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TMI Blog2016 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... turned was duly accepted in various assessment proceedings for different years as detailed in the chart. Under such circumstances, adding the same income at the hands of assessee would amount to double taxation on the same income. Considering the above submissions and evidences on file and in the absence of any incriminating evidence against the assessee, the additions solely on the basis of retracted statements, which have duly been explained by the respective persons that the same were obtained under duress and further that the same were not correct and the correct position being explained with sufficient corroborative evidences on the file, in our view, the additions solely on the basis of such retracted statements without any corroborative evidence are not sustainable in the eyes of law especially when the assessee has proved with sufficient evidence on the file that various sub agents were offering business to the assessee for which the assessee was paying the commission to them including the concerns about which the AO has doubted the transactions. The another interesting fact is that assessment of the assessee for the assessment year 1996-97 which was originally completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e foregoing, appellant pleads that Learned CIT(A) erred in confirming the disallowance of sub-commission of ₹ 1,83,36,710 paid to M/s. Airwings Travel and Cargo Pvt. Ltd. and Airtrac Agents (India) Pvt. Ltd. 4. Without prejudice to the foregoing, appellant pleads that Learned CIT(A) erred in not appreciating the fact that the entire sub-commission paid to Airwings Travel and Cargo Pvt. Ltd. and Airtrac Agents (India) Pvt. Ltd. have been offered for taxation in the earlier years by the respective recipients and their status was accepted as such in the past and therefore the amounts cannot be brought to tax in the block period of the appellant. 5. Without prejudice to the foregoing, appellant pleads that on the facts and in the circumstances of the case, Learned CIT(A) erred in not appreciating the fact that the recipients of the sub-commission had to incur expenditure in the years during which the sub-commission payments were received by them. In the assessment of the recipients these were accepted in the past. Therefore those expenses will have to be allowed as deduction in the assessment of the appellant and it is only the resultant net income that can be brought to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by recording statements from the son of the builder/owner and it turned out to be that in one case the possession of the premises itself was not given and in the other case it was found during search action that the premise was used as godown of the Assessee company. The AO raised doubts on the existence of employees and the nature of services rendered by them, their capability to render such services, the availability of infrastructure and managerial capabilities of the said two companies, for which they were stated to have been paid commission. AO concluded that Shri Ravishankar, Director of Airtrac did not come to the office; that the work of Airtracwas being done by the staff of Assessee company that there was no agreement between Assessee company and Airtrac; that there was no documentary evidence available in support of the services rendered by Airwings also to earn the commission. He therefore disallowed the commission payment to above stated two companies for the block period 01.04.1996 to 12.12.2002. The assessing officer also added the commission/incentives received by the Airtrac directly from other companies holding that in fact the said commission/incentive was recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He has further stated that the assessee had also filed affidavit of Mr. M.D. Hansotia, retracting the statement given by him during the course of Assessment proceedings. Further that the recipients of the sub-commission had sufficient infrastructure to render the services to the assessee. That the AO has not discussed about the other rented premise which were in the occupation of those two companies, which were adequate to carry on the business by the two respective companies. The Ld. AR has further submitted that with regard to the employees functioning in these two companies, the muster roll, salary register, the employees' registration, the TDS Return wherever applicable and a few employees were all produced before the AO during the course of the assessment proceedings. He thus has contended that the assessee had discharged its primary onus and that the AO had not brought out on record any material evidence to counter or negate submissions of assessee. The Ld. AR has further contended that assessments of the assessee for the assessment year 1996-97 which were originally completed was reopened under Section 148 on the basis of the information gathered during the search a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. BHUVANENDRAN 303 ITR 235 (MAD) [PGS 5 OF JUDICIAL PRECEDENT PAPERBOOK (JPPB)]; CIT v. TEMPLETON 337 ITR 541 (BOM) [PG 10 OF JPPB]; GO6v. DCIT 346 ITR 106 (AP) [PG 16 OF JPPB]. 2) Addition cannot be made in block assessment merely on the basis of statement recorded under Section 132(4) [CIT v. BHUVANENDRAN 303 ITR 235 (MAD); DCIT v. OKASA 10 SOT 164 (MUM) [PGS 30, 31 OF JPPB]; DCIT v. PRAMUKH 115 TTJ 330 (AHM)(TM)[PGS 41, 42, 43, 52, 53 OF JPPB]; CIT v. CHINNASWAMY 350 ITR 694 (MAD) [PGS 63, 65 OF JPPB]; SHREE GANESH v. CIT 84 CCH 25 (JHAR) [PGS 69, 70 OF JPPB]; EDULJI v. DCIT DATED 27.12.2004 (MUM) [PG 143 OF JPPB]. 3) Expenditure not found to be false as a result of evidence found in search [RADAN v. DCIT 58 ITR 129 (MUM) [PGS 122 TO 126 OF JPPB]; EDULJI v. DCIT DATED 27.12.2004 (MUM) [PGS 135, 136 TO 143 OF JPPB]; SIGMA v. JCIT 102 lTD 342 (MUM) [PG 161 OF JPPB]; MANGE v. ACIT 105 TTJ 594 (DEL)(SB) [HN] [PGS 165 TO 167 OF JPPB]. 4) Commission payments are reflected in regular books of accounts and allowed in regular assessments since last several years after detailed scrutiny, consideration and consideration as per charts submitted and hence cannot constitute undi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above stated two companies but has paid commission to various other parties. The Ld. AR in this respect has invited our attention to various documents placed in the paper book to show that the assessee company had been paying commission to various sub agents for procuring business for the assessee. The Ld. A.R. has also invited our attention to P L Account of the Airwings as well as of the Airtrac and the various assessment orders for different assessment years wherein the said companies have consistently been assessed to income tax and have offered the commission/incentive income received from time to time for taxation. The Ld. A.R. has submitted a chart in this respect which for the sake of convenience is reproduced as under: 9. The Ld. A.R. has further submitted that the statements of the employee and director of the company were recorded under pressure and undue influence which were retracted by way of filing detailed affidavits before the AO. The Ld. A.R. has further explained that the said director and employees whose statements were recorded during search action had applied for copies of the statements which were provided to them only in the 2nd week of January 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Travel. The Revenue has never doubted the payment of commission to any of the sub agents in the past. It was also explained that both the above sub agents have been paying tax at the same rate at which the assessee company was paying and that there was no question of shifting burden of income tax or evasion of any tax. It was also explained that the assessee company had no direct relation with the above sub agents. So far as the contention of the Department that there was no infrastructure of employees available with the said sub agents, the Ld. A.R. of the assessee has brought our attention to the letters of the sub agents/above stated companies informing that they operated from the rented premises of the Airlift taken from the assessee. The Ld. A.R. in this respect has invited our attention to the respective rent deeds between the parties. He has also invited our attention to the accounts of the respective companies to show that the payment and receipt of rent was regularly accounted for in the accounts of the respective companies. He has also invited our attention to agency agreement between assessee and Airwings and also between Assessee and Airtrac. Further confirmations f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ines also. The ld. CIT(A) has given a categorical finding that the AO had not brought any material on record in support of his conclusions that either these incomes relate to the same business in respect of which Assessee paid commission to Airtrac or to the effect that Assessee had diverted these incomes to Airtrac. The basis for coming to such conclusion by the AO does not find mention in the assessment order. 10. Moreover, the above stated two companies have been regularly filing their returns of income with Income Tax Department. The income returned was duly accepted in various assessment proceedings for different years as detailed in the chart. Under such circumstances, adding the same income at the hands of assessee would amount to double taxation on the same income. Considering the above submissions and evidences on file and in the absence of any incriminating evidence against the assessee, the additions solely on the basis of retracted statements, which have duly been explained by the respective persons that the same were obtained under duress and further that the same were not correct and the correct position being explained with sufficient corroborative evidences on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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