M/S KAMDHENU ISPAT LTD., BHIWADI V. ACIT, Alwar

ITA 662/JPR/2012

• Counselvise Citation: 66223114 RSA 2012
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 10-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLI AGARWAL
• Assessee Lawyers: HARISH AGARWAL
• Keywords: Opportunity of being heard; Additional evidence; Commercial expediency
• Section: 143(3); 153A; 133(6); 37(1); 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NOS. 662 TO 668/JP/2012 ASSTT. YEARS- 2003-04 TO 2009-10 PAN NO. AAACK 7155 M M/S KAMDHENU ISPAT LIMITED THE A.C.I.T., A-1114, RIICO INDUSTRIAL AREA, VRS. CENTRAL CIRCL E, PHASE-III, BHIWADI (RAJ.). ALWAR. (APPELLANT) (RESPONDENT) ASSESSEE BY :- SHRI SATISH AGARWAL & SHRI HARISH AGARWAL. DEPARTMENT BY :- SMT. ROLI AGARWAL. DATE OF HEARING : 17/11/2014 DATE OF PRONOUNCEMENT : 21/11/2014 O R D E R PER: T.R. MEENA, A.M. THE PRESENT GROUP OF SEVEN CASES FILED BY THE ASSES SEE ARE AGAINST THE ORDERS DATED 18/5/2011 FOR THE A.YS. 2003-04, 2004- 05, 2005-06 AND 2006-07 AND DATED 17/5/2012 FOR A.YS. 2007-08, 2008-09 AND 2009-10 BY THE LEARNED C.I.T.(A)-CENTRAL, JAIPUR. THE EFFECTIVE GROUNDS OF A LL THE APPEALS FILED BY THE ASSESSEE ARE AS UNDER:- GROUNDS OF ITA NO. 662/JP/2012 (A.Y. 2003-04) 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (A), CENTRAL, JAIPUR WITH RESPECT TO CONFIRMING PART OF THE ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 2 ADDITION MADE BY THE ASSESSING OFFICER AND DISMISSI NG THE ADDITIONAL GROUND RAISED BY THE APPELLANT REGARDING THAT NO ADDITION IS WARRANTED U/S 153A IS BAD IN LAW AND FACT S OF THE CASE TO THAT EXTENT. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HA S GROSSLY ERRED IN CONFIRMING PART OF ADDITION OF EXP ENDITURE INCURRED ON COMMISSION OF RS. 1,38,262/- ON FACILIT ATION OF SALES AS PER DETAIL GIVEN AS BELOW ON CRITERIA THAT THE AMOUNT INVOLVED IN PAYMENT TO THE BELOW MENTIONED PARTIES WAS NOT ON THE BASIS OF AGREEMENTS EXECUTED ON PRESCRIBED STAMP PAPER FOR PAYMENT OF COMMISSION EI THER IN CURRENT OR EARLIER YEARS IGNORING THE NEXUS OF P AYMENT. S.NO. PAN NAME OF PERSON AMOUNT OF COMMISSION 1 AADHR9000C GARG STEEL CORP. 74,947 2. AAFPG1404K SANJAY GOYAL 2,439 3. AIFPK7469L SUSHIL KUMAR AGARWAL 24,166 4. AHNPB8961D VIPUL BIYANI 35,587 MISC. COMMISSION 1,123 TOTAL 1 ,38,262 3. WITHOUT PREJUDICE TO THE GROUND NO. 2, THE LEARN ED COMMISSIONER OF INCOME TAX (A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR MAKING ADDITION U/S 153A OF THE ACT WITHOUT APPRECIATING TH E FACT THAT NO INCRIMINATING MATERIAL OR DOCUMENTS WERE FOU ND DURING THE COURSE OF SEARCH ACTION U/S 132 OF THE A CT, WHICH WARRANTED ADDITION. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HA S GROSSLY ERRED IN CONFIRMING PART DISALLOWANCE OF COM MISSION IGNORING THE FACT THAT NO DISALLOWANCE OF COMMISSION EXPENDITURE WAS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED U/S 147/143(3) OF THE ACT. ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 3 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE THE ABOVE GROUNDS OF APPEAL AT THE TIME OF HEARING. GROUND OF ITA NO. 663/JP/2012 (A.Y. 2004-05) 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (A), CENTRAL, JAIPUR WITH RESPECT TO CONFIRMING PART OF THE ADDITION MADE BY THE ASSESSING OFFICER AND DISMISSI NG THE ADDITIONAL GROUND RAISED BY THE APPELLANT REGARDING THAT NO ADDITION IS WARRANTED U/S 153A IS BAD IN LAW AND FACT S OF THE CASE TO THAT EXTENT. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HA S GROSSLY ERRED IN CONFIRMING PART OF ADDITION OF EXP ENDITURE INCURRED ON COMMISSION OF RS. 9,70,315/- ON FACILIT ATION OF SALES AS PER DETAIL GIVEN AS BELOW ON CRITERIA THAT THE AMOUNT INVOLVED IN PAYMENT TO THE BELOW MENTIONED PARTIES WAS NOT ON THE BASIS OF AGREEMENTS EXECUTED ON PRESCRIBED STAMP PAPER FOR PAYMENT OF COMMISSION EI THER IN CURRENT OR EARLIER YEARS IGNORING THE NEXUS OF P AYMENT. S.NO. PAN NAME OF PERSON AMOUNT OF COMMISSION 1 AAGHA2851R ASHISH & SONS (HUF) 80,319 2. AACPD4106G ASHOK DANG 100,590 3. AIVPK1130G ANUJ GLOBAL CORPORATION 350,305 4. AERPG2141P CHANDER SHEKHAR GOYAL 150,066 5. AJMPM6714G KANTA MODI 100,595 6. ABIPJ3965G KASTUR CHAND JAIN 54,357 7. AAUPJ2410R PANNA LAL KUNDAN LAL 59,280 8. AHNPB8961D SH. VIPUL BIYANI 50,224 9. ACIPG5343C VARDHMAN IRON STORE 24,579 TOTAL 9,70,315/- ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 4 3. WITHOUT PREJUDICE TO THE GROUND NO. 2, THE LEARN ED COMMISSIONER OF INCOME TAX (A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR MAKING ADDITION U/S 153A OF THE ACT WITHOUT APPRECIATING TH E FACT THAT NO INCRIMINATING MATERIAL OR DOCUMENTS WERE FOU ND DURING THE COURSE OF SEARCH ACTION U/S 132 OF THE A CT, WHICH WARRANTED ADDITION. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HA S GROSSLY ERRED IN CONFIRMING PART DISALLOWANCE OF COM MISSION IGNORING THE FACT THAT NO DISALLOWANCE OF COMMISSION EXPENDITURE WAS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE THE ABOVE GROUNDS OF APPEAL AT THE TIME OF HEARING. GROUNDS OF ITA NO. 664/JP/2012 (A.Y. 2005-06) 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (A), CENTRAL, JAIPUR WITH RESPECT TO CONFIRMING PART OF THE ADDITION MADE BY THE ASSESSING OFFICER AND DISMISSI NG THE ADDITIONAL GROUND RAISED BY THE APPELLANT REGARDING THAT NO ADDITION IS WARRANTED U/S 153A IS BAD IN LAW AND FACT S OF THE CASE TO THAT EXTENT. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HA S GROSSLY ERRED IN CONFIRMING PART OF ADDITION OF EXP ENDITURE INCURRED ON COMMISSION OF RS. 82,552/- ON FACILITAT ION OF SALES AS PER DETAIL GIVEN AS BELOW ON CRITERIA THAT THE AMOUNT INVOLVED IN PAYMENT TO THE BELOW MENTIONED PARTIES WAS NOT ON THE BASIS OF AGREEMENTS EXECUTED ON PRESCRIBED STAMP PAPER FOR PAYMENT OF COMMISSION EI THER IN CURRENT OR EARLIER YEARS IGNORING THE NEXUS OF P AYMENT. ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 5 S.NO. PAN NAME OF PERSON AMOUNT OF COMMISSION 1 AABFR8071R R.K. BROTHERS 897 2. AAACR8108F RAHUL ALLOYS (P) LTD. 15,482 3. AAFCS2939G SANJAY IRON & STEEL LTD. 1,086 4. AGZPG6400D SHASHI BALA GOYAL 50,689 5. ACIPG5343C VARDHMAN IRON STORE 14,398 TOTAL 8 2,552 3. WITHOUT PREJUDICE TO THE GROUND NO. 2, THE LEARN ED COMMISSIONER OF INCOME TAX (A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR MAKING ADDITION U/S 153A OF THE ACT WITHOUT APPRECIATING TH E FACT THAT NO INCRIMINATING MATERIAL OR DOCUMENTS WERE FOU ND DURING THE COURSE OF SEARCH ACTION U/S 132 OF THE A CT, WHICH WARRANTED ADDITION. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HA S GROSSLY ERRED IN CONFIRMING PART DISALLOWANCE OF COM MISSION IGNORING THE FACT THAT NO DISALLOWANCE OF COMMISSION EXPENDITURE WAS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE THE ABOVE GROUNDS OF APPEAL AT THE TIME OF HEARING. GROUND OF ITA NO. 665/JP/2012 (A.Y. 2006-07) 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (A), CENTRAL, JAIPUR WITH RESPECT TO CONFIRMING PART OF THE ADDITION MADE BY THE ASSESSING OFFICER AND DISMISSI NG THE ADDITIONAL GROUND RAISED BY THE APPELLANT REGARDING THAT NO ADDITION IS WARRANTED U/S 153A IS BAD IN LAW AND FACT S OF THE CASE TO THAT EXTENT. ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 6 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HA S GROSSLY ERRED IN CONFIRMING PART OF ADDITION OF EXP ENDITURE INCURRED ON COMMISSION OF RS. 7,85,421/- ON FACILIT ATION OF SALES AS PER DETAIL GIVEN AS BELOW ON CRITERIA THAT THE AMOUNT INVOLVED IN PAYMENT TO THE BELOW MENTIONED PARTIES WAS NOT ON THE BASIS OF AGREEMENTS EXECUTED ON PRESCRIBED STAMP PAPER FOR PAYMENT OF COMMISSION EI THER IN CURRENT OR EARLIER YEARS IGNORING THE NEXUS OF P AYMENT. S.NO. PAN NAME OF PERSON AMOUNT OF COMMISSION 1 AEIPG1583L AMIT GOEL 25,138 2. AANPG6554A ANAND GOEL 50,093 3. AAWPS6316B ANIL SHARDA 50,170 4. AIVPK1130G ANUJ GLOBAL CORPORATION 2,00,554 5. AAHPG2010K RAJNI GUPTA 80,484 6. AADPA3044P SANGAM TRADERS 1,06,884 7. AGZPG6400D SHASHI BALA GOYAL 50,741 8. AGZPG6401C SUMIT GOEL 50,010 9. AHHPG9415F VIDYA GUPTA 70,627 10. AANPA3737B VIJAYA ARORA 1,00,720 TOTAL 7,85,421 3. WITHOUT PREJUDICE TO THE GROUND NO. 2, THE LEARN ED COMMISSIONER OF INCOME TAX (A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR MAKING ADDITION U/S 153A OF THE ACT WITHOUT APPRECIATING TH E FACT THAT NO INCRIMINATING MATERIAL OR DOCUMENTS WERE FOU ND DURING THE COURSE OF SEARCH ACTION U/S 132 OF THE A CT, WHICH WARRANTED ADDITION. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE THE ABOVE GROUNDS OF APPEAL AT THE TIME OF HEARING. ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 7 GROUND OF ITA NO. 666/JP/2012 (A.Y. 2007-08) 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (A), CENTRAL, JAIPUR WITH RESPECT TO CONFIRMING PART OF THE ADDITION MADE BY THE ASSESSING OFFICER AND DISMISSI NG THE ADDITIONAL GROUND RAISED BY THE APPELLANT REGARDING THAT NO ADDITION IS WARRANTED U/S 153A IS BAD IN LAW AND FACT S OF THE CASE TO THAT EXTENT. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HA S GROSSLY ERRED IN CONFIRMING PART OF ADDITION OF EXP ENDITURE INCURRED ON COMMISSION OF RS. 24,22,074/- ON FACILI TATION OF SALES AS PER DETAIL GIVEN AS BELOW ON CRITERIA THAT THE AMOUNT INVOLVED IN PAYMENT TO THE BELOW MENTIONED PARTIES WAS NOT ON THE BASIS OF AGREEMENTS EXECUTED ON PRESCRIBED STAMP PAPER FOR PAYMENT OF COMMISSION EI THER IN CURRENT OR EARLIER YEARS IGNORING THE NEXUS OF P AYMENT. S.NO. PAN NAME OF PERSON AMOUNT OF COMMISSION 1 AAEHA3305C ABHINAV AGARWAL (HUF) 230,152 2. AANPG6554A ANAND GOEL 5,620 3. AACPD4106G ASHOK DANG 125,577 4. AAAHD8559D BELCO ISPAT & ALOYS 6,790 5. AEEPA4747G DEEPAK KUMAR AGARWAL 60,824 6. AACCS1989H GAURANG STEEL (P) LTD. 251,867 7. AABFI2812F ISHAN ENTERPRISES 50,815 8. ABIPA5888R KADAMBARI STEEL SUPPLIERS 378,293 9. AJUPG0987B PANKAJ GARG 100,509 10. AAHPG2010K RAJNI GUPTA 125,894 11. AAFHR7717G RATAN LAL (HUF) 92,585 12. AEIPG1583L SH. AMIT GOEL 150,509 13. AAFPD8867M SANJEEV DANG 230,328 14. AGZPG6401C SUMIT GOEL 100,580 ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 8 15. AAXPK9527D SWEETY KHERA 120,435 16. AABCT5988L TREPI CONSULTANTS (P) LTD. 140,780 17. AASPK3157C UMESH KUMAR 50,348 18. AAGHP9659C YES TRADING CO. 200,168 TOTAL 24,22,074 3. WITHOUT PREJUDICE TO THE GROUND NO. 2, THE LEARN ED COMMISSIONER OF INCOME TAX (A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR MAKING ADDITION U/S 153A OF THE ACT WITHOUT APPRECIATING TH E FACT THAT NO INCRIMINATING MATERIAL OR DOCUMENTS WERE FOU ND DURING THE COURSE OF SEARCH ACTION U/S 132 OF THE A CT, WHICH WARRANTED ADDITION. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE THE ABOVE GROUNDS OF APPEAL AT THE TIME OF HEARING. GROUNDS OF ITA NO. 667/JP/2012 (A.Y. 2008-09) 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (A), CENTRAL, JAIPUR WITH RESPECT TO CONFIRMING PART OF THE ADDITION MADE BY THE ASSESSING OFFICER AND DISMISSI NG THE ADDITIONAL GROUND RAISED BY THE APPELLANT REGARDING THAT NO ADDITION IS WARRANTED U/S 153A IS BAD IN LAW AND FACT S OF THE CASE TO THAT EXTENT. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HA S GROSSLY ERRED IN CONFIRMING PART OF ADDITION OF RS. 66,79,862/- MADE BY THE ASSESSING OFFICER FOR PAYM ENT OF COMMISSION ON FACILITATION OF PURCHASES. 2.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) H AS GROSSLY ERRED IN CONFIRMING ADDITION OF COMMISSION OF RS. 35,13,323/- ON PURCHASES TO M/S SHALIMAR KRAFTS AND ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 9 TISSUES (P) LTD. BY STATING THAT THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE RECIPIENT COMPANY DO ES NOT INCLUDE OBJECT OF DEALING IN M.S. INGOTS AND BILLET S WITHOUT APPRECIATING THAT THE APPELLANT CANNOT BE EXPECTED TO DO AN IMPOSSIBLE TASK. 2.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) H AS GROSSLY ERRED IN CONFIRMING ADDITION OF COMMISSION OF RS. 31,66,539/- ON PURCHASES PAID TO THE 11 PARTIES ON THE CONTENTION THAT SOME OF THE PARTIES ARE ALSO IN REC EIPT OF COMMISSION ON SALES OF TMT AND CTD BARS FROM THE APPELLANT COMPANY IN EARLIER YEARS AND SOME OF THE PARTIES HAVE NO FORMAL AGREEMENT WITH THE APPELLANT COMPANY ON STAMP PAPER OR ON LETTER HEAD. S.NO. PAN NAME OF PARTY AMOUNT OF COMMISSION 1 AAEHA3305C ABHINAV AGARWAL (HUF) 226.410 2. ACAPB9144Q GAGAN BANSAL 150,740 3. AADHR9000C GARG STEEL CORPORATION 446,358 4. ABAPA4427A GHANSHYAM AGARWAL 201,577 5. ABCPK1191R KRISHAN KUMAR 150,780 6. AABFN4078Q NARESH CHAND JAIN (HUF) 720,716 7. AAEHP6875L PUNEET JAIN & SONS (HUF) 708,218 8. AAFHR7717G RATAN LAL (HUF) 141,370 9. AIFPK7469L SUSHIL AGARWAL 202,538 10. AASPK3157C UMESH KUMAR 66,071 11. AAQPB5647J VIVEK KUMAR 151,761 TOTAL 3,166,539 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HA S GROSSLY ERRED IN CONFIRMING PART OF ADDITION OF EXP ENDITURE INCURRED ON COMMISSION OF RS. 12,75,841/- ON FACILI TATION OF SALES AS PER DETAIL GIVEN AS BELOW ON CRITERIA THAT THE ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 10 AMOUNT INVOLVED IN PAYMENT TO THE BELOW MENTIONED PARTIES WAS NOT ON THE BASIS OF AGREEMENTS EXECUTED ON PRESCRIBED STAMP PAPER FOR PAYMENT OF COMMISSION EI THER IN CURRENT OR EARLIER YEARS IGNORING THE NEXUS OF P AYMENT. S.NO. PAN NAME OF PARTY AMOUNT OF COMMISSION 1 AHOPB3963A ARUN PRAKASH BIYANI 81,341 2. AACCS1989H GAURANG STEEL (P) LTD. 62,810 3. AABFI2812F ISHAN ENTERPRISES 100,643 4. AAEFJ9788L JHELUM INDUSTRIES 1,749 5. AJMPM6714G KANTA MODI 150,345 6. APGPM0582C NEHA MODI 151,595 7. ABGPL2004C RATTAN LAL 215,190 8. AQIPS0179G REKHA SHARMA 222,517 9. AAWPD4583D SALASAR PLYWOOD 38,718 10. AHCPA3286B VIBHORE AGARWAL 150,135 11. AAEPG9375L SURESH CHAND GARG 100,073 12. SUPER ENTERPRISES 725 TOTAL 12,75,841 4. WITHOUT PREJUDICE TO THE GROUND NO. 2 AND 4, THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR MAKING ADDITION U/S 153A OF THE ACT WITHOUT APPRECIATING TH E FACT THAT NO INCRIMINATING MATERIAL OR DOCUMENTS WERE FOU ND DURING THE COURSE OF SEARCH ACTION U/S 132 OF THE A CT, WHICH WARRANTED ADDITION. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE THE ABOVE GROUNDS OF APPEAL AT THE TIME OF HEARING. GROUNDS OF ITA NO. 668/JP/2012 (A.Y. 2009-10) 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (A), CENTRAL, JAIPUR WITH RESPECT TO CONFIRMING PART OF THE ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 11 ADDITION MADE BY THE ASSESSING OFFICER AND DISMISSI NG THE ADDITIONAL GROUND RAISED BY THE APPELLANT REGARDING THAT NO ADDITION IS WARRANTED U/S 153A IS BAD IN LAW AND FACT S OF THE CASE TO THAT EXTENT. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HA S GROSSLY ERRED IN CONFIRMING PART OF ADDITION OF RS. 29,65,592/- MADE BY THE ASSESSING OFFICER FOR PAYM ENT OF COMMISSION ON FACILITATION OF PURCHASES. S.NO. PAN NAME OF PARTY AMOUNT OF COMMISSION 1 AAMPA5140M ABHINAL AGARWAL 50,511 2. AAEHA3305L ABHINAV AGARWAL (HUF) 299,076 3. AADFA0428P AGARWAL STEEL CORPORATION 200,639 4. AARPA7598J ANJANI SALES 35,717 5. ABIPJ3972H ANUP KUMAR JINDAL 505,085 6. ABBPJ3940N ARUN JINDAL 503,749 7. AFJPJ9092H DHRUV JAIN 201,775 8. ABAPA4427A GHANSHYAM AGARWAL 191,855 9. AAAPJ1806B RAVI JAIN CORPORATION 201,846 10. AIFPK7469L SUSHIL AGARWAL 227,788 11. AASPK3157C UMESH KUMAR 150,505 12. AAAHU3590H UMESH KUMAR (HUF) 397,046 TOTAL 2,965,592 2.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) H AS GROSSLY ERRED IN CONFIRMING ADDITION OF COMMISSION OF RS. 29,65,592/- PAID TO THE 12 PARTIES FOR FACILITATING PURCHASES, ON THE CONTENTION THAT SOME OF THE PARTIES ARE ALSO IN RECEIPT OF COMMISSION ON SALES OF TMT AND CTD BARS FRO M THE APPELLANT COMPANY IN EARLIER YEARS AND SOME OF THE PARTIES HAVE NO FORMAL AGREEMENT WITH THE APPELLANT COMPANY ON STAMP PAPER OR ON LETTER HEAD. ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 12 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HA S GROSSLY ERRED IN CONFIRMING PART OF ADDITION OF EXP ENDITURE INCURRED ON COMMISSION OF RS. 3,87,451/- ON FACILIT ATION OF SALES AS PER DETAIL GIVEN AS BELOW ON CRITERIA THAT THE AMOUNT INVOLVED IN PAYMENT TO THE BELOW MENTIONED PARTIES WAS NOT ON THE BASIS OF AGREEMENTS EXECUTED ON PRESCRIBED STAMP PAPER FOR PAYMENT OF COMMISSION EI THER IN CURRENT OR EARLIER YEARS IGNORING THE NEXUS OF P AYMENT. S.NO. PAN NAME OF PARTY AMOUNT OF COMMISSION 1 AEIPG1583L SH. AMIT GOEL 70,468 2. AHOPB3963A ARUN PRAKASH BIYANI 19,246 3. AALPJ5951G GLOBAL MARKETING CO. 106,192 4. AAHPG6724G HARI NIWAS 12,853 5. AAWPD4583D SALASAR PLYWOOD 22,941 6. AGNPA2451N SHRI BALAJI TRADING CO. 1,52,455 7. MAHAVEER 3,296 TOTAL 3,87,451 4. WITHOUT PREJUDICE TO THE GROUND NO. 2 AND 4, THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR MAKING ADDITION U/S 153A OF THE ACT WITHOUT APPRECIATING TH E FACT THAT NO INCRIMINATING MATERIAL OR DOCUMENTS WERE FOU ND DURING THE COURSE OF SEARCH ACTION U/S 132 OF THE A CT, WHICH WARRANTED ADDITION. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE THE ABOVE GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. ALL THE GROUNDS OF ALL THE APPEALS ARE REVOLVING AROUND THE PAYMENT OF COMMISSION EITHER ON SALE OR PURCHASE AND CHALLENGI NG THE VALIDITY OF ORDER PASSED U/S 153A OF THE INCOME TAX ACT, 1961 (HEREINA FTER REFERRED AS THE ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 13 ACT). A SEARCH OPERATION WAS CONDUCTED ON 17/9/2008 IN KAMDHENU GROUP OF CASES. BRIEF FACTS OF THE CASE ARE THAT M/S KAMDHEN U ISPAT LTD. BELONGS TO SATISH KUMAR AGARWAL FACTION OF KAMDHENU SUB-GROUP. THIS SUB-GROUP IS MAINLY ENGAGED IN THE BUSINESS OF MANUFACTURING OF IRON BARS LIKE TMT BARS. IT HAS FURTHER DIVERSIFIED IN THE FIELD OF PAINTS. SHR I SATISH KUMAR AGARWAL DE- FACTO HEAD OF THE FACTION/FAMILY HAS SURRENDERED AN AMOUNT OF RS. 5.71 CRORES AS UNACCOUNTED/UNDISCLOSED INCOME OF THE GROUP/FAMI LY, IN HIS STATEMENT RECORDED DURING THE SEARCH U/S 132(4) OF THE ACT ON BEHALF OF THE GROUP/FAMILY, WHICH WAS CONFIRMED BY OTHER MEMBERS OF THE FAMILY. THE SURRENDER OF INCOME WAS UNDER VARIOUS HEADS LIKE UNA CCOUNTED CASH, INVESTMENT IN PROPERTY, JEWELLERY, INVESTMENT IN VAR IOUS COMPANIES OF THE GROUP AS SHARE APPLICATION MONEY. THE SURRENDER WAS PERSONS SPECIFIC. ALTHOUGH THE GROUP HAS HONOURED THE SURRENDER OF IN COME, IT HAS MADE DURING THE SEARCH BUT THE AMOUNTS DECLARED AS ADDITIONAL I NCOME BY MANY MEMBERS OF THE GROUP DIFFER FROM THE AMOUNT SURRENDERED DUR ING THE SEARCH. IN CASE OF ASSESSEE M/S KAMDHENU ISPAT LTD., NO INCOME WAS SURR ENDERED DURING THE SEARCH. AS SUCH, DURING THE YEAR UNDER CONSIDERATIO N, NO ADDITIONAL INCOME HAS BEEN DECLARED ON ACCOUNT OF UNDISCLOSED/UNACCOU NTED INCOME. THE ASSESSEE FILED RETURNED INCOME ON 30/6/2010 IN PURS UANCE TO NOTICE ISSUED U/S 153A OF THE ACT ON 10/2/2010. THE ASSESSING OFF ICER ISSUED DETAIL ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 14 QUESTIONNAIRE ON 03/8/2010, WHICH WAS ALSO RESPONDED BY THE APPELLANT. AFTER EXAMINATION OF THE RETURN OF INCOME, ACCOMPANYING D OCUMENTS AND THE DETAILS/DOCUMENTS/EVIDENCES FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED ASSESSING OFFICER FOUND T HAT THE ASSESSEE HAD MADE COMMISSION PAYMENT ON SALE AMOUNTING TO RS. 6,57,40 6/- IN A.Y. 2003-04, RS. 20,57,895/- IN A.Y. 2004-05, RS. 21,86,974/- IN A.Y . 2005-06, RS. 25,78,399/- IN A.Y. 2006-07, RS. 44,69,998/- IN A.Y. 2007-08, R S. 1,01,59,019/- IN A.Y. 2008-09 AND RS. 1,67,08,226/- IN A.Y. 2009-10. THE L EARNED ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING ON COMMISSION PAYMENT, WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 06/12/201 0 IN ALL THE ASSESSMENT YEARS. IT WAS SUBMITTED AS UNDER:- A.Y. 2003-04 COMMISSION ON SALES AMOUNTING TO RS. 11,08,486/- H AD BEEN REFLECTED IN SCHEDULE 19 OF THE BALANCE SHEET AS AT 31/3/2003 . OUT OF WHICH, COMMISSION AMOUNT OF RS. 6,57,406/- WAS RELATED TO S ALES MADE FROM BHIWADI UNIT AND REST OF THE COMMISSION WAS PAID ON S ALES MADE FROM BRANCH OFFICES OF THE COMPANY. KINDLY NOTE THAT WE U SED TO SETTLE COMMISSION ACCOUNT ANNUALLY, HENCE, ACCOUNTED FOR C OMMISSION ON SALES AT THE YEAREND ONLY AND MADE PAYMENT IN THE N EXT FINANCIAL YEAR. IN SOME CASES, WERE DISTRIBUTORS REQUESTED US TO REL EASE THE PAYMENT WITHIN THE FINANCIAL YEAR, WE NORMALLY ACCEPT THE REQ UEST AND MADE THE PAYMENT OF COMMISSION TO THEM. ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 15 NOTICES U/S 133(6) OF THE ACT WERE ALSO ISSUED TO TH E BROKERS WHO HAVE RECEIVED COMMISSION FROM THE ASSESSEE COMPANY, NAME LY SH. SUBHASH CHAND, SH. VIPUL VIYANI, SH. VIKRANT MAHAJAN, SH. S USHIL KUMAR AGARWAL, SH. SANJAY GUPTA, SH. SANJAY GOYAL, M/S RAJ ESH KUMAR (HUF), M/S RAJENDRA STEELS, SH. NARESH GARG, SH. MAMAN CHA ND GOYAL, SH. GULSHAN GUPTA, SH. DHARMPAL KHERA, SH. ANIL SHARDA, SH. AMIT GOYAL, SH. ABHISHEK GARG TO PROVE DETAILS AND DOCUMENTS AS UNDER: 1. FILE COPY OF THE BILL SUBMITTED BY YOU TO M/S KAMDH ENU ISPAT LTD. IN RESPECT OF THE SALES ARRANGED DURING THE RELEVAN T FINANCIAL YEAR AGAINST WHICH COMMISSION PAYMENTS WERE RECEIVED BY YO U. 2. FILE COMPLETE NAME AND ADDRESSES OF THE PARTIES TO WHOM SALES WERE MADE BY M/S KAMDHENU ISPAT LTD. WHICH WERE ARRANG ED BY YOU DURING THE RELEVANT FINANCIAL YEAR. 3. FOR THE RELEVANT FINANCIAL YEAR, FILE COPIES OF BOO KING FORMS RECEIVED FROM THE CUSTOMERS FOR WHOM SALES WERE ARRAN GED BY YOU AND COPIES OF BOOKING FORMS SUBMITTED BY YOU TO M/S KAMDHENU ISPAT LTD. FOR ARRANGING THE SALES ON WHIC H COMMISSION HAS BEEN EARNED. 4. PL. STATE WHETHER YOU HAVE PROVIDED SIMILAR SERVICES TO ANY OTHER PERSON OR CONCERN AS YOU HAVE PROVIDED TO M/S KAMDH ENU ISPAT LTD. IF YES, PLEASE FILE COPY OF LEDGER A/C OF ALL SUCH PERSONS FROM WHOM COMMISSION PAYMENTS WERE RECEIVED BY YOU DURING THE RELEVANT FINANCIAL YEARS. 5. WHAT WAS THE NATURE OF BUSINESS OR PROFESSION CARRIE D OUT BY YOU DURING THE RELEVANT FINANCIAL YEAR? 6. DURING THE RELEVANT FINANCIAL YEAR, HAVE YOU CARRIE D OUT ANY ACTIVITIES OTHER THAN ARRANGING SALES FOR M/S KAMDH ENU ISPAT LTD. ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 16 7. FILE COPY OF LEDGER ACCOUNT OF M/S KAMDHENU ISPAT L TD. IN YOUR BOOKS OF ACCOUNT FOR THE RELEVANT FINANCIAL YEAR. 8. FILE COPIES OF BANK ACCOUNT STATEMENTS SHOWING THE R ECEIPT OF PAYMENTS FROM M/S KAMDHENU ISPAT LTD. FOR SERVICES PROVIDED BY YOU DURING THE AFORESAID PERIOD. PLEASE NOTE THAT T HE BANK ACCOUNT STATEMENT(S) IS (ARE) REQUIRED TO BE SUBMIT TED FOR THE COMPLETE FINANCIAL YEAR DURING WHICH SUCH PAYMENTS H AVE BEEN RECEIVED BY YOU. 9. ARE YOU A DISTRIBUTOR OR A BROKER, IF, DISTRIBUTOR, PLEASE FILE COPY OF AGREEMENT ENCLOSED INTO WITH M/S KAMDHENU ISPAT LTD. AND THE AMOUNT OF SECURITY DEPOSITED WITH M/S KAMDHENU ISPAT LTD.? A.Y. 2004-05 NOTICES U/S 133(6) OF THE ACT WERE ALSO ISSUED TO T HE BROKERS NAMELY SH. NARESH GARG, SH. NARENDRA GOYAL, SH. ASH OK DANG, M/S ANUJ GLOBAL CORPORATION, M/S ASHISH & SONS (HUF ), SH. MAMAN CHAND GOYAL, M/S KANTA MODI, M/S AGARWAL STEEL CORPORATION, SH. KASTUR CHAND JAIN, M/S PANNA LAL K UNDAL LAL, SH. RAJEEV GARG, SH. VIPUL VIYANI, SH. VIKRANT MAHAJAN, SH. DHARAMPAL KHERA, SH. CHANDR SEKHAR GOYAL TO PROVIDE DETAILS AND DOCUMENTS. A.Y. 2005-06 NOTICES U/S 133(6) OF THE ACT WERE ALSO ISSUED TO T HE BROKERS NAMELY MS. KANTA MODI, SH. CHANDER SHEKHAR GOYAL, S H. JAGDISH MANCHANDDA, SH. MAMAN CHAND GOYAL, SH. SHARD MANCHA NDDA, M/S ASHAM SETTEL, SH. VIKRANT MAHAJAN, M/S PROJECT CONSULTANT, ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 17 SH. ANIL KUMAR MAHAJAN, SH. NARENDRA GOYAL, SH. NAR ESH GARG TO PROVIDE DETAILS AND DOCUMENTS. A.Y. 2006-07 NOTICES U/S 133(6) OF THE ACT WERE ALSO ISSUED TO T HE BROKERS NAMELY SH. AMIT GOEL, SH. NARESH GARG, SH. GULSHAN GUPTA, SH. ANIL SHARDA, SH. ANIL KUMAR, SH. ANNAND GOEL, M/S S ANGAM TRADERS, MS RAJNI GUPTA, SH. VIJAY ARORA, SH. SUMIT GOEL, SH. VIKRANT MAHAJAN, SH. SHARAD MANCHANDA, SH. JAGDISH MANCHANDA, SH. MAMAN CHAND GOEL, MS SASHI BALA GARG, M/S ANUJ GLOBAL CORPORATION, M/S RAJEEV GARG (HUF) TO PROVIDE DETAI LS AND DOCUMENTS. A.Y. 2007-08 NOTICES U/S 133(6) OF THE ACT WERE ALSO ISSUED TO T HE BROKERS NAMELY M/S ANUBHAV AGARWAL (HUF), SH. SUMIT GOEL, SM T. RAJNI GUPTA, M/S ISHAN ENTERPRISES, SH. DEEPAK KUMAR AGAR WAL, M/S AJAY TRADERS, SH. AMIT GOEL, SH. ANNAND GOEL, SH. AN IL KUMAR, SH. ASHOK DANG, SH. DHARMPAL KHERA, M/S STEEL GARG, M/S GAURANG STEEL PVT. LTD., SH. GULSHAN GUPTAL, SH. JAGDISH MA NCHANDA, SH. MAMAN CHAND GOYAL, SH. NARSH GARG, SH. PANKAJ GARG, SH. RAJEEV GARG, M/S RATAN LAL (HUF), SH. SANJEEV DANG, MS SWEETY KHERA, M/S TREPI CONSULTANTS PVT. LTD., SH. UMESH KU MAR, SH. VIKRANT MAHAJAN TO PROVIDE DETAILS AND DOCUMENTS. A.Y. 2008-09 NOTICES U/S 133(6) OF THE ACT WERE ALSO ISSUED TO T HE BROKERS NAMELY MS. KANTA MODI, M/S ASHOK KUMAR DANG & SONS (HUF), M/S SANJEEV DANG AND SONS (HUF), SH. ANIL KUMAR MAH AJAN, SH. ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 18 VIKRANT MAHANAJ, SH. VIKRAM MAHAJAN, M/S VIBHORE AG ARWAL, M/S SANGAM BUILDWAY, M/S SALASAR PLYWOOD, SH. SURESH CHAN D GARG, SH. NARESH GARG,, SH. ANKIT GARG, SH. UMESH GARG, M /S SUPER ENTERPRISES, SH. SARTHAK GUPTA, SH. JAGDISH MANCHAN DA, SH. DHARAMPAL KHERA, M/S ISHAN ENTERPRISES, SH. ANIL SH ARDA, SH. ARUN PRAKASH BIYANI, M/S GANPATI STEEL CORPORATION , M/S GAURANG STEEL (P) LTD. M/S AGARWAL STEEL CORPORATION, M/S GA RG STEEL, SH. NAMAN JAIN, SH. NEERAJ JAIN, M/S NEERAJ JAIN & SONS (HUF), M/S JHELUM INDUSTRIES, SH. GULSHAN GUPTA, MS. NEHA MODI , SH. MAMAN CHAND GOYAL, SH. DEEPAK MITTAL, MS. REKHA SHARMA, M S. KIRTIKA JAIN, MS. VANDANA JAIN, SH. SANJAY MITTAL, SH. RATT AN LAL, SH. PURSHOTTAM KUMAR GOYAL, SH. ROSHAN LAL GUPTA, SH. S ANJAY KUMAR GUPTA TO PROVIDE DETAILS AND DOCUMENTS. A.Y. 2009-10 NOTICES U/S 133(6) OF THE ACT WERE ALSO ISSUED TO T HE BROKERS NAMELY M/S T.K. CHOUDHARY, M/S SURESH CHAND GARG (HU F), M/S SATISH CHAND GARG (HUF), M/S SANJEEV DANG & SONS (H UF), SH. SANJEEV MITTAL, SH. SANJAY KUMAR GUPTA, SH. NARESH KUMAR GARG, SH. NARESH GARG,, SH. MAMAN CHAND GOYAL, M/S GLOBAL MARKETING CO., M/S GARG STEEL, M/S GANPATI STEEL CORPORATION, SH. DHARAMPAL KHERA, SH. ANKIT GARG, SH. ANIL SHARDA TO PROVIDE DETAILS AND DOCUMENTS. 2.1 THE SIMILAR REPLY WAS SUBMITTED FOR ALL OTHER AS SESSMENT YEARS. THE LEARNED ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE ACT TO ALL THE BROKERS, WHO HAD RECEIVED COMMISSION FROM THE ASSESS EE COMPANY. FOR ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 19 A.Y. 2003-04 OUT OF 15 SO CLAIMED BROKERS MENTIONED ABOVE ONLY SH. ABHISHEK GARG, M/S RAJESH KUMAR (HUF), SH. SANJAY G UPTA, SH. VIKRANT MAHAJAN, SH. NARESH KUMAR GARG, SH. MAMAN CHAND GOY AL, SH. ANIL SHARDA REPLIED. FOR A.Y. 2004-05 OUT OF 15 SO CLAIMED BROKERS MENTIONED ABOVE ONLY SH. VIKRANT MAHAJAN, M/S AGARWAL STEEL CORPORATION, M/S ASHISH & SONS (HUF), SH. VIPUL VIYANI, SH. ASHOK KUMAR DANG, M/S PANNA L AL KUNDAL LAL, SH. MAMAN CHAND GAOYL, SH. NARESH GARG, KASTUR CHAND JA IN, SH. NARENDER GOYAL, SH. CHANDER SEKHAR GOYAL REPLIED. FOR A.Y. 2005-06 OUT OF 11 SO CLAIMED BROKERS MENTIONED ABOVE ONLY SH. ANIL KUMAR MAHAJAN, SH. VIKRANT MAHAJAN, SH. MA MAN CHAND GOYAL, SH. NARESH GARG, SH. NARENDER GOYAL, SH. CHANDER SHEKHA R GOYAL, SH. SHARAD MANCHANDDA REPLIED. FOR A.Y. 2006-07 OUT OF 17 SO CLAIMED BROKERS MENTIONED ABOVE ONLY SH. ANIL KUMAR MAHAJAN, SH. VIKRANT MAHAJAN, MS. RA JNI GUPTA, MS. SHASHI BALA GARG, SH. NARESH KUMAR GARG, SH. MAMAN CHAND G OYAL, SH. SUMIT GOEL REPLIED. FOR A.Y. 2007-08 OUT OF 25 SO CLAIMED BROKERS MENTIONED ABOVE ONLY SH. DEEPAK KUMAR AGARWAL, SH. SANJEEV KUMAR DANG, SH . VIKRANT MAHAJAN, SH. ANIL KUMAR MAHAJAN, M/S ISHAN ENTERPRISES, M/S TREPI CONSULTANTS PVT. ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 20 LTD., SH. SANJEEV KUMAR GUPTA, SH. SUMIT GOEL, SH. ASHOK DANG, M/S RATAN LAL (HUF), SH. NARESH GARG, SH. MAMAN CHAND GOYAL, M/S AJAY TRADERS, SH. PANKAJ GARG REPLIED. FOR A.Y. 2008-09 OUT OF 40 SO CLAIMED BROKERS MENTIONED ABOVE ONLY SH. SANJAY KUMAR GUPTA (DISTRIBUTOR, COMM RS. 2,50, 116), SH. SARTHAK GUPTA (DISTRIBUTOR, NO AGREEMENT, COMM. RS. 2,25,300/-), M/S ISHAN ENTERPRISES, M/S AGARWAL STEEL CORPORATION, SH. VIKRAM MAHAJAN, S H. ANIL KUMAR MAHAJAN, SH. VIKRANT MAHAJAN, M/S UMESH KUMAR & SONS (HUF), M/S ASHOK KUMAAR DANG (HUF), M/S SANJEEV KUMAR DANG (HUF), SH. ARUN PRAKASH BIYANI, SH. MAMAN CHAND GOYAL, SH. NARESH GARG, SH. RATAN LAL, SH. ANIL SHARDA, SH. ROSHAN LAL GUPTA, M/S NEERAJ KUMAR JAIN & SONS (HUF ), SH. NEERAJ KUMAR JAIN, SH. NAMAN JAIN, MS. KRITIKA JAIN, MS. VANDANA JAIN, SH. VIBHOR AGARWAL, M/S GANPATI STEEL CORPORATION REPLIED. FOR A.Y. 2009-10 OUT OF 15 SO CLAIMED BROKERS MENTIONED ABOVE ONLY SH. SANJAY KUMAR GUPTA, SH. JAGDISH MANCHANDA, M/S SANJEEV KUMAR DANG (HUF), SH. NARESH KUMAR GARG, SH. MAMAN CHAND GOYAL , SH. ANIL SHARDA, M/S GANPATI STEEL CORPORATION, SH. ANKIT GARG, M/S SURE SH CHAND GARG (HUF), M/S SATISH CHAND GARG (HUF), SH. SANJAY MITTAL REPLIED. 2.2 THE LEARNED ASSESSING OFFICER OBSERVED THAT ALL THE YEARS THAT INFORMATION SOUGHT FROM THE ABOVE BROKERS WAS NOT PR OVIDED BY THEM ON DUE ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 21 DATE OF COMPLIANCE. MOST OF THEM SOUGHT ADJOURNMENT AT ONE PRETEXT OR THE OTHER AND SOME OF THEM EVEN DID NOT SEEK ADJOURNMEN T AND COMPLIED THE NOTICES AT THEIR SWEET WILL, MOST BEYOND THE DUE DATE OF COMPLIANCE. THE INFORMATION OR DOCUMENTS SOUGHT MUST BE READILY AVA ILABLE WITH THEM AND THERE WAS NO NEED TO SEEK ADJOURNMENT OR DELAY THE P ROVIDING OF INFORMATION. IT IS FURTHER OBSERVED THAT IT WAS SURPRISING TO HIM THAT EVEN AFTER TAKING MORE REQUIRED TIME TO COMPLY, SO CLAIMED BROKERS ONLY GA VE NAMES OF THE PARTIES TO WHOM SALES WERE MADE BY M/S KAMDHENU ISPAT LTD. THRO UGH THEM DURING THE YEAR BUT NEITHER ADDRESSES NOR TELEPHONE NUMBERS WER E PROVIDED. THIS INFORMATION SHOULD HAVE BEEN WITH THESE SO CLAIMED B ROKERS IF THEY REALLY HAD DONE SOME DEALING WITH SUCH PARTIES BECAUSE FOR MANY OF THEM COMMISSION INCOME FROM THE ASSESSEE WAS THE ONLY SOURCE OF INCO ME OR MAJOR SOURCE OF INCOME AS HAD BEEN REVEALED FROM THE DETAILS OF INC OME FILED BY THEM. THESE BROKERS WERE ALSO ASKED TO FILE COPIES OF BOOKING FO RMS RECEIVED FROM THE CUSTOMERS FOR WHOM SALES WERE ARRANGED BY THEM AND CO PIES OF BOOKING FORMS SUBMITTED BY THEM TO M/S KAMDHENU ISPAT LTD. FOR ARRANGING THE SALES ON WHICH COMMISSION HAS BEEN EARNED. MOST OF BROKERS HAD STATED THAT THE BUSINESS HAD BEEN CONDUCTED ON TELEPHONE OR BY PERS ONAL VISIT AND THEY DO NOT FOLLOW THE SYSTEM OF BOOKING FORMS, OR CHOSE TO REMAIN SILENT. HE FURTHER OBSERVED AS UNDER: ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 22 IF THESE SO CLAIMED BROKERS, HAD DONE ANY DEALING OVER TELEPHONE WITH SO CLAIMED CUSTOMERS, THEY COULD HAVE EASILY GO T COMPLETE POSTAL ADDRESSES OF THE PARTIES OVER TELEPHONE OR BY PERSO NS VISIT EVEN AFTER THE NOTICE U/S 133(6) HAS BEEN ISSUED TO THEM, IF I T WAS NOT READILY AVAILABLE AND WOULD HAVE PASSED ON THE SAME TO THE U NDERSIGNED. IN VIEW OF INABILITY OF THESE SO CLAIMED BROKERS TO PRO VE THE ADDRESSES AND TELEPHONE NUMBERS OF THE CUSTOMERS FOR SALE, I CONSIDER THAT THE REASON FOR NOT SUPPLYING ADDRESSES AND TELEPHONE NU MBERS OF THESE PARTIES IS THAT THEY DO NOT KNOW THEM AND HAVE NOT D ONE ANY TRANSACTION WITH THEM. HAD THEY KNOW THEM AND HAD DON E SOME TRANSACTION WITH THEM, THEY COULD HAVE EASILY PROVID ED THE DESIRED INFORMATION. FURTHER, IN ALMOST ALL THE CASES TO WHOM SUCH COMMIS SION PAYMENTS HAVE BEEN MADE BY THE ASSESSEE COMPANY, IT IS OBSER VED THAT THE RESPECTIVE ACCOUNTS OF THE BROKERS HAVE BEEN CREDIT ED BY THE BROKERAGE AMOUNT ON THE LAST DAY OF THE ACCOUNTING YEAR AND THEY PAYMENTS HAVE BEEN MADE IN THE NEXT YEAR. IN ADDITI ON, THE BILLS RAISED BY ALL THESE SAID BROKERS MOSTLY HAVE BEEN R AISED ON THE LAST DAY OF THE ACCOUNTING YEAR OR IN THE LAST MONTH OF THE ACCOUNTING YEAR. NORMAL PRACTICE OF THE BUSINESS REQUIRES A BILL TO BE RAISED AS AND WHEN IT BECOMES DUE. RAISING OF BILLS BY ALMOST ALL THE BROKERS ON THE LAST DAY OR LAST MONTH OF THE ACCOUNTING YEAR GIVES THE IMPRESSION THAT THE BILLS WERE ISSUED AT THE INSISTENCE OF THE ASSES SEE AS PER ITS REQUIREMENT TO MAKE ADJUSTMENT IN THE P&L ACCOUNT T O BRING DOWN THE PROFIT TO THE DESIRED LEVEL OF THE ASSESSEE. IT IS SURPRISING TO NOTE THAT THESE SO CALLED BROKERS PROVIDE SERVICE IN A YEAR A ND SILENTLY WAIT FOR ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 23 NEXT 6 MONTHS OR MORE TO RECEIVE PAYMENT AGAINST TH E SERVICE PROVIDED. NO PRUDENT PERSON WOULD LIKE TO DO A JOB A ND DEMAND REMUNERATION AGAINST IT AFTER 6 MONTHS OR A YEAR. IT IS ALSO OBSERVED THAT COMMISSION HAS BEEN PAID TO SOME LADIES ALSO IN A.Y. 2005-06 ONWARDS. THESE LADIES HAPPEN TO BE T HE RELATIVES OR WIVES OF BROKERS, THEREFORE, THESE LADIES APPEAR TO BE JUST NAME LENDERS. IN ONE CASE OF SH. DEEPAK KUMAR AGARWAL REL ATING TO A.Y. 2007-08, HE HAS DECLARED IN HIS SUBMISSION THAT HE HAS CONFECTIONARY BUSINESS. IF IT HAS BEEN CLAIMED THAT SUCH PERSON H AS PROVIDED SERVICES RELATING TO CONFECTIONARY BUSINESS, IT SEEMED A NAT URAL COROLLARY BUT TO CLAIM THAT SUCH PERSON HAS PROVIDED SERVICES IN IRO N BAR SELLING, IT BECOMES DIFFICULT TO ACCEPT. WHOLE GAMUT OF RAISING BILL FOR COMMISSION AT THE F AG END OF THE YEAR AND RECEIVING CHEQUES FROM THE ASSESSEE COMPANY FOR COMMISSION IN THE NEXT YEAR, IS A MAKE BELIEVE ARRANGEMENT BETWEEN THE ASSESSEE COMPANY AND THESE SO CLAIMED BROKERS TO SIPHON OFF THE PROFIT TO EVADE TAX. THE BILLS ARE RAISED AT THE FAG END OF TH E YEAR AFTER CALCULATING THE ADJUSTMENT TO BE MADE IN THE P&L AC COUNT TO REDUCE THE PROFIT. ALL THE ABOVE FACTS PUT TOGETHER PROVE THAT NO SERVICES HAVE BEEN PROVIDED BY THESE SO CLAIMED BROKERS TO THE AS SESSEE COMPANY TO EARN COMMISSION. HE ALSO RELIED ON THE FOLLOWING CASE LAWS:- (I) NIEMLA TEXTILES FINISHING MILLS PVT. LTD. VS. CIT 100 ITR 611 (P&H). (II) PRECISION INSTRUMENT MANUFACTURING CO. VS. CI T 137 ITR 5 (DELHI). (III) VISHNU COTTON MILLS LTD. VS. CIT 117 ITR 754 ( CALCUTTA) ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 24 FOR OTHER ASSESSMENT YEARS, THE OBSERVATION OF THE LEARNED ASSESSING OFFICER IS AS UNDER:- IT IS SURPRISING TO NOTE THAT EVEN AFTER TAKING MO RE THAN REQUIRED TIME TO COMPLY, SO CLAIMED BROKERS ONLY GAVE NAMES OF TH E PARTIES TO WHOM SALES WERE MADE BY M/S KAMDHENU ISPAT LTD. THROUGH T HEM DURING THE YEAR BUT NEITHER ADDRESSES NOR TELEPHONE NUMBERS WER E PROVIDED. THIS INFORMATION SHOULD HAVE BEEN WITH THESE SO CLAIMED B ROKERS IF THEY REALLY HAD DONE SOME DEALING WITH SUCH PARTIES BECAU SE FOR MANY OF THEM COMMISSION INCOME FROM THE ASSESSEE IS THE ONL Y SOURCE OF INCOME OR MAJOR SOURCE OF INCOME AS HAS BEEN REVEAL ED FROM THE DETAILS OF INCOME FILED BY THEM. THESE BROKERS WERE ALSO ASKED TO FILE COPIES OF BOOKING FORMS RECEIVED FROM THE CUSTOMERS FROM WHOM SALES WERE ARRANGED BY THEM AND COPIES OF BOOKING FORMS SU BMITTED BY THEM TO M/S KAMDHENU ISPAT LTD. FOR ARRANGING THE S ALES ON WHICH COMMISSION HAS BEEN EARNED. TO THIS QUERY MOST OF TH EM HAVE STATED THAT THE BUSINESS HAS BEEN CONDUCTED OVER TELEPHONE OR BY PERSONAL VISIT AND THEY DO NOT FOLLOW THE SYSTEM OF BOOKING F ORMS, OR CHOSE TO REMAIN SILENT. IF THESE SO CLAIMED BROKERS, HAD DON E ANY DEALING OVER TELEPHONE WITH SO CLAIMED CUSTOMERS THEY COULD HAVE EASILY GOT COMPLETE POSTAL ADDRESSES OF THE PARTIES OVER TELEP HONE OR BY PERSONAL VISIT EVEN AFTER THE NOTICE U/S 133(6) HAS BEEN ISS UED TO THEM, IF IT WAS NOT READILY AVAILABLE AND WOULD HAVE PASSED ON THE S AME TO THE UNDERSIGNED. IN VIEW OF INABILITY OF THESE SO CLAIM ED BROKERS TO PROVIDE THE ADDRESSES AND TELEPHONE NUMBERS OF THE CUSTOMER S FOR SALE, I CONSIDER THAT THE REASON FOR NOT SUPPLYING ADDRESSE S AND TELEPHONE NUMBERS OF THESE PARTIES IS THAT THEY DO NOT KNOW TH EM AND HAVE NOT ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 25 DONE ANY TRANSACTION WITH THEM. HAD THEY KNOW THEM AN D HAD DONE SOME TRANSACTION WITH THEM, THEY COULD HAVE EASILY PROVIDED THE DESIRED INFORMATION. FURTHER, IN ALMOST ALL THE CASES TO WHOM SUCH COMMI SSION PAYMENTS HAVE BEEN MADE BY THE ASSESSEE COMPANY, IT IS OBSER VED THAT THE RESPECTIVE ACCOUNTS OF THE BROKERS HAVE BEEN CREDIT ED BY THE BROKERAGE AMOUNT ON THE LAST DAY OF THE ACCOUNTING YEAR AND T HE PAYMENTS HAVE BEEN MADE IN THE NEXT YEAR. IN ADDITION, THE BILLS RAISED BY ALL THESE SAID BROKERS MOSTLY HAVE BEEN RAISED ON THE LAST DAY OF THE ACCOUNTING YEAR OR IN THE LAST MONTH OF THE ACCOUNTING YEAR. NORMAL PRACTICE OF THE BUSINESS REQUIRES A BILL TO BE RAISED AS AND WHEN IT BECOMES DUE. RAISING OF BILLS BY ALMOST ALL THE BROKERS ON THE LAST DAY OR LAST MONTH OF THE ACCOUNTING YEAR GIVES THE IMPRESSION THAT THE B ILLS WERE ISSUED AT THE INSISTENCE OF THE ASSESSEE AS PER ITS REQUIREME NT TO MAKE ADJUSTMENT IN THE P&L ACCOUNT TO BRING DOWN THE PROF IT TO THE DESIRED LEVEL OF THE ASSESSEE. IT IS SURPRISING TO NOTE THA T THESE SO CALLED BROKERS PROVIDE SERVICE IN A YEAR AND SILENTLY WAIT FOR NEXT 6 MONTHS OR MORE TO RECEIVE PAYMENT AGAINST THE SERVICE PROVIDED. NO PR UDENT PERSON WOULD LIKE TO DO A JOB AND DEMAND REMUNERATION AGAINST IT AFTER MONTHS OR A YEAR. IT IS ALSO OBSERVED THAT COMMISSION HAS BEEN PAID T O SOME LADIES ALSO. THESE LADIES HAPPEN TO BE THE RELATIVES OR WIVES OF B ROKER, THEREFORE, THESE LADIES APPEAR TO BE JUST NAME LENDERS. IN ONE CASE OF SH. DEEPAK KUMAR AGARWAL RELATING TO A.Y. 2007-08, HE HAS DECLA RED IN HIS SUBMISSION THAT HE HAS CONFECTIONERY BUSINESS. IF I T HAS BEEN CLAIMED ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 26 THAT SUCH PERSON HAS PROVIDED SERVICES RELATING TO CONFECTIONERY BUSINESS IT SEEMED A NATURAL COROLLARY BUT TO CLAIM THAT SUCH PERSON HAS PROVIDED SERVICES IN IRON BAR SELLING, IT BECOMES D IFFICULT TO ACCEPT. SIMILARLY, IT IS ALSO DIFFICULT TO ACCEPT THAT M/S NEERAJ KUMAR JAIN & SONS (HUF), SH. NEERAJ KUMAR JAIN, SH. NAMAN JAIN, MS. K RITIKA JAIN, MS. VANDANA JAIN WHO BELONG TO M/S ASHIANA ISPAT LTD. G ROUP OF CASES WHICH IS UNDER SCRUTINY ASSESSMENT WITH THE UNDERSIGN ED AND THE FACT THAT M/S ASHIANA ISPAT LTD. IS MANUFACTURING KAMDH ENU BRAND OF IRON BARS INCLUDING TMT BARS AND IS PAYING ROYALTY TO THE ASSESSEE COMPANY, WOULD ARRANGE CUSTOMERS FOR M/S KAMDHENU ISPAT LTD. WHEN THEY THEMSELVES HAVE KAMDHENU BRAND OF MATERIAL MANUFA CTURED BY THEIR COMPANY, M/S ASHIANA ISPAT LTD. TO SELL. SIMILARLY, IT HAS BEEN NOTED THAT IN SOME CASES LIKE SH. VIKRAM MAHAJAN, SH. ANIL KUM AR MAHAJAN, SH. VIKRANT MAHAJAN THAT WHOLE FAMILY HAS BEEN ENGAGED B Y THE ASSESSEE COMPANY TO ARRANGE CUSTOMERS FOR IT ALTHOUGH NONE O F THEM KNOWN THE ADDRESS OF THE CUSTOMER CLAIMED TO BE ARRANGED BY T HEM FOR THE ASSESSEE COMPANY. WHOLE GAMUT OF RAISING BILL FOR COMMISSION AT THE FAG END OF THE YEAR AND RECEIVING CHEQUES FROM THE ASSESSEE COMPANY FOR COMMISSION IN THE NEXT YEAR, IS A MAKE BELIEVE ARRANGEMENT BETWEEN THE ASSESSEE COMPANY AND THESE SO CLAIMED BROKERS TO SIPHON OFF THE PROFIT TO EVADE TAX. THE BILLS ARE RAISED AT THE FAG END OF THE YEAR AFTER CALCULATING THE ADJUSTMENT TO BE MADE IN THE P&L ACCOUNT TO REDUCE THE PROFIT. ALL THE ABOVE FACTS PUT TOGETHER PROVE THAT NO SERVICES HAV E BEEN PROVIDED BY THESE SO CLAIMED BROKERS TO THE ASSESSEE COMPANY TO EARN COMMISSION. HE ALSO RELIED ON THE FOLLOWING CASE LAWS:- ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 27 (I) NIEMLA TEXTILES FINISHING MILLS PVT. LTD. VS. CIT (SUPRA) (II) PRECISION INSTRUMENT MANUFACTURING CO. VS. CI T (SUPRA) (III) VISHNU COTTON MILLS LTD. VS. CIT (SUPRA) HE FURTHER HELD THAT IN THE CASE OF THE ASSESSEE TO O, THERE ARE AGREEMENTS OF BROKER APPOINTMENT WITH A FEW BUT IT IS NOT THE CONCL USIVE PROOF THAT THESE BROKERS HAVE REALLY RENDERED SOME SERVICE TO THE AS SESSEE COMPANY, SINCE THE BROKERS HAVE FAILED TO GIVE COMPLETE POSTAL ADDRESS , TELEPHONE NUMBERS OF THE CUSTOMERS CLAIMED TO BE PROVIDED BY THEM TO THE ASS ESSEE. NEITHER THE ASSESSEE NOR THE BROKERS COULD PROVIDE ANY EVIDENCE OF CORRESPONDENCE BETWEEN THEM EXCEPT AGREEMENT OF APPOINTMENT IN FEW C ASES AND ONE BILL RAISED AT THE FAG END OF THE YEAR FOR COMMISSION. F ACTS IN THE CASES MENTIONED ABOVE ARE VERY MUCH SIMILAR TO THE FACTS OF THE CAS E UNDER CONSIDERATION AS DISCUSSED ABOVE, TO DISALLOW COMMISSION PAID ON SALE S. THE ASSESSING OFFICER CONCLUDED THAT NO SERVICES HAD BEEN RENDERED BY THE SO CLAIMED BROKERS TO WARRANT ANY COMMISSION. THE COMMISSION PAID CLAIMED B Y THE ASSESSEE IS NOT HOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. HE RELIED ON THE DECISION IN THE CASE OF ASSAM PESTICIDES AND AGRO CHEMICALS VS. CIT 227 ITR 846 FOR DISCOUNT AND COMMISSION PAID WITHOUT ANY COMMERCIAL CONSIDERATION. THE ASSESSEE HAS NOT PROVIDED THE ADDRESSES OF THE CUST OMERS, ADDRESSES OF THE BROKERS, COPY OF ORDER BOOKING FORMS ETC., WHICH LEA DS TO THE CONCLUSION THAT ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 28 COMMISSION PAID BY THE ASSESSEE WAS WITHOUT ANY COMME RCIAL CONSIDERATION OR BUSINESS EXPEDIENCY AND WITHOUT ANY SERVICE RENDERED BY THEM, THESE TRANSACTIONS ARE SHAM AND ONLY A DEVICE TO REDUCE T HE INCOME OF THE ASSESSEE COMPANY. THEREFORE, HE MADE ADDITION OF RS.6,57,406/ - IN A.Y. 2003-04, RS. 20,57,895/- IN A.Y. 2004-05, RS. 21,86,974/- IN A.Y . 2005-06, RS. 25,78,399/- IN A.Y. 2006-07, RS. 44,69,998/- IN A.Y. 2007-08, R S. 1,05,59,019/- IN A.Y. 2008-09 AND RS. 1,67,08,266/- IN A.Y. 2009-10. ON VERIFICATION OF P&L ACCOUNT, BALANCE SHEET AND ANNEXURES ENCLOSED FOR A.YS. 2008-09 AND 2009-10 WITH THE RETURN OF INCOME, NO COMMISSION ON PURCHASE WAS EVIDENT WHEREAS COMMISSION ON SALE WAS SE PARATELY MENTIONED IN THE SCHEDULE FOR SELLING AND DISTRIBUTION EXPENS ES. THE ASSESSEE HAD PAID COMMISSION ON PURCHASES, THEREFORE, HE GAVE REASONA BLE OPPORTUNITY OF BEING HEARD BY ASKING TO IT THAT TO FILE COPY OF LEDGER A CCOUNT OF THE PARTIES, WHO HAVE BEEN PAID COMMISSION ON PURCHASE OF RAW MATERI AL WITH THEIR COMPLETE ADDRESSES AND TELEPHONE NUMBERS AND NAME AND ADDRES SES AND TELEPHONE NUMBERS OF PARTIES FROM WHOM RAW MATERIAL HAS BEEN PU RCHASED. THE LEARNED ASSESSING OFFICER OBSERVED THAT: HOWEVER, THE ASSESSEE DID NOT REPLY ON THE STIPULAT ED DATE. AFTER REMINDING SEVERAL TIMES OVER TELEPHONE AND VERBALLY , DETAILS WERE FILED ON 06/12/2010. ON GOING THROUGH THE DETAILS IT HAS BEEN FOUND THAT THE ASSESSEE HAS PAID COMMISSION OF RS. 4,18,95,182 /- DURING THE YEAR ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 29 ON PURCHASE OF RAW MATERIAL. HOWEVER, IT HAS BEEN NOT ICED FROM THE DETAILS FILED THAT THE ASSESSEE HAS NOT FILED INFOR MATION SOUGHT IN PARA 2 OF THE NOTICE I.E. NAME AND ADDRESSES AND TELEPHO NE NUMBERS OF PARTIES FROM WHO RAW MATERIAL HAS BEEN PURCHASED. THIS INFORMATION WAS CRUCIAL AS IT WAS REQUIRED TO MAKE ENQUIRIES FROM THESE PARTIES WHETHER THEY HAVE MADE SALE OF RAW MATERIAL I.E. INGO TS ETC. TO THE ASSESSEE COMPANY DIRECTLY OR THROUGH ANY BROKER. SI MILARLY, THE ASSESSEE HAS NOT FURNISHED THE TELEPHONE NUMBERS OF THE BROKERS, WHICH ALSO IS A DELIBERATE ACT, SO THAT INSTANT ENQU IRY IS NOT POSSIBLE. IT IS SURPRISING THAT THE ASSESSEE DOES NOT HAVE THE T ELEPHONE NUMBERS OF THE BROKERS WHOM IT HAS BEEN PAYING COMMISSION IN CRORES. MOREOVER, THESE COULD HAVE BEEN EASILY ARRANGED THE SE NOT READILY AVAILABLE, ONLY IF THE ASSESSEE WANTED TO PROVIDE TH E SAME. FROM THE CONDUCT OF THE ASSESSEE AS HAS BEEN DISCUSSED UNDER PARA FOR COMMISSION ON SALES ABOVE AND AS DISCUSSED ABOVE IN THIS PARA, IT IS APPARENT THAT THE ASSESSEE HAS DELIBERATELY DELAYED FURNISHING DESIRED INFORMATION IN ORDER TO AVOID DETECTION OF TRUE PIC TURE ABOUT THE COMMISSION EXPENDITURE CLAIMED ON ACCOUNT OF PURCHA SE OF RAW MATERIAL. MOREOVER, KAMDHENU ISPAT IS A WELL KNOW COM PANY AND INSTEAD OF IT SEARCHING A RAW MATERIAL SUPPLIER IT S HOULD BE OTHER WAY ROUND I.E. SUPPLIERS OF RAW MATERIAL SHOULD BE IN SE ARCH OF CONSUMER. IN ALMOST ALL THE CASES TO WHOM SUCH COMMISSION PAYM ENTS HAVE BEEN MADE BY THE ASSESSEE COMPANY, IT IS OBSERVED THAT T HE RESPECTIVE ACCOUNTS OF THE BROKERS HAVE BEEN CREDITED BY THE B ROKERAGE AMOUNT ON THE LAST DAY OF THE ACCOUNTING YEAR AND THE PAYM ENTS HAVE BEEN MADE IN THE NEXT YEAR. BILLS HAVE BEEN RAISED BY AL L THESE SAID BROKERS MOSTLY ON THE LAST DAY OF THE ACCOUNTING YEAR OR IN THE LAST MONTH OF ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 30 THE ACCOUNTING YEAR. NORMAL PRACTICE OF THE BUSINES S REQUIRES A BILL TO BE RAISED AS AND WHEN IT BECOMES DUE. IT IS SURPRISI NG TO NOTICE THAT THESE SO CALLED BROKERS PROVIDE SERVICE IN A YEAR A ND SILENTLY WAIT FOR NEXT 6 MONTHS OR MORE TO RECEIVE PAYMENT AGAINST TH E SERVICE PROVIDED. NO PRUDENT PERSON WOULD LIKE TO DO A JOB A ND DEMAND REMUNERATION AGAINST IT AFTER 6 MONTHS OR A YEAR. SOME OF THE BROKERS NAMELY M/S NARESH CHAND JAIN (H UF), M/S PUNIT JAIN & SONS (HUF) BELONG TO M/S ASHIANA ISPAT LTD. GROUP OF CASES, WHICH IS UNDER SCRUTINY ASSESSMENT WITH THE UNDERSIGN ED AND IT HAS ALSO BEEN MANUFACTURING KAMDHENU BRAND OF IRON BA RS INCLUDING TMT BARS. IN SUCH CIRCUMSTANCES IT WOULD BE NAVE TO A CCEPT THAT PERSONS BELONGING TO M/S ASHIANA ISPAT LTD. WOULD AR RANGE CUSTOMERS FOR M/S KAMDHENU ISPAT LTD. WHEN THEY THEMSELVES NEE D RAW MATERIAL FOR THEIR OWN COMPANY AND HAVE BEEN PAYING HEAVY CO MMISSION ON PURCHASE OF RAW MATERIAL AS HAS BEEN NOTED DURING TH E ASSESSMENT FOR A.Y. 2003-04 TO 2009-10 IN THAT CASE. FROM THE CONDUCT OF ASSESSEE AND NON FILING OF COMP LETE DESIRED INFORMATION AND DELAYING THE EVEN PART REPLY AS DIS CUSSED ABOVE, THE ASSESSEE FAILS TO PROVE NEED OF THE BUSINESS OF THE ASSESSEE TO PAY COMMISSION FOR PURCHASE OF RAW MATERIAL. WHOLE GAMU T OF RAISING BILL FOR COMMISSION AT THE FAG END OF THE YEAR AND RECEI VING CHEQUES FROM THE ASSESSEE COMPANY FOR COMMISSION IN THE NEXT YEA R IS A MAKE BELIEVE ARRANGEMENT BETWEEN THE ASSESSEE COMPANY AND THESE SO CLAIMED BROKERS TO SIPHON OFF THE PROFIT FROM TAXAT ION. THE BILLS ARE RAISED AT THE FAG END OF THE YEAR AFTER CALCULATING THE ADJUSTMENT TO BE MADE IN THE P&L ACCOUNT TO REDUCE THE PROFIT. ON TH E ISSUE OF ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 31 COMMISSION ON PURCHASES ALSO, IN RELY UPON THE DECI SIONS AS HAS BEEN MENTIONED IN ISSUE ABOUT THE COMMISSION ON SALE IN PARA ABOVE. IN VIEW OF THE FACTS OF THE CASE REGARDING PAYING O F COMMISSION TO THE SO CLAIMED BROKERS AS DISCUSSED ABOVE, IT IS HELD T HAT NO SERVICES HAVE BEEN PROVIDED BY THE SO CLAIMED BROKERS TO WARRANT A NY COMMISSION. AS SUCH THE AMOUNT OF COMMISSION OF RS. 4,18,95,182 CLAIMED TO BE PAID BY THE ASSESSEE COMPANY IS NOT PROVED TO BE EX PENDED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE COMPANY. THE REFORE, THE CLAIM OF COMMISSION AMOUNTING TO RS. 4,18,95,182/- IS DISALLOWED, NOT BEING WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE COMPANY AN ADDITION OF RS. 4,18,95,182/- I S MADE TO THE INCOME OF THE ASSESSEE. THE SAME FINDINGS HAD BEEN GIVEN IN A.Y. 2009-10 FOR DISALLOWING COMMISSION OF RS. 35,73,721/-. 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A ), WHO HAD PASSED A COMBINED ORDER DATED 18/5/2012 FOR A.YS. 2003-04 TO 2006-07 AND HELD THAT THIS ISSUE CAME UP FOR CONSIDERATION IN THE APPEAL FOR A.YS. 2003-04 TO 2006- 07 IN APPEAL NO. 860 TO 862/2010-11 WHEREIN VIDE CO MMON APPEAL ORDER DATED 17/5/2012, AFTER CONSIDERING THE OBSERVATIONS AND ARGUMENTS OF BOTH THE SIDES I.E. A.O/A.R., THE REMAND REPORT OF PRESE NT A.O. AND DISCUSSING THE MATTER IN DETAIL, HE HELD THAT BROKERS, WHO HAD DULY EXECUTED AGREEMENT ON ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 32 STAMP PAPER DURING THE YEAR AND FURTHER BROKERS WHO HAD BEEN CONTINUING FROM EARLIER YEARS AND HAVING DULY EXECUTED AGREEME NT ON STAMP PAPER IN OTHER YEARS THOUGH IN THE RELEVANT YEAR, THE AGREEM ENT WAS ON LETTER HEAD, CAN BE CONSIDERED TO BE GENUINE AND HAD BEEN PAID C OMMISSION FOR THE PURPOSE OF AFFECTING THE SALES. AS THE FACTS AND CI RCUMSTANCES FOR THE YEARS UNDER CONSIDERATION ARE ALSO SAME, IN VIEW OF THE DI SCUSSION AND REASONING GIVEN IN THE ABOVE SAID APPEAL ORDER, THE SAME FIND ING APPLIES IN THE PRESENT ORDER ALSO. HE HAS GIVEN DETAILS OF BROKERS, WHO HAS EXECUTED AGREEMENT DULY ON STAMP PAPER FOR A.Y. 2003-04 WERE 11 IN NUMBERS, FOR COMMISSION OF RS. 4,57,229/- WAS PAID. REMAINING BROKERS WERE HELD NON -GENUINE CONSIDERING THAT THOUGH THEY DO NOT HAVE AGREEMENT ON STAMP PAP ER DURING THE YEAR BUT CERTAINLY IN OTHER YEARS, THEY HAD AGREEMENT DULY O N STAMP PAPER AND MOREOVER THEY HAVE BEEN WORKING AS BROKERS FOR THE A PPELLANT FOR LAST 4-5 YEARS OR EVEN MORE. LIST OF THESE BROKERS IS GIVEN IN THE AFORESAID APPEAL ORDER AT PARA 8.5. IN A.Y. 2003-04, TWO BROKERS NAMELY M/S AJAY TRADERS AND SH. VIKRANT MAHAJAN HAD BEEN PAID COMMISSION AMOUNTING TO RS. 61,915/-. ACCORDINGLY, ADDITION TO THE EXTENT OF RS. 5,19,144 /- ON ACCOUNT OF COMMISSION PAID TO 11 PARTIES MENTIONED IN SCHEDULE BY THE LEA RNED CIT(A) ON PAGE 3 OF HIS ORDER AND TWO PARTIES REFERRED ABOVE I.E. AJAY TR ADERS AND SH. VIKRANT ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 33 MAHAJAN WAS DELETED AND BALANCE ADDITION OF RS. 1,38 ,262/- WAS CONFIRMED BY THE LEARNED CIT(A). 3.1 IN A.Y. 2004-05, FOUR BROKERS HAD DULY EXECUTED AGREEMENT ON STAMP PAPER AND COMMISSION OF RS. 6,54,666/- WAS PAID TO T HEM. APART FROM THE ABOVE, THERE ARE FOUR BROKERS OUT OF THE LIST OF 10 BROKERS WHO HAD BEEN TREATED NOT NON-GENUINE NAMELY SH. MAMAN CHAND GOYA L, NARESH KUMAR GARG, VIKRANT MAHAJAN AND M/S AJAY TRADERS AND COMM ISSION PAID TO THEM WAS TOTALING TO RS. 4,32,914/-. ACCORDINGLY, ADDITION T O THE EXTENT OF RS. 10,87,580/- (654666+432914) HAD BEEN DELETED BY THE LEARNED CIT(A) AND BALANCE ADDITION OF RS. 9,70,314/- HAD BEEN CONFIRM ED IN A.Y. 2004-05 UNDER THE HEAD COMMISSION ON SALE. 3.2 IN A.Y. 2005-06, 10 BROKERS HAD DULY EXECUTED A GREEMENT ON STAMP PAPER AND COMMISSION AMOUNT PAID ON SALE AT RS. 19, 19,086/-. APART FROM THE ABOVE 10 BROKERS MENTIONED BY THE LEARNED CIT(A) AT PAGE 5 OF HIS ORDER, THERE WERE TWO BROKERS OUT OF THE LIST OF 10 BROKERS, WHO HAD BEEN TREATED NON NON-GENUINE NAMELY SH. ANIL KUMAR AND SH. NARES H KUMAR GARG AND COMMISSION PAID TO THEM WAS TOTAING TO RS. 1,85,336/ -. ACCORDINGLY ADDITION TO THE EXTENT OF RS. 21,04,422/- (1919086+185363) WA S DELETED AND BALANCE ADDITION OF RS. 82,552/- WAS CONFIRMED BY THE LEARNE D CIT(A). ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 34 3.3 IN A.Y. 2006-07, 8 BROKERS HAD EXECUTED AGREEME NT ON STAMP PAPER AND COMMISSION PAID TO THEM WAS RS. 14,16,949/- AS M ENTIONED BY THE LEARNED CIT(A) AT PAGE 6 OF HIS ORDER. APART FROM T HE ABOVE, THERE WERE THREE BROKERS OUT OF LIST OF 10 BROKERS, WHO HAD BEEN TRE ATED NOT NON-GENUINE NAMELY SH. GULSHAN GUPTA, SH. MAMAN CHAND GOYAL AND SH. SANJAY GUPTA AND COMMISSION PAID TO THEM IS TOTALING TO RS. 3,76 ,029/-. ACCORDINGLY, ADDITION TO THE EXTENT OF RS. 17,92,978/- (1416949+ 376029) WAS DELETED AND BALANCE ADDITION OF RS. 7,85,421/- WAS CONFIRMED BY THE LEARNED CIT(A). 3.4 IN A.Y. 2007-08, THE LEARNED CIT(A) OBSERVED TH AT OUT OF 29 BROKERS FOR SALE OF STEEL, THE AGREEMENT EXECUTED ON STAMP PAPE R DURING THE YEAR WAS ONLY IN RESPECT OF 3 BROKERS TO WHOM TOTAL COMMISSIO N OF RS. 7,61,774/- HAD BEEN PAID. THOUGH AGREEMENT WITH OTHER 8 PARTIES OUT OF REMAINING 26 PARTIES WAS ONLY ON LETTERHEAD OF THE APPELLANT COMPANY DURI NG THE YEAR BUT AS SEEN IN A.Y. 2009-10 WHEREIN THERE WERE TWO PARTIES NAMELY SH. JAGDISH MANCHANDA AND M/S AJAY TRADERS, WHO HAD BEEN CONTINU OUSLY WORKING FOR LAST SO MANY YEARS. THERE WERE SIX MORE PARTIES NAMEL Y SH. GULSHAN GUPTA, SH. DHARMPAL KHERA, M/S GARG STEEL, SH. MAMAN CHAND GUPTA, SH. SANJAY GUPTA AND SH. VIKRANT MAHAJAN, WHO HAD WORKED CONTINU OUSLY FOR MANY YEARS AND ENTERED INTO AGREEMENT DULY ON STAMP PAPER FOR AT LEAST 3 YEARS (EXCEPT IN CASE OF M/S GARG STEEL WHO HAS BEEN WITH THE COMPA NY AS SALES BROKER FOR ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 35 A.Y. 2007-08, 2008-09 AND A.Y. 2009-10, WHEREIN STAM P PAPER AGREEMENT IS IN TWO YEARS). ON THE BASIS OF FINDINGS GIVEN IN A.Y . 2009-10, HE INFERRED THAT THESE 8 PARTIES WITH WHOM APPELLANT HAD GOT DULY EXEC UTED AGREEMENT ON STAMP PAPER IN OTHER YEARS, HAVE BEEN CONTINUOUSLY WORKING AS SALES BROKER DURING THE YEAR ALSO. TOTAL COMMISSION AMOUNT PAID T O THESE 8 PARTIES DURING A.Y. 2007-08 COMES TO RS. 12,86,150/-. THE LEARNED C IT(A) HAD GIVEN A CHART ON PAGE NO. 47 OF HIS ORDER OF 13 PARTIES, WHO GOT C OMMISSION AFTER EXECUTING THE STAMP PAPER, WHICH PERTAINS TO OTHER YEARS ALSO WITH DETAIL OF COMMISSION PAID FROM A.Y. 2003-04 TO 2009-10, WHICH IS REPRODU CED AS UNDER: S. NO PAN NAME OF PERSON/PAYEE A.Y. 2003-04 A.Y. 2004-05 A.Y. 2005-06 A.Y. 2006-07 A.Y. 2007-08 A.Y. 2008-09 A.Y. 2009-10 REMARKS (RS.) (RS.) (RS.) (RS.) (RS.) (RS.) (RS.) SP AGREEMENT 1. AAFFA8750Q AJAY TRADERS 11,743 67,355 133348 (SP) 76715 (SP) 100,872 26,496 30,496 A.Y. 05 - 06, 06-07 2. AALPM1419Q JAGDISH MANCHANDA - - 302462 (SP) 365493 (SP) 120,656 432,398 1 50,049 A.Y. 05 - 06, 06-07 3. AAIPG5053B GULSHAN GUPTA 112631 (SP) - - 75,338 75,369 125501 (SP) 165514 (SP) A.Y. 03 - 04, 08-09, 09- 10 4. AAXPK9526O DHARMPAL KHERA 55729 (SP) 125142 (SP) - - 111,549 101736 (SP) 94768 (SP) A.Y. 03 - 04, 04-05, 08- 09, 09-10 5. ABJPA7704M GARG STEEL - - - - 350,883 461260 (SP) 360193 (SP) A.Y. 08 - 09, 09-10 6. AAOPG2435P MAMAN CHAND GOYAL 50057 (SP) 110,386 86004 (SP) 100,507 150,966 150896 (SP) 257678 (SP) A.Y. 03 - 04, 05-06, 08- 09, 09-10 7. AAHPG2008D SANJAY GUPTA 63027 (SP) - - 200,184 150,006 250116 (SP) 201079 (SP) A.Y. 03 - 04, 08-09, 09- 10 8. ABJTM4381N ANIL KUMAR - - 129,004 100567 (SP) 250196 (SP) 200256 (SP) - A.Y. 06 - 07, 07-08, 08- 09 9. AHNPM4153C VIKRANT MAHAJAN 50,172 125,031 100317 (SP) 50388 (SP) 225,849 200498 (SP) 205636 (SP) A.Y. 05 - 06, 06-07, 08- 09, 09-10 10. AEUPG4303A NARESH KUMAR GARG 63077 (SP) 130,142 56,332 100453 (SP) 150450 (SP) 150158 (SP) 129295 (SP) A.Y. 03 - 04, 06-07 TO 10 TOTAL 61,915 432,914 185,336 376,029 1,286,1 50 458,894 180,545 ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 36 ACCORDINGLY, ADDITION OF RS. 20,47,924/- (RS. 76177 4+1286150) WAS DELETED AND BALANCE ADDITION OF RS. 24,22,074/- WAS CONFIRME D IN A.Y. 2007-08 IN RESPECT OF COMMISSION ON SALE. 3.5 IN A.Y. 2008-09, THE LEARNED CIT(A) OBSERVED THA T OUT OF TOTAL 42 BROKERS FOR COMMISSION ON SALE OF STEEL PRODUCTS, T HE AGREEMENT DULY EXECUTED ON STAMP PAPER DURING THE FINANCIAL YEAR WA S IN CASE OF 28 BROKERS. THE TOTAL COMMISSION AMOUNT PAID TO THESE 28 BROKERS WAS AMOUNTING TO RS. 84,24,284/- WHICH HE HAS CONSIDERED ALLOWABLE AS PER FINDING GIVEN FOR A.Y. 2009-10 IN RESPECT OF COMMISSION ON SALE OF STEEL PRODUCT, INSTEAD OF ENTIRE AMOUNT TREATED TO BE ALLOWABLE BY THE PRESENT A.O. I N THE REMAND REPORT IN ALL THE YEARS. HE GAVE DETAILS OF COMMISSION PAID AND A GREEMENT ON STAMP PAPER ON PAGE 45 OF HIS ORDER. BESIDES ABOVE, AS DISCUSSE D IN A.Y. 2009-10, SOME BROKERS HAVE BEEN WORKING FOR THE APPELLANT COMPANY FOR LAST 4-5 YEARS AND EVEN MORE AND THE APPELLANT HAS DULY EXECUTED AGREE MENT ON STAMP PAPER WITH THEM MAINLY IN INITIAL YEARS AND SINCE BUSINESS RELATIONSHIP CONTINUED WITH THE CONFIDENCE AND TRUST, IN SOME YEARS THE AGREEME NT ON STAMP PAPER WAS DISPENSED WITH BUT IN ANY CASE THESE PARTIES CANNOT BE CONSIDERED AS NON- GENUINE AND THEY HAVE RENDERED SERVICES. SUCH BROKE RS ARE SH. JAGDISH MANCHANDA AND M/S AJAY TRADERS AND COMMISSION PAID T O THEM IS RS. 4,32,398 + RS. 26,496, IN TOTAL RS. 4,58,894/-. HE FURTHER OBSERVED THAT TOTAL ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 37 COMMISSION WHICH CAN BE TREATED AS NOT NON-GENUINE A ND THUS ALLOWABLE COMES TO RS. 88,83,178/- (RS. 84,24,284 + 4,58,894) IS AGAINST CLAIM BY THE ASSESSEE AT RS. 1,01,59,019/-. ACCORDINGLY, HE DELE TED THE ADDITION OF RS. 88,83,178/- COMMISSION OF SALE AND REMAINING AMOUNT OF RS. 12,75,841/- WAS CONFIRMED FOR A.Y. 2008-09. 3.6 THE LEARNED CIT(A) OBSERVED THAT DURING THE YEAR A.Y. 2008-09, THE ASSESSEE HAD CLAIMED COMMISSION ON PURCHASE AT RS. 4,18,95,182/-. THE LEARNED CIT(A) FOUND THAT M/S SHALIMAR KRAFTS & TISS UES PVT. LTD. (IN SHORT M/S SKT) TO WHOM COMMISSION ON PURCHASE WAS PAID AT R S. 35,13,323/- WAS DEALING IN VARIOUS KINDS OF PAPERS INCLUDING TISSUE PAPER, CRAFT PAPER, CARD BOARD AND OTHER TYPES OF BOARDS ETC. THE REGISTERED OFFICE AND FACTORY AT MUZZAFARNAGAR AND HEAD OFFICE IS ALSO SITUATED AT M UZZAFARNAGAR. HE DID NOT FIND ANY BUSINESS RELATIONSHIP WITH SUPPLIER OF INGO TS, WHICH WAS MAINLY IN THE IRON STEEL PRODUCING BELTS GEOGRAPHICALLY FAR AWAY F ROM THE NORMAL PLACE OF BUSINESS OF M/S SKT. NO EVIDENCE HAS BEEN FILED EIT HER BEFORE THE ASSESSING OFFICER OR BEFORE HIM THAT M/S SKT WAS HAVING EXPERTI SE AND EXPERIENCE IN PURCHASE/ARRANGING PURCHASE OF M.S. INGOTS/BILLETS. THE LEARNED CIT(A) HAS REPRODUCED ON PAGES 49 AND 50, THE MAIN OBJECT OF M /S SKT AS PER MEMORANDUM OF ARTICLE OF ASSOCIATION, IT HAS BEEN E MPHASIZED BY THE LEARNED CIT(A) THAT PRIMARILY SKT WAS ENGAGED IN ACTIVITIES IN VARIOUS KINDS OF PAPERS ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 38 AND NO WHERE MENTIONED THAT IT DEALS M.S. INGOTS/BIL LETS. EVEN IN ANCILLARY OR INCIDENT OBJECTS, M/S SKT WAS NOT FOUND IN THE BUSIN ESS OF SUPPLY OF M.S. INGOTS FOR WHICH COMMISSION HAD BEEN PAID TO IT. FU RTHER IT HAS BEEN ALSO FOUND BY HIM THAT COMMISSION BILL WAS ISSUED BY THE M/S SKT ON 31/3/2008 I.E. LAST DAY OF FINANCIAL YEAR WITH BILL NO. 1, WHIC H IS NOT POSSIBLE. HE ALSO FOUND MISTAKE IN CALCULATION OF COMMISSION, BUT WHIC H WAS NOT SO SIGNIFICANT. ACCORDINGLY, THE COMMISSION PAID ON PURCHASE SHOWN TO BE MADE TO M/S SKT AMOUNTING TO RS. 35,13,323/- WAS CONFIRMED BY THE LE ARNED CIT(A). THE REMAINING COMMISSION PAID TO 11 PARTIES TO WHOM COMM ISSION ON PURCHASE CLAIMED AT RS. 31,66,539/-, HE FOUND THAT THESE PAR TIES WERE APPEARING IN THE LIST OF COMMISSION PAID ON SALE OF TMT AND CTD BARS I N OTHER YEARS. THESE PARTIES CAN BE SAID TO BE IN CONTACT WITH THE LOCAL DEALERS TO WHOM THEY CAN ARRANGE SALE OF CTD AND TMT BARS BUT NO EVIDENCE HAS B EEN FURNISHED BY THE AR EITHER IN ORIGINAL ASSESSMENT PROCEEDINGS OR IN APPELLATE PROCEEDINGS TO SUPPORT THE ISSUE THAT THESE PARTIES HAVE REALLY GO T EXPERIENCE AND EXPERTISE AND MOREOVER, HAVE REALLY CONTACTS WITH SUPPLIERS OF INGOTS SO AS TO ENABLE PURCHASE OF INGOTS BY THE APPELLANT COMPANY AT COMP ETITIVE RATES. MOREOVER, AT LEAST IN RESPECT OF 5 PARTIES EVEN NO FORMAL AGR EEMENT ON STAMP PAPER WAS FOUND EXECUTED. FURTHER EVEN THERE IS NO FORMAL AGR EEMENT ON LETTER HEAD. THE LEARNED CIT(A) DISAGREED WITH THE COMMENTS SENT B Y THE LEARNED A.O. IN ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 39 THE REMAND REPORT FOR ALLOWABILITY OF COMMISSION REL ATED TO PURCHASES, THUS HE CONFIRMED COMMISSION ON PURCHASE OF 11 PARTIES AT R S. 31,66,539/-. THE LEARNED CIT(A), THUS ALLOWED COMMISSION ON PURCHASE IN CASE OF M/S PREM STEEL PVT. LTD., M/S DOABA ROLLING MILLS PVT. LTD A ND M/S SHRI RAM METTALLOYS PVT. LTD. TOTALING TO RS. 3,52,15,320/-. REMAINING ADDITION AS MENTIONED ABOVE RS. 66,79,862/- (35,13,323+31,66,539) HAS BEEN CONF IRMED. 3.7 IN A.Y. 2009-10, THE LEARNED ASSESSING OFFICER DISALLOWED COMMISSION ON SALE AT RS. 1,67,08,266/- OUT OF WHICH, THE LEARN ED CIT(A) ALLOWED THE COMMISSION AS GENUINE AT RS. 1,63,20,815/-. THE TOT AL COMMISSION INCLUDES COMMISSION ON SALE OF STEEL AT RS. 67,58,832/- AND COMMISSION ON PAINT BUSINESS AT RS. 99,49,434/-. OUT OF TOTAL BROKERS S HOWN BY THE ASSESSEE, 28 BROKERS FOUND GENUINE, COMMISSION ON SALE TO WHOM CO MMISSION WAS PAID AT RS. 61,90,836/- IN CASE OF TWO PARTIES RS. 1,80,545/ -. THUS, HE DELETED THE TOTAL ADDITION OF RS. 63,71,381/- AND CONFIRMED THE ADDITION OF RS. 3,87,451/- UNDER THE HEAD COMMISSION ON SALE. THE COMMISSION PA ID IN PAINT DIVISION ON SALE IS ALLOWED FULLY BY THE LEARNED CIT(A). IN A.Y. 2009-10, THE COMMISSION ON PURCHASE WAS DISALLOWED BY THE ASSESSING OFFICER A T RS. 35,73,721/- PAID TO 13 PARTIES. IT IS OBSERVED BY THE LEARNED CIT(A) THAT FEW OF THE PARTIES NAMELY SH. ABHINAV AGARWAL, GHANSHYAM AGARWAL, SUSHIL AGARWAL AND SH. UMESH KUMAR AND M/S SHRI RAM METALLOYS PVT. LTD. AR E APPEARING IN A.Y. ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 40 2008-09 ALSO. THE COMMISSION SHOWN TO BE PAID TO THE M SO DISALLOWED BY THE ASSESSING OFFICER HAS BEEN SUSTAINED IN A.Y. 2009-1 0 ON THE BASIS OF FINDINGS GIVEN FOR A.Y. 2008-09 EXCEPT IN CASE OF M/S SHRI R AM METALLOYS PVT. LTD., WHICH HAS BEEN DELETED. THE FACTS REGARDING REMAINING 8 PARTIES ASSESSEE MORE OR LESS SAME AS THE FACTS OF THE VARIOUS PARTI ES OF THE COMMISSION ON PURCHASES IN A.Y. 2008-09. IN CASE OF 5 PARTIES, TH ERE IS NEITHER ANY AGREEMENT ON STAMP PAPER NOR EVEN ON THE LETTER HEA D. ACCORDINGLY, THE DISALLOWANCE OF COMMISSION ON PURCHASE SO MADE BY TH E ASSESSING OFFICER IN A.Y. 2009-10 IN RESPECT OF ALL PARTIES EXCEPT M/S S HRI RAM METALLOYS PVT. LTD. HAS BEEN CONFIRMED AMOUNTING TO RS. 29,65,592/- AND ADDITION OF RS. 6,08,129/- DELETED I.E. COMMISSION PAID ON PURCHASE TO M/S SHRI RAM METALLOYS PVT. LTD.. 4. NOW THE ASSESSEE IS IN APPEALS BEFORE US. 5. THE LEARNED A.R. FOR THE ASSESSEE SUBMITTED THAT THE PARTIES TO WHOM COMMISSION HAVE BEEN PAID HAVE EITHER CONFIRMED DIR ECTLY TO THE DEPARTMENT IN RESPONSE TO NOTICES U/S 133(6) OR THE APPELLANT HAS FILED CONFIRMATION FROM THE PARTIES CONCERNED, FOR WHICH HE FILED DETAILED P APER BOOK FOR ALL THE YEARS UNDER THE HEAD CONFIRMATION FILED BEFORE THE ASSESS ING OFFICER DIRECTLY AND CONFIRMATION FILED BY THE APPELLANT BEFORE THE LEAR NED CIT(A). THE ASSESSEE HAS GIVEN NAMES, ADDRESSES, PAN NUMBERS, COPY OF CO NFIRMATION ALONGWITH ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 41 COPY OF ACCOUNT IN SOME CASES, COPY OF AGREEMENT AN D COPY OF BANK ACCOUNT OF RECIPIENTS. THE LEARNED CIT(A) DISALLOWED THE CLAIM OF COMMISSION PRIMARILY FOR THE REASON THAT THE AGREEMENT WITH THE PARTIES WE RE NOT ON THE STAMP PAPER OR IN SOME CASES PAYMENT WAS MADE WITHOUT BEING AGREEMENT IN WRITING. THE LEARNED CIT(A) ALLOWED THE CLAIM OF COMMI SSION FOR SUCH PARTIES, ONE AGREEMENT WAS ON STAMP PAPER IN THE YEAR UNDER C ONSIDERATION OR IN ANY EARLIER YEARS. IT IS FURTHER ARGUED THAT IN ABSENCE OF ANY CONTRARY MATERIAL AGAINST EVIDENCE PRODUCED BY THE ASSESSEE BY WAY OF CONFIRMATIONS OF COMMISSION PAID TO VARIOUS PARTIES WAS ALLOWABLE U/S 37(1) OF THE ACT AS AN EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR T HE BUSINESS PURPOSES. HE RELIED ON THE DECISION IN THE CASE OF SKYLARK CHIT FUND & FINANCIERS (P) LTD. VS. CIT (1996) 56 TTJ (DEL TRIB) 669. THE RECIPIENT HAD CAT EGORICALLY STATED THAT IT HAD RECEIVED PAYMENT OF COMMISSION FOR WHICH THE ASS ESSEE RELIED UPON THE DECISION IN CASE OF SUPREME ROYANS (P) LTD. VS. DY. CIT (2006) 104 TTJ 896 (JOD-TRIB). HE FURTHER RELIED ON THE FOLLOWING CASE L AWS:- (I) DHARAMVIR DHIR VS. CIT (1961) 42 ITR 7 (SC). (II) CALCUTTA LANDING & SHIPPING CO. LTD. VS. CIT ( 1967) 65 ITR 1 (CAL). (III) CIT VS. PANIPAT WOOLLEN & GENERAL MILLS CO. L TD. (1976) 103 ITR 66 (SC). (IV) CEPT VS. N.M. RAYALOO IYER & SONS (1961) 41 ITR 671 (SC). ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 42 THE A.R. FURTHER ARGUED THAT THE ASSESSEE HAS FURNIS HED COPY OF AGREEMENT, COPY OF RECEIPT BILLS/INVOICES FROM THE BROKERS, CO NFIRMATION FOR COMMISSION FROM THE RECIPIENTS, PAYMENT MADE TO THE BROKERS TH ROUGH BANKING CHANNEL, PAYMENT OF COMMISSION ON SALE OR PURCHASE AFFECTED THROUGH AGENTS BEING FULLY JUSTIFIED ON ACCOUNT OF COMMERCIAL EXPEDIENCY , THE PAYMENT OF COMMISSION BEING A REGULAR FEATURE OF THE ASSESSEE COMPANYS OPERATION AND AN ACCEPTED TRADE PRACTICE AND CLAIM OF COMMISSION ACCEPTED IN THE SCRUTINY ASSESSMENTS MADE U/S 143(3) FOR THE A.YS. 2003-04, 2004-05 AND 2005-06, 2010-11 AND 2011-12. IN VIEW OF WHICH THE PAST HISTO RY CANNOT BE IGNORED. THE EXPENDITURE MADE IS FOR BONAFIDE BUSINESS EXIGEN CY AND HAS DIRECT NEXUS WITH THE BUSINESS OF ASSESSEE. THE RECIPIENT HAD REND ERED SERVICES BY EITHER IN SALE OR IN PURCHASE ON WHICH COMMISSION WAS PAID, WHIC H WAS PAID IN FURTHERANCE OF BUSINESS. THE ASSESSEE HAD PRODUCED A LL POSSIBLE EVIDENCES TO PROVE THESE EXPENSES GENUINE AND INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE BOOKS OF ACCOUNT OF THE ASS ESSEE ARE AUDITED, NO FAULT WAS FOUND OUT BY THE ASSESSING OFFICER IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. IT IS SETTLED PRINCIPLE S OF LAW THAT NO ADDITION/DISALLOWANCE CAN BE MADE ON SUSPICION, SURM ISES AND CONJECTURES AS HELD BY THE HON'BLE SUPREME COURT IN FOLLOWING CASES :- (I) DHIRAJLAL GIRDHARILAL VS. CIT 26 ITR 736. ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 43 (II) OMAR SALAY MOHAMMED SAIT VS. CIT 37 ITR 151. (III) DHAKESHWARI COTTON MILLS LTD. VS. CIT 26 ITR 775. (IV) LALCHAND BHAGAT AMBICA RAM VS. CIT 37 ITR 288. THEREFORE, HE PRAYED TO ALLOW THE APPEAL OF THE ASSES SEE IN ALL THE YEARS. 6. AT THE OUTSET, THE LEARNED D.R. VEHEMENTLY SUPPO RTED THE ORDER OF LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS FILED CONFIRMAT IONS EITHER BEFORE THE ASSESSING OFFICER ASSESSING OFFICER OR BEFORE THE C IT(A). THE LEARNED CIT(A) HAD CALLED REMAND REPORT ON ADDITIONAL EVIDENCE FUR NISHED BEFORE HIM WHERE ASSESSING OFFICER HAS ACCEPTED THE COMMISSION PAID EITHER ON SALE OR PURCHASE AS GENUINE. HOWEVER, LEARNED CIT(A) HAS NOT ACCEPTED THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER AND DEVIATED FRO M THE FINDINGS OF THE ASSESSING OFFICER DURING THE APPELLATE PROCEEDINGS BY GIVING REASONS FOR DEVIATION. IT IS A FACT THAT IN THE LINE OF BUSINES S, MOSTLY GOODS IS BEING SOLD THROUGH BROKERS ON WHICH COMMISSION IS PAID. PURCHAS E ALSO MADE THROUGH BROKERS, THEREFORE, IT REQUIRES TO PAY COMMISSION T O THE MIDDLE MAN WHO MAKE AVAILABLE OF GOODS FROM THE MARKET. THE ASSESSEE HAS SUBMITTED CONFIRMATIONS, PAN NUMBER, COPY OF RETURN IN SOME C ASE COPY OF BANK ACCOUNT WITH CONFIRMATIONS. ON VERIFICATION OF CONFIRMATIONS , IN ALL THE CASES TDS HAS BEEN DEDUCTED BY THE ASSESSEE ON COMMISSION. THE LEA RNED CIT(A) SPECIFICALLY ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 44 MENTIONED COMMISSION PAID TO M/S SKT ON PURCHASE, W HO IS DEALING IN TISSUE PAPER, CRAFT PAPER, CARD BOARD AND OTHER TYPES OF B OARDS ETC., IN A.Y. 2008-09. THE AR SUBMITTED THAT DETAILS OF COMMISSION PAID TO IT ON PURCHASES MADE BY THE ASSESSEE ALONGWITH COPY OF BILLS, CONFIRMATIONS AND BANK STATEMENTS OF ASSESSEE COMPANY EVIDENCING THE PAYMENT OF COMMISSI ON HAS BEEN FILED BEFORE THE LEARNED CIT(A). HE PARTICULARLY DREW OUR ATTENTION ON PAGE 137 TO 151 OF THE PAPER BOOK FOR A.Y. 2008-09, WHICH IS COP Y OF CONFIRMATION WITH PAN NUMBER, COPY OF BANK ACCOUNT OF THE ASSESSEE CO MPANY, WHICH SHOWS THAT THE COMMISSION PAYMENT WAS MADE THROUGH BANKING CHANNEL. IT ALSO FILED COPY OF AGREEMENT DATED 21/3/2007 BETWEEN ASSESSEE A ND M/S SKT. IN THIS CASE ALSO, THE ASSESSEE HAD DEDUCTED TDS AT RS. 3,94 ,757/-. IT IS FURTHER REVEALED FROM THE CONFIRMATION THAT THE ASSESSEE H AD PAID THIS COMMISSION IN SUBSEQUENT YEAR TO M/S SKT AFTER DEDUCTING TDS. THERE FORE, WE ARE OF THE CONSIDERED VIEW THAT ADDITIONS CONFIRMED BY THE LEAR NED CIT(A) DESERVE TO BE DELETED. ACCORDINGLY, WE ALLOW ALL THE SEVEN APPEALS OF THE ASSESSEE FOR ALL THE ASSESSMENT YEARS. 8. THE ASSESSEE RAISED A TECHNICAL GROUND THAT THE L EARNED CIT(A) HAD GROSSLY ERRED IN CONFIRMING THE ACTION OF THE ASSES SING OFFICER FOR MAKING ADDITION U/S 153A OF THE ACT WITHOUT APPRECIATING TH E FACT THAT NO INCRIMINATING MATERIAL OR DOCUMENTS WERE FOUND DURIN G THE COURSE OF SEARCH ITA 662 TO 668/JP/2012 KAMDHENU ISPAT LTD. VS. ACIT 45 U/S 132 OF THE ACT. SINCE WE HAVE ALLOWED THE APPEALS ON MERIT, THEREFORE, ON TECHNICAL GROUND WE ARE NOT GIVING ANY FINDING ON IT . 9. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSE SSEE FOR ALL THE ASSESSMENT YEARS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/11/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 21 ST NOVEMBER 2014 * RANJAN COPY FORWARDED TO :- 1. M/S KAMDHENU ISPAT LTD, BHIWADI. 2. THE A.C.I.T., CIRCLE, ALWAR. 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NOS. 662 TO 668/JP/2012) BY ORDER, AR ITAT JAIPUR.