TaxTMI 
TaxTMI 
2015 (12) TMI 191
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....nd earning income from coordination commission received from Shaw Wallace Distilleries Ltd. (in short SWDL). The AO during the course of assessment proceedings noted that during the relevant AY the assessee has filed two audit reports, one along with forwarding letter dated 01.11.2004 which is audited by K. M. Gulgulia of M/s. K. M. Gulgulia & Co. dated 30.10.2004 and another audit report by Shri Anurag Mathur of M/s. Anurag Mathur & Co. dated 27.10.2004 filed along with the return of income, which was filed on 20.03.2006. According to AO, both the audit reports were signed by the partners. On query from the AO, the assessee requested that the audit report of assessee audited by Shri Anurag Mathur of M/s. Anurag Mathur & Co. dated 27.10.2004 is the actual audit report filed along with the return of income but, according to AO, the assessee has maintained two separate sets of accounts and hence, two separate audit reports were prepared. According to AO, he has recorded statements of both the auditors and both of them have stated that they have audited the accounts of the assessee on the basis of books of account and documents provided and supplied by the assessee to them. Both of th....
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....fer satisfactory explanation in the variation during assessment proceeding and also during appeal proceedings. The appellant has not obtained any confirmation from M/s. Shaw Wallace Distilleries Ltd. regarding the commission payment made to the appellant. The appellant placed reliance on the TDS certificates submitted. It is seen that the appellant received commission for the service rendered to M/s. Shaw Wallace Distilleries Ltd. In the absence of confirmation from the company regarding the payment made to the appellant and since the appellant failed to reconcile the variation of commission receipt found in the audit report the AO is correct as per law in assessing the difference of Rs. 78,59,892/- as undisclosed commission receipt. The AO's action is correct as per law and is upheld." Aggrieved, assessee came in second appeal before Tribunal. 4. Before us Ld. Counsel for the assessee Shri S. K. Tulsiyan, first of all, stated that M/s. K. M. Gulgulia & Co. was the previous auditor of the assessee firm who used to audit the accounts of the assessee firm but during the relevant FY 2003-04 relevant to this AY 2004-05, the partners of the assessee firm have shifted the audit to ....
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....before the AO during the course of assessment proceedings. In view of these arguments, Ld. Counsel for the assessee requested the bench to delete the addition. 5. On the other hand, the Ld. Sr. DR Md. Ghayasuddin, JCIT relied on the orders of the lower authorities and stated that when two audit reports are available, AO has taken the highest figure mentioned by assessee as receipts. He stated that the assessee is unable to explain the difference between the two audit reports and according to him, even Shri K. M. Gulgulia of M/s. K. M. Gulgulia & Co. admitted to have audited the accounts of the assessee when his statement was recorded. Accordingly, he urged the bench to confirm the orders of the lower authorities. 6. We have heard rival submissions and gone through facts and circumstances of the case. We have also perused the case records and paper book filed by assessee. We find that the facts narrated above are undisputed. We find that the AO compared two audit reports and based on audit reports only he added the difference in total receipts at Rs. 78,59,892/- while completing assessment u/s. 143(3) of the Act. The assessee from the very beginning before the AO as well as before....
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....he cannot make any addition on this account. 7. We find that this issue has been dealt with by Hon'ble Supreme Court in the case of Indore Malwa United Mills Ltd. Vs. State of Madhya Pradesh & Anr. (1966) 60 ITR 41 (MP), wherein the Hon'ble High Court has held as under: "Held, that, as the appellant produced before the assessing authorities all its registers, it was their duty to definitely come to one conclusion or the other in regard to the reliability of every one of the relevant accounts filed by the appellant, and in the absence of any such finding it was not open to them to pick and choose some of the registers, which were more favourable to the revenue." Similarly, Hon'ble Gauhati High Court in the case of CIT Vs. Arman Sheikh (2007) 293 ITR 266 (Gau), wherein it has been held as under: "Held, dismissing the appeal, that the two amounts were received by the assessee from a Government agency by cheques and they were deposited in the bank account of the assessee and duly reflected in the regular books of account. The Assessing Officer relied upon a part of the entries in the books of account and rejected the other part. Since the entries made in the books of ....
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....en to them to pick and chose one receipt or the other, which are more favourable to the revenue. They could accept the assessee's explanation or reject them or they could check the entries therein with reference to the books of account. But they have not done none of these things. Accordingly, we are of the view that the assessee's audit report as filed along with the return of income as audited by M/s. Anurag Mathur & Co. is the correct accounts for the reason that the receipts disclosed therein are matching with the TDS certificates issued by SWDL and also with the bills raised. Accordingly, we delete the addition and allow this issue of assessee's appeal. 9. The second issue in this appeal of assessee is against the order of CIT(A) confirming the action of AO in disallowing commission of Rs. 1,93,89,240/-. For this, assessee has raised following ground no.2: "2. That on the fact and in the circumstances of the case the addition on account of disallowance of commission of Rs. 1,93,89,240/- is unfair based on no evidence and based on incongruous factual premises." 10. Briefly stated facts are that the AO during the course of assessment proceedings noticed from the ....
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....ies regarding the sub-coordinator commission received. No details regarding the bills raised, services claimed to be rendered by them etc. are furnished. In the absence of such basic information the appellant failed to establish that the sub-coordinator commission is a genuine business expenditure incurred for services rendered by these parties. In the absence of evidence regarding services rendered by the parties and the genuineness of the payment made to these parties, the A.O is correct as per law in disallowing the claim of sub-coordinator commission. The A.O's action is correct as per law and is upheld." Aggrieved, assessee is in second appeal before Tribunal. 11. We have heard rival submissions and gone through facts and circumstances of the case. The Ld. Counsel for the assessee before us stated that the assessee was receiving commission income of Rs. 2,14,70,195/- from SWDL for undertaking responsibility to look after all the policy matters for requiring purchase, cordial relationship between SWDL and the buyers, liquor ordering, URC operation etc. and in lieu of this, the SWDL paid commission to the assessee. According to Ld. Counsel, the aforesaid job was executed b....
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...., URC operation etc. and in lieu of this, the SWDL paid commission to the assessee. We find from record that the aforesaid job was executed by the assessee by assigning the work to third parties as mentioned above and these parties were engaged in the same job. Apart from cost plus remuneration, the parties raised the bills for expenses incurred by them along with their service charges on monthly basis. The assessee paid commission charges and submitted statement of account of the aforesaid parties mentioning their PAN with Xerox copies of bills and account payee cheques along with ledger account of commission payment. We find from the case records that the assessee produced complete details including payments by cheques, bills and recipients' income tax returns along with PAN to the AO but he failed to carry out any enquiry in this respect. We find that in the immediate preceding year i.e., assessment year 2003-04, the assessee was engaged in the same business and also taken services from the said parties and paid commission to them and no disallowance was made by the AO originally, but again case was reopened by issuing notice u/s. 148 read with section 147 of the Act on the ....
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....ellant has not furnished any details regarding the payment made to Stanchart Bank. The purpose for making the payment is not properly explained. It is not known whether this expenditure is incurred for the purpose of business of the appellant. In the absence of proper evidence the AO is correct in making disallowance of the amount of Rs. 2,88,704/-. The appellant claimed payment of Rs. 3,0-4,000/- to Rohit Enterprises for the purchase of ball pens. In the absence of proper bills and vouchers, a disallowance of Rs. 1 lakh out of the claim would meet the ends of justice. The appellant gets a relief of Rs. 2,04,000/- (3,04,000 - 1,00,000). The appellant claimed cash expenditure towards hotel bills, guest entertainment. The total expenditure claimed by the appellant is Rs. 2,47,190/-. However evidence in support of this expenditure is not furnished before the AO or during the appeal proceedings. Considering the business requirement of the appellant a disallowance of Rs. 1,00,000/- would meet the ends of justice. The appellant gets relief of Rs. 1,48,190/- (2,47,190 - 1,00,000/-)". To sum up, disallowance of Rs. 4,88,704/- (2,88,704 + 1,00,000 + 1,00,000) is sustained. The appella....