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2024 (4) TMI 387 - AT - Income TaxAddition made on account of non-genuine commission payment - commission/incentives paid to staff members - AO observed that despite the assessee was repeatedly asked to furnish the genuineness of the commission expenses incurred by the assessee, the assessee has chosen not to reply and not provided complete details at the fag end of the completion of the assessment proceedings - investigation over the genuineness of the commission could not be carried out in the case of the assessee by the undersigned - HELD THAT:- We observe that the assessee has filed the information before the CIT(A) and based on that CIT(A) has given part relief to the assesse and even revenue has filed grievances that the facts were not properly verified and this needs to be verified whether the agents have actually performed the duties of an agent and their credentials were not verified. After considering all this issue needs to verified afresh, we deem it fit to remit this issue back to the file of AO for fresh verification of the documents submitted by the assessee before the CIT(A). Accordingly, we remit this issue back to the file of AO with the direction to verify the evidences/documents as per law after giving proper opportunity of being heard to the assessee. Grounds raised by the revenue and assessee are allowed for statistical purpose. Disallowance u/s 14A r.w.r. 8D - Whether assessee has not received any exempt income during this year? - HELD THAT:- We observed that the assessee has not received any exempt income from the investments made and as held in the case of Cheminvest Limited [2015 (9) TMI 238 - DELHI HIGH COURT] that if disallowance exceeds the exempt income the same should be restricted to the exempt income only. The Hon'ble Bombay High Court in the case of Pr.CIT v. M/s. Ballarpur Industries Limited [2016 (10) TMI 1039 - BOMBAY HIGH COURT] rejected the appeal filed by the Revenue holding that there is no substantial question of law, in upholding the view of the Tribunal that provisions of section 14A would not apply when there is no exempt income received or receivable during the relevant previous year. This bench is consistently holding that, the disallowance u/s. 14A of the Act shall not exceed exempt income and shall be restricted to the exempt income earned by the assessee. Therefore, we direct the Assessing Officer to delete the 14A disallowances. Estimation of income - Bogus purchases - CIT(A) restricted addition @ 5.87% - HELD THAT:- No infirmity in the order passed by the Ld.CIT(A) in restricting the addition to gross profit ratio of 5.87% of purchases as against 100% of the purchases disallowed by the Assessing Officer in the assessment year under consideration. Accordingly, ground raised by the revenue is dismissed.
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