated 18.08.2017. China Tax is paid by the Chinese manufacturers which is deducted from the commission paid to the assessee. The gross commission is credited and the Chinese Tax paid by the manufacturer is debited. b. With regard to commission- It was explained before the AO that the commission has been paid to various persons namely, Sh. Rajesh Jain, Sh. Rajat Singhal, Sh. Vijayanat Jain, Ms. Roopa Malhotra for obtaining orders from different companies and for different products. The invoices issued by the agents have been submitted and TDS has been duly deducted. Vide letter dated 20.11.2017, copies of the agreements, contracts for receipt of commission from Chinese Companies were submitted before the AO. The details of the commission have been duly explained in detail vide reply dated 28.11.2017 submitted before the AO. For the sake of ready reference, the reply given by the assessee to the AO is reproduced as under: Sub.: Assessment Proceedings u/s. 143(2) and 142(1) of the Income Tax Act, 1961. Respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispatch of said Material. Copies of related documents enclosed are enclosed as per Annexure 4. 3.7 The Chinese Supplier books the shipment of Product in favor of Indian Manufacturers Customers sends the original Bill of Lading along with shipment documents to Indian Customers Bank and sends the copy of same to Assessee LLP. The copy related documents are enclosed as per Annexure 5. 3.8 Upon the arrival of Goods in India, Indian Customers get the same cleared from Custom Authorities, employees of Assessee LLP coordinates with Clearing House Agent for clearance of any doubts as products are related to Pharma Industry. 3.9 Assessee LLP then issued Commission Note on Chinese Manufacturers that our Commission would be due within 90 days. Copy of Commission Note is enclosed as per Annexure 6. 3.10 On the Completion of 90 days the Invoice is raised on the Chinese Manufacturers Companies for Commission due. Copy of invoice is enclosed as per Annexure 7. 3.11 Thereafter the employees of Assessee LLP follow up for the payment of dues. The payment is received directly in Bank through banking channels i.e. Swift Transfer. Few Copies of Foreign Inward Remittance Certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly on the portion of sales and related commission effected by these agents. 4.11. Details of the four agents, which your good-self specifically asked for are as under: 4.11.1 Rajan Jain is a graduate having 10 years of experience having PAN as AANPJ3470G and is associated with shah TC group since FY 2009-10. Customers for relevant products provided by him were Morepan Laboratories Ltd. and Sarca Laboratories Ltd. He is not a party u/s. 40A2(b) of the assessee LLP. Related documents of commission to him has already been submitted to your office as per para 4.4 above. 4.11.2 Rajat Singhal is a graduate having 10 years of experience having PAN as BCTPS6986B and is associated with shah TC group since FY 2014-15. Customer for relevant products provided by him was MSN Laboratories Ltd. He is not a party u/s. 40A2(b) of the assessee LLP. Related documents of commission to him has already been submitted to your office as per para 4.4 above. 4.11.3. Vijayant Jain is a graduate having 10 years of experience having PAN as AANPJ3471H and is associated with shah TC group since FY 2009-10. Customers for relevant products provided by him were Hetero Labs Ltd., C J Shah Co. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue is losing tax lawfully payable by a person, it would be certainly prejudicial to the interest of revenue. In case of Malabar Industrial Co. Ltd. Vs. CIT (2000) 243 ITR 87 (SC) Hon'ble Apex Court held that there was no material to support the claim of appellant yet AO accepted the entry in the statement of account in absence of any supporting material and without making any inquiry. It is incumbent on the officer to investigate the facts stated in the return. The order becomes erroneous if such as enquiry has not been made as held in case of Duggal Co. Vs. CIT (1998) 220 ITR 458 (Del.). 13.1 Where the Assessing Officer keeps a letter on record and does not carry out necessary investigations which are per se required to verify the correctness of the averments, there being an error in the sense that he has failed to carry out the requisite enquiry which can be rectified in a revision. Thus the Commissioner was to pass a fresh order under Section 283 after hearing the assesses [CIT vs. DLF Power Ltd., (2012) 345 ITR 448(Del.)]. 13.2 The Hon'ble Delhi High court in the case of CIT Vs. Shri Braham Dev Gupta in ITA No. 907/2017 and 1162/2017 has clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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