SHRI SURENDRA GAJRAJ , JAIPUR V. INCOME TAX OFFICER, WARD-4-2, JAIPUR

ITA 1018/JPR/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5623 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 04-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PG Q
• Keywords: Capital asset converted into stock in trade; Business expenditure; Search and seizure; Principle of natural justice; TDS
• Section: 143(3); 37(1); 13; 22; 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S A, JAIPUR JH LANHI XLKA] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 1018/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 SURENDRA GAJRAJ, F-132 C, ROAD NO. 12, VKI AREA, JAIPUR. CUKE VS. I.T.O., WARD- 4(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABYPG 2156 Q APPELLANT RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI RAHUL PANDYA (ADV.) JKTLO DH VKSJ LS@ REVENUE BY: SMT. MONISHA CHOUDHARY (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08/09/2021 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 14/09/2021 VKNS'K@ ORDER PER: SANDEEP GOSAIN, J.M. THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)-2, JAIPUR DATED 18/06/2018 FOR THE A.Y. 2014 -15. THE GROUNDS TAKEN BY THE ASSESSEE ARE AS UNDER: 1. THAT THE LD. A.O., ITO WARD 4(2), JAIPUR HAVE MA DE ADDITION OF RS. 1058382/- DISALLOWING ON COMMISSION PAID TO VIKRAM SINGH KULHARI RS. 3,58,952/-, RAMESHWAR SINGH JANU RS. 3, 46,569/- AND SURENDRA GAJRAJ HUF RS. 4,52,861/- AND THE LD. CIT( A)-2, JAIPUR GROSSLY ERRED IN SUSTAINING THE ADDITION OF RS. 105 8382/-. 2. THAT THE LD. A.O., ITO WARD 4(2), JAIPUR HAVE MA DE TRADING ADDITIONS OF RS. 100000/- ON ACCOUNT OF MANUFACTURI NG REGISTER NOT MAINTAINED BY ASSESSEE AND THE LD. CIT(A)-2, JA IPUR GROSSLY ITA 1018/JP/2018 _ SURENDRA GAJRAJ VS ITO 2 ERRED IN SUSTAINING THE ADDITIONS TO RS. 50,000/- A ND ALLOWED PARTLY RELIEF OF RS. 50,000/- 3. THAT THE LD. LOWER AUTHORITIES GROSSLY ERRED IN LAW AND FACTS IN PASSING ORDER ON THE BASIS OF ASSUMPTION AND PRESUM PTIONS. 4. THAT ORDER OF LD. LOWER AUTHORITIES ARE AGAINST PRINCIPLES OF NATURAL JUSTICE. APPELLANT WAS NOT CONFRONTED WITH THE MATERIAL USED AGAINST THE APPELLANT AND WAS NOT GIVEN OPPORT UNITY OF REBUTTAL. 5. THAT FURTHER SUBMISSION SHALL BE MADE AT THE TIM E OF HEARING. 6. THAT APPELLANT CRAVES LEAVE TO ADD AMEND OR ALTE R ALL OR ANY GROUNDS OF APPEAL AND RELIEF BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. THE HEARING OF THE APPEAL AND C.O. WERE CONCLUDE D THROUGH VIDEO CONFERENCE IN VIEW OF THE PREVAILING SITUATION OF C OVID-19 PANDEMIC. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS PROPRIETOR OF FIRM M/S JAMNA INDUSTRIES AND DERIVED INCOME FROM M ANUFACTURING AND SELLING SPRINKLER AND ITS SPARE PARTS. THE ASSESSEE FILED HIS RETURN OF INCOME ON 27/11/2014 DECLARING TOTAL INCOME OF RS. 11,70,880/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. NEC ESSARY NOTICES WERE ISSUED TO HIM AND FINALLY, THE ASSESSMENT WAS COMPL ETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) AT A T OTAL INCOME OF RS. 23,29,260/- BY MAKING ADDITIONS ON ACCOUNTS OF DISA LLOWANCE ON COMMISSION AND THE TRADING ADDITION. ITA 1018/JP/2018 _ SURENDRA GAJRAJ VS ITO 3 4. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS AS WELL AS MATERIAL PLACED ON RECORD, GIVEN PART RELIE F TO THE ASSESSEE BY UPHOLDING THE ACTION TAKEN BY THE A.O. WITH REGARD TO DISALLOWANCE ON COMMISSION AND HAD RESTRICTED THE ADDITION TO RS. 5 0,000/- MADE WITH REGARD TO TRADING ADDITION. 5. AGAINST THE SAID ORDER PASSED BY THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE ITAT ON THE GROUNDS MENTIONED ABOVE. 6. GROUND NO. 1 RAISED BY THE ASSESSEE RELATES TO C HALLENGING THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ORDER OF A.O. DISALLOWING THE PAYMENT OF COMMISSION PAID BY THE ASSESSEE TO THREE PERSONS. IN THIS RESPECT, THE LD. AR WHILE REITERATING THE SAME ARGU MENTS AS WERE RAISED BY HIM BEFORE THE LOWER AUTHORITIES HAS RELIED UPON THE WRITTEN SUBMISSIONS FILED BEFORE THE BENCH AND THE CONTENTS OF THE SAME ARE REPRODUCED BELOW: 1. THAT FIRM HAVE PAID COMMISSION OF RS. 1058382/- TO FOLLOWING PERSONS:- S. NO. NAME OF PERSON AMOUNT (RS.) INCOME SHOWN IN THEIR ITR TDS DEDUCTED A. VIKRAM SINGH KULHARI (PAN-AKAPK8984B) 358952.00 358952.00 (PAGE - 11 OF PAPER BOOK) 35896.00 (PAGE -32 OF PAPER BOOK) ITA 1018/JP/2018 _ SURENDRA GAJRAJ VS ITO 4 B. RAMESHWAR SINGH (PAN-CNXPS9600J) 246569.00 246 569.00 (PAGE - 17 OF PAPER BOOK) 24657.00 (PAGE -32 OF PAPER BOOK) C. SURENDRA GAJRAJ HUF (PAN-AAWHS0393E) 452861.00 452861.00 (PAGE - 22 OF PAPER BOOK) 45286.00 (PAGE -32 OF PAPER BOOK) TOTAL 1058382.00 1058382.00 105838.00 THE COMMISSION IS PAID TO ENHANCE THE SALE OR TO MA INTAIN THE SALES TAT - GET AS PER THE TURNOVER OF PROCEEDING YEAR, SINCE THE SALES DEPOT / OFFICE AT KARNATAKA & UTTAR PRADESH HAVE CLOSED DOWN IN THE YEAR 201213 DUE TO GOVERNME NT RESTRICTION IN THEIR STATE & HUMBLE APPELLANT AFRAI D THAT TURNOVER IS LIKELY TO DOWN BY 25%-30% DUE TO CLOSIN G OF SALES DEPOT THUS NEGOTIATED WITH THESE PERSONS TO E NHANCE SALE OF THEIR PRODUCTS IN VILLAGES OF RAJASTHAN. TH ESE PERSONS ARE EXPERIENCED IN THE FIELD AND VILLAGERS BEING ILLITERATE ARE MORE CONVINCED ON MOUTH PUBLICITY / PERSONAL DISCUSSION THAN ANY TYPE OF PUBLICITY WITH THE EFFO RTS OF THESE REPRESENTATIVES THE HUMBLE APPELLANT COULD MAINTAIN ED HIS SALES TARGET BETTER THAN PREVIOUS YEARS. (II) THAT HUMBLE APPELLANT HAVE PAID SALES COMMISSION @ 1.5 % TO THESE PERSONS. THE SALES COMMISSION IS PAID ON S ALE AFFECTED THROUGH THEIR EFFORTS & AS PER MARKET USAG E & PRACTICE. THE SALES COMMISSION IS PAID WHOLLY & EXC LUSIVELY FOR BUSINESS PURPOSE TO ENHANCE SALE IS ALLOWABLE E XPENDITURE AS PER PROVISIONS OF INCOME TAX ACT. THAT COMMISSIO N PAID TO THE PERSONS ARE WELL KNOWN AND EXPERIENCED IN THE F IELD OF SPRINKLER AND PIPE BUSINESS. THE COMMISSION PAID IS ALLOWABLE BUSINESS EXPENDITURE U/S 37(1) OF INCOME TAX ACT. (III) WE BEG TO SUBMIT THAT FAMILY ALWAYS SIGNIFIES A GRO UP. PLURALITY OF PERSONS IS AN ESSENTIAL ATTRIBUTE OF A FAMILY. A ITA 1018/JP/2018 _ SURENDRA GAJRAJ VS ITO 5 SINGLE PERSON, MALE OR FEMALE DOES NOT CONSTITUTE A FAMILY. A FAMILY CONSISTING OF A SINGLE INDIVIDUAL IS A CONTR ADICTION IN TERMS. SECTION 2(31) OF THE INCOME TAX ACT, 1961, T REATS A HINDU UNDIVIDED FAMILY AS AN ENTITY DISTINCT AND DI FFERENT FROM AN INDIVIDUAL. ASSESSMENT IN THE STATUS OF A HINDU UNDIVIDED FAMILY CAN BE MADE ONLY WHEN THERE ARE TWO OR MORE MEMBERS OF THE HINDU UNDIVIDED FAMILY (REFER C. KRI SHNA PRASAD VS. CIT (1974) 97 ITR 493(SC) & ALSO IN ITAT DELHI BENCH 'E' IN CASE OF ITO WARD 36(2) NEW DELHI VS. M ITTAL INVESTMENT CO. (A COPY OF JUDGMENT IS SUBMITTED IS SUBMITTED HEREWITH FOR YOUR KIND PERUSAL). FURTHER WE ALSO BEG TO SUBMIT THAT 1-IUF IS A SEPAR ATE LEGAL ENTITY WHICH CAN PERFORM ITS BUSINESS THROUGH ITS K ARTA AND OTHER MEMBERS. AS THE SERVICES RENDERED BY SH. SURE NDRA GAJRAJ IN HIS INDIVIDUAL CAPACITY HAD BEEN ACCEPTED , THERE WAS NO REASON FOR NOT ACCEPTING HIS SERVICES IN HIS CAPACITY AS A KARTA OF THE IMF, THE PAYMENT OF COMMISSION TO BOTH THE SPECIFIED PERSONS AS WELL AS PERSONS OTHER THAN SPECIFIED PERSONS HAD BEEN MADE ON THE SAME BASIS AND THE SAM E PERCENTAGE & IDS HAD BEEN DEDUCTED ON THE COMMISSIO N PAYMENTS IN TERMS OF SECTION 194H. THAT WE HAVE ALREADY SUBMITTED COPY OF ITR & COPY O F COMPUTATION OF TOTAL INCOME OF SHRI VIKRAM SINGH KU LHARI, SHRI RAMESHWAR SINGH & M/S. SURENDRA GAJRAJ HUF TOLD AO. IT WOULD BE OBSERVED THAT THE SAID PERSON HAVE SURRENDERED T HE INCOME OF COMMISSION & PAID THE DUE TAXES. THUS DOUBLE TAX ATION CANNOT BE LEVIED (KINDLY REFER PAGE NO. 10-26 OF PA PER BOOK(ITR8Z COMPUTATION OF TOTAL INCOME) & COPY OF T DS RETURN PLACED AT PAGE NO. 27-34 OF PAPER BOOK). ITA 1018/JP/2018 _ SURENDRA GAJRAJ VS ITO 6 (IV) THE SALES COMMISSION IS NORMAL BUSINESS PRACTI CE IN THE TRADE TO ENGAGE PERSON/ PARTIES TO MARKET THE PRODUCT IN VIL LAGES TO PUBLISH THE QUALITY & USES OF PRODUCT FOR BETTER IR RIGATION ON MINIMUM COST & WASTAGE OF WATER. THE LEARNED AO HAV E ALLOWED BUSINESS EXPENDITURE IN EARLIER YEAR ALSO, WHILE PASSING THE ORDER U/S 143(3) OF IT ACT AND AS PER A CT DIFFERENT VIEW OF ONE ISSUE CAN NOT BE TAKEN BY LD AO, WE REQ UEST TO YOUR HONOUR TO KINDLY ALLOW THE COMMISSION PAID AS BUSINESS EXPENDITURE. (V) THAT THE HON'BLE DELHI HIGH COURT IN CASE OF CI T V. GENESIS COMMET P. LTD. (2007) 197 TAXATION 248/ 163 TAXMAN 482 (DELHI)(HIGH COURT) HELD THAT THE ASSESSING OFFICER DISALLOWED COMMISSION PAID BY THE ASSESSEE TO AGENTS ON THE GR OUND THAT THE ASSESSEE WAS NOT ABLE TO PRODUCE PARTIES TO WHO M COMMISSION WAS PAID. EVEN THOUGH THE COPIES OF ACCO UNTS AT THE PARTIES AND THE PARTICULARS OF SERVICES RENDERED WE RE PRODUCED BEFORE THE ASSESSING OFFICER THE TRIBUNAL ALLOWED T HE CLAIM. ON APPEAL AT THE INSTANCE OF REVENUE THE HIGH COURT CONFIRMING THE FINDINGS OF THE TRIBUNAL HELD THAT T HE COMMISSION PAID WAS ALLOWABLE AS BUSINESS EXPENDITU RE AS, THE ASSESSEE HAD PRODUCED ALL THE MATERIAL THAT IT COUL D POSSIBLY PRODUCE. IF THE ASSESSING OFFICER WAS NOT INCLINED TO BELIEVE THE MATERIAL SO PRODUCED, HE COULD HAVE USED COERCIVE P OWERS AVAILABLE TO HIM WHICH HE FAILED TO EXERCISE. (A.Y. 2001-02) (VI) 'THAT THE ASSESSEE HAD DEDUCTED TDS, PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES, GIVEN PAN NUMBER OF THE PARTIES AND CONFIRMED THE COMMISSION PAYMENT. THE L AW DOES NOT REQUIRE FROM THE ASSESSEE TO ENTER IN AGRE EMENT ON STAMP PAPER FOR CLAIMING COMMISSION AS HELD IN THE CASE OF ITA 1018/JP/2018 _ SURENDRA GAJRAJ VS ITO 7 CHICAGO PNEUMATIC INDIA LTD. VS. DY.CIT (2007) 15 S OT 252 (MUM.). THE BOOKS OF ACCOUNT ARE AUDITED WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER, SALE AND PURCHAS E HAVE BEEN TREATED GENUINE, BUT DOUBTED THE COMMISSION PA YMENT AND THE LEARNED ASSESSING OFFICER MADE ADDITION ON SURMISES AND CONJECTURES.' THEREFORE, WE ARE OF THE CONSIDER ED VIEW THAT COMMISSION PAID BY THE ASSESSEE EITHER ON SALE AND PURCHASE ARE ALLOWABLE AS THE EXPENSES INCURRED WHO LLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS U/S 37 OF T HE ACT - AS HELD IN ITA NO. 535/JP/2015. ORDER DT 30/10/2015. (VII) T HE HON'BLE ITAT AHMEDABAD BENCH '13' IN CASE OF STA LLION LABORATORIES (P.) LTD. V. INCOME-TAX OFFICER [2017] 88 TAXMANN.COM 880 (AHMEDABAD - TRIB.) HELD THAT 'EXCE SSIVE OR UNREASONABLE PAYMENTS - ASSESSMENT YEAR 2011-12 - WHERE ASSESSEE HAD MADE IMPUGNED COMMISSION PAYMENT S AFTER DEDUCTING TDS AND HAD PLACED ON RECORD CONFIR MATIONS OF PAYERS BY WAY OF CONTRA ACCOUNTS, SUCH PAYMENTS COULD NOT BE HELD TO BE EXCESSIVE PAYMENTS' WE THEREFORE REQUEST YOUR HONOUR TO KINDLY ACCEPT T HE GROUND & DELETE THE ADDITIONS OF RS. 1058382.00. 7. ON THE OTHER HAND, THE LD. DR HAS VEHEMENTLY SUP PORTED THE ORDERS OF THE LOWER AUTHORITIES. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY PERUSED THE MATERIAL PLACED ON RECORD. FROM PERUSAL OF RECORD, WE NOTICED THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING OF SPRINKLER A ND SPARE PARTS IN ITS FACTORY LOCATED AT JAIPUR UNDER THE NAME AND STYLE M/S JAMUNA INDUSTRIES ITA 1018/JP/2018 _ SURENDRA GAJRAJ VS ITO 8 AS REGISTERED WITH ISI AND THE ASSESSEE IS MANUFACT URING ISI PRODUCTS OF HIGH QUALITY AND WEIGHT AS PER ISI STANDARDS. APART FROM THIS, THE ASSESSEE HAS ALSO AWARDED ISO 9001 CERTIFICATE FOR ITS QUALITY PRODUCTS. IT WAS SPECIFICALLY ASSERTED BY THE ASSESSEE THAT THE FIRM OF THE ASSESSEE HAD PAID COMMISSION OF RS. 10,58,352/- TO THREE PER SONS I.E. SH. VIKRAM SINGH KULHARI, SH. RAMESHWAR SINGH AND SH. SURENDRA GAJRAJ HUF AND IN THIS RESPECT, HE HAS ALSO DRAWN OUR ATTENTION TO A CHART WHICH IS MENTIONED IN HIS WRITTEN SUBMISSIONS REPRODUCED BY US IN THE EARLIER PARA OF THIS ORDER AND AS PER THE SAID CHART, WE NOTICED THAT THE REQUIRED TDS HAD ALSO BEEN DEDUCTED BY THE ASSESSEE WHILE MAKING COMMISSION PAYMENTS TO THE ABOVE PERSONS AND THE ONLY PURPOSE FOR MAKING PAYMENT OF COMMISSION BY THE ASSESSEE WAS TO ENHANCE THE SA LE OR TO MAINTAIN THE SALE TARGETS ON THE TURNOVER OF THE PRECEEDING YEARS. ACCORDING TO THE ASSESSEE, SINCE THE SALES DEPOT / OFFICE AT KARNATA KA & UTTAR PRADESH HAVE CLOSED DOWN IN THE YEAR 2012-13 DUE TO GOVERNM ENT RESTRICTION IN THEIR STATE, THEREFORE, THE ASSESSEE WAS AFRAID THAT HIS TURNOVER IS LIKELY TO GO DOWN BY 25%-30% BECAUSE OF CLOSING OF SALES DEPOT, THEREFORE, UNDER THESE PECULIAR CIRCUM STANCES, THE ASSESSEE HAD ENTERED INTO NEGOTIATIONS WITH THESE T HREE PERSONS NAMELY SH. VIKRAM SINGH KULHARI, SH. RAMESHWAR SING H AND SH. SURENDRA GAJRAJ HUF TO ENHANCE SALE OF THEIR PRODUC TS IN VILLAGES OF ITA 1018/JP/2018 _ SURENDRA GAJRAJ VS ITO 9 RAJASTHAN. SINCE ACCORDING TO THE ASSESSEE, THESE P ERSONS ARE EXPERIENCED IN THE FIELD OF SALES AND VILLAGERS BEI NG ILLITERATE ARE MORE CONVINCED ON MOUTH PUBLICITY / PERSONAL DISCUS SION THAN ANY OTHER MODE OF PUBLICITY. THEREFORE, WITH THE EFFORT S OF THESE REPRESENTATIVES, THE ASSESSEE COULD MAINTAIN HIS SA LE TARGETS BETTER THAN PREVIOUS YEARS. FROM THE RECORD, WE FURTHER NOTICED THAT THE ASSESSEE HAD PAID SALES COMMISSION @ 1.5 % TO THESE PERSONS ON SALE AFFECTED THROUGH THEIR EFFORTS AND AS PER MARKET US AGE & PRACTICE. THE ASSESSEE HAD CATEGORICALLY STATED THAT SALES CO MMISSION WAS PAID WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE TO ENHANCE SALE AND THUS THE SAME CAN BE CATEGORIZED AS ALLOWABLE EXPEN DITURE AS PER PROVISIONS OF SECTION 37(1) OF THE ACT. APART FROM THIS, THE LD. AR RELIED UPON ITS DETAILED WRITTEN SUBMISSIONS WHICH HAVE ALREADY BEEN CONSIDERED BY US. 9. WE HAVE GONE THROUGH THE SUPPORTIVE DOCUMENTS IN THE SHAPE OF COPY OF ITR, COPY OF COMPUTATION OF TOTAL INCOME OF RESPECTED PERSONS TO WHOM COMMISSIONS WERE PAID AND WHICH ALS O SHOWS THAT THE SAID PERSONS HAVE SHOWN THE INCOME OF COMMISSIO N IN THEIR RESPECTIVE RETURNS AND HAVE PAID DUE TAXES. WE ARE ALSO AWARE OF THE FACT THAT IN NORMAL BUSINESS PRACTICE IN THE TR ADE TO ENGAGE PERSONS/PARTIES TO MARKET THE PRODUCT IN VILLAGES T O PUBLISH THE ITA 1018/JP/2018 _ SURENDRA GAJRAJ VS ITO 10 QUALITY AND USES OF PRODUCT AND FOR THAT SALES PERS ON HAVE TO BE ENGAGED AND PAYMENT OF SALES COMMISSION IS A NORMAL TRADE PRACTICE. WE FOUND SUPPORT FROM THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CASE OF CIT V. GENESIS COMMET P. LTD. (2007) 197 TAXATION 248/ 163 TAXMAN 482 (DELHI)(HIGH COURT) WHEREIN IT WAS HELD THAT THE ASSESSING OFFICER DISALLOWED COMMISS ION PAID BY THE ASSESSEE TO AGENTS ON THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO PRODUCE PARTIES TO WHOM COMMISSION WAS PAID. EVEN T HOUGH THE COPIES OF ACCOUNTS AT THE PARTIES AND THE PARTICULARS OF S ERVICES RENDERED WERE PRODUCED BEFORE THE ASSESSING OFFICER THE TRIBUNAL ALLOWED THE CLAIM. ON APPEAL AT THE INSTANCE OF REVENUE THE HIGH COURT CO NFIRMING THE FINDINGS OF THE TRIBUNAL HELD THAT THE COMMISSI ON PAID WAS ALLOWABLE AS BUSINESS EXPENDITURE AS THE ASSESSEE HAD PRODUCE D ALL THE MATERIAL THAT IT COULD POSSIBLY PRODUCE. IF THE ASSESSING OF FICER WAS NOT INCLINED TO BELIEVE THE MATERIAL SO PRODUCED, HE COULD HAVE USE D COERCIVE POWERS AVAILABLE TO HIM WHICH HE FAILED TO EXERCISE. 10. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTA NCES, WE NOTICED THAT THESE ARE UNDISPUTED FACT THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF MANUFACTURING OF SPRINKLERS WHICH USED IN THE AGRIC ULTURE AND HAD MAINTAINED HIS TARGETS FROM THE PREVIOUS YEARS AND HAD MADE PAYEMENTS TO THE RESPECTIVE PERSONS ON ACCOUNT OF COMMISSION PAYMENT THROUGH ITA 1018/JP/2018 _ SURENDRA GAJRAJ VS ITO 11 ACCOUNT PAYEE CHEQUES AND ALL THOSE ACCOUNTS ARE AU DITED AND REQUIRED TDS HAD ALSO BEEN DEDUCTED. SINCE, ENGAGING OF THES E PERSONS FOR ENHANCING OF SALES IS SPECIFICALLY WITHIN THE NOTIC E AND KNOWLEDGE OF THE ASSESSEE AND THE ASSESSEE HAS DISCHARGED HIS BURDEN OF PROVING THE EXISTENCE OF CIRCUMSTANCES FOR ENGAGING THE PERSONS FOR ENHANCING THE SALES AND HAD MAKING PAYMENT TOWARDS COMMISSION @ 1 .5% TO THE RESPECTIVE PERSONS AND APART FROM THIS NOTHING HAS BEEN BROUGHT ON RECORD BY THE A.O. TO CONTROVERT THE SAID FACTS PLA CED ON RECORD BY THE ASSESSEE ALONGWITH SUPPORTIVE DOCUMENTS. THEREFORE, WE SEE NO REASONS TO DISBELIEVE THE SPECIFIC AVERMENTS AND SUPPORTIVE DOCUMENTS MADE BY THE ASSESSEE TO THIS EFFECT. THEREFORE, WE DIRECT T O DELETE THE ADDITION MADE QUA THIS ISSUE. 11. GROUND NO. 2 RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE TRADING A DDITION OF RS. 50,000/-. 12. HAVING CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY PERUSED THE MATERIAL PLACED ON RECORD. FROM PERUSAL OF RECORD, WE NOTICED THAT THE ASSESSEES PROPRIETORSHIP FIRM M/S. JAMNA INDUSTRIE S IS MANUFACTURING OF SPRINKLER SYSTEM AND ITS SPARE PARTS AND THE ASS ESSEE HAS MAINTAINED COMPLETE BOOKS OF ACCOUNT INCLUDING STOC K REGISTER. ALL THE SALES, PURCHASES AND EXPENSES ARE FULLY VOUCHED AND VERIFIABLE. ITA 1018/JP/2018 _ SURENDRA GAJRAJ VS ITO 12 THERE IS NO CHANGE IN THE METHOD OF ACCOUNTING AS C OMPARED TO PRECEEDING YEARS. THE BOOKS OF ACCOUNT ARE DULY AUD ITED. ALL THE BOOKS OF ACCOUNT AND RECORD OF THE UNIT WERE PRODUC ED BEFORE THE A.O.. ALL THE DETAILS OF PURCHASES WERE FURNISHED B EFORE THE LOWER AUTHORITIES AND MAINTAINED STOCK REGISTER, PRODUCTI ON RECORD AND FINISHED STOCK REGISTER OF THE UNIT. THE ASSESSEE A LSO FILED COMPLETE STOCK CHART OF RAW MATERIAL, FINISHED GOODS SHOWING OPENING STOCK, PURCHASE, MANUFACTURING, SALES AND CLOSING STOCK AL ONGWITH AUDIT BALANCE SHEET BEFORE THE REVENUE AUTHORITIES. SINCE THE A.O. CHECKED THE BOOKS OF ACCOUNT AND ALSO CHECKED THE M ANUFACTURING RECORDS AND NO ANY DEFECT WAS POINTED OUT THEN IN T HAT EVENTUALITY, SUSTAINING OF ADDITION OF RS. 50,000/- ON ACCOUNT O F TRADING ADDITION IS NO LEGS TO STAND, THEREFORE, WE DIRECT TO DELETE TH IS ADDITION. 13. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH SEPTEMBER, 2021. SD/- SD/- FOE FLAG ;KNO LANHI XLKA (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14/09/2021 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI SURENDRA GAJRAJ, JAIPUR. ITA 1018/JP/2018 _ SURENDRA GAJRAJ VS ITO 13 2. IZR;FKHZ @ THE RESPONDENT- I.T.O., WARD- 4(2), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1018/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR