AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 748
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..... 2. The assessee had filed its return for assessment year (AY) 2006-07, declaring an income of Rs. 28,56,87,073/- on 05.12.2006. On 19.12.2008, in answer to queries made by the AO, the assessee furnished the statement showing the FOB Value of exports to the parties where Agency Commission was payable, along with an up to date statement of commission showing commission paid/payable during the AY 06-07 in respect of exports made. The outstanding commission payable continued to be shown as a liability in its books of account. The details of the statement clearly shows that out of seven commission agents, payments were made for Rs. 7,52,783.52/- and the assessee had claimed the commission due as being Rs. 1577070.55/-. The AO felt that no pru....
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....ona fide belief that the AO had only asked for details of major expenses exceeding Rs. 5 lakhs. Though, there is a clear requirement of commissions paid and received vide Para 20 of the questionnaire dated 12.02.2008, the AO did not give any specific reminder to the appellant to the effect that details relating to commission payment below Rs. 5 lakhs were not filed. Therefore, there was some communication gap between the AO and the assessee company in so far as filling details of Rs. 10,28,957/- was concerned. The CIT(A) noted that the assessee company had made an aggregate payment of Rs. 7,08,59,575/- and all requisite details were duly made available to the AO but for the details of commission of Rs. 10,28,957/-,which is only 1.45% of the....
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....ad furnished copies of letters written by the assessee to its bankers for release of remittance of commission amount to the agents. Those letters clearly suggested that the assessee had to declare not only the appointment of agents, export of goods with his assistance, but it also has to declare the fact that it has received and realized the sales proceeds. It was only thereafter that banks released the payment(s) of commission. Thus, the payment of commission was not left to the sweet will or discretion of the assessee; it was to be paid after satisfaction/fulfillment of stringent conditions laid down by the Reserve Bank of India; commission payments were to made only after realization of export sales proceeds. The CIT(A) also agreed with ....
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....yment in connection with any transactions pertaining to Iraq during the year under consideration. Further, the AO had conveniently ignored the fact that Saddam Hussain was removed as president of Iraq and was jailed in April, 2003 and therefore there was no basis for using the findings of Volcker Committee for disallowing the assessee's claim for the assessment year under consideration. 7. As regards addition of Rs. 2,10,00,000/- the CIT(A) was of the view that the AIR information showing cash deposits of Rs. 2,10,00,000/- on 28 occasions by the assessee in the Lord Krishna Bank, New Delhi did not appear to be correct. The assessee had made cash deposits of only Rs. 1,05,00,000/- (Rs.52,50,000/- on 7 occasions in CP and Rs. 52,50,000/- on ....
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....nts entered into with the agents, who were paid commission, there was no other material to support the expenditure claimed. Counsel submitted that without a correlation to the nature of service provided, by the commission, the needle of suspicion that the amounts were slush money, as was suggested in the Volker Committee Report, could not be ruled out. Similarly, with respect to the cash deposits, counsel highlighted that the ITAT fell into error, because there was no sufficient co-relation between the amounts withdrawn. 10. It is seen from the above discussion that the additions made by the AO were on two counts: commission expenditure and deposits. The first was disallowed, because, in the AO's opinion, apart from producing copies of agr....