TaxTMI 
TaxTMI 
2023 (9) TMI 1317
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....he case, the ld. CIT(A) erred in deleting the addition of sundry creditors of Rs. 14,53,200/-." 2. The assessee has raised the following grounds of appeal: "i. That ld. Commissioner of Income Tax (Appeals)-10, [CIT(A)] has erred in law and on the facts in not allowing fully the addition of Rs. 2,23,33,949/- as alleged bogus purchase made by AO. ii. That the ld. CIT(A) has likewise further erred in confirming the said addition to the extent of Rs. 33,50,092/- being 15% of Rs. 2,23,33,949/-. iii. That ld. CIT(A) has likewise further erred in not allowing full relief of Rs. 14,53,200/- as alleged unproved purchase by confirming Rs. 2,17,980/- being 15% of said sum of Rs. 14,53,200/-. iv. That appellant craves leave to add, to amend or withdraw to any ground on or before the hearing of the appeal." 3. Brief facts of the case are that the assessee filed its return of income of Rs. 4,36,110/-. The return of income filed by the assessee was assessed by the AO at Rs. 2,51,62,090/-. During the assessment proceeding, the ld. AO notices that the assessee obtained different orders from different State Electricity Board which assessee has engaged agents....
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....o verify the authenticity of the alleged transaction of payment of commission by summoning the commission agent u/s 131 of the Act. Besides that assessee while making the payment to the commission agent was deducted tax from the agent as per the provisions of I.T. Act. In such a situation, the ld. AO cannot disallow such payments made to the agents. 9. We after hearing the rival submission of the parties and perusal of the material available on record. The specific issue involved in the instant appeal raised by the revenue is that ld. CIT(A) erred in law by allowing relief to the assessee by deleting the addition of Rs. 9,38,838/- whereby ld. CIT(A) has set aside the addition made by the ld. AO by making following observation: "1. I have carefully considered the action of the Ld. A.0 in making the impugned addition of Rs. 9,38,833/- by disallowing in entirety the claim of commission payments as made by the assessee. I find that the main reason as to why the Ld. A.O. has is believed the alleged payments as claimed to have been made to the commission agent is that the appellant was unable to produce the said agent before the Ld. A.O. It was the claim of the appellant befo....
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.... Pvt. Ltd. was Rs. 644,287/-. b. As to appearance of Sri Anil Majhi, A.O. said that She asked to produce him for verification. Though the Firm's A.R. does not remember as to such requirement of Ld. A.O., but in any case A.O. himself could have issued summons u/s. 131 or letter u/s. 133(6) as he did in case of above named two customers of the Firm. C. It is, therefore, humbly submitted that for the facts and under the circumstance at least Rs. 938,833/- paid to Sri Majhi as commission on sales to end Customer should not be sustained. d. As to sales made to M/s. Devi Ispat Pvt. Ltd., they confirmed the transaction but have stated that there was no middleman. In paragraph 1.4 A.O. has quoted the Firm's reply in this regard. It is again asserted that trading in iron material was very first attempt by the Firmn. As Sri Majhi was known he was asked to let the Firm know prospective buyers. Sri Majhi gave us name of Devi Ispat Pvt. Ltd. as possible buyer. He met them or not the Firm has no knowledge but when the firm approached they agreed to buy material. As Sri Majhi helped the Firm it was a moral duty to reward him by payment of commission on this deal....
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....ls including address of the buyers and the agents, details of payments etc. I also find that the judgment of the Hon'ble Jurisdictional High Court of Calcutta, in the case of C.I.T. Vs Alfa Hydronics Pvt Ltd, ITA No 549/2004 decided on 10th November, 2014, wherein it has been held that when there was nothing to show that the transaction of the payments of commission was not genuine or the commission was excessive or unreasonable, no disallowance can be made. Overall, from the facts and circumstances emanating in the case, and the judicial\decisions applicable, especially that of the Hon'ble Kolkata High Court I find that the Ld AO was not justified in making the impugned disallowance of Rs. 9,38, 833/ -, and therefore the same is therefore ordered to be deleted. The ground accordingly stands adjudicated as allowed in favour of the assessee-appellant." 10. We after going through the facts of the case noticed that while disallowing the claim of assessee, the ld. AO has not made any attention to verify the authenticity of the transaction by calling the commission agent, Shri Majhi by issuing summon u/s 131 of the Act. Similarly, we find that out of total payment made to the....