2023 (3) TMI 43

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....ppeal. It be so held now. 3. Ld. CIT(A) ought to have considered that appellant paid commission for backward integration to execute customer's requirement in timely and efficient manner and appellant chose to pay commission instead of service charges/labour charges. Ld. CIT(A) ought to have considered the submission of the appellant and allow the commission expenses. It be so held now. 4. Without prejudice to the above and in alternative, ld. CIT(A) ought to have allowed commission expenses as payee has already offered the same as income in his return of income and disallowance of commission income in case of assessee would lead to double taxation which is against the principle of natural justice. It be so held now. 5. Charging of interest u/s 234B and 234C of the Act. 6. The order passed in illegal and without observing principle of natural justice and required to be quashed. It be so held now and addition/disallowance required to be deleted. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal." 2. Brief facts of the cas....

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....M/s Shah Industrial Products (proprietorship of assessee). M/s Trimurti Polymers not turned up despite service of summons. The Assessing Officer further recorded that summons were issued to Shri Chintan K Shah (brother of assessee), his statement was recorded under Section 131 of the Act. In the statement, Shri Chintan K Shah stated that he is doing the same business in the name of proprietorship firm namely M/s Shreeji traders. He has no technical qualification, knowledge or experience for installation, monitoring or site execution of firefighting equipment. He has not rendered any type of service. On the basis of his statement, the Assessing Officer was of the view that the services of which commission was paid, required some experience and technical education, which the commission agent does not possess. The assessee in his submission, explained that the commission was paid on the sales. Kalpena Industries denied the role of Shri Chintan K Shah for any transaction. Sh. Chintan K Shah was asked to produce the bills; vouchers or travel details to substantiate the genuineness of rendering his services but he failed to produce despite giving time to produce the same. On the basis of....

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..... Aggrieved by the additions/disallowances of commission payment, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee filed detailed written submissions. The submission of assessee is recorded in para 3.2 at page No. 6 to 14 of order of ld. CIT(A). In the submission, the assessee stated that during the period under consideration, the assessee paid commission of Rs. 8,62,403/- to Sh. Chintan K Shah and Kishore K Shah for rendering services in relation to execution, facilitation and timely completion of sales transaction by assessee. The Assessing Officer disallowed such commission payment by observing that no services were rendered by these persons. The Assessing Officer also noted that he issued notice under Section 133(6) of the Act to various vendors of the assessee to enquire the genuineness of commission. The assesse enquired from the vendors, they informed that all of them has replied to Assessing Officer in response to notice under Section 133(6) of the Act. The Assessing Officer noted that the vendors has given information to whom that they do not know either Sh. Chintan K Shah or Sh. Kishore K Shah, on such observation, the Assessing Officer....

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....uded by Assessing Officer disproved the claim of assessee. Various case laws relied by assessee are not applicable on the specific facts of the present case and accordingly confirmed the additions/disallowances. Further aggrieved, the assessee has filed the present appeal before the Tribunal. 8. I have heard the submissions of the learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue and have perused the orders of the lower authorities carefully. The ld. AR of the assessee submits that during the year under consideration, the assessee paid aggregate commission of Rs. 8,62,403/- to Sh. Chintan K Shan and Sh. Kishore K Shah for rendering services in relation to execution, facilitation and timely completion of sale transaction done by assessee. The Assessing Officer disallowed commission payment by taking a view that no services were rendered by the recipient of commission. The Assessing Officer investigated the facts from vendor's party to enquiry about the genuineness of commission expenses. The Assessing officer recorded that the vendors have given information to him that they do not know either....

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....for allowance of entire commission expenses as genuine business expenses. To support his submission, the ld. AR of the assessee relied on the following case laws: (i) ITA No. 2312/Ahd/2011 ITO Vs Shri Sandip Kirtibhai Patel order dated 23/08/2013. (ii) CIT Vs Sandip Kirtibhai Patel (2015) 53 taxmann.com 162 (Gujarat). (iii) CIT Vs Gautam Creations (P) Ltd. (2008) 171 Taxman 271 (Delhi) (iv) Voltamp Transformers (P) Ltd. Vs CIT (1981) 5 Taxman 253 (Gujarat) (v) ITA No. 2539/Ahd/2017 Seahorse Pharma P Ltd. Vs ITO order dated 21/05/2020. 9. On the other hand, the ld. Sr. DR for the revenue supported the orders of lower authorities. The ld. Sr. DR for the revenue submits that in para 5.2 of the assessment order, the Assessing Officer clearly recorded that in response to notice issued under Section 133(6) of the Act, M/s Kalpana Industries vide their reply dated 24/11/2016 stated that there was no role of Sh. Chintan K Shah regarding purchases from Shah Industrial products. Similarly Sumitomo Chemicals vide reply dated 21/11/2016 also stated that there is no role of Kishore K Shah on purchases made from Shah Industrial products. Shri Shash....