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TMI Blog2018 (1) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Section 37 was set at naught; besides, the AO virtually positioned himself in the armchair of the assessee, as regards the business conducted by it- an entirely untenable situation, that the law frowns upon. For these reasons, the court is of opinion that the concurrent findings of fact rendered by the lower appellate authorities do not call for disturbance. As in the case of commission expenditure, the AO’s conclusion that the sources of income towards deposits made were not disclosed or sufficiently proved, were correctly set aside by the lower authorities - Decided in favour of assessee. - ITA 640/2017 - - - Dated:- 4-1-2018 - MR. S. RAVINDRA BHAT MR. A.K. CHAWLA JJ. Appellant Through: Mr. Zoheb Hossain, Sr. Standing Counsel. Respondent Through: Mr. V.P. Gupta, Advocate. S. RAVINDRA BHAT, J. 1. In this appeal, the revenue challenges findings rendered by the Income tax appellate tribunal (ITAT) as unreasonable and contrary to fact. The ITAT affirmed the decision of the CIT (Appeals), who had directed deletion of the amounts that were brought to tax by the AO, by disallowance of expenditure claimed, by the assessee. 2. The assessee had filed its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid and received vide Para 20 of the questionnaire dated 12.02.2008, the AO did not give any specific reminder to the appellant to the effect that details relating to commission payment below ₹ 5 lakhs were not filed. Therefore, there was some communication gap between the AO and the assessee company in so far as filling details of ₹ 10,28,957/- was concerned. The CIT(A) noted that the assessee company had made an aggregate payment of ₹ 7,08,59,575/- and all requisite details were duly made available to the AO but for the details of commission of ₹ 10,28,957/-,which is only 1.45% of the total expenditure and part of which was paid to the parties which are already included in the details filed before the AO. Therefore, the CIT (A) was of the view that the assessee company did not file the details of ₹ 10,28,9571- as it was under bona fide impression that there was sufficient compliance by filing details of commissions exceeding ₹ 5 lakhs. Accordingly, the CIT (A) found that the assessee company was prevented by sufficient cause. He also noted that the AO has been allowed sufficient opportunity to examine the additional evidence in the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore her, as copies of the agreements were duly placed before her in the course of assessment proceedings. Some agreements were old and the assessee on the basis of such agreements made commission payments even in earlier years. Therefore, keeping in view the detailed responsibilities assigned to the commission agents, the CIT(A) disagreed with the AO s finding that no specific details of services rendered by the commission agents were made available. With regard to naming the assessee in the independent inquiry committee, namely, Volcker Committee Report, the CIT(A) held that this ground was also not relevant so far as the present AY was concerned. As stated by the assessee, no export, directly or indirectly, had been made to Iraq nor had the assessee claimed any commission payment in connection with any transactions pertaining to Iraq during the year under consideration. Further, the AO had conveniently ignored the fact that Saddam Hussain was removed as president of Iraq and was jailed in April, 2003 and therefore there was no basis for using the findings of Volcker Committee for disallowing the assessee s claim for the assessment year under consideration. 7. As regards addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is seen from the above discussion that the additions made by the AO were on two counts: commission expenditure and deposits. The first was disallowed, because, in the AO s opinion, apart from producing copies of agreements, the assessee did not furnish any other proof of payment. Moreover, the sums payable were not shown to be due; the AO correctly concluded that prudent men of commerce would not have allowed matters regarding payment to languish as was apparent in the books of account, and other material, furnished. The CIT (A) and the ITAT concluded that the nature of the assessee s activities, i.e as a trader and supplier, could lead one to conclude that the assistance of commission agents, was to aid it to introduce buyers and transact business. The ITAT, from the given materials and circumstances, produced in a tabular statement, the payments above 10 lakh; it also drew another chart indicating the amounts made to different parties in different African countries. The impugned order shows that 9 parties in 11 different countries were shown to have been paid ₹ 7,33,093,398/- out of a total of ₹ 167,68,66,065/25 ( over Rupees one hundred and sixty seven crores) worth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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