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TMI Blog2016 (1) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission - CIT(A) deleted the addition - Held that:- The ld. CIT(A) has concluded that the assessee has engaged foreign commission agent i.e. Sinar Mandiri and has paid foreign export commission under the regulations of RBI through banking channel @ 12% on which copies of invoices were furnished during the appellate proceedings. In our considered opinion, the ld. CIT(A) is quite justified in deleting the disallowance made by the A.O. We find no reason to interfere with the order of the ld. CIT(A) and accordingly we uphold the same - Decided against revenue - I.T.A. No. 1973/Mum/2011, I.T.A. No. 1974/Mum/2011, Cross Objection No. 209/Mum/2014, Cross Objection No. 210/Mum/2014 - - - Dated:- 31-7-2015 - SHRI G. S. PANNU, AM AND SHRI SANJAY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) has erred in allowing the disallowance of foreign export commission of ₹ 38,09,985/-, considering the submission of various evidences during the appellate proceedings ignoring the fact that: a) The assessee has failed to produce the supporting evidence before the AO at the time of assessment proceedings b) Admitting the additional evidence without giving the AO an opportunity is violation of Rule 46A of I.T Rules. (3) The appellant prays that the order of the CIT(A) on the above ground be set side and that of the AO be restored. 2. The facts of the case are that the assessee is a proprietor of M/s Trinity International, which is engaged in the business of export of textile fabrics. During the financial year releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he GP rate of 11.333% actually earned by the assessee. The assessee also submitted that the payments were made through banking channel and the addition has been wrongly made by the A.O. The ld. CIT(A) after considering the submissions upheld the A.O. s action in invoking the provisions of section 145(3) of the Act as the books of account do not provide the correct figure and came to the conclusion that the A.O. cannot act in an arbitrary manner and has to justify the estimation of gross profit. The assesse was called upon to furnish the gross profit ratio in grey purchases. The assessee furnished a chart showing the details of the same for A.Y. 2005-06 as under:- Bill No. Date Sales price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,35,952.00 2,65,459.16 14.93 Based upon this chart, the ld. CIT(A) estimated the gross profit ratio @ 15% as against 30% adopted by the A.O. Aggrieved by the decision of the ld. CIT(A), the Revenue is in appeal before us. 3. The ld. D.R. submitted that the A.O. has rightly invoked the provisions of section 145(3) of the Act to verify the genuineness of the purchases made by the assessee but these parties did not turn up and hence there were several discrepancies in the transaction and the A.O. has rightly rejected the books of account. However, though the ld. CIT(A) upheld the action of A.O. in invoking the provisions of section 145(3) of the Act, has wrongly adopted the gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the ld. CIT(A) and dismiss the ground raised by the Revenue. 6. In ground No. 2 the Revenue is aggrieved by the decision of ld. CIT(A) in allowing the disallowance of foreign export commission of ₹ 38,09,985/- in A.Y. 2006-07 and ₹ 33.65 lacs in A.Y., 2007-08. 7. The assessee has debited an amount of ₹ 38,09,985/- in his P L account as foreign export commission in A.Y. 2006-07 and ₹ 33.65 lacs in A.Y. 2007-08. The entire amount is shown as liability under the head sundry creditors . The A.O. asked the assessee to furnish the details of the expenses along with confirmation and relevant invoices, reasonableness of such commission and details of payment. In reply, the assessee submitted that he has paid comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... helps the assessee to know the buyer and also the fashion trend of different countries. Since the textile fabric which is highly fashion oriented and keeps on changing from time to time and is different in various countries, it is the foreign commission agent who guides the assessee on the colour, texture and design of items etc. to be exported. The payments were made through banking channel, which is on record. These payments were made as per the regulation of RBI. The ld. CIT(A), accordingly, concluded that it cannot be said that the foreign export commission claimed by the assessee was unverifiable and accordingly directed the A.O. to delete the same. Aggrieved by the order of the ld. CIT(A) on this issue, the Revenue is in appeal befor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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