Blue Bird Technicks Pvt. Ltd. Vs DCIT (ITAT Kolkata)
Commission Not Bogus When Payee Exists & Taxed: ITAT Deletes ₹51.37 Lakh Disallowance
The appeal before the Income Tax Appellate Tribunal, Kolkata Bench, related to Assessment Year 2015–16 and arose from an order passed by the Addl./JCIT(A)-12, Mumbai, confirming a disallowance made by the Assessing Officer (AO). The assessee was engaged in the business of supplying telecom and signal parts to Indian Railways and had declared a total income of ₹70,01,266 for the relevant year..
During the assessment proceedings, the AO disallowed a sum of ₹51,37,428 paid as commission to a third-party company, treating the payment as bogus. According to the assessee, the actual commission paid amounted to ₹57,72,416, and the difference between this figure and the disallowed amount represented service tax and tax deducted at source (TDS). The assessee produced confirmation of accounts from the commission recipient, reflecting the commission, service tax, and TDS components..
The AO’s disallowance was primarily based on two factors: an Inspector’s report stating that the commission agent was not found at the given address, and a response to a notice issued under section 133(6), where one individual allegedly stated that he was unaware of the transactions. The assessee contended that the Inspector’s report was never furnished to it and challenged the reliance placed on statements made by a person who was not a director of the commission agent company. To substantiate the genuineness of the commission recipient, the assessee placed on record the income tax return acknowledgment of the commission agent for the same assessment year, showing declared income and a substantial refund claim, along with company master data evidencing its incorporation, active status, and statutory compliances.
