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2010 (11) TMI 484 - AT - Income TaxAddition - commission paid to commission agent - The AO has categorically made out the case that the expenses were claimed solely to reduce the tax liability - The sole income returned by the assessee is Rs.19,662/- The transaction has been held to be colourable and a mere book entry - The person to whom the GI pipes etc. have been supplied namely M/s.Soor Neogi Coomar and Co.(P) Ltd is a party as per the assessment order with whom the assessee has transacted in the earlier years also - Further there is no evidence or argument that the said party was introduced to the assessee by Shri Arindam Nath Das i.e. the alleged commission agent - Accordingly,the deposition of the alleged commission agent stands undisputed on record and no other evidence is placed either before the AO, the CIT(A) or for that matter before this forum to show that any services were rendered by Shri Arindam Nath Das - the appeal of the assessee is dismissed.
Issues:
1. Disallowance of commission payment on the grounds of lack of service rendered by the commission agent. Analysis: Issue 1: Disallowance of Commission Payment The appeal was filed against the disallowance of Rs.2,33,417/- on account of commission paid by the assessee to a commission agent. The commission agent, Shri Arindam Nath Das, accepted receiving the payment but denied working as a commission agent for the assessee or having knowledge of the business activities related to the sales made through him. The Assessing Officer (AO) concluded that no services were rendered by the commission agent to justify the payment, considering it a colorable transaction to evade tax liabilities. The AO found discrepancies in the agent's statements and the lack of association with the party to whom sales were made, leading to the disallowance of the commission payment as a non-business-related book entry. Issue 1.1: First Appellate Authority's Decision The First Appellate Authority upheld the AO's decision, stating that the commission payment lacked justification as no services were rendered by the commission agent for the business purposes of the assessee. The authority found no substance in the appellant's argument, emphasizing that the AO provided sufficient evidence to support the disallowance. The authority dismissed the appeal, affirming the AO's stance that the commission payment was not related to business activities. Issue 1.2: Tribunal's Decision The Tribunal considered the arguments presented by both parties. The appellant contended that the commission agent had raised bills for services rendered, the payments were made through legitimate channels, and TDS was deducted. The appellant highlighted the lack of control over the agent's statements and the inability to cross-examine him. However, the Tribunal found no evidence to refute the consistent findings that no services were rendered by the commission agent. The Tribunal noted the lack of specific grounds raised by the assessee to challenge the disallowance and upheld the lower authorities' decisions. The Tribunal rejected the appeal, emphasizing the undisputed nature of the payment, the colorable transaction, and the absence of evidence supporting the commission payment as a genuine business expenditure. In conclusion, the Tribunal dismissed the appeal, affirming the disallowance of the commission payment due to the lack of services rendered by the commission agent, considering it a colorable transaction aimed at reducing tax liabilities without genuine business justification.
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