2017 (12) TMI 1345

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.... has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs. 38.000/- on account of Diwali expenses and that too without any basis and by recording incorrect facts and findings. 3. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowances and framing the impugned assessment order is illegal, void ab-initio, contrary to law and facts, beyond jurisdiction and deserves to be quashed. 4. That having regards to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging the interest u/s 234A and 234B of the Income Tax Act, 1961. 3. That the appellant craves to leave to add modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. 2. Briefly stated facts of the case as culled out from the order of the lower authorities are that the assessee, i.e., a partnership firm was engaged in trading of electrical goods. The assessee filed return of income on 30/09/2010, declaring total income of Rs. 1,37,22,030/-. The case of the asse....

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....ounts, sales made corresponding to the commission paid to the parties, copies of return of income or intimation u/s 143(1) of the Act in case of persons to whom commission was paid, vouchers of commission payment etc. The ld. CIT(A) has reproduced the entire submission of the assessee in the impugned order. The assessee contested that commission amount was paid to the persons for the services rendered by them. According to the assessee, those agents ensured business to the assessee and payment from the parties and in order to minimize the risk, for business expediency and liaison work, commission was paid to those agents. The assessee submitted that for verification of the services rendered the Assessing Officer could have made independent inquiries from those parties but he did not. The assessee submitted that there was no written agreement with those agents. According to the assessee, all those parties to whom commission on sales was paid, were assessed to tax and they had shown commission receipt in their hands. The assessee also relied on the various judicial pronouncements in its submissions. In view of the submissions, the assessee requested before the ld. CIT(A) for allowing....

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....xpenses paid to the commission agents and therefore, the expenses should be allowed to the assessee. Alternatively, he submitted that issue may be restored to the file of the Assessing Officer for detailed verification of the evidences filed by the assessee. 3.9 Ld. Sr. DR, on the other hand, relied on the order of the lower authorities and submitted that the evidences filed by the assessee could not justify the commission expenditure. He submitted that return of income of those commission agents did not contain commission income. 3.10 We have heard the rival submission and perused the relevant material on record. We find that the Ld. CIT(A) observed that certain details in respect of the commission payment which were filed before him, had not been produced before the Assessing Officer. In such circumstances, the Ld. CIT(A) should have asked the assessee for filing application for additional evidences under Rule 46A of Income Tax Rules, 1962 and should have called for a remand report from the Assessing Officer. Simultaneously, we find that the Ld. CIT(A) noted one of the reason for sustaining the disallowance as the commission income was not reflected in the return of income file....

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....ssee with the above referred payees. In view of the observation, the Assessing Officer disallowed the amount of Rs. 38,000/- out of the amount of Rs. 88,000/-. 4.2 Before the learned CIT(A), the assessee filed detailed submission justifying the expenditure, but the CIT(A) did not accept the contention of the assessee and sustained the disallowance with following observations: "As regards Ground 7 relating to the disallowance of Rs. 38.000/- made by the AO on account of Diwali expenses the evidence furnished by the appellant were considered in the light of the reasons cited by the AO for making the disallowance. Upon a meritorious consideration of the same, I am of the firm view that the AO had concrete evidence at the disposal to make such a disallowance. The relevant para of the AO's order bordering on this aspect of the matter is reproduced below:- "Further, it is noticed that out of above noted total expenditure of Rs. 1,73,779/-, a cash expenditure of Rs. 88,000/- has been debited on 07- 10-2009. The assessee furnished the photocopy of a chart alongwith the written reply, dated 20-03-2013, in which breakup of rite payment of Rs. 88,000/- to 13 persons is shown and the sig....