What did the Tribunal hold?

The Tribunal set aside the impugned order and restored the issue to the Assessing Officer for fresh enquiry. The Assessing Officer is to make enquiries from the parties who received the commission, especially in light of their affidavits.

The Assessing Officer disallowed commission expenses of Rs. 19,14,948/- on the grounds that payments made to certain individuals were not genuine. The CIT(A) upheld this disallowance.

What were the issues?

The primary issue was the genuineness of the commission expenses claimed by the assessee. The assessee contended that the commission was genuinely paid and the job was carried out by family members of the recipients.

M/S. Vardhman Fabrics, Surat vs The Addl.CIT, Range-II, Surat | s.143(3) | ITAT Surat 2019

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: SHRI.KUL BHARAT & SHRI O.P.MEENA

For Respondent: Shri Dileep Kumar – Sr.DR

Hearing: 18.02.2019

M/s. Vardhman Fabrics, Surat V/s Addl. CIT, Range-II, Surat /ITA No.506/AHD/2016/ A.Y. 2011-12 Page 1 of 4 आयकरअपीलीयअिधकरण,सुरत�ायपीठ,सुरत IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI.KUL BHARAT, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER आ.अ.सं./I.T.A. No.506/AHD/2016/SRT िनधा�रणवष�/Assessment Year : 2011-12 Vs. Addl. CIT, M/s. Vardhman Fabrics, F/28, City Centre Complex, Range-II, Surat. Udhna Magdalla Road, Beside Sosyo Circle, Surat. [PAN: AAEFV 5070 F] अपीलाथ� Appellant ��थ�/Respondent िनधा�रतीकीओरसे /Assessee by Shri Rasesh Shah – CA राज�कीओरसे /Revenue by Shri Dileep Kumar – Sr.DR

सुनवाईकीतारीख/ Date of hearing: 18.02.2019 उद्घोषणाकीतारीख/Pronouncement on: 20.02.2019 आदेश /O R D E R PER KUL BHARAT, JM: 1. This appeal filed by the Assessee is directed against the order of the Commissioner of Income Tax(Appeal)-II, Surat dated 07.12.2015 pertaining to the assessment year 2011-12.

The assessee has raised the following grounds of appeals, as under : “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer in making disallowance of Rs.19,14,948/- on account of commission expense. 2. It is therefore prayed that above disallowance made by Assessing Officer and confirmed by CIT (A) may please be deleted.

M/s. Vardhman Fabrics, Surat V/s Addl. CIT, Range-II, Surat /ITA No.506/AHD/2016/ A.Y. 2011-12 Page 2 of 4 3. Appellant craves to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 3. The only effective ground is against the confirming The disallowance of commission expenses of Rs. 19,14,948/-, The facts giving rise to the present appeal are that case of the assessee was picked up for scrutiny and assessment u/s.143(3) of the Income Tax Act, 1961 hereinafter refer to as the Act was framed vide order dated 28.04.2014. During the course of assessment proceedings, the Assessing Officer observed that the assessee in profit and loss account debited an amount of Rs.39,35,053/- under the head sales commission as against Rs.30,53,165/- claimed in the immediate preceding year. The Assessing Officer, thereafter, out of these claimed expenditure found that commission paid to Smt. Saroj Sancheti, Smt. B Kumari, Smt. Shaveta Bothra, Smt. Bela Vinod Sancheti and Smt. Chandrakanta Bothra were not found genuine and same was disallowed accordingly, an addition of Rs.19,14,948/- was made.

Being aggrieved, assessee preferred an appeal before Ld.CIT(A) who after considering the submissions dismissed appeal and sustained the addition.

The Ld. Counsel for the assessee vehemently argued that the Assessing Officer was not justified in disallowing the

M/s. Vardhman Fabrics, Surat V/s Addl. CIT, Range-II, Surat /ITA No.506/AHD/2016/ A.Y. 2011-12 Page 3 of 4 claim; he submitted that the commission was genuinely paid to the parties has duly stated this fact on oath in affidavit. Ld.Counsel argued that authorities have failed to appreciate the fact that the job was carried out through the family members of those parties. Therefore, it cannot be stated that the claimed expenditure is not genuine. Alternatively he urged that the matter may be set aside to the Assessing Officer to make fresh enquiry about genuineness of the claim.

On contrary, the Departmental Representative opposed submissions made by the Ld. Counsel of the assessee and he supported the order of authority below. He submitted that the assessee was afforded sufficient opportunity to prove the genuineness of claim.

We have heard the rival contentions perused the material available on record and gone through the order of the authorities below. It is not in dispute that the persons whom commission was paid have admitted in their affidavit the payment of commission. It is also a fact that statement was recorded before the Assessing Officer and the assessee had sought cross-examination of those parties. Therefore, after considering the totality of the facts we deem it proper in the interest of justice to set aside the impugned order and restore the issue of payment of commission to the file of the

M/s. Vardhman Fabrics, Surat V/s Addl. CIT, Range-II, Surat /ITA No.506/AHD/2016/ A.Y. 2011-12 Page 4 of 4 Assessing Officer to decide it afresh after making enquiries from the parties more particularly in view of the affidavit filed by those parties. If he finds that the contents of the affidavits are not correct, he may proceed against the deponents in accordance with law. Therefore, this ground is allowed for statistical purpose.

In the result, appeal of the assessee is allowed for statistical purpose only.

The order pronounced in the open court on 20.02.2019

Sd/- Sd/- (O.P.MEENA) (KUL BHARAT) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) सुरत/ Surat, �दनांक Dated: 20th Feb, 2019/Subhankar Samanta, PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat

M/S. VARDHMAN FABRICS,SURAT vs. THE ADDL.CIT, RANGE-II, SURAT

What did the Tribunal hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

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