Rahul Kheria Vs ITO (ITAT Kolkata)
The commission claimed to have been paid to under section 133(6) to M/s Jessop and Co and we note that the said Jessop replied to the notice. The AO however doubted the reply by Jessop on the ground it was a reputed company so the logo in the letter-head should have been in different colors etc which action of AO cannot be countenanced. We note that the AO has disallowed the commission simply on surmises without bringing any evidence on record to the contrary but on presumption that the Jessop companies building was in dilapidated condition etc or that the telephone made by the AO was not picked up by the employee of Jessop Co. Ltd cannot be a ground for disallowing the commission. Furthermore, we note that the parties to whom commission was paid were not relatives of the assessee. There is no evidence that the commission paid has come back to the assessee. Our attention was drawn to the following cases wherein it has been held that if there is no evidence to show that the agents were relatives of the assessee and that the commission paid has not come back to the assessee, then it cannot be said that the commission paid was not genuine.
FULL TEXT OF THE ITAT JUDGMENT
This appeal preferred by the assessee is against the order of Ld. CIT(A)-13, Kolkata dated 01.08.2016 for AY 2012-13.
2. Though the assessee has raised as many as five grounds of appeal but the sole issue involved in this appeal of assessee is against the action of Ld. CIT(A) in confirming the addition made by the AO on account of commission/service charges.
3. Briefly stated facts are that the assessee is engaged in trading of cotton and iron and steel through the business venture named as M/s. Sharp International and M/s. Peacon International respectively. Both these business units are proprietorship concern of the assessee. In respect of commission expenses claimed in the accounts of M/s. Sharp International, the assessee disclosed gross sales of Rs.10,25,08,000/-. From the list of parties to whom goods were sold and as furnished by assessee, the AO found that the sale was made to only three parties. Rs.10,19,91,795/- worth of cotton was exported to a party in Hong Kong, namely- M/s. Sunhing Lee Textiles Ltd. and fabrics worth Rs.5,16,200/-was sold to two Indian parties, namely- M/s. Parlwar (sale amount being Rs.4,66,313/-) and M/s. Metro Enterprises (sale amount being Rs.49,892/-). Among the various expenses incurred and claimed as deduction included in the profit & loss accounts was Rs.30,06,163/- towards commission. The assessee was first asked by notice u/s 142(1) of the Act issued on 11/11/2014 to furnish among other details and documents, the following in respect of the commission expenses-
“Names and complete postal addresses of the agents / brokers to whom commission paid. Please state the purpose of paying such commission in detail. If the said commission was paid for procuring sale contracts then furnish confirmation from the parties to whom goods sold who will certify that the goods were purchased by them only due to the services provided by the said agents / brokers. Also furnish evidence in support of deduction and deposit of TDS on commission. Please note that failure to furnish any of these details and documents shall be considered as insufficient evidence and render disallowance of commission charges from total income. “
According to AO on 24.02.2015 the AR appeared and claimed payment of commission to five parties as under:
