TMI Blog2023 (5) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... er authorities have not raised any doubt regarding the source of the payment of the commission. Therefore, as submitted that addition so made by the AO may be deleted. We note that assessee has proved the genuineness and bona fide of the commission expense. Hence, we are not inclined to accept the contention of the AO in any manner and hence the addition so made is deleted. Hence this appeal of the assessee is allowed. - ITA No. 125/SRT/2021 - - - Dated:- 23-5-2023 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Rasesh Shah, CA For the Revenue : Shri Vinod Kumar, Sr- DR ORDER PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2013-14, is directed against the order passed by the National Faceless Appeal Centre (NFAC for short)/Ld. CIT(A)] dated 27.07.2021 which in turn arises out of an assessment order passed by Assessing Officer under section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as the Act ] dated 31.03.2016. 2. Grounds of appeal raised by the assessee are as follows: 1. On the facts and circumstances of the case as well as law on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... analysing the replies received from these parties, the Assessing Officer issued show cause asking the assessee as to why the said commission should not be considered as unexplained expenses and added to the total income of the assessee (vide para 4.14 of assessment order). After considering the said reply of the assessee, the Assessing Officer also issued Page | 3 notice u/s 133(6) to M/s Sumeet Industry Ltd and M/s J P Foils Ltd asking them to prove the genuineness of the commission received from the assessee. In response to this reply was received only from M/s Sumeet Industry Ltd. Since the Assessing Officer did not find the reply of the parties, (M/s Sumeet Ind. Ltd) satisfactory, therefore on the basis of detailed investigation carried out by the Assessing Officer, he has recorded his observation at para-4.24 to 4.25 of assessment order and made the addition of Rs.2,34,91,839/- as unexplained expenditure u/s 69C of the Act. 5. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Learned CIT(A), who has confirmed the addition made by the Assessing Officer. Aggrieved, the assessee is in further appeal before us. 6. Shri Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder wrong section of the Income Tax Act, is not sustainable in the eye of law, hence addition should be deleted. Another argument of the ld Counsel was that similar commission was allowed in the past in the scrutiny assessment. The assessee had paid the commission @ 45% to the parties including the service tax amount. It is contended that in the assessment for A.Y 2012-13, the Assessing Officer disallowed only the commission of Rs.12,18,829/- by holding that 45% of the amount cannot be paid on service tax component. 11. On the other hand, ld Sr-DR for the Revenue argued that contention of the ld Counsel for the assessee that Assessing Officer in the assessment years 2010-11, 2011-12 and 2013-14 has allowed the similar commission based on the similar agreement is not well founded, as in the Income Tax proceedings, principle of res judicata is not applicable. In the Income Tax Act each assessment year is different assessment year, therefore, the assessee cannot claim that the Assessing Officer is required to follow principle of consistency, in the impugned assessment years, 2010-11, 2011-12 and 2013-14. 12. On merits, ld Sr-DR submitted that assessee has not proved the bona fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2012-13, Assessing Officer disallowed only commission of Rs.12,18,829/- by holding that 45% of the amount cannot be paid on service tax component. The assessee preferred an appeal before Ld.CIT(A) against this assessment order which was dismissed by Ld. CIT(A) vide order dated 08.09.2017. However, the Hon`ble Tribunal vide order dated 14.02.2020 allowed the commission even on the portion of service tax and the commission was allowed in full. The copy of the order of Hon`ble Tribunal is enclosed at page no. 45 to 48 of paper book. Besides, the commission expense was also allowed in full in the scrutiny assessment for A.Y. 2011-12 also. The copy of the assessment order is enclosed at page no. 33 to 37 of the paper book. Therefore, we note that assessee`s claim for commission expense was allowed by the Department in preceding three assessment years, viz: Assessment years, 2010-11, 2011-12 and 2012-13, hence we are of the view that based on the principle of consistency, the commission expense for the assessment year 2013-14 should also be allowed. It is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustries Ltd and J P Foils Ltd. The Assessing Officer reproduced the reply of the eight parties. From the perusal of these replies it is clear that Assessing Officer never asked the parties regarding the involvement of the M/s Sumeet Industries Ltd and M/s J P Foils Ltd. This can be verified from the details called for from the parties as reproduced by Assessing Officer at para no. 4.2 of the assessment order. Thereafter Assessing Officer again sent the letters to the parties asking for the involvement of the agents to whom the commission was paid. In this letter also the names of the two agents viz Sumeet Industries Ltd. and M/s.J P Foils Ltd were not referred. The four parties have stated that they directly deal with the assessee. One of the parties namely M/s Taurus Sniping Pvt Ltd referred the name of Sumeet also. One of the parties namely M/s Hindalco Industries Ltd stated that they are dealing with the assessee for long time and since then various employees have changed at their end and so they are not able to lay hands to old records to find out by whom they were introduced. Accordingly, Assessing Officer did not disclose the true facts of the customers from whom assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record is in favour of the assessee and there is no incriminating evidence available with the Assessing Officer. Both the parties to whom the commission were paid have confirmed the receipt of the commission and they have shown the commission income in their accounts and their return of income. Here the commission was paid to corporate entities and their expertise and necessity cannot be doubted. The other judgments cited by the Ld. CIT(A) are even otherwise not applicable when cross examination of the concerned parties was not granted to the assessee. Therefore, if documents and evidences are available then there is no need to take assistance of surrounding circumstances, and human probabilities. Besides, there is no change in facts, in the assessment years 2010-11, 2011-12, and 2012-13 wherein the similar claim of the assessee was allowed in scrutiny assessments. 19. The Assessing Officer observed that the parties to whom the commission was paid were incurring huge losses. In this connection it was submitted by ld Counsel that M/s Sumeet Industries Ltd paid the tax of Rs. 6,20,26,768/- on book profit of Rs.29,05,61,639/-. In case of J P Foil Ltd., the amount of Rs.29,45, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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