2019 (7) TMI 1325

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....ruction of buildings. The company is also engaged in trading of irrigation pipes and fittings. In the Assessment Year (AY) 2013-14, the assessee declared its total income as Rs. 46,08,958/-. The AO who carried scrutiny under Section 143(c), assessed the income as Rs.1,43,79,630/- and disallowed commission expenditure to the tune of Rs. 97,98,305/-. The assessee's appeal was rejected by the CIT(A). It approached the ITAT, unsuccessfully. 3. Learned counsel for the assessee points out that in all the previous years, especially in the last three years, similar commission expenditure was claimed and though the disallowance was made, it was only marginal. Learned counsel submits that the rationale for disallowance of 100% in respect of the comm....

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....d noticed that the assessee was impressed upon with the need for verification of commission expenses repeatedly in December, 2016 and January, 2017. Despite this, the assessee did not produce a single witness. Summons were issued to ten witnesses under Section 131. Three from the list of ten persons replied. None of these individuals, in fact, appeared before the AO for verification and inquiry. Even the replies by the three parties were unsatisfactory. On this aspect, this Court notice that in Para 5.6, CIT(A) has extracted relevant details with respect to the concerned parties which shows, prima facie, that the amounts were deposited on a particular date and within two day the same or marginally higher amounts were withdrawn. 7. The as....

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.... precisely the failure of the appellant in producing witness of commission expenses the AO was under compulsion to make certain adverse observations as under:- b. Assessee's non-commission sales was Rs. 7,88,90,251.45, if we calculate only commission part on this sale then it comes to Rs. 48,91,195/- where as the income as per return was Rs. 46,08,958/- which is below the figure. It means that the assessee has paid commission out of its pocket and not out of profits. Which is not possible in any business? c. During the year under consideration gross profit rate and net profit rate has been declined for which assessee failed to submit any justification. g. It was seen that for sale of some of the goods to a particular builder commiss....

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....,00,000/- was transferred to Shri Nand Kishore through RTGS Vide letter no.ACIT/Cir.- 4/92/2015-16/1918 dated 02.02.2016 Shri Sanjay Harlalka was again requested to attend this office on 04.03.2016. This letter was duly served upon him on 02.03.2016 but he did not attend. Signature on submission filed on 26.02.2016 and confirmation filed by the assessee during assessment proceedings were entirely different. 3. Shri Manoj Vyas:- He did not attend but furnished reply on 14.03.2016 stating that he received a sum of Rs. 3,49,455/- on account of commission. On examination of bank account it was found that he received Rs. 3,14,509/- on 28.03.2013 and on 29.03.2013 Rs. 3,14,539/- was transferred to Mahendra Kumar by RTGS. Shri Manoj Vyas is no....