TaxTMI 
TaxTMI 
2015 (6) TMI 244
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.... at Rs. 17,43,477/- ignoring the fact that the assessee could not produce any evidence that the purchasers had placed any purchase order through Sh. Naval Khanna, the recipient of commission so paid. 2. Whether on the facts and circumstances of the case the ld. CIT(A) is right in ignoring the fact that the purchasers summoned u/s 131 of the Act also could not spell out the purchase orders placed to the assessee through Sh. Naval Khanna, the recipient of commission so paid. 3. Whether on the facts and circumstances of the case the ld. CIT(A) is right in ignoring the fact that out of commission of Rs. 17,43,477/- credited in the name of Sh. Naval Khanna, only Rs. 12,802/- were actually paid during the year and Rs. 1730,675/- has been sh....
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....e issue to the file of the AO with the direction to issue summons to the purchasers, who have purchased through Sh. Nawal Khanna and give an opportunity of cross examination of them by the assessee. It was further directed that if the AO fails to get response of the purchasers, the same facts may be brought to the notice of the assessee and if the assessee fails to produce the purchasers, the AO is at liberty to decide the issue in accordance with the law. As the case was set aside by the ITAT, Amritsar Bench, a notice u/s 143(2) was issued in response to which Sh. K.R.Jain, Advocate attended the proceedings. Following the directions of ITAT, Amritsar Bench, summons were issued to the following 10 parties who had made purchases from M/s. H.....
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.... 3. Sh. Chohan 4. Sh. Nawal Kumar Other persons were also sent summons to send the written reply that either there was no intermediary involved and those persons placed orders to the company through their representatives or employees. The AO not being satisfied with the statement taken from Sh.Harminder Benipal in person or in writing and the rest of the persons, observed that commission amounting to Rs. 17,43,477/- is not wholly and exclusively declared to have been paid for the purpose of business of the assessee and the claim is found to be bogus and therefore, added the same to the income of the assessee. 4. The Ld. CIT(A) deleted the same and the relevant findings of the ld. CIT(A) are reproduced for the sake of convenience,....
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....val Khanna is an 'Independent Agent', who is receiving orders on his letterhead/purchase order forms and then passing them to the assessee. Whereas Sh. Naval Khanna was more like an employee of the assessee who was at best can be described as Dependent Agent's of the assessee, who was solely acting for the assessee to procure orders for the assessee. Thus there was no question of his name being mentioned in purchase order of financial invoices etc. It is very difficult to look for evidence in financial statements/documents in this regard. The AO should have understood first the business of the assessee and the model of procurement of sales for the assessee. During appellate proceedings details of commission payment by the assess....
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....son as provided u/s 40A (2)(b) of the Income Tax Act and as such there is no question of diversion of any income by the assessee by paying him higher commission. In fact, AO has also not taken this ground and has disallowed u/s 37(1) as 'bogus'. The fact discussed above and as available in all the statement and cross examination clearly proves that all parties were knowing Sh. Naval Khanna and have also explained about various services carried out by Sh. Naval Khanna to the assessee, like procurement of orders, cheques etc. In view of above commission payment made by the assessee to Sh. Naval Khanna is being treated as genuine and allowable u/s 37(1). In view of above, main ground of appeal regarding disallowance of commission ex....