TaxTMI 
TaxTMI 
2012 (2) TMI 480
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....see's submissions in this regard. c) In upholding disallowance of Rs. 16 lacs as commission u/s 40A(2) without appreciating assessee's submissions in this regard. 2. The assessee craves leave to amend/add any ground of appeal before the same is heard." 3. In Ground No.1(a), the assessee agitated that the CIT(A), erred in law and on facts in upholding the addition of Rs. 42,48,003/- made by the AO, on account of cash purchases of old silver, treating the same as bogus purchasers. The brief facts are that the AO, found that the assessee had made cash purchases of Rs. 42,48,003/-, and no particulars of sellers were recorded on the purchase bills. It was observed by the AO on a few purchase bills, some names had been mentioned without recording other identifiable details, such as addresses of the sellers. The AO granted opportunity to the assessee, to explain such transactions of purchases. However, the assessee failed to file any explanation. Consequently, such purchases were held as bogus/unverifiable by the AO and, consequently, the impugned addition was made. Before the CIT(A), assessee contended that the raw material, so purchased by the assessee had been so....
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....e is allowed. 7. In Ground No. 1 (b), the assessee contended that CIT(A), erred on facts and law, in upholding the disallowance of Rs. 10,50,806/-, out of total rent paid of Rs. 14,40,000/- u/s 40A(2), without appreciating the facts and submissions in the matter. The ld. 'AR' merely justified the said claim. However, Ld. 'DR' placed reliance, on the order of the lower authorities. 8. In the course of assessment proceedings, the AO found that the assessee had paid rent of Rs. 14,40,000/- which worked out approximately 370% more than the rent paid, in the preceding year, an increase from Rs. 3,89,194/-, to Rs. 14,40,000/-, to the same three persons - Deepak Malik, Ramesh Malim and Mukesh Malik. There being no agreement and no plausible explanation, was filed by the assessee, the AO disallowed the rent amounting to Rs. 10,50,806/-. Ld. CIT(A) upheld the finding of the AO vide para 11 to 13 of the appellate order. The relevant part of the said order is reproduced hereunder : "11. After having considered rival submissions, I find that 1. There is no evidence on record to support or prove the contention of the appellant in the absence of a pr....
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....cts and submissions in this regard. 11. We have carefully perused the rival submissions and found that Shri Subhash Chander Malik, Proprietor Subhash Jewellers, SCF 32, Sector 8B, Chandigarh, had claimed expenses in the shape of commission amounting to Rs. 16 lacs, paid to his sons, daughter-in- law and daughter, namely Deepak Malik, Ramesh Malik and Mukesh Malik (sons) and Sarika Malik, (daughter- in-law) and Rama Malik (daughter). The chart indicating details of such payments, is reproduced, in para 4 of the order of the CIT(A), which is reproduced hereunder : COMMISSION ON SALE PAID ON 31.3.2007 Name Gross amount Deepak Malik Rs.2,40,000/- Ramesh Malik Rs.2,40,000/- Mukesh Malik Rs.2,40,000/- Sarika Malik Rs.4,40,000/- Rama Malik Rs.4,40,000/- Total : Rs.16,00,000/ - 12. It is undisputed fact that the assessee had paid Rs. 4,80,000/-, as salary, as also the impugned commission to each of the above closely related persons. A comparison of the commission paid viz-a- viz salary paid by the assessee to his sons, daughter and daughter-in-law, clearly indicates that Rs. 2,40,000/- and Rs. 4,80,000/-....
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.... the Appellate Assistant Commissioner and the Tribunal must be accepted. We are unable to agree with counsel for the assessee that even if the taxpayer does not produce any evidence in support of the claim for allowance, the Income-tax Officer must independently collect evidence and decide that the allowance claimed is excessive or unreasonable having regard to the legitimate business needs of the assessee before the power under section 10(4A) may be exercised. " (ii) In the case of Synpro Inds. Vs. CIT [1984] 40 CTR 106 [mp], it has been held that "Business expenditure - Disallowance u/s 40A(2) -A firm paid commission of Rs. 12000/- in addition to salary to the husband of one of the partners. Since no agreement for payment of commission was executed during the previous year - Disallowance was held to be justified. " (iii) In case of Ganesh Soap Works vs. CIT [1987] 59 CTR [mp] 109, the Hon'ble High Court held that if Tribunal finds the amount claimed as payment of commission excessive or unreasonable having regard to services or facilities rendered to the assessee, disallowance on the ground that it does not .satisfy test of commercial expediency is justified. - The a....