OLIVINE INTERNATIONAL,KOLKATA vs. DCIT, CENTRAL CIRCLE 2(1),, KOLKATA

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ITA 932/KOL/2026Status: DisposedITAT Kolkata25 June 2026AY 2013-20145 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since payments were made by cheque, TDS was deducted and deposited, and the assessee provided all necessary details, the disallowance was unjustified. The Tribunal followed the jurisdictional High Court's decision in CIT vs. M/s Inbuilt Merchant Pvt. Ltd.

What were the facts?

The assessee debited ₹57,95,566/- on account of brokerage and commission. The AO disallowed the expenses as notices u/s 133(6) to the commission recipients could not be served. The CIT(A) affirmed the addition.

What were the issues?

Whether brokerage and commission expenses are allowable when notices to recipients could not be served, despite other evidence of payment and TDS compliance.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 133(6),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

For Appellant: Shri Manish Tiwari, AR
For Respondent: Shri Sandip Sarkar, DR
Hearing: 16.06.2026Pronounced: 25.06.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Panaji(hereinafter referred to as the “Ld. CIT(A)”] dated 31.01.2026 for the AY 2013-14.

2.

The only issue raised by the assessee is against the order of ld. CIT (A) confirming the addition of ₹23,88,636/- as made by the ld. AO on account of brokerage and commission without appreciating the fact that the expenditure was incurred wholly and exclusively for the purpose of business and is fully allowable u/s 37(1) of the Act.

5.

We have heard the rival contentions and perusing the materials available on record, we find that the assessee is engaged in the business of sale of medicine, medical equipments and surgical goods, etc. The assessee has engaged the services of various person for procuring the sales orders and used to pay the brokerage and commission on the same. During the year the assessee engaged with various persons / entities to whom the commission and brokerage were paid after deduction of tax at source and the same was deposited into the Government Treasury. The ld. AO has disallowed the payment only on the ground that the notices u/s 133(6) of the Act, could not serve. Whereas, on the other hands, the assessee has filed all the evidences, comprising names, addresses, PANs, TDS details, bank details, etc. In our opinion, the assessee has maintained the books of accounts propery. Moreover, the ld. AO has not doubted the genuineness of the payments.Therefore, once it is established that the payments were made by cheque and the tax deducted at source have been deposited then no disallowance can be made in respect of said expenses. The case of the assessee is squarely covered by the decision of Hon'ble

“The views expressed by the Assessing Officer are erroneous in law. The Assessing Officer has overlooked the importance of the books of accounts maintained in the ordinary course of business. Reference in this regard may be made to sub-section (2) of Section 32 of the Indian Evidence Act, 1872. The books of accounts maintained in the ordinary course of business are relevant and they cannot be discarded in the absence of appropriate reasons. The mere fact that recipient did not reply in some cases or they were not found at the address furnished by the assessee does not in the least prove the fact that they were non existent or that the payments shown to have been made by the assessee were imaginary. With the advancement of technology, it has become possible to sell goods throughout the country through the internet. For that purpose, agents are required throughout the country. The mechanism in that regard has been disclosed by the assessee and has been recorded in the order of the CIT (Appeals). For the purpose of carrying on its business, the assessee has to recruit the agents. It may not be possible for the assessee to know them personally. Whatever address was furnished to the assessee, has been disclosed to the Income-tax Department. Payments were admittedly made by cheque after deduction of tax. The tax deducted as source has duly been deposited. The judgment in the case of CIT vs. Precision Finance Pvt. Ltd. reported in 208 ITR 465 relied upon by Mr. Bhowmick does not really assist him. The aforesaid judgment is an authority for the proposition that mere payment by account payee cheque cannot establish that the transaction was genuine, but in the case beforeus, besides the fact that payment was made by cheque, there are other pieces of evidence available which are as follows: a) Books of Accounts maintained by the assessee in the ordinary course of business; b) Deduction of Tax at source; c) Deposit of the money deducted at source; d) Particulars of the recipient were duly furnished; We are, as such, of the opinion that the views expressed by the learned Tribunal are unexceptionable. We, therefore refuse to admit the appeal. The appeal is thus dismissed.”

7.

In the result, the appeal of the assessee is allowed.

Order pronounced on 25.06.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 25.06.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Asst. Registrar Income Tax Appellate Tribunal, Kolkata

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