TaxTMI 
TaxTMI 
2010 (2) TMI 754
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....nd some agents for inland and international destinations. The assessee has Head Office in Mumbai and nine branches situated in different parts of the country. A search and seizure operation was carried out under section 132 of the Act on 01.11.1999 and this was concluded on 02.11.1999. The assessment before us pertains to the period subsequent to the date of search. The orders were passed under section 143(3). In the A.Y. 2000-01 the assessee filed a return of income on 30.11.2000 declaring the total income of Rs.93,20,056/-. The A.O. disallowed the claim of the assessee pertaining to commission payment by adopting reasons followed by him in the block assessment dated 29.11.2001 passed under section 158BC r.w.s 143(3) for the period 01.04.1989 to 01.11.1999. At para 5.2 to 5.4, the results of his investigation during the block assessment proceedings are brought out and as the facts are same, the claims of commission payment were disallowed. Similarly for A.Y. 2000-01 a disallowance or Rs.1,75,000/- was made on the ground that the payment in question was opposed to public policy. Aggrieved, the assessee carried the matter in appeal. The first appellate authority referred to the orde....
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....ecords whatsoever in relation to the so-called parties introduced by them. iii) There was a contradiction between the version of the assessee company and the so-called commission agents in so far as the issue of credit notes was concerned. While the assessee company has stated that credit notes had been issued the recipients denied receipt thereof. iv) The deposit of commission in the bank account was followed immediately by a cash withdrawal or issue of cheques. In spite of a specific query on this account, no explanation was submitted by any of the parties which indicates the culpable nature of the transaction. v) The alleged commission agents have "acted" as a recipient of commission because it did not incur any tax liability upon it. The returned income filed by the alleged commission agents have been few thousands of rupees whereas, the assessee company could save huge taxes on this account. vi) Credit notes are shown to have been issued by the assessee on the last date of the accounting year whereas, payments are made after more than 9 months or so. It is improbable that a party who has actually rendered services did not approach a person for p....
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....er markets where a payment for commission is made after the amounts are realized and after the accounting year is over, in the appellant's trade also the same procedure is followed. Thus the appellant is required to make a provision on accrual basis for payment of commission for the entire year and the working for the same is made in one instalment after the accounting year is over." 7. Parties to whom commission has been paid and which are involved in these two assessment years are: (i) Sanjay Finance and Trading Co., (ii) Chandan Synthetic Pvt. Ltd. and Shantketan Films Distributors Pvt. Ltd. 8. The assessee also furnished details relating to commission payments year-wise for all the previous years alongwith the date of payment, cheque numbers and the name of the bank. Income tax particulars and the names of the Directors and Partners were also furnished. Copy of credit notes and copy of sub-agency agreements were also furnished. The parties to whom payments were made had submitted the following details during the course of assessment of assessee for A.Y. 1998-99: (i) confirmation of commission income, (ii) Stamped receipts, (iii) copy of bank statement reflecting....
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....the assessment order. The remaining commission of Rs.86,32,474/- pertains to the Accounting Year 1998-99 relevant to AY 1999-00 (upto the date of search 1-11-1999). It is noticed that during the course of assessment proceedings, the 5 parties to whom the commission of Rs.220.86 lakhs was paid were called and examined by the AO. They are regularly assessed to income tax. They have confirmed the receipt of commission and produced requisite papers before the AO and they have also produced evidence to render services in view of the commission received. None of these 5 parties denied the non receipt of commission. None of them have admitted that there is a cash payment from them to the appellant company. All the 5 parties have produced the bank statement. They have rendered the services to the appellant regularly and commission is being paid to them since accounting year 1992-93. It is further noticed that the appellant has not only paid commission to these 5 parties but had also paid commission to other sub-agents which have been treated as genuine. Thus, these 5 parties have confirmed the receipt of commission, produced stamped receipts, copy of the bank statements and also copy of th....