TaxTMI 
TaxTMI 
2018 (3) TMI 2051
X X X X Extracts X X X X
X X X X Extracts X X X X
....ents were complied and the requirements of Sec. 37(1) is met. 2. The Hon'ble Appellate Commissioner is not justified to make 10% disallowance of expenses claimed in P & L account in the head of telephone expenses and tour & travels or vehicle maintenance, Depreciation being of personal nature. 3. The Hon'ble Appellate Commissioner is not justified to uphold 10% disallowance made by Assessing Officer of depreciation in relation expenses being of the personal nature." 3. The brief facts of the case in respect of ground no.1 are as per order of AO reproduced hereinbelow: "During the year under consideration, the assessee has debited commission expenses of Rs.18,22,663/- in the P & L A/c vide questionnaire dated 30....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as recorded u/s 131 of the Income-tax Act, 1961. As per all the details filed by the assessee regarding commission expenses, enquiries conducted and statements (copy enclosed) recorded following conclusions can be drawn: 1. The assessee in a planed manner has selected few families for paying commission wherein all the members of the family have not actually tendered any services to the assessee. 2. The statements recorded reflect that the commission receivers don't have much knowledge of the services rendered and payments being made to them. 3. The statements recorded also reflect that most of the commission receivers could not recollect name of the customers sent by them to the assessee. 4. The commissio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see with the commission receivers. Neither the assessee has any bill in this regard issued by the recipient of commission nor there any evidence/receipt for this payment. The only evidence the assessee has in this regard is that the payment have been routed through banking channels. Here, the assessee fails to prove the genuineness of payment. The case of Lachminarayan Madan Lal v CIT [1972] 86 ITR 439 (SC) is also quoted, wherein it was held that ITO can examine whether commission is properly deductible, even if it is paid under agreement. The mere existence of an agreement between the assessee and its selling agents or payment of certain amounts as commission, does not bind the ITO to hold that the payment was made exclusively and holly f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he commission. The assessee has produced few parties for examination by the AO which were examined. Most of the parties were served with the notice of the AO and who have replied and confirmed to have received the commission. The parties examined have also confirmed to have rendered services to the assessee for which they have earned the commission. If some parties have not been produced by the assessee, the assessee cannot be paralized for the same. It is the duty of the AO to summon such parties u/s 131 of the Act, which power vest with the AO and not with the party. In such circumstances and facts of the case, no addition or any enhancement can be made by the AO or the ld. CIT(A) and additions and enhancements so made are directed to be ....