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Income Tax Appellate Tribunal, DELHI BENCH “SMC” NEW DELHI
Before: SHRI B.P. JAIN
PER B.P. JAIN, ACCOUNTANT MEMBER:
This appeal of the assessee arises from the order of ld. CIT(A)-12, New Delhi vide order dated 30.11.2015 for the A.Y. 2010-11. The assessee has raised the following grounds of appeal:-
1. That on the facts and circumstances of the case and in law, the learned CIT(A) has erred by upholding decision of assessing officer and disallowing commission expenses of Rs. 13,15,522/- despite providing all the evidences/details in respect of the expenses and as such the addition of Rs. 13,15,522/- may please be deleted.
2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in making upholding addition of Rs. 2,42,103/- in respect of Rebate and Discount given to M/s Vaishno India as quantity discount out of business expediency and as such the same may please be deleted.
3. That the Appellant craves leave to add or alter any or all grounds of appeal before or at the time of hearing of the appeal.”
2. The brief facts of the case are that the assessee has claimed a sum of Rs. 13,15,522/- as commission expenses in the profit and loss account. The assessee submitted vide letter dated 18.1.2013 confirmations form parties to whom commission was paid. The assessee also submitted income tax particulars, bank statements of such persons to substantiate his claim. The Assessing Officer observed that itself are accommodation entries and accordingly issued notice u/s 133(6) to all the said six parties. The assessee was requested to produce following persons to whom commission expenses were paid. i. Sh. Kishan Chander U-75, Mangol Puri, Delhi 83 ii. M/s Kishan Chander HUF, U-75, Mangol Puri, Delhi-83
iii. M/s. Subodh Kumar Sharma, HUF, 1/10374B, Street No. 31, West Gorakhpur, Shahdra, Delhi -32
The Assessing Officer in the case of Subodh Kumar examined him and he was not satisfied with the answers given in the statements. As regards the Kishan Chander who could not appear but was represented by his counsel who in fact submitted all the details. As regards the personal appearance, the Assessing Officer was asked to send the notice as per the law. The Assessing Officer pointed out the defects in respect of the said parties which in fact were explained by the assessee. However not being satisfied with the explanation of the assessee the Assessing Officer disallowed the commission amounting to Rs. 13,15,522/- paid to the said parties and added to the income of the assessee.
The ld. CIT (A) confirmed the action of the Assessing Officer.
I have heard the rival contentions and perused the facts of the case. The undisputed facts in the present case are that the assessee has filed the confirmations of commission paid to the various parties along with their income tax particulars and bank statements. Here itself the assessee Page 3 of 7 is said to have discharged his burden since the assessee has given income tax particulars and the bank statement and confirmation. The identity, creditworthiness and genuineness of the transactions is proved. As regards the personal appearance, the party produced was Subodh Kumar Sharma who has been given answers to all questions of A.O., but the A.O. was not satisfied with the said answers. The statement so given to the Assessing Officer does not prove that commission payment becomes accommodation entries. In any case all the queries were explained by the assessee to the Assessing Officer vide letter dated 21.3.2013. Similarly in the case of Sh. Kishan Chander the parties were represented by his counsel who submitted all the explanation to the Assessing Officer. As regards, the personal appearance, the assessee submitted that the party is not under his control and therefore the action under the income tax act may be taken. The purpose of the commission payment was explained as liaison work. Therefore in the circumstances and facts of the case assessee has established the identity, creditworthiness and genuineness of transaction and therefore the Assessing Officer is not justified in making any disallowance and any disallowance so made is directed to be deleted. Thus ground no. 1 is allowed.
As regards the ground no. 2 the Assessing Officer amongst other rebate and discount disallowed, the rebate and discount given to M/s. Vaishno (India) Ltd. amounting to Rs. 2,42,103/- was confirmed by the ld. CIT for the reason that the assessee failed to justify the basis of the rebate and discount.
I have heard the rival contentions and perused the facts of the case. The very basis for which discount given was not allowed was that assessee failed to justify the basis of rebate and discount to M/s. Vaishno (India) Ltd. which in fact has been explained by the assessee that such discount was a quantity discount which is normally given to the party after achieving the sales of certain quantity exceeding 1 lac kg. in a year in the present case. This is a sufficient explanation for which I am satisfied and on this account no addition is called for by the Assessing Officer and any additions so made on this account is directed to be deleted and accordingly ground no. 2 of the assessee is allowed.
In the result, the appeal of the assessee in is allowed.
Pronounced in the open court on 28.03.2017.