M.R. Shah, J.
1. As common question of law and facts arise in both these tax appeals and as such they arise out of the impugned common judgment and order passed by the learned Income Tax Appellate Tribunal (hereinafter referred to as "Tribunal") and as such with respect to the same the assessee but different assessment years, both these appeals are decided and disposed of together by this common order.
2. Both these tax appeals have been preferred by the Revenue challenging the impugned common judgment and order dated 23.08.2013 passed by the learned Tribunal in ITA No.2312/Ahd/2011 for the Assessment Year 2008-09 and ITA No.2029/Ahd/2011 for the Assessment Year 2009-10 by which the learned Tribunal has partly allowed the said appeals preferred by the Revenue and has modified the orders passed by the learned CIT(A) restricting the disallowance made by the AO of Rs.5 lac instead of Rs.40 lac made by the AO [for the year AY 2008-09] and restricting the disallowance of Rs.4.50 lac instead of Rs.37,67,708/- made by the AO [for the AY 2009-10] with the following proposed question of law.
Tax Appeal No.501/2014
"Whether in the facts and circumstances of the case, the learned ITAT has erred in law in not confirming the entire disallowance of commission expenses of Rs.40,00,000 made by the Assessing Officer u/s. 40A(2)(b) of the Income Tax Act?"
Tax Appeal No.405/2014
"Whether in the facts and circumstances of the case, the learned ITAT has erred in law in not confirming the entire disallowance of commission expenses of Rs.37,67,708/- made by the Assessing Officer u/s. 40A(2)(b) of the Income Tax Act?"
3. For the sake of convenience the facts in Tax Appeal No.501/2014 arising out of the impugned common judgment and order passed by the learned Tribunal passed in ITA No.2312/Ahd/2011 for AY 2008-09 are considered as, as such there is no difference so far as ITA No.2029/Ahd/2011 for AY 2009-10 except the amount of commission paid by the assessee to his brother by way of commission.
3.1 That the assessee, a proprietor of Meet Marketing filed return of income for the AY 2008-09 declaring total income of Rs.10,45,520/-. The case was selected for scrutiny through CASS and notice under Section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as "Act") was issued. That it was found that for the first time the assessee paid substantial amount of Rs.54,78,397/- to his brother Shri Amit K. Patel. The AO was of the view that since the said payment was substantial in nature and the recipient of such payment was covered within the provisions of section 40A(2)(b) of the Act, the assessee was called upon to furnish his explanation and to substantiate his claim of commission payment to his brother by producing the details of services rendered justifying such commission. The assessee furnished the explanation and also produced one agreement on a stamp paper of Rs.100/-. However, the genuineness of the said agreement was doubted by the AO. The assessee also produced various communications/certificates issued by M/s. Godrej and Boyce Mfg. Co. Ltd., the main supplier of the assessee stating that Shri Amit Patel was the key person of Meet Marketing. The assessee also claimed that because of the services rendered by the said Shri Amit Patel, his business/turnover has increased from Rs.9,21,31,740/- to Rs.15,02,76,058/-. However, the AO was not satisfied with the explanation furnished by the assessee and as such held that the commission expenditure incurred by the assessee was not having color of business expenditure but was incurred as a measure of diversion of income and legitimate tax liabilities. Accordingly, the AO held that the commission paid of Rs.14,78,397/- as reasonable and the remaining amount of Rs.40 lac as unjustifiable and excessive and accordingly the AO disallowed the same and add back to the total income of the assessee.
3.2 Feeling aggrieved and dissatisfied with the order passed by the AO in disallowing Rs.40 lac as unjustifiable and excessive payment of commission paid to Shri Amit Patel and adding back to his total income the assessee preferred appeal before the learned CIT(A) and the learned CIT(A) allowed the said appeal and deleted the addition of Rs.40 lac.
3.3 Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A) in deleting the addition of Rs.40 lac, the Revenue preferred appeal before the learned Tribunal and by impugned judgment and order, the learned Tribunal partly allowed the said appeal and has restricted the disallowance made by the AO to Rs.5 lac instead of Rs.40 lac.
3.4 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal, the Revenue has preferred the Tax Appeal No.501/2014.
3.5 Now, so far as Tax Appeal No.405/2014 arising out of ITA No.2029/Ahd/2011 for the Assessment Year 2009-10 is concerned, the assessee paid total commission of Rs.49,67,708/- and the AO considered Rs.12 lac as reasonable and accordingly disallowed Rs.37,67,708/-considering it to be excessive. On appeal the learned CIT(A) deleted the said addition however by impugned judgment and order the learned Tribunal has restricted the disallowance to Rs.4.50 lac instead of Rs.37,67,708/- made by the AO.
3.6 Feeling aggrieved and dissatisfied with the same, the Revenue has preferred the Tax Appeal No.405/2014 for AY-2009-10.
4. We have heard Shri Varun Patel, learned advocate appearing on behalf of the Revenue and Shri S.N. Divatia, learned advocate appearing on behalf of the assessee.
At the outset it is required to be noted that as such against the very impugned judgment and order passed by the learned Tribunal partly allowing the appeals preferred by the Revenue and restricting the disallowances made by the AO to Rs.5 lac instead of Rs.40 lac (AY 2008-09) and restricting disallowance to Rs.4.50 lac instead of Rs.37,67,708/-(for the AY 2009-10), the assessee preferred tax appeals before this Court being Tax Appeal No.319/2014 with Tax Appeal No.320/2014 and the Division Bench has dismissed the said appeals by observing that the issue is based on factual aspects on considering the evidence on record and therefore, no question of law arise.
5. Having heard Shri Varun Patel, learned advocate appearing on behalf of the Revenue Shri S.N. Divatia, learned advocate appearing on behalf of the assessee and considering the impugned judgment and orders passed by the learned Tribunal, even the present appeals preferred by the Revenue against the impugned judgment and order passed by the learned Tribunal also deserve same fate. On appreciation of evidence the learned Tribunal has restricted the disallowances. Restrictions of disallowances are absolutely on appreciation of evidence and as such based on factual aspects.
6. Under the circumstances, as no question of law arise, both these tax appeals deserve to be dismissed and are, accordingly, dismissed.