9911796707
TMI Blog2010 (2) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue and are directed against separate orders passed by the CIT(A) XXV dated 14.10.2003 for the assessment years 2000-01 and 2001-02. There is a common issue in both these appeals and this pertains to the deletion of an addition on account of commission payment by the CIT(A) for the assessment year 2000-01. One more ground has been raised by the Revenue and this pertains to the deletion of an addition of Rs.1,75,000/-. As the issues in both these appeals are common, for the sake of convenience, they are heard together and disposed off by way of this common order. 2. The facts in brief are that the assessee is a company and is an IATA approved agent and carries on the business of cargo clearing and forwarding to facilitate the transportation of cargo by air for various clients and some agents for inland and international destinations. The assessee has Head Office in Mumbai and nine branches situated in different parts of the country. A search and seizure operation was carried out under section 132 of the Act on 01.11.1999 and this was concluded on 02.11.1999. The assessment before us pertains to the period subsequent to the date of search. The orders were passed under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... length. 4. On a careful consideration of the facts and circumstances of the case and a perusal of the papers on record and the orders of the authorities below as well as case law cited we hold as follows. 5. The first appellate authority at para 9.3 of his order in the block assessment proceedings has summarised the findings of the A.O. from the statements of the witnesses. It is extracted below for ready reference: - "i) None of the parties had ever issued any bills to the assessee for the services rendered by them. It was improbable that an organisation doing business in a commercial or professional manner did not issue or raise any bill particularly when services had been rendered by it. ii) The alleged commission agents had not maintained any records whatsoever in relation to the so-called parties introduced by them. iii) There was a contradiction between the version of the assessee company and the so-called commission agents in so far as the issue of credit notes was concerned. While the assessee company has stated that credit notes had been issued the recipients denied receipt thereof. iv) The deposit of commission in the bank account was followed imme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for every shipment the intermediaries will liaise with the clearing and forwarding agents. The position of an intermediary is similar to that of a broker, or a sub-broker or a commission agent in any other trade where large business are carried out on telephonic conversation rather than thorough exchange of correspondence and other similar paper work. iii) The appellant has been regularly paying commission to various subagents and intermediaries. These sub-agents and intermediaries are contacted by the directors personally and not through their staff in order to maintain secrecy, confidentiality and loyalty of business. Often the names of such intermediaries are not known to the staff for the above reasons. Like all other markets where a payment for commission is made after the amounts are realized and after the accounting year is over, in the appellant's trade also the same procedure is followed. Thus the appellant is required to make a provision on accrual basis for payment of commission for the entire year and the working for the same is made in one instalment after the accounting year is over." 7. Parties to whom commission has been paid and which are involved in these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee during the course of search and subsequent retraction and held that the retraction, under the facts and circumstances of the case, was justified. We are not concerned with this part of the order of the block assessment and we express no opinion on the same. Nevertheless, the first appellate authority, in an appeal in the block assessment order, on merits gave the following findings: - "Secondly, now coming to the merit of the addition of Rs.3,07,67,916/-, I noticed that the addition of Rs.3,07,67,916/- comprises of commission of Rs.22.086 lakhs paid to the 5 parties for the Accounting Years from 1991-93 to 1997-98. The facts have been discussed by the AO in the assessment order. The remaining commission of Rs.86,32,474/- pertains to the Accounting Year 1998-99 relevant to AY 1999-00 (upto the date of search 1-11-1999). It is noticed that during the course of assessment proceedings, the 5 parties to whom the commission of Rs.220.86 lakhs was paid were called and examined by the AO. They are regularly assessed to income tax. They have confirmed the receipt of commission and produced requisite papers before the AO and they have also produced evidence to render serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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