TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 949
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.... assessee furnished the details. 2.1 During the scrutiny proceedings, on perusal of P & L Account, the AO noticed that under the head Administrative and selling Expenses, assessee claimed 'commission expenses' of Rs. 2,74,76,118/-. The AR of the assessee was asked to submit the details of the name of the persons to whom commission is paid, their address, PAN No. and amount of commission paid to each of them. In response to this, the AR of the assessee submitted the details of commission paid to various persons along with their addresses. On verification of details, the AO noticed that during the f. Y. 2015-16 assessee paid commission to the below mentioned persons: a) Sri. Ashish Bharat Shah b) Sri. Borule Narsing Tulsiram c) Ms. Deepa Rathi d) Sri. Java Prakash K e) Lalith Kumar Rathi, HUF f) Manivanan g) Megtlraj h) Renuka polymersm m) Santhosh Genu Mardhekar j) Sachin Prakash Trivedi k) Sandip Sharma I) Sangamesh B i) S.N. suvitha 0) Srinivas p) subramanyam n) Sapthagiri polymers and Inks q) sudesh Kumar Mehta r) sumit Kabra s) Meenakshi Rathi t) Riddhi enterprises - Rajesh rathl: u) Shreeya International-Manish Rath 2.2. To ve....
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....e debtors were still not available and the AR of the assessee did not discharge the burden of proof to produce the commission agents with the information sought for. Further, he observed that the AR failed to provide details of services provided by parties to whom commission payments were made. In view of the above observations, he held that since the company has completly failed in discharging its burden in establishing the business expediency for payment of commission, disallowed the whole commission payments of Rs. 2,74,76,118/- incurred by the assessee. 3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A). 4. Before the CIT(A), the assessee, inter-alia, submitted that the appellant case selected for scrutiny only for the AY 2014-15 and in no year the disallowance of commission was made. In fact in some years the scrutiny selection was only for verification of commission expenditure. No addition of commission expenditure was made in earlier years because the expenditure was incurred absolutely for the purpose of business of appellant. The assessment so made is in violation of CBDT instructions No.20 of 2015 dated 29.12.2015 and 5 of 2016 dated 14....
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....in sustaining a part of the disallowance of commission expenditure instead of fully allowing the expenditure. 2) That the learned CIT(Appeals) erred in ignoring the fact that Appellant had submitted complete details of the Agents including their Permanent Account Number and full address and details of customers represented by Agents and further the payments to agents were made by account payee cheques and TDS was also deducted and in such circumstances no disallowance should have been made. 3) That the commission expenditure was incurred wholly and necessarily for the purpose of Business and the services of Agents are vital for the Business of Appellant as there are thousands of customers and Agent is a vital link between customers and Appellant. 4) That the learned CIT(Appeals) erred in not considering the contention of Appellant that addition of Commission expenditure is against rule of consistency as every year commission was being paid and appellant case was selected for scrutiny but no disallowance of commission expenditure was made. 5) That the scrutiny assessment made is invalid as it was made in violation of Board Instruction on Limited Scrutiny and the learned CIT(....
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....fore submits that the Commission expenditure was incurred wholly and necessarily for Business and Appellant humbly prays the Honorable Tribunal to allow the claim of commission expenditure in full. 9. Another important aspect of the case is that the assessment so made is in violation of CBDT instructions regarding limited scrutiny. The Appellant's case was selected for limited scrutiny vide Notice issued u/s. 143(2) dated 18.03.2016 (paper Book page 33). The six issues for which Scrutiny was taken was communicated vide Notice issued u/s 142(1) dated 15.02.2017 (Paper Book at Page 34). 10. The Appellant vide letter dated 20.03.2017 (Paper Book page 35) submitted its clarification on each of the six issues. With reference to the issue of large commission expenses and low net profit Appellant explained due to high depreciation expenditure the profit was low and the low profit cannot be attributed to commission expenditure. In fact there was increase in Profit before Depreciation by 480/0. A chart of commission expenditure and net profit for asst. years 2014-15 & 2015-16 is enclosed in Paper Book at Page 212. Thus so far low net profit was concerned it was not relatable to comm....
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....in regard to the existence of the recipients. He further submitted that Ld. CIT (A) has deleted the addition only on the basis of return filed by the agents without examining as to whether the agents have rendered any services or not 9. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. On perusal of the paper books filed by the assessee containing page no. 01 to 294 and written submissions, it has been observed that the commission is being paid regularly and scrutiny assessment was also made for the previous years. The assessee has enclosed assessment orders from AY 10-11 to 13-14. The details of commission paid to the agents has also been filed from the AY 10-11 to 14-15 . There is no dispute that the commission has been paid every year and no disallowance was made on this count. Facts for the impugned AY are the same to that of earlier AYs but, only there is a change in the names of the recipients. We find substance in submissions of the ld. AR that the principle of consistency should be followed. In support of our decision, we rely on the decision of co-ordinate bench of Mumbai ITAT in the case....
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....0 (MP)]; Foss Electric 263 ITR 125] and Distributors of Baroda [118 ITR 243]. The Hon'ble Delhi High Court in CWT v. Meattles (P.) Ltd. 156 ITR 569 has held that the revenue authorities cannot be stopped from taking a view of statutory provisions in the later year. Contention of the appellant is therefore not acceptable 5.1 We have carefully heard the rival contentions and perused relevant material on record including judicial pronouncements as cited before us. The prime contention of the assessee revolves around the rule of consistency. It has been submitted that the assessee has been granted exemption u/s. 11 since AY 2005-06 and the activities & manner of functioning including expenditure incurred by the assessee Trust are on similar pattern and the same has been accepted by the revenue over several years in scrutiny assessments u/s. 143(3). The Ld. DR has controverted the same by submitting that the principle of res-judicata do not apply to Income Tax proceedings and each year is independent unit of assessment and therefore, the rule of consistency could not absolve the assessee to justify his claim in the impugned AY. Nevertheless, we find that the fact that the assessee....
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....ally adopt an earlier pronouncement of the law or a conclusion of fact unless there is a new ground urged or a material change in the factual position. The reason why courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of the theory of precedent or the precedential value of the earlier pronouncement. Where facts and law in a subsequent assessment year are the same, no authority whether quasi judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision of where the earlier decision is per incuriam. However, these are fetters only on a coordinate Bench which, failing the possibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter to a Bench of superior strength or in some cases to a Bench of superior jurisdiction." (Emphasis Supplied) 9. The principle accepted by the Revenue for 10 earlier years and 4 subsequent years to the Assessment Years 2007-08 and 2008-09 was that the entire expenditure ....