Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI MANISH AGARWAL
O R D E R Per Bench : This is an appeal filed by the assessee against the order of the ld. Addl./JCIT(A)-1, Office of the CIT(A), Delhi, dated 07.01.2024, in DIN & Order No.ITBA/APL/S/250/2023-24/1059445764 (1) for the assessment year 2012-2013. 2. In this appeal, though the assessee has taken five grounds of appeal
, however, the only issue is pertaining to the addition of Rs.9,19,045/- made by treating the commission claimed by the assessee as bogus.
3. Brief facts of the case are that the assessee is an individual, engaged in the retail business of readymade garments, textile items, leather goods and other accessories under the name and style M/s RAJHANS. The return of income was filed on 30.09.2012 declaring total income of Rs.21,22,416/- and the assessment was completed u/s.143(3)
Act dated 18.03.2015 at a total income of Rs.25,01010/-. Thereafter the order was subject to the revision u/s.263 of the Act and the ld.Pr.CIT has passed the order dated 23.03.2017 for examination on account of claim of brokerage and commission of Rs.9,19,045/-, verification of unsecured loans of Rs.62,01,971/- and interest paid on unsecured loans at Rs.24,66,035/-. In compliance, the AO passed the impugned order dated 26.12.2017 where after considering and verifying the issues as directed by the ld. Pr.CIT in the order u/s.263 of the Act, has disallowed the claim of commission expenses paid to five parties of Rs.9,19,045/- holding the same as bogus claim.
In first appeal, the ld. Addl./JCIT(A)-1, Delhi confirmed the disallowance so made, thus, the assessee is before us in appeal.
During the course of hearing, the ld. AR of the assessee stated that the commission was paid during the normal course of business and it was paid to the parties for soliciting purchases made from various vendors. To support the claim, the assessee has filed the confirmations also before the lower authorities and claimed that the commission has paid after deducting the TDS as per the law and all the recipients have filed their income tax returns which fact was grossly ignored by the AO. He further stated that during the course of assessment proceedings, the statements of recipients were recorded where out of five parties, three were found available and as per the enquiry report filed by the Inspector, it is stated that they have not visited the shop of the assessee nor has received any amount in last 4-5 years. The ld. AR of the assessee submitted that the Inspector visited the premises in the year 2017 whereas the commission was paid for the services rendered in financial year 2011-2012 i.e. after more than 5 years back, therefore, the recipients were not readily could be able to state the actual services rendered. However, they had not denied of having receipt the commission from the assessee and simply stated that they have not received this amount since last five years though the matter relates to beyond five years. Therefore, he prayed that the claim of commission is liable to be allowed as genuine business expenditure.
Per Contra, ld. Sr. DR submitted that all the recipients have denied of visiting to the shop of the assessee and also denied of having received any amount in past few years nor were able to tell the exact work done for the assessee. Moreover, the suppliers also denied any such practice of involving agents for supply to the local showrooms. He, therefore, prayed for confirmation of the disallowance made and upheld by the lower authorities.
We have considered the rival submissions and perused the material available on record. In this case, it is seen that the assessee has paid commission after making TDS as per law and when the ld. AR contended that all the recipients have filed their income tax returns wherein such income was disclosed, the Sr. DR was directed to file copies of the necessary ITRs along with copies of the statements of the recipients as obtained by the AO by deputing the Circle Inspector. The said report dated 17.05.2024 of the AO is placed before us. A perusal of the same, ITR of four out of five recipients, namely, Smt. Sulochana Devi Ganeriwala, Rakhi Ganeriwala, Manju Ganeriwala and Pushpa Devi Ganeriwala were available. As per their return of income, they have included the commission received from the assessee under the head income from other sources and claimed the TDS against their tax liabilities. With regard to the 5th recipient i.e. Shri Dharmesh V. Yagnik, it is stated that he left Cuttack and presently residing in Mumbai and since his whereabouts are not traceable, thus, his ITR could not be gathered either by the assessee or by the department. Looking to the fact that due TDS was deducted on all the payments and all the recipients have filed their return of income declaring the commission income which was accepted by the department. Further considering the fact that the Circle Inspector made enquiries from the recipients much after the transaction solicited between the parties and due to the passage of time, the recipients were not able to describe the exact nature of the transaction, however, they have not denied of having receipt of such amount of commission from the assessee.
In view of these facts, we are of the considered view that the commission paid by the assessee is in the normal course of business and recipients have already accepted the receipt of commission and rendering of the services by filing their confirmations as well as declaring such receipt in their return of income. Therefore, we have no hesitation in holding that the commission is genuine expense and the addition made by the AO and upheld by the ld. CIT(A) is hereby deleted.