TaxTMI 
TaxTMI 
2021 (4) TMI 900
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....assessee derived income from purchase and export of carpets. The assessee filed its return of income on 26/09/2009 declaring total income of Rs. NIL. The case of the assessee was selected for scrutiny and finally the A.O. passed assessment order U/s 143(3) of the Income Tax Act, 1961 (in short, the Act) dated 27/12/2011 at a total loss of at Rs. 15,99,375/-. 4. Being aggrieved by the order of the A.O., assessee carried the matter before the ld. CIT(A), who after considering the submissions of both the parties as well as material placed on record, dismissed the appeal of the assessee. Against which, the assessee is in further appeal before the ITAT on the grounds mentioned above. 5. Ground No. 1 of the appeal raised by the assessee relates to challenging the order of the ld. CIT(A) in confirming the disallowance of commission payment of Rs. 3,00,000/-. The ld AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and relied on the written submissions filed before the Bench and the same is reproduced below: "In the case of Jaipur Gem Crafts which in a sister concern an addition of Rs. 900000/- on the same grounds as mentioned....
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....5.00 lacs paid on 31/12/2007 and Rs. 10.00 lacs paid on 05/05/2008 and total Rs. 15.00 lacs was paid by the assessee to the TCI. Since the commission of Rs. 15.00 lacs was paid for the period of 15 months and out of which only 12 months relates to the year under consideration i.e. A.Y. 2009-10 and remaining 3 months relates to the preceeding assessment year, therefore, the A.O. disallowed proportionate payment of Rs. 3,00,000/- for the period of 3 months which were falling in the preceeding assessment year and therefore added the same to the total income of the assessee. The said order of the A.O. was also confirmed by the ld. CIT(A) whereas as per the assessee it had submitted copy of agreement and vide letter dated 16/12/2011 it was categorically submitted by the assessee that the agreement entered into with TCI was a draft agreement and was not signed by both the parties. It was also submitted that the TDS was duly deducted and also filed confirmation letter of TCI wherein it was categorically stated that the entire amount of Rs. 15.00 lacs was for the F.Y. 2008-09 i.e. A.Y. 2009-10 but no further enquiries were carried out for the said confirmation of TCI. It was further submit....
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....rage on sales (Prepaid)", which again makes it clear that the said amount was paid in advance in FY 2007-08 and was hence treated as prepaid expense for that year and was not debited in the P&L account for AY 2008-09. Further, such practice has been followed by the assessee across several years as seen from such prepaid commission appearing in balance-sheets of various years. Also, it is not the case of the AO that such expenses are non-genuine or there is double claim of same amount in different years. Considering the facts, the disallowance of Rs. 9,00,000/- is unfounded and is hereby deleted." In this respect, the assessee had drawn our attention to the paper book filed by the assessee wherein copy of letter from TCI to ITO dated 24/09/2011 and 16/12/2011 has been placed on record. Apart from this, the assessee had also placed on record copy of order of ld. CIT(A) passed in the case of sister concern of the assessee namely M/s Jaipur Gems Crafts wherein under the identical circumstances, the additions were deleted. 8. Be that as it may, after considering the entirety of facts and circumstances of the present case, we found that while deciding this ground, the A.O. as well as....
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.... their own earnings. They were not men of means. The Learned CIT(A) arbitrarily assumed on surmises that whenever there was cash shortage in the books, the assessee used to deposit cash in these two persons account. No addition can be made on assumption. The assessee having turnover of Rs. 5145367/ -. As expenses by cheques what was the necessity to adopt such means. There used to be sufficient cash and bank balances. As and when need arise the assessee used to withdraw from the banks. Assessee will never adopt such illegal and unethical means. There was no shortage of cash. The CIT(A) before making such addition ought to have seen the cash book to find out that on the date of deposit of cash in these accounts was there any necessity to meet the expenses. As such without pointing out a single instance of this nature the addition is on presumption and surmises arbitrarily be deleted." 11. On the other hand, the ld. DR has relied on the orders passed by the revenue authorities. 12. We have considered the rival contentions and carefully perused the material available on record. From perusal of the record, we noticed that as per the A.O., on examination of the cash books of the a....