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TMI Blog2019 (11) TMI 1300X X X X Extracts X X X X X X X X Extracts X X X X ..... . This is the reason why it is expected from the A.O. that he should consider the factor that might influence the margins before making a fair estimation of the profit. A.O. did not make necessary enquiry, which would have enabled him to make a fair estimation of profit. Hence, action of the A.O. cannot be sustained. A.O. is therefore directed to delete the addition. Disallowance of excess commission - HELD THAT:- Admittedly, payment of commission is not treated as a bogus. The A.O. has not brought any adverse material suggesting that the commission was not paid or payment so made was received back by the assessee. It is also not the case that the payments have been made to the related parties. The decision in respect of quantum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) to sustain the addition of ₹ 4,29,234 made by the Ld. A.O. for alleged low gross profit in Indore Branch of the appellant as compared to Ujjain Head office. 2. That the addition in respect of enhancement of gross profit of ₹ 4,29,234 by taking it as 3.5% instead of 2.2% shown in the books of the Indore Branch of the appellant has been made without any finding about the correctness or completeness of the books as required u/s 145(3) and thus the entire addition is 3. That there is no justification either in law or on facts for the Ld. CIT(A) to sustain the addition of ₹ 4,06,142 made by the Ld. A.O. for alleged excess commission paid by Indore branch as compared to Ujjain Head Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in estimating the profit without rejecting the books of accounts. In support of this contention, Ld. Counsel for the assessee has relied on the decision of the coordinate bench of this Tribunal rendered in the case of Mayank Kumar Natwarlal Soni Vs. Addl. CIT (2019) 111 Taxmann.com 6 (Ahmedabad-Trib). The Ld. Counsel also placed reliance on the judgement of Hon'ble Madras High Couirt rendered in the case of PCIT Chennai Vs. Marg Ltd. (2017) 84 taxmann.com 52. 5. The Ld. D.R. opposed these submissions and supported the order of the A.O. 6. I have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. Undisputedly, the A.O. has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the factors that influenced the profit. In a given market condition, if competition is high, the natural consequence would be lower profit margins and where there is no such competition, naturally the traders would fetch desired margins. This is the reason why it is expected from the A.O. that he should consider the factor that might influence the margins before making a fair estimation of the profit. In the present case, the A.O. did not make necessary enquiry, which would have enabled him to make a fair estimation of profit. Hence, action of the A.O. cannot be sustained. The A.O. is therefore directed to delete the addition. 7. Ground Nos.3 4 are in respect of disallowance of excess commission. Ld. Sr. Counsel to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 1. Sales ₹ 3,21,77,573/- ₹ 3,37,71,430/- 6,59,49,003/- 2. Discount ₹ 11,01,504/- ₹ 12,64,877/- 23,66,381/- allowed (3.42%) ₹ 3,22,368/- (3.74% of sale) ₹ 39,682/- 3,62,050/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all companies are not allowing commission but some companies are providing commission to the assessee, but the assessee is providing commission to all its dealers. Thirdly, the assessee is not allowing commission at the uniform rate. Fourthly, the assessee is allowing commission to its dealers on the sales in respect of purchases made from the company who is not allowing commission to the assessee. All this is being done by the assessee in order to reduce the income being earned by him. 10. From the above finding of the A.O. it is clear that he had disallowed the expenditure without verifying veracity of claim by making proper enquiry. The finding is purely based on guess work and conjectures. There is nothing on record s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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