9911796707
TMI Blog2012 (9) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... the case are that the assessee filed a return declaring income of Rs.3,13,655/- and the same was processed u/s 143(1) of the Income Tax Act, 1961(hereinafter referred to as 'the Act') and the case was selected for scrutiny and a notice u/s 143(2) of the Act dated 6.10.2004 was served upon the assessee company. The assessee submitted the necessary details and furnished the relevant documents. The Assessing Officer considered the issue of commission on sales and disallowed the same treating as bogus and made an addition of Rs.11,49,679 with the following observations:- "On perusal of the P&L account for the year under consideration it was noticed that the assessee has debited a sum of Rs.1149679/- as commission on sales. During the course of assessment proceedings the assessee company was asked to furnish the details of commission on sales. It was also asked to explain the basis of payment of the same and also to furnish the confirmations from the parties to whom commission was paid. In response to that the assessee has submitted only the details of the parties to whom commission was paid along with copy of ledger account of commission on sales in its books of accounts. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reeable rate. These parties not only assist the Assessee in its out-of-town assignments and help procure orders, but given the nature of the Assessee's business, .where UPS machines are sold and thereafter also maintained on Annual Maintenance Contract basis, these parties also help handle mechanical issues from time to time as found mutually convenient. 14. During assessment proceedings, the Assessee had written to the parties and sought confirmation for Income-tax purposes, which were received only after the assessment order had already been passed. These were filed before Your Honour's predecessor, and were forwarded to the Assessing Officer for his comments. These form Para 4 of the remand report (ANNEXURE-I). The Assessing Officer has observed inter-alia, that the copious evidence before him could not be relied upon because it had not passed the test of scrutiny, little realising that that was the specific purpose of the remand proceedings in the first place. 15. Details of commission paid during the year form ANNEXURE-7 to these submissions. All these payments have suffered deduction of tax at source, which has been deducted and duly deposited by the Assessee, and copies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to show that the amount does not represent capital or personal expenses, which is obviously not the case herein, and has been incurred wholly and exclusively for the purpose of business. The payment of commission against procurement of orders in the Assessee's line of business is a common and natural phenomenon. All payments have been made by cheque and TDS deduction has been effected. It is not the Assessing Officer's case that these parties are related to the Assessee. In view of this evidence, there was no occasion for the Assessing Officer to disallow the entire amount of commission paid by the Assessee to as many as ten parties throughout the year. c. TDS CERTIFICATES - TDS Certificates and challans evidencing deposit of the deducted amounts were also placed before the Assessing Officer. This evidence is the Department's own evidence, which would have enabled the Assessing Officer to trace the payments to their sources without recourse to any outside mechanism. Without even adverting to this evidence, let alone making any verification or enquiry on this basis, the Assessing Officer was wrong in making any disallowance. Statutory compliances such as TDS requirements h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e details of the commission on sales and to explain the basis of payment with the confirmation from the parties to whom the commission was paid, in response to that the assessee only submitted the details of the parties to whom the commission was paid and neither the basis of payment nor the confirmation from the parties were submitted. When the assessee was again asked through the questionnaire, he only submitted that all the payments were made through account payee cheques and showed its inability to submit confirmation in this regard. The assessee had not furnished the basis of payment of commission on sales. Therefore, the Assessing Officer rightly held the payment of commission as bogus and disallowed the claimed commission. The AR finally submitted that the impugned order be set aside restoring the assessment order in this regard. 8. The assessee's representative before us vehemently contested the above submissions of the Revenue and submitted that the ld. Commissioner of Income Tax(A) considered the additional evidence filed by the assessee, remand report of the Assessing Officer and rejoinder and other submissions of the assessee. The AR also submitted that the ld. Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of ACIT vs Shree Sajjan Mills Ltd. 302 ITR (AT) 088 (Ind) wherein the Third Member Bench held that the assessee therein had placed all details with regard to commission payments including details of sales made to various parties before the Assessing Officer. Without making any inquiry that such payments are bogus, it was not open to the Assessing Officer to make a disallowance of the commission paid by the assessee. In the present case, the Assessing Officer did not make any inquiry to substantiate the fact that the commission payment claimed by the assessee was bogus. 13. In view of above, we observe that the Assessing Officer made disallowance on commission payment of sales on the basis of a superficial approach supported by surmises and conjectures without making any due inquiry in regard to the genuineness of the parties and services rendered by the recipients of commission to the assessee in lieu of commission. We also observe that the Assessing Officer did not consider all material and the evidence placed before him by the assessee. Per contra, we observe that the ld. Commissioner of Income Tax(A) followed a due procedure and admitted the additional evidence follow ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
