TMI Blog1994 (6) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Krishan Gopal 8,629 5. Navdeep Singh 14,450 6. Sukhdev Singh 1,11,141 7. Jaswinder Singh 10,305 8. Devinder Singh 14,540 9. Kesar Singh 4,975 10. Charanjit Singh 13,400 11. Satnam Singh 4,355 12. Ashwani Kumar 11380 13. Baldev Singh 10,393 14. Ishwar Chander 6,897 15. Karnataka Agro Inds. Corpn. Ltd. 2,955 Total : 1,47,203 The assessee had filed 12 affidavits. The Assessing Officer, however, recorded the statement of Navdeep Singh, Gurnam Singh and Kesar Singh, all at the back of the assessee. In their statements, according to the Assessing Officer, these persons denied having received any commission from the assessee. The Assessing Officer allowed an opportunity to the assessee to inspect the statements recorded by him and to produce the persons to whom the commission had been allegedly paid. Since no worthwhile evidence was forthcoming from the assessee and it appeared to the Assessing Officer that most of the sales were made to the Government departments and commission had been paid very late to these pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover for several years at page 28, paper book A of the assessee, it was pointed out that in asst. yr. 1976-77, the sales were only of the order of Rs. 1,91,698 and that for asst. yr. 1983-84, these had increased to Rs. 16,57,200. It was pointed out that for asst. yr. 1984-85, the sales had slumped alarmingly to Rs. 10,26,571 which made the assessee sit up and think as to how to boost the sales. It was pointed out that in the year under consideration, it was because of the efforts made by the assessee which included the appointment of commission agents that the sales amounted to Rs. 28,70,384 thereby registering an increase of Rs. 18 lakhs. The G.P. rate earned by the assessee came to 15.59% and even if the assessee paid commission of 5%, the assessee was still having substantial income. In the subsequent year, no such commission was paid because the assessee had succeeded in marketing her products and in capturing the market. It was explained that that was the reason why in asst. yr. 1986-87, the sales were still higher at Rs. 30,62,339 in spite of the fact that commission agents had ceased to work. 8. The learned counsel for the assessee vehemently stressed that the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement and there was as such no discrepancy at the time of cross-examination. 10. In the case of Shri Krishan Gopal, it was pointed out that no question had been put by the Inspector regarding commission and that in the cross-examination, he clearly admitted to have received the commission. Similarly, in the case of Sarva Shri Navdeep Singh, Kesar Singh, Stanam Singh, Ashwani Kumar and others, our attention was drawn to the copies of their accounts, their statements and their affidavits and other information. It was also pointed out that in the case of Karnataka Agro Indus. Corpn. Ltd., commission @7.5% was paid by way of cheque. Our attention in this regard was invited to pp 74 to 76 of assessee's paper book B. 11. It was submitted that the absence of written agreement should not go against the assessee particularly when the parties had filed affidavits and had deposed in their statements and had rendered services. As regards dealing with commission agents with Government and semi-Government departments, it was submitted that day in and day out commission was being paid to the parties even for paying commission to the Government and semi Government departments and the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration for deciding the issue. 14. The learned counsel also relied on the Gujarat High Court decision in Voltamp Transformers P. Ltd. vs. CIT (1981) 23 CTR (Guj) 312 : (1981) 129 ITR 105 (Guj) for the proposition that commission could be paid even when the sales were effected to Government and semi-Government departments. 15. To sum up, the learned counsel submitted that the commission had been paid out of commercial expediency and there was no justification for disallowing the same. It was also pointed out that, in this very case, certain credits were not accepted by the Assessing Officer but later on at the intervention of the learned CIT(A), the parties were summoned and statements were recorded and those very statements were accepted as genuine and correct by the learned CIT(A) without attributing the charge of these being tutored statements. 16. The learned Departmental Representative strongly relied on the orders of the Revenue authorities and submitted that the statements recorded initially could not be ignored and that the subsequent statements were manipulated and tutored. The learned Departmental Representative submitted that it was very strange that the ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statements recorded by his Inspector. This was against all canons of natural justice. The learned CIT(A), therefore, rightly allowed the assessee to produce the parties whose statements were recorded by the Assessing Officer and the assessee got an opportunity to cross-examine them. Except for a few discrepancies here and there which also have been reconciled and explained in the cross-examination, no serious defects or discrepancies have been pointed out on behalf of the Revenue in the statements of the agents. We have carefully gone through the material on record, the affidavits filed by the parties and their statements and their copies of accounts and we find that this plethora of evidence in the absence of written agreements cannot be brushed aside and has to be taken into consideration while deciding the issue of allowability or otherwise of commission payments. We are satisfied that the wealth of evidence produced by the assessee points to the commission agents being genuine parties and the commission payments being genuine payments. The Revenue authorities, in our opinion, have proceeded more on the basis of suspicion and conjecture which is a poor substitute for hard ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77 to 1984-85, the gross profit shown by the assessee had ranged from 15.04% to 21.7%. In fact, drawing our attention to details at page 28 of the assessee's paper book A, it was submitted that the G.P. rate of 21.7% was only in asst. yr. 1984-85 and that in other years, the G.P. rate was 15% or 16%. It was pointed out that in the immediately preceding year, the sales were to the extent of Rs. 10,26,571 only whereas in the year under consideration, the sales had gone upto Rs. 28,70,384. It was, therefore, pointed out that even for the sake of argument if the books of accounts were rejected, the rate of 15.59% shown by the assessee was quite reasonable and should be accepted. 24. After carefully considering the submissions of the parties, we are of the view that the learned CIT(A) was justified in deleting the addition of Rs. 1,72,218. In our opinion, the only defect that has been ultimately upheld is non-maintenance of production register. In our opinion, on that basis alone, the book results of the assessee cannot be rejected. Even if it is assumed that the provisions of s. 145(2) are attracted in the instant case, the history of the case shows that G.P. rate of 15% or 16% has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attention was drawn at pages 19 to 27 in the case of Shri Kamikar Singh, pages 28 to 29 of Gurmit Singh, pages 40 to 50 in the case of Baktawar Singh and pages 51 and 52 in the case of Balwinder Singh. It was also pointed out that there was a credit of Rs. 5,000 in the name of Charanjit Singh s/o Harbans Singh, which was also added by the Assessing Officer and deleted by the learned CIT(A) and that the Revenue had accepted the order of the CIT(A) on the point. It was also pointed out that all the creditors except Shri Balwinder Singh had been produced and they had all affirmed having given credits to the assessee-firm. In the case of Balwinder Singh, it was pointed out that it was not necessary to produce him because his father Shri Harbans Singh accepted the credit as belonging to him. It was vehemently argued that the identity and the creditworthiness of the parties stood duly established and there was no doubt about the genuineness of these transactions. 29. After carefully considering the submissions of the parties, we are of the opinion that the learned CIT(A) has correctly deleted the addition of Rs. 39,500. These parties were identified, they had land holdings, they had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion was drawn to pages 94 to 105 of the assessee's compilation, part C, in which the gifts were received from Dalwinder Singh, Bakshish Singh and Malwinder Pal Singh. These papers include the memo of gifts, their statements and affidavits and copies of their accounts appearing in the books of accounts. It was submitted that on the basis of this evidence, it was abundantly clear that the accretion in the name of the three minor children of the assessee stood established. 35. After considering the rival submissions and going through the material on record, we are satisfied that the donors, after withdrawing the moneys from their accounts in the books of the assessee, gifted certain amounts to the minor children of the assessee. The gifts are evidenced by the memoranda of gifts and in the affidavits and statements, the donors have admitted the factum of having made the gifts to the assessee's minor children. We also find merit in the submission of Shri Sehgal that those donors, who are the near relations of the assessee, had deposited certain moneys in the books of the assessee in the earlier years after the death of the assessee's husband and that it was out of these amounts whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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