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Income Tax Appellate Tribunal, BENCH “SMC”, KOLKATA
Before: Hon’ble Shri N.V.Vasudevan, JM]
This is an appeal by the assessee against the order dated 17.02.2013 of CIT(A)-XXXVI, Kolkata relating to A.Y.2006-07.
The Assessee is an individual. He carries on business of trading in electrical goods. In the course of assessment proceedings AO found that he paid commission to two parties namely Smt. Darshana Kachalia and Smt. Kajal Kachalia of Rs.2,95,000/- each. AO wanted to examine the recipients of the commission. On 19.11.2008, the recipients of the commission were examined by the AO on oath. AO found that both recipients of the commission were housewives and were in no way involved in procuring contracts for the assessee. Since no services were proved who have rendered for which commission was paid by the assessee, the AO disallowed a sum of Rs.5,90,000/- and added the same to the total income of the assessee.
2.1. Aggrieved by the aforesaid order of the AO assessee preferred appeal before CIT(A). In the course of appellate proceedings CIT(A) noticed that apart from commission paid to Smt. Darshana Kachalia and Smt. Kajal Kachalia of Rs.2,95,000/- each the assessee had also paid commission of Rs.2,95,000/- to one
Poonam Kachalia. A.Yr.2006-07 Hitesh kachalia and Rs.8,00,000/- to Popuri Marketing Services. CIT(A) was of the view that even the commission in respect of the aforesaid two parties ought to have been disallowed by the AO as was done in respect of commission paid to Smt. Darshana Kachalia and Kajal Kachalia. CIT(A) accordingly issued an enhancement notice u/s 251(1) of the Act for disallowing commission of Rs.2,95,000/-.
2.2. The assessee in proceedings before CIT(A) wanted to withdraw the appeal challenging the disallowance of commission paid to Smt. Darshana Kachalia and Smt. Kajal Kachalia. CIT(A) issued a show cause notice u/s 251(1) of the Act and to the said show cause notice the assessee had not sent any reply. In the circumstances CIT(A) confirmed the order of AO with regard to the commission disallowed by the AOand also further disallowed commission paid to Hitesh Kachalia and Popuri Marketing Services.
Aggrieved by the order of CIT(A) assessee is in appeal before the Tribunal.
The limited plea of the learned counsel for the assessee was that AO considered the books of account and supporting details and vouchers provided in the course of assessment proceedings and thereafter completed the assessment. AO has also gone into the question with regard to the commission paid by the assessee in the course of his business. The AO did not think it fit to disallow the commission paid to Hitesh Kachalia and Popuri Marketing Services. The CIT(A) without any further evidence and without any examination of the concerned parties came to the conclusion that the commission paid to the aforesaid two parties namely Hitesh Kachalia and Popuri Marketing Services cannot be allowed as he failed to prove the services rendered by those two parties. He prayed for one more opportunity of providing the aforesaid parties before the AO for examination and to prove that the commission was paid to the aforesaid two parties for the services rendered.
The learned DR relied on the order of AO.
Poonam Kachalia. A.Yr.2006-07 6. After considering the rival submissions I am of the view that the plea made by the learned counsel for the assessee is justified and deserves acceptance. As rightly pointed out by him that the CIT(A) could have called for remand report from the AO directing the AO to examine Hitesh Kakalia and Popuri Marketing Services to find out as to whether services were rendered by these two parties without such examination. In this regard I also notice that proceedings before CIT(A) assessee sought to withdraw challenge to the disallowance of commission paid to Smt. Darshana Kachalia and Smt. Kajal Kachalia. Thus in these circumstances the assessee could not produce Hitesh Kakalia and Popuri Marketing Services for examination of the AO. In my view in the interest of justice, the assessee should be afforded an opportunity to establish his case. Accordingly, I set aside the order of the CIT(A), in so far as it relates to disallowances of commission paid to Hitesh Kakalia and Popuri Marketing Services are concerned. The assessee has to establish his case before AO by providing proper evidence.
In the result the appeal of assessee is allowed for statistical purposes. Order pronounced in the court on 15.01.2016.