SHANTILAL JAIN,MUMBAI vs. ITO 19 (3)(3), MUMBAI

PER RAJESH KUMAR, ACCOUNTANT MEMBER

(Shantilal Jain) 3. Facts of the case in brief are that assessee filed his return of income on 30/09/2013 declaring total income of Rs. 16,94,680/- which was processed u/s. 143(1) of the Act. Thereafter, case of the assessee was selected for scrutiny under CASS and statutory notices were duly issued and served on the assessee. The assessee is a proprietor of M/s. Surya Impex carrying on business of stainless steel utensils, household products and appliances during the year. The assessee has debited commission of Rs.17,55,023/- to the Profit & Loss account. Accordingly, the AO called upon the assessee to furnish the details of commission paid along with the names and addresses of the recipients.

Accordingly, the assessee has filed the details before the AO. The AO on perusal of the said details found that commission agents included inter alia Shri Nitesh J. Jain and Shri Jitesh J. Jain to whom the assessee has paid Rs. 1,68,018/- and Rs.1,71,036/- respectively as commission. Accordingly, summons u/s. 131 were issued to both the parties. The AO disallowed the commission paid after recorded their statements in which those parties could not give specific reply and finally the AO concluded that the said commission is bogus and not genuine, however, the AO noted that the said persons have disclosed the commission receipts from the assessee in their returns of income. The assessee has made the (Shantilal Jain) payments by cheque and the commission was remitted to those parties after deducting TDS at source. According to the AO, the commission is not genuine as the parties/recipients could not provide the nature of services rendered by them to the assessee.

The assessee also could not furnish the details of services rendered or details of suppliers introduced to the assessee by these two persons and finally disallowance of Rs.3,39,054/- was made and added to the income of the assessee.

(Shantilal Jain) the lower authorities did not agree with the contentions of the assessee on the ground that the said recipients were not having knowledge and could not give satisfactory answer to the queries put during the course of recording their statements u/s.131 of the Act. In our view, the expenses claimed by the assessee as commission, cannot be disallowed merely because details of suppliers introduced could not be provided whereas assessee has duly deducted TDS on the said payments and the payments were made by cheques. The correspondingly commission amounts were shown as income by the two persons. Under these facts and circumstances, we are not in agreement with the ld.CIT(A) that commission is bogus and not genuine. The AO has also not brought anything on record to show that money has come back to the assessee after paying to the recipients. Under these circumstances, we set aside the order of the ld.CIT(A) and direct the AO to delete the addition. Thus, this appeal filed by the assessee is allowed.