2010 (8) TMI 944 - AT - Income Tax

Summary

Issues Involved:
1. Erroneous order of CIT(A).
2. Non-production of paddy suppliers during assessment.
3. Incorrect consideration of suppliers as farmers by CIT(A).
4. Documentation aimed at avoiding section 40A(3) of the Income-tax Act.
5. Any other grounds raised during the hearing.

Summary:

1. Erroneous order of CIT(A):
The revenue contended that the order of the CIT(A) was erroneous both in law and on facts. However, the Tribunal found that the CIT(A)'s findings were consistent with the Tribunal's decision for the assessment year (A.Y.) 2002-03, where similar issues were raised and resolved in favor of the assessee.

2. Non-production of paddy suppliers during assessment:
The revenue argued that the assessee should have produced the suppliers of paddy during the assessment proceedings with supporting documents. The Tribunal noted that the delay in furnishing information was attributable to the assessee, but subsequent evidence produced was not to be taken at face value. The Tribunal, however, found that the payments made to commission agents, who were representatives of farmers, were covered by the exemption under clause-f of rule 6DD of the I.T. rules.

3. Incorrect consideration of suppliers as farmers by CIT(A):
The revenue argued that the CIT(A) incorrectly considered all suppliers as farmers despite the assessee's inability to distinguish between farmers and agents. The Tribunal upheld the CIT(A)'s decision, referencing the Tribunal's previous ruling that the commission agents were representatives of the farmers and thus covered by the exemption under clause-f of rule 6DD.

4. Documentation aimed at avoiding section 40A(3) of the Income-tax Act:
The revenue contended that the documentation provided by the assessee was aimed at avoiding the provisions of section 40A(3). The Tribunal, however, found that the payments to commission agents were genuine and covered by the exemption under clause-f of rule 6DD, as previously determined for A.Y. 2002-03.

5. Any other grounds raised during the hearing:
No additional grounds were raised that altered the Tribunal's decision.

Conclusion:
The Tribunal confirmed the CIT(A)'s order, finding no infirmity and dismissing the revenue's appeal. The Tribunal's decision was consistent with its previous ruling for A.Y. 2002-03, where payments to commission agents were deemed exempt under clause-f of rule 6DD. The appeal was dismissed, and the decision was pronounced in open court on 19.8.2010.