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TMI Blog2016 (9) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has not placed any material on record by which it could be demonstrated the nature of services rendered by those parties to the assessee. However, as far as payment of sales commission to Devkalpi Dyes & Intermediates is concerned, we find from the chart of commission that has been placed by assessee in the paper-book that assessee had paid ₹ 47,775/- in AY 2008-09, ₹ 78,975/- in AY 2009- 10 and ₹ 1,14,338/- in AY 2010-11. The commission payments to this party has not been disallowed while framing the assessment u/s.143(3) of the Act; meaning thereby that the nature of services, as far as this party is concerned, is not doubted by the Revenue in subsequent years. Before us, Revenue has also not placed any material on record to demonstrate that no services were rendered by it to the assessee. In view of the aforesaid facts, out of the total disallowance of ₹ 7,15,111/-, we direct the deletion of ₹ 47,302/- being the amount of commission paid to Devkalpi Dyes & Intermediates and uphold the balance addition(s) of commission made to other parties. - Decided partly in favour of assessee - I.T.A. No.278/Ahd/2011 - - - Dated:- 9-8-2016 - SHRI RAJPAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .stock u/s.145A(b) to the extent of increase in the balance of unutilized duty, tax etc. 3.2. Without prejudice to the above, the ld.CIT(A) ought to have directed AO to modify the valuation of op.stock as on 1.4.2006 and 1.4.2007 to bring in line with Sec.145A(b). 4.1. The Ld.CIT(A) has erred in law and or on facts in upholding the disallowances of sales commission of ₹ 7,15,111 as non-genuine and unsupported by the proof of services. 4.2. The observations made and the conclusion reached by CIT(A) in upholding the disallowance of commission of ₹ 7,15,111. 4.3. The Ld.CIT(A) has erred in not admitting the additional evidences with regard to the commission expenses. 3. At the outset, ld.AR submitted that though assessee has raised various grounds but the issues to be decided are only two issues, namely one with respect to addition of unutilized balance of various taxes u/s.145A of the Act and second about the disallowance of sales commission. 3.1. We first take up the issue with respect to addition u/s.145A of the Act. 3.2. During the course of assessment proceedings and on perusing of tax audit report, AO noticed that assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. by including all tax, duties, cess etc. in the closing stock. These taxes, duties, etc. will have to be added to the closing stock of the current year in view of the above discussion. However, the assessee has to necessarily follow the closing stock of last year as opening stock of the current year. Since the assessee has not shown that these taxes, etc. were included in the closing stock of last year, the same cannot be included in the opening stock of the current year. Hence the addition made by the A.O. is correct and this ground of appeal is dismissed. 3.3. Aggrieved by the order of the ld.CIT(A), assessee is now in appeal before us. 4. Before us, Ld.AR, reiterated the submissions made before AO and ld.CIT(A) and further submitted that the Coordinate Bench of the Tribunal (ITAT A Bench Ahmedabad) on identical facts, in the case of ACIT vs. Shri Paragbhai Ramanlal Patel in ITA No.832/Ahd/2011 for AY 2007-08 order dated 23/01/2015 had decided the issue in favour of assessee. He placed on record the copy of the aforesaid order and pointed to the relevant findings of the order of the Tribunal. He therefore, submitted that following the aforesaid decision of the Coo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s.Devkaipi Dyes Intermediates Rs.47,302/- (b) M/s.Spectro Colour Lab ₹ 4,515/- (c) Deepak Industries Rs.48,000/- (d) Shri Dixit S Patel Rs.30,165/- (e) Shri Arvindgiri J.Goswami Rs.27,245/- (f) M/s.Rajmata Rubber Products Rs.48,000/- (g) Shri Vishal Jitendrakumar Patel Rs.1,27,400/- (h) Shri Navinbhai R.Patel Rs.3,72,000/- (i) Smt.Bina N.Shah Rs.9,784/- Total Rs.7,15,111/- 7. The assessee was asked to justify the claim of expenditure and also furnish the details of services rendered by them. AO noted that assessee had failed to submit any evidence to prove the genuineness of payment of sales commission, need for payment and proof of services rendered by s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by the assessee and hence they do not require signature of the other party. The appellant stated that it had given a chart showing the details of sales commission and the relevant evidence were produced, The appellant had requested the parties to attend before the AO, but they did not do so on the ground that the correspondence and other material were trade secret and cannot be shown to the AO. Shri Navin Patel clearly stated so. The appellant stated, that the AO should be directed to summon these parties to verify the payments. The appellant further stated that the cases relied upon by the AO are distinguishable on facts. 3.3.1 1 have considered the submission made by the appellant and observation of the AO. Both during the assessment proceeding as well as appellate proceeding the appellant had only stated that the sales were being affected by these parties. The commission was given in respect of the sales being affected through these parties. The appellant has given proof of payment and TDS, which, is not denied by the AO. What the AO has stated that the appellant has not given any proof of services rendered. No correspondence between the assessee and these parties, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed. In view of the above, since the appellant has failed to prove the services rendered by giving documentary evidences. The disallowance made by the AO is confirmed and this ground of appeal is dismissed. 8. Aggrieved by the order of ld.CIT()A, assessee is now in appeal before us. 8.1. Before us, ld.AR reiterated the submissions made before AO and ld.CIT(A) and further pointed out to the Chart of commission placed at page 90-A of the paper-book and from the aforesaid chart, he submitted that the payment of commission of Devkalpi Dyes Intermediates (Rs.47,302/-) was also made in subsequent assessment years and it has been allowed in the scrutiny assessment. He therefore submitted that since the payment of commission has been accepted by the Revenue in subsequent years and the payment has not been doubted, it needs to be allowed. With respect to the payments of commission to other parties, he submitted that before making the payment assessee had deducted TDS. He therefore submitted that the payment of commission be allowed. 8.2. Ld.DR, on the other hand, supported the orders of AO and ld.CIT(A) and further submitted that the assessee has failed to prove the nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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