ALOK ARYA,KOLKATA vs. I.T.O., WARD - 37(4), , KOLKATA

ITA 1757/KOL/2024Status: DisposedITAT Kolkata25 March 2025AY 2013-20145 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the commission paid, which was subjected to TDS and made through banking channels, could not be doubted merely because summons under Section 131 or notices under Section 133(6) were not complied with. The Tribunal noted that commission payment is a regular phenomenon in the medical business, and the assessee had provided invoices for commission payments specifying sales and orders procured. The Tribunal observed that the commission paid in the current year was in proportion to the higher commission/discount received from suppliers. The Tribunal found that the assessee had been regularly paying commission from the beginning of the business and in subsequent years, and the genuineness of the transactions could not be doubted when all evidence was filed before the authorities. Therefore, the Tribunal set aside the appellate order and directed the AO to delete the addition.

What were the facts?

The assessee, Alok Arya, engaged in trading medical goods and equipment, filed a return for AY 2013-14 disclosing an income of ₹12,24,580. The case was selected for scrutiny. The Assessing Officer (AO) noted a significant increase in commission expenses from ₹66,69,135 in AY 2012-13 to ₹1,34,82,460 in AY 2013-14, while turnover increased marginally. The assessee explained this by stating higher commission/discount received from suppliers (₹137.55 lacs vs ₹76.25 lacs) was passed on to parties for procuring orders and timely realization of dues. The AO, unconvinced, issued summons under Section 131 to commission recipients, who did not appear. The AO disallowed ₹67,98,098 of commission expenses. The National Faceless Appeal Centre (NFAC), Delhi, affirmed the AO's order and enhanced the income by ₹66,84,362, deeming the commission expenses bogus due to non-compliance with summons and notices under Section 133(6).

What were the issues?

1. Whether the Tribunal had to decide on the addition made by the AO and enhanced by the CIT(A) on account of bogus commission expenses amounting to ₹67,98,098, and further enhanced by ₹66,84,362, respectively, for AY 2013-14, turning on Section 37(1) of the Income Tax Act, 1961. Assessee's contentions: The commission payments were genuine business expenses incurred for procuring orders and timely realization of dues, a regular phenomenon in the medical business. The increased commission was due to higher discounts/commissions received from suppliers. Payments were made through banking channels and subjected to TDS. The genuineness of transactions should not be doubted solely due to non-compliance with summons or notices under Section 133(6). Revenue's contentions: The commission expenses were bogus as the parties to whom commission was paid did not appear in response to summons issued under Section 131 of the Act, and notices under Section 133(6) were not complied with, as held by the CIT(A).

Which sections of the Income-tax Act were involved?

Section 37(1),Section 143(1),Section 143(2),Section 142(1),Section 131,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Shri Manish Tiwari, AR
For Respondent: Shri Subhro Das, DR
Hearing: 13.02.2025Pronounced: 25.03.2025

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 21.06.2024 for the AY 2013-14. 02. The issue raised in ground no.1 is general in nature and does not require any specific adjudication.

03.

The issue raised in ground Nos.2,3 and 4 is against the order of Id. AO confirming the addition on account of bogus commission expenses amounting to %67,98,098/- and further enhancing the income by %66,84,362/- on account of bogus commission expenses.

04.

Alok Arya; A.Y. 2013-14

The facts in brief are that the assess

The order continues below.

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