2017 (6) TMI 581

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.... assessee as well as shared the responsibility of guarantee payments and supply of goods. The Assessing Officer issued summons to brokers out of which five brokers appeared and confirmed having received the commission of 3%. One Shri Pankaj Somani stated to have earned 1% commission and Ashma Shah stated that she did not remember having done any business with the assessee-firm. The Assessing Officer proposed to disallow part of the commission. The assessee relied on AY 2007-08 where the ld. Assessing Officer restricted the commission to 1% by following observations:- "4.11 As regards the assessee's AR's plea that it is not the responsibility of assessee to see that broker to whom summons are issued also attend the office, the prim....

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.... it is to be mentioned here that disclosure of higher rate of G.P would not justify the brokerage payment because the payment of brokerage has no nexus with gross profit margin. Having regard to all these facts of the case, I hereby consider the brokerage payment at 1% as reasonable. Therefore, brokerage payment in excess of 1% paid to above mentioned parties amounting co Rs. 19,33,655/- is disallowed and added back to the total income of the assessee. Penalty proceedings U/s.271(1)(c) of the Act are separately initiated on this issue." 3. Aggrieved, the assessee preferred first appeal where ld. CIT(A) considered various facts and gave findings of fact that...... (i) The facts of this year are clearly distinguishable from AY 2007-08; (i....