The ACIT,(OSD)-1, Circle-4, Ahmedabad V. Moly Metal Pvt.Ltd., Ahmedabad

ITA 782/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72874 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N DIVETIA
• Assessee Lawyers: J P JHANGIDSR
• Keywords: Capital asset converted into stock in trade; Principle of natural justice; Question of law; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 528 & 782/AHD/2013 (ASSESSMENT YEAR: 2009-10) M/S MOLY METAL PVT. LTD. 202, ADITYA BUILDING MITHAKHALI SIX ROAD, MITHAKALI, AHMEDABAD-380006 V/S ACIT (OSD)-1, CIR-4 AHMEDABAD (APPELLANT) (RESPONDENT) THE DCIT(OSD)-1, CIRCLE-4 AHMEDABAD V/S M/S MOLY METAL PVT. LTD. 202, ADITYA BUILDING MITHAKHALI SIX ROAD, MITHAKALI, AHMEDABAD-380006 (APPELLANT) (RESPONDENT) PAN: AAECM 6720C APPELLANT BY : SHRI S.N. DIVETIA RESPONDENT BY : SHRI J.P. JHANGID,SR. D.R. ( )/ ORDER DATE OF HEARING : 08-01-2014 DATE OF PRONOUNCEMENT : 17 -01-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE TWO APPEALS, ONE FILED BY THE ASSESSEE AND THE OTHER FILED BY THE REVENUE ARE AGAINST THE ORDER OF CIT(A)-VIII, AHMED ABAD DATED 19.12.2012 FOR A.Y. 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ON RECORD ARE AS UNDER. ITA NOS. 528 & 728 /AHD/2013 . A.Y. 2009- 10 2 3. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SUPPLY OF FERRO MOLYBDENUM & FERRO ALLOYS STEEL. ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2009-10 ON 26.9.2009 DECLARING TOTAL INCOME OF RS 53,50,390/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE A SSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 28.12.2011 AND THE TOTAL IN COME WAS ASSESSED AT RS 2,90,14,940/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 1 9.12.2012 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. THE GROUNDS RAISED BY THE REVENUE READS AS UNDER:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING ADDITION MADE BY THE A.O. OF RS. 2,24,78,303/- WITHOUT ANY JUSTIFIABLE BASIS AND WIT HOUT APPRECIATING THE FACT THAT THE G.P. IN CURRENT YEAR WAS 4.56% AS COMPARED TO 14.48% IN THE IMMEDIATELY PRECEDING YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. THE GROUNDS RAISED BY THE ASSESSEE READS AS UNDE R:- 1.1 THE ORDER PASSED U/S. 250 ON 19.12.2012 FOR A.Y. 20 09-10 BY CIT(A)-VIII, AHMEDABAD UPHOLDING THE DISALLOWANCE OF COMMISSION EXP. OF RS. 11,86,24 6 MADE BY A.O. IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR O N FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE A PPELLANT WITH REGARD TO THE IMPUGNED DISALLOWANCE. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON F ACTS IN CONFIRMING THE DISALLOWANCE OF COMMISSION EXP. OF RS. 11,86,246 PAID TO THREE FEMA LES. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THE DISALLOWANCE OF COMMISSION EXP. OF RS. 1 1,86,246 PAID TO THREE FEMALES. WE FIRST TAKE UP REVENUES APPEAL (ITA NO. 782/AHD/ 2013). ADDITION ON ACCOUNT OF GROSS PROFIT (G.P);- ITA NOS. 528 & 728 /AHD/2013 . A.Y. 2009- 10 3 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO N OTICED THAT THE GROSS PROFIT (GP)OF THE YEAR UNDER APPEAL WAS 4.56% AS AG AINST 14.48% IN THE IMMEDIATELY PRECEEDING ASSESSMENT YEAR DESPITE INCR EASE IN TURNOVER. THE AO ASKED THE ASSESSEE TO JUSTIFY THE FALL IN GP. AS SESSEE INTERALIA SUBMITTED THE REASON FOR FALL IN GP DUE TO GLOBAL RECESSION A ND FALL IN THE PRICE OF MOLYBDENUM. THE SUBMISSIONS OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO AS HE WAS OF THE VIEW THAT A REDUCTION IN TH E PRICE OF RAW MATERIAL WOULD ALSO RESULT IN FALL IN PRICE OF THE FINAL PRO DUCT RESULTING IN THE FALL IN SALES. HE ALSO NOTED THAT THE PRICE IN PRICE WAS GRADUAL A ND NOT A SUDDEN FALL. HE ACCORDINGLY DID NOT ACCEPT THE GP @ 4.56% AND THEREFORE PROCEEDED TO ESTIMATE THE GP AT 8% OF SALES AND ACCORDINGLY WORK ED OUT THE GROSS PROFIT AT RS 6,44,77,100/- AND AFTER GIVING THE CREDIT OF GRO SS PROFIT OF RS 4,19,98,797/- SHOWN BY THE ASSESSEE, MADE THE ADDITION OF DIFFERE NCE OF RS 2,24,78,303/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE (WH ICH HAS ALSO BEEN REPRODUCED BY CIT(A)) DELETED THE ADDITION BY HOLDI NG AS UNDER:- 2.6 I HAVE CONSIDERED THE VARIOUS SUBMISSIONS OF TH E LD. A.R. CONSIDERING THE FACT THAT THE MAJOR IMPACT ON G.P. HAS BEEN AN ACCOUNT OF VALUATION OF INVENTORY, BEING COST OR MARKET VALUE WHICHEVER IS LOWER, WHICH IN ITSELF HAS AN IMPACT OF RS. 4,35,17 ,175/-(RS. 3,11,63,593/- ON ACCOUNT OF DECREASE IN STOCK VALUATION OF FINISHED GOODS AND RS. 1,23,53,5 82/- ON ACCOUNT OF DECREASE IN STOCK VALUATION OF RAW MATERIALS). IF ONE CALCULATES THE IMPACT OF RS. 4,35,27,275/- ON G.P. RATIO, IT WORKS OUT TO 4.72% THE LD. ASSESSING OFFICER HAS DETERMINED THE G.P. R ATIO OF 7% (THOUGH MENTIONED AS 8%) WITHOUT CONSIDERING THE ABOVE IMPACT ON GP OF 4.72%. I HAVE ALSO GONE THOUGH JUDICIAL PRONOUNCEMENTS REFERRED TO BY THE LD. A.R. OF THE HONBLE AHMEDABA D TRIBUNAL ON THE SUBJECT (SUPRA) WHICH ARE RELATED TO THE FACTS OF THE APPELLANT. THE A.R. HAS MADE A CASE BY PROVIDING EVIDENCES AS REGARDS THE FALL IN THE INTERNATIONAL PRICES OF THE MAIN RAW MATERIAL ROAST ED MOLY DURING THE SECOND HALF OF F.Y. 2008-09 WHICH HAS IMPACTED THE OVERALL GP FOR THE YEAR UNDE R APPEAL. IT IS ALSO SEEN THAT THE A.O. HAS NOT POINTED OUT ANY SPECIFIC DISCREPANCIES IN THE BOOKS OF ACCOUNTS AND ALSO HAS NOT MADE ANY CASE FOR REJECTING THE BOOKS OF ACCOUNTS AND HAS ALSO NOT RE JECTED FOR THE BOOKS OF ACCOUNTS UNDER SECTION 145(3) OF THE I.T. ACT BEFORE ESTIMATING THE GROSS PROFIT OF THE APPELLANT. THE GROSS PROFIT FOR THE APPELLANT COMPANY ESTIMATED BY THE A.O. IS ARBITRAR Y AND NOT BASED ON ANY SOUND FINDING. IN VIEW OF THE ABOVE DISCUSSION, THE FINDING OF THE A.O. CANNO T BE SUSTAINED. THE A.O. IS DIRECTED TO DELETE THE ABOVE. THE GROUND OF THE APPELLANT IS ALLOWED. ITA NOS. 528 & 728 /AHD/2013 . A.Y. 2009- 10 4 6. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, THE LD.D.R. TOOK US THROUGH THE FINDI NGS OF AO AND SUBMITTED THAT THE FALL IN GP HAS NOT BEEN FULLY JUSTIFIED BY THE ASSESSEE. HE FURTHER SUBMITTED THAT CIT(A) HAS ACCEPTED THE SUBMISSIONS OF THE ASSESSEE WITHOUT ANY SUPPORTING EVIDENCE. HE THUS SUPPORTED THE ORDE R OF AO. LD A.R. ON THE OTHER HAND SUBMITTED THAT THE BOOKS OF THE ASSESSEE ARE AUDITED BY CHARTERED ACCOUNTANTS, AO HAS NOT POINTED OUT ANY D EFECTS IN THE BOOKS OF ACCOUNTS AND FURTHER THE AO HAS NOT REJECTED THE BO OKS OF ACCOUNTS. HE FURTHER REITERATED THE SUBMISSIONS MADE BEFORE CIT( A). HE THEREFORE SUBMITTED THAT WHEN THE AO HAS NOT REJECTED THE BOO KS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION. 145(3) AND WITH OUT ANY MATERIAL ON RECORD, THE AO CANNOT MAKE ESTIMATE OF GROSS PROFIT. HE ALS O RELIED ON THE DECISION OF HON'BLE GUJ H.C. IN THE CASE OF VIKRAM PLASTIC 2 39 ITR 161 AND OTHER DECISIONS. HE THUS SUPPORTED THE ORDER OF CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON PERUSING THE ASSESSMENT ORDER IT IS SEEN THAT THE A O HAD MADE ADDITION ON ACCOUNT OF GROSS PROFIT WITHOUT REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IT IS ALSO A FACT THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS MANDATORILY REQUIRED TO GET ITS ACCOUNTS AUDITED BY CHARTERED ACCOUNTANT AND THE SAME HAVE BEEN AUDITED BY INDEPENDENT CHART ERED ACCOUNTANTS. THE PERUSAL OF THE AUDIT REPORT REVEALS THAT NO DISCREP ANCY HAS BEEN POINTED OUT BY THE AUDITORS OF THE ASSESSEE. CIT(A) WHILE DELET ING THE ADDITION HAS GIVEN A FINDING THAT THAT MAJOR IMPACT ON THE GROSS PROFI T WAS ON ACCOUNT OF VALUATION OF INVENTORY AS THE ASSESSEE VALUES THE I NVENTORY ON THE BASIS OF 'COST OR MARKET VALUE WHICHEVER IS LOWER.' HE HAS F URTHER GIVEN A FINDING THAT THE GROSS PROFIT ESTIMATED BY THE AO IS ARBITRARY A ND NOT BASED ON ANY SOUND FINDING. ITA NOS. 528 & 728 /AHD/2013 . A.Y. 2009- 10 5 9. IN THE CASE OF CIT VS VIKRAM PLASTIC (SUPRA) TH E H'BLE H.C HAS HELD AS UNDER:- HELD, DISMISSING THE APPLICATION FOR DIRECTING REF ERENCE (I) THAT IN VIEW OF THE FINDING REACHED BY THE TRIBUNAL THAT THERE WERE NO DISCREPANCIES OR DE FECTS POINTED OUT IN THE BOOKS OF ACCOUNT AND FURTHER THAT THEY WERE REGULARLY MAINTAINED ADDITIO N ALSO ON THE FINDING THAT THERE WAS NO MATERIAL BROUGHT ON RECORD TO ESTABLISH THAT PURCHASES OR EX PENSES WERE INFLATED OR SALES SUPPRESSED AND ALSO IN VIEW OF THE FINDING THAT IT WAS NOT THE CASE THA T THERE WAS NO METHOD OF REGULAR ACCOUNTING EMPLOYED, THE TRIBUNAL WAS FULLY JUSTIFIED IN COMIN G TO THE CONCLUSION THAT THE PROVISIONS OF SEC. 145(2) OF THE INCOME TAX ACT,1961, COULD NOT BE INV OKED. THIS CONCLUSION WAS BASED ON A FINDING OF FACT AND RAISED NO QUESTION OF LAW. 10. IN THE FACTS OF THE PRESENT CASE, SEEN IN THE L IGHT OF THE ABOVE MENTIONED DECISIONS AND FURTHER SINCE THE BOOKS OF ACCOUNTS H AVE NOT BEEN REJECTED U/S 145(3), NO DEFECT BEING POINTED OUT IN THE BOOKS OF ACCOUNTS, WE ARE OF THE VIEW THAT THE AO WAS NOT RIGHT IN MAKING ADDITION O N ACCOUNT OF GROSS PROFIT AND THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A). THUS THIS GROUND OF THE REVENUE IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. NOW WE TAKE UP ASSESSEES APPEAL. THE ONLY GROUND IS WITH RESPECT TO DISALLOWANCE OF COMMISSION EXPENSES. 12. ON GOING THROUGH THE DETAILS OF COMMISSION EXPE NSES CLAIMED BY THE ASSESSEE, AO NOTICED THAT ASSESSEE HAD PAID AGGREGA TE COMMISSION OF RS 11,86,246/- COMPRISING OF PAYMENTS TO SMT. LAXMI DE VI RS 4,24,712/-, MS MAYA CHAUDHARY RS 5,41,534/- AND TO SMT RAJANI CHAU DHARI RS 2,20,000/-. ASSESSEE WAS ASKED TO PRODUCE THE EVIDENCE AND JUST IFICATION FOR THE PAYMENT. IN RESPONSE, ASSESSEE INTERALIA SUBMITTED THAT THE NAMED PERSONS WERE SERVICE AGENTS AND THE COMMISSION WAS MADE AT VARIOUS RATES ON THE SALES MADE. THE SUBMISSIONS OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO ITA NOS. 528 & 728 /AHD/2013 . A.Y. 2009- 10 6 THE AO FOR THE REASON THAT ASSESSEE HAD NOT ENTERED INTO ANY AGREEMENT WITH THEM. HE ALSO NOTICED THAT THE ADDRESS OF THE AFORE SAID 3 PARTIES WERE SAME, THE AGENTS WERE FEMALES, THOUGH THEY WERE RESIDENT OF JHARKAND BUT THE SALES HAVE BEEN STATED TO HAVE BEEN MADE IN THE GEOGRAPHI CAL AREAS OF BIHAR AND ORISSA. HE FURTHER CONCLUDED THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM. HE ACCORDINGLY CONSIDERED T HE COMMISSION PAYMENT TO BE BOGUS AND ACCORDINGLY DISALLOWED RS 11,86,246/-. AGGRIEVED BY THE ORDER OF A.O. ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) CONFIRMED THE ADDITION MADE BY THE AO BY HOLDING AS UNDER:- 3.4 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND TH E SUBMISSION OF THE APPELLANT CAREFULLY. THE AO HAS DISALLOWED THE COMMISSION EXPENSES TO THE EXTEN T OF RS.11,86,246/- IN RESPECT OF THE COMMISSION PAID TO SMT. MAYA CHAUDHARY, SMT. LAXMIDEVI AND SMT . RAJNI CHAUDHARY TREATING AS BOGUS AND ADDED TO THE TOTAL INCOME OF THE APPELLANT. THE APPELLANT HAS SUBMITTED THAT THE APPELLANT FURNISHED ALL THE DETAILS REGARDING EACH OF THE THREE SALES COMMISSIO N AGENTS, NAMELY THE SALES EFFECTED THROUGH EACH OF THEM DURING THE YEAR, THE AMOUNT OF SALES COMMISSIO N PAID TO ALL OF THEM, SERVICES RENDERED BY THEM, THEIR INDIVIDUAL GEOGRAPHICAL AREA OF OPERATION, TH EIR EXPERIENCE IN THE FIELD, RATE OF COMMISSION, TH EIR QUALIFICATION, THEIR PERMANENT ACCOUNT NUMBER AND A DDRESS, AND THE SCOPE OF SERVICES RENDERED BY EACH OF THEM. IT MAY BE NOTED THAT SMT. RAJNI CHAUD HARY HAS BEEN PAID COMMISSION OF RS.2,20,000 @ 2.75% ON THE SALES GENERATED BY HER OF RS.80,14,000 /-.IN RAIPUR TERRITORY. SIMILARLY, SMT. MAYA CHAUDHARY HAS BEEN PAID COMMISSION OF RS.5,41,534/- @ 3.50% ON THE SALES GENERATED BY HER OF RS.1,54,35,600/- IN THE TERRITORY OF RANCHI (BIHAR) . SMT. LAXMI DEVI HAS BEEN PAID COMMISSION OF RS.4,24,712/- @ 3.30% ON SALES GENERATED BY HER OF RS.1,28,91,000/- IN THE TERRITORIES OF BHILAI AND ORISSA. THUS, SUFFICIENT BUSINESS FOR THE COMPANY H AS BEEN GENERATED IN TERMS OF AGGREGATE SALES OF RS. 3.63 CRORES BY THE ABOVE FEMALE SALES AGENTS. A LL THE THREE COMMISSION AGENTS ARE REGULARLY FILING THEIR INCOME TAX RETURNS AND HAVE FILED THEIR I.T. RETURN FOR A.Y. 2009-10, DECLARING THE COMMISSION INCOME EARNED FROM THE COMPANY, DURING THE YEAR UND ER APPEAL. THUS, THEY HAVE OFFERED THE COMMISSION INCOME FOR TAXATION AND HAVE PAID TAX ON THE BASIS OF TOTAL INCOME RETURNED BY THEM. 3.5 AFTER GOING THROUGH THE DETAILS OF THE CASE, IT IS SEEN THAT THE PAYMENTS WERE MADE TO THE THREE LADIES OF THE SAME ADDRESS AT 41, EIPHEL TOWER, 22, CONTRACTOR AREA, JAMSHEDPUR AND JHARKHAND. THE APPELLANT HAS SUBMITTED THAT THEY HAVE BEEN PAID FO R THE SALE EFFECTED IN THE FAR OFF AREA OF RAIPUR, BHILAI AND ORISSA. THE APPELLANT COULD NOT PRODUCE ANY WRITTEN AGREEMENT WITH THEM FOR THE SO CALLED SALES EFFECTED THROUGH THEM. THE APPELLANT HAS NOT PRODUCED THE DETAILS AS TO WHAT WAS THE ROLE OF THE LADIES AND HOW THEY HAVE ACHIEVED THIS FROM SITTING AT JHARKHAND TO SELL OFF THE MOLY IN AREAS OF RAIPUR, BHILAI AND ORISSA. IT IS NOT CONVINCING AND ACCEPTABLE THAT ALL THE THREE LADIES FROM THE SAME PLACE HAVE EXPERTISE IN SELLING THE MOLY OF THE APP ELLANT WHO IS BASED IN AHMEDABAD. THE APPELLANT HAS ALSO NOT SUBMITTED THAT HOW HE HAS EMPLOYED THE SERVICES OF THE ABOVE LADIES. THE ARGUMENTS OF THE ITA NOS. 528 & 728 /AHD/2013 . A.Y. 2009- 10 7 APPELLANT THAT ON THE COMMISSION INCOME, THE ALL TH E THREE LADIES HAVE PAID THE INCOME TAX IS NOT MATERIAL TO THE FACT OF THE CASE AS BY THIS THE NAT URE OF THE COMMISSION WHICH IS NOT GENUINE IS NOT GOING TO CHANGE. IT APPEARS THAT THE SERVICES HAVE NOT BEEN RENDERED BY THE LADIES AS CLAIMED BY THE APPELLANT. IN VIEW OF THE ALL THE ABOVE FACTS AND C IRCUMSTANCES OF THE CASE, IT HAS BECOME CLEAR THAT THE COMMISSION EXPENSES CLAIMED BY THE ASSESSEE ARE NOT GENUINE AND IN THE NATURE OF BOGUS EXPENSES. THE SAME VIEW HAS BEEN TAKEN IN THE CASE OF SCHNEIDER E LECTRIC INDIA LTD. VS. CIT (DEL) 304 ITR 360 WERE IT IS HELD AS- 'THE TRIBUNAL WAS RIGHT IN HOLDING THAT THERE WAS A BSOLUTELY NO MATERIAL ON RECORD TO SUGGEST THAT 'R' HAD PROCURED ANY SALE ORDERS FOR THE ASSESSEE. THE PRODUCTION OF A FEW BILLS OR PAYMENTS HAVING BEEN MADE BY ACCOUNT-PAYEE CHEQUES COULD NOT, BY ITSELF, SHOW THAT 'R' HAD PROCURED SALE ORDERS FOR THE ASSESSEE. APART FROM AN INTERNAL NOTE, THERE WAS NO EVIDENCE OF ANY CORRESPONDENCE OR ANY PERSONAL MEETINGS, ETC., BETWEEN THE ASSESSEE AND 'R' TO SUG GEST THAT THERE WAS ANY RELATIONSHIP ON THE BASIS OF WHICH 'R' PROCURED SOME ORDERS FOR THE ASSESSEE FOR WHICH IT WAS ENTITLED TO RECEIVE COMMISSION. MOREOVER, THE UNDERSTANDING BETWEEN THE PARTIES WAS AN ORAL UNDERSTANDING AND IT APPEARED TO BE DOUBTFUL THAT SUCH AN ORAL UNDERSTANDING COULD BE A RRIVED AT WITHOUT ANY LONG STANDING RELATIONSHIP HAVING BEEN ESTABLISHED BETWEEN THE ASSESSEE AND RE VENUE. IT SEEMED TO BE BIT OUT OF PLACE THAT THE PARTIES HAD ENTERED INTO AN ORAL BUSINESS RELATIONS HIP INVOLVING SUCH HUGE AMOUNTS OF MONEY OVER A PERIOD OF TIME. [PARA13] THEREFORE, THE TRIBUNAL WAS JUSTIFIED IN DISALLOWIN G THE ASSESSEES CLAIM. ACCORDINGLY, IN VIEW OF THE FACTS OF THE CASE AND D ISCUSSION, THE COMMISSION EXPENSES CLAIMED TO HAVE BEEN INCURRED BY THE ASSESSEE TO THE ABOVE THREE PE RSONS AGGREGATING TO RS. 11,86,246/- DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPA NY BY THE A.O. IS CONFIRMED. 13. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS N OW IN APPEAL BEFORE US. BEFORE US, LD A.R. POINTED TO THE SUBMISSIONS MADE BEFORE CIT(A) AND REITERATED THE SAME. HE FURTHER POINTED TO THE DETA ILS OF THE SALES MADE BY THE 3 LADIES AND ALSO SUBMITTED THAT THE SAME HAVE BEEN CONFIRMED BY THEM. HE THUS SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN DIS ALLOWING THE EXPENSES. THE LD. D.R. ON THE OTHER HAND SUBMITTED THAT ADDRESS O F THE THREE LADIES IS STATED TO BE SAME ADDRESS, NO AGREEMENT ENTERED BY THE ASS ESSEE WITH THEM HAS BEEN PLACED ON RECORD AND FURTHER THEIR EDUCATIONAL AND TECHNICAL QUALIFICATION IS NOT KNOWN. HE THUS SUPPORTED THE ORDER OF A.O. A ND CIT(A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE COMMISSION HAS BEEN STA TED TO HAVE BEEN PAID TO ITA NOS. 528 & 728 /AHD/2013 . A.Y. 2009- 10 8 THE AFORESAID 3 LADIES MENTIONED BY THE A.O. IN HIS ORDER. AO WHILE DISALLOWING THE EXPENSES HAS NOTED THAT THE ADDRESS ES OF ALL THE THREE LADIES ARE STATED TO BE THE SAME ADDRESS AND FURTHER THE E XPENSES HAVE NOT BEEN SUPPORTED BY ANY AGREEMENT WHICH THE ASSESSEE HAS E NTERED WITH THEM. CIT(A) WHILE CONFIRMING THE ADDITION HAS GIVEN A FI NDING THAT ASSESSEE HAS NOT PRODUCED THE DETAILS AS TO WHAT WAS THE ROLE OF THE 3 LADIES AND WHAT WAS THEIR EXPERTISE IN SELLING THE PRODUCT OF THE ASSES SEE AND HOW THEIR SERVICES HAVE BEEN UTILIZED BY THE ASSESSEE. THE ASSESSEE HA S NOT PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF TH E LOWER AUTHORITIES NOR HAS HE PLACED ANY TANGIBLE EVIDENCE TO DEMONSTRATE THEI R EXPERTISE ON ACCOUNT OF EDUCATIONAL OR TECHNICAL EXPERTISE IN SELLING THE G OODS OF THE ASSESSEE. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO I NTERFERE WITH THE ORDER OF CIT(A). THUS THIS GROUND OF ASSESSEE IS DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. 16. THUS THE APPEALS OF REVENUE AND ASSESSEE ARE DI SMISSED. ORDER PRONOUNCED IN OPEN COURT ON 17 - 01 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD