TaxTMI 
TaxTMI 
2026 (5) TMI 467
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....ted order for the sake of convenience. 2. Common facts are such that the assessee is an individual engaged in the business of export and trading of paper products through proprietary concern M/s Marisa International. For the relevant assessment years, the assessee had claimed deduction on account of foreign agency commission payable to M/s Shore Chem LLC, USA. The original assessments in earlier years were completed under section 143(3) accepting the returned income. Subsequently, based on information received during assessment proceedings for A.Y. 2010-11, the Assessing Officer initiated enquiries through CBDT with the US tax authorities under Article 28 of the DTAA between India and USA. 3. The information received from US authorities indicated that M/s Shore Chem LLC had neither rendered any services to the assessee nor had any income receivable from the assessee. Based on such information, the Assessing Officer formed a belief that the assessee had inflated its expenditure by way of commission payable and accordingly initiated reassessment proceedings under section 147 for earlier years and also made disallowances in A.Y. 2010-11. 4. In the reassessment orders passed u....
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....marily on account of failure of the assessee to establish genuineness of services and also in view of categorical denial by M/s Shore Chem LLC of rendering any services to the assessee. The CIT(A) thus confirmed the additions made by the Assessing Officer for all the years. 8. Year-wise details of the assessments are tabulated below for the ready reference : Particulars A.Y. 2007-08 A.Y. 2008-09 A.Y. 2009-10 A.Y. 2010-11 Return filed 30.07.2007 29.09.2008 29.09.2009 25.09.2010 Original Assessment 143(3) dated 06.11.2009 143(3) dated 22.12.2010 143(3) dated 25.11.2011 143(3) dated 22.03.2013 Assessed Income u/s 143(3) And read with section 147 Rs. 27,42,260/- Rs. 1,45,76,150/- Rs. 77,49,320/- Rs. 2,52,47,097/- Rs. 81,52,650/- Rs. 1,84,62,953/- Rs. 1,65,39,590/- Reassessment 143(3) r.w.s. 147 dated 31.03.2015 31.03.2015 27.02.2014 Not applicable ITAT First Order 22.11.2017 22.11.2017 12.05.2017 12.05.2017 Set-aside Assessment 143(3) r.w.s. 254 dated 28.12.2018 28.12.2018 28.12.2018 31.12.2018 CIT(A) Order 19.11.2025 19.11.2025 19.11.2025 19.11.2025 Commission ....
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....3-14 under section 143(3) r.w.s. 254 dated 20.12.2019, wherein the Assessing Officer has examined the said write back of commission amounting to Rs. 4,94,48,280/- credited in the Profit & Loss Account under the head "amount no more payable write back". It was submitted that the Assessing Officer, after considering the explanation of the assessee, has accepted the returned income and no adverse inference has been drawn in respect of such write back. 12. The learned AR also referred to the Profit & Loss Account for A.Y. 2013-14, wherein the aforesaid amount of Rs. 4,94,48,280/- has been credited, and submitted that once the corresponding liability has been taxed in the subsequent year, the disallowance of the same expenditure in the earlier years would result in double taxation of the same amount, which is impermissible in law. 13. It was thus contended that disallowance of the commission expenditure in the impugned assessment years would result in taxation of the same amount twice, inasmuch as the liability, to the extent not payable, has already been written back and offered to tax in A.Y. 2013-14. It was submitted that once the said amount has been subjected to tax in the su....
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....ient entity, M/s Shore Chem LLC, categorically denied having rendered any services or having received any commission, as confirmed through information obtained under the Exchange of Information mechanism, (iii) no supporting bills, vouchers or contemporaneous correspondence evidencing services rendered were furnished, and (iv) the confirmations relied upon by the assessee were in the nature of unverified email communications lacking evidentiary value. 18. Further, from the analysis of past records, it emerges that substantial commission liabilities were continuously claimed over multiple years without actual discharge, and in certain instances were merely adjusted through book entries. The Assessing Officer has thus drawn a consistent inference across years that no real liability existed and that the claim was not supported by any demonstrable business exigency. It has also been specifically held that the plea of subsequent write back under section 41(1) is not tenable where the very liability is found to be non-genuine from inception. 19. On an overall consideration of the factual matrix emerging from the assessment orders for the relevant as well as preceding years, we find....
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....istencies in the identity of parties, lack of clarity regarding actual payments vis-à-vis outstanding liabilities, non-compliance with statutory requirements governing foreign remittances, and adverse information received from the competent authority under the Exchange of Information mechanism. Accordingly, the disallowance of such expenditure is upheld on merits. 23. However, the controversy does not rest at this stage. The assessee has raised an alternative contention, duly supported by documentary material placed on record, that the aggregate amount of Rs. 4,94,36,992/-, representing commission claimed over the earlier years, has been written back in A.Y. 2013-14 and offered to tax under the head "amount no more payable write back". It is an admitted position that the assessment for A.Y. 2013-14 has been completed under section 143(3) r.w.s. 254 dated 20.12.2019 and the said write back has been examined and accepted by the Assessing Officer. 24. In our considered view, once the very same amount has been subjected to tax in a subsequent year in the hands of the same assessee, sustaining the disallowance of the corresponding expenditure in the earlier years, without g....