TaxTMI 
TaxTMI 
2026 (1) TMI 1584
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....puting the total in come. 3. That the computation of total income is bad in law and is against the actual facts-and. evidence on record. 4. That the learned CIT (A) has erred in not allowing commission of Rs. 41,55,067/. 5. The appellant craves leave to add, alter, amend, amplify or delete any or all of the grounds of appeal before or at the time of hearing 6. That the learned CIT (A) has erred in not allowing donation of Rs. 12,100/- 7. That the Learned CIT(A)has further erred in charging interest u/s 234A and 234B of the Income Tax Act and raising an aggregate demand of Rs. 17,79,400/-. Thus failing to appreciate that no such interest was leviable on the facts of the instant case and in any case and without prejudice the same had to be calculated in accordance with the statutory provisions. 3. The assessee has contested the addition of Rs. 41,55,067/- on account of commission expenses, through grounds of appeal no. 1 to 4. Brief facts of the case are that the assessee is a trader in steel and is proprietor of Anupam Steel Centre. The main issue is addition of Rs. 41,55,067-, made on account of disallowance o....
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.... 24 parties, 14 parties had the same address, i.e. 1/5812, Loni Road, Shahadara, Delhi- 110032. Other 02 parties also shared the address, i.e. 64, Govind Khand, Vishwakarma Nagar, Delhi. These details stand recorded on page no. 05 of the assessment order. On page no. 05 & 06 of the assessment order, the ld. AO has described the well-known modus operandi of assessee's who book bogus expenses of commission and brokerage or some other expenses of similar nature. He then observed as under: "This would be a legal way of tax planning if the essential requirement for commission expense is satisfied which is that the person receiving the payment must be a genuine commission agent, who has in actual fact rendered services of commission agency to the assessee. Simply producing confirmations or proof of TDS deduction and Income Tax Return is not sufficient. The parties who have received the payment must establish that they have knowledge of the business, skill, contacts etc. and have actually rendered services to the assessee. Therefore, in such cases, it becomes necessary to summon the commission agents personally in order to cross question them and the assessee did not produce even....
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....that the parties did render relevant services for the assessee and consequently became entitled to commission. No evidence of any kind of service has been furnished. If the assessee had filed self evidencing material establishing genuineness of the commission payment then AO had no need of requiring the assessee to produce the parties before him. It is noteworthy that AO twice requested the assessee to produce the parties. It is the fact that they were not produced. Moreover, AO has clearly pointed out that 14 parties (all private limited companies) were operating from the same address, i.e. 1/5812, Loni Road Shahdara, Delhi-110032. Despite the above narrated circumstances, assessee has sought to justify the commission payment on the basis of the only fact that payments were made (mostly) through bank and due TDS was deducted. It is now settled law that payment thorough bank does not establish genuineness of the payment if the other material indicate that the payment/expense was not genuine. The case laws relied upon by the assessee have been duly considered and are found to be quite distinguishable on facts. In view of the above, the contentions of the assessee are not acceptable.....
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....t debits expenditure on account of commission or similar expense. Given large turnover and income of the assessee, he usually falls in the tax slab of 30%. Therefore, every debit in the P&L Account on the expense side reduces tax by 30% of the amount debited. The assessee normally has a few commission agents the full amount that is due to them, the assessee normally makes payments to various members of the agent's family as well as different HUFs of the agent, who by themselves either do not earn any income, or fall in the lower tax brackets (say 10% or 20%). The assessee even debits bogus expenditures and shows payments to parties who have remotely no connection with commission business and simply fall in the lower tax brackets. TDS is duly deducted on these payments and the income is also shown by the recipients. However, the recipients of the payments, by virtue of falling in the lower tax brackets, will pay tax only at 10% or 20%. Even if the assessee pays the entire tax on behalf of the parties to whom commission has been paid, he still saves tax of 10% or 20% on debiting the expense because the debit in the P&L. Account reduces tax on that amount by 30% whereas the corres....