TaxTMI 
TaxTMI 
2015 (6) TMI 420
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.... erred in holding that the appellant had stated that none of the commission recipients had come back to his emporium. The said finding is illegal and unjustified. 4. That the learned CIT(Appeals) has erred in holding that there is change in the facts and circumstances in the current year as compared to earlier years. The said finding is illegal and unjustified. 5. That the learned CIT(Appeals) has erred in holding that the appellant has miserably failed to submit that the commission agents have procured any export orders. The said finding is illegal and unjustified. 6. That on the facts and circumstances of the case the learned CIT(Appeals) has erred in sustaining a disallowance of Rs. 16,54,883/- out of commission paid by the assessee. The disallowance sustained is illegal, unjustified and excessive. 7. That on the facts and circumstances of the case the learned CIT(Appeals) has erred in sustaining a disallowance of Rs. 75,424/- out of entertainment expenses. The disallowance sustained is unjustified and excessive. 8. That the learned CIT(Appeals) has erred in sustaining disallowance of Rs. 24,600/- on account of employee's contribution towards PF. The disallowance ....
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.... been mentioned in purchase and sale invoices. Thus, the Assessing Officer was helpless to examine anything from the record maintained by the assessee. The assessee had disclosed G.P. on estimate basis near about the G.P. rate shown in the preceding years. In preceding year also, the same defects were noticed by the Assessing Officer and books of account were rejected and trading additions were made by him. Accordingly he rejected the book result U/s 145(3) of the Act on the basis of defects pointed out by the Assessing Officer in preceding para. He also relied upon the decision of the Hon'ble Supreme Court in the case of S.N. Namaswery Chettiyar Vs. CIT (1960) ITR 579 for maintenance of stock register, CIT Vs. British Paints India Ltd. 188 ITR 44 for the books disclosed the true statement of account and correct income, Commissioner of Sales Tax Vs. H.Esuf Ali, H.M. Abdul Ali 90 ITR S.C. 1973 271 for estimating the turn over. The ld Assessing Officer estimated the G.P. rate @ 56.17% in export division similar to the G.P. rate declared by the assessee in A.Y. 2004-05 and applied by the Assessing Officer in A.Y. 2005-06 to 2007-08 as no reasons for fall in G.P. rate in the year u....
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....rly, the Assessing Officer had applied G.P. rate of 36% in the local unit which is quite fair and reasonable. The same is upheld by following the decision of Hon'ble Rajasthan High Court in the case of Radhey Shyam Sita Ram Vs. DCIT (supra). Accordingly, assessee's appeal had been dismissed in both the grounds. 4. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that the ld Assessing Officer applied Section 145(3) of the Act by pointing out various defects in the books of account but the ld CIT(A) had completely disregarded the past history in this case. The assessee had declared G.P. rate in export unit at 49.06% as against G.P. rate of 49.07% and 49.1% in assessment year 2007-08 and 2006-07 respectively. The ld Assessing Officer applied G.P. rate in A.Y. 2005-06 @ 56.17%, which was confirmed by the ld CIT(A) @ 52% as reasonable in export unit. The assessee had preferred further appeal before the Hon'ble ITAT Jaipur Bench, Jaipur vide ITA No. 21/JP/2009 for A.Y. 2005-06. It had been decided vide order dated 23/10/2009 and had deleted the entire addition and GP rate of 47.5% declared by the assessee, had been accepted as such. In A.Y. 2006-07 and ....
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....en pointed out. The purchases and sales are fully vouched. The reason for fall in G.P. was explained because the export of gold jewellery was made for the first time by the assessee during the impugned year. The ld CIT(A) has accepted the contention of the assessee to some extent. The explanation given appears to be satisfactory. The estimation made by the Assessing Officer appears to be on the higher side in spite of the fact that the ld CIT(A) has accepted the explanation may be to some extent which is not defined. In the facts and circumstances of the present case, no addition is called for when the explanation of fall in G.P. appears to be satisfactory. In the present case, the finding of the Coordinate Bench are squarely applicable as no specific defect in purchase and sale has been pointed out by the Assessing Officer. In local sale, the G.P. had increased from 34.46% to 34.53% compared to preceding year. In export division, the GP was constant as shown in A.Y. 2007-08 @ 49.07% and in year under consideration @ 49.06%. Therefore, by respectfully following the decision of the Coordinate Bench, we delete the addition confirmed by the ld CIT(A). Accordingly, both the grounds of ....
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....e payments were made for the purpose of business. He further relied on the decision of Hon'ble Bombay High Court in the case of CIT Vs. Sigma Paints reported in 103 CTR (Bom) 305 wherein it has been decided that even name of recipient has not been mentioned on the bill for secret commission, it is allowable. After consider the assessee's submission, the ld Assessing Officer held that whatever evidence submitted by the assess was showed that it were printed receipts showing the sale voucher number, amount of bill, name of persons to whom commission given alongwith signature of the recipient. The assessee had not submitted address of the recipient nor the identity of person from these vouchers. The contention of the assessee that the commission had been paid to various drivers and guides of the vehicles is very general statement. The details were prepared by the staff of the assessee, which are not verifiable. Thus, he disallowed the commission @ 8% from the total commission claimed by the assessee. He made addition of Rs. 16,54,883/- in the income of the assessee. 8. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), wh....
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....e, it was difficult to ascertain the disallowance U/s 40(A)(3).The voucher dated 29/04/2007 showed that commission of Rs. 20,530/- was paid to Shri Dilawar in respect of sales made to Haleleine Reeve of Australia and Virgilio Mazzardo of Italy. It was hard to believe that same taxi driver had brought 2 customers (not of same family) on the same day to the emporium through the same taxi. The voucher dated 20/06/2007 showed that commission of Rs. 22,800/- was paid to Shri Arvind in cash and voucher dated 23/06/2007 showed that commission of Rs. 20,900/- was paid to Shri Gyan Prakash in cash. Since the amount paid in cash exceeded Rs. 20,000/-, disallowance U/s 40(A)(3) was liable to be made. However, the counsel of appellant had produced vouchers for few months only. Therefore, it was difficult to ascertain the disallowance U/s 40(A)(3) The vouchers dated 05/4/2007 and 23/06/2007 showed that commission of Rs. 57,624/- and Rs. 33,860/- was paid to Shri Pramod. However, the alleged vouchers showed different taxi numbers and different signatures. The voucher dated 26/06/2007 showed that commission of Rs. 23.120/- was paid to Shri Jivan in cash, voucher dated 27/07/2007 showed that commi....
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....ance of the transactions. Merely because a paper trail had been created, that would not by itself make the transaction genuine. He further relied on the decision of Hon'ble Punjab & Haryana High Court in the case of Mittal Belting and Machinery Stores Vs. CIT 253 ITR 341, decision of Hon'ble Delhi High Court in the case of Schneider Electric India Ltd. 304 ITR 360, Hon'ble Supreme Court's decision in the case of CIT Vs. Premier Breweries Ltd. 279 ITR 51, Onam Agarbathis Co Vs. DCIT 310 ITR 56 and CIT Vs. McDowell Co Ltd. 291 ITR 107. Accordingly it was held that the assessee was not entitled to deduct commission. The assessee had miserably failed to substantiate his claim for export commission. Accordingly, he confirmed the addition. 9. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that the ld CIT(A) had pointed out various discrepancies in his order and confirmed the addition but no opportunity has been provided by the ld CIT(A). He drawn our attention on page No. 1 and 2 i.e. the copy of ordersheet of the ld CIT(A). The ld CIT(A) has not given any show cause notice and not called any explanation from the assessee with regard to discrepanc....