TMI Blog2012 (2) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 lacs as commission u/s 40A(2) without appreciating assessee's submissions in this regard. 2. The assessee craves leave to amend/add any ground of appeal before the same is heard. 3. In Ground No.1(a), the assessee agitated that the CIT(A), erred in law and on facts in upholding the addition of ₹ 42,48,003/- made by the AO, on account of cash purchases of old silver, treating the same as bogus purchasers. The brief facts are that the AO, found that the assessee had made cash purchases of ₹ 42,48,003/-, and no particulars of sellers were recorded on the purchase bills. It was observed by the AO on a few purchase bills, some names had been mentioned without recording other identifiable details, such as addresses of the sellers. The AO granted opportunity to the assessee, to explain such transactions of purchases. However, the assessee failed to file any explanation. Consequently, such purchases were held as bogus/unverifiable by the AO and, consequently, the impugned addition was made. Before the CIT(A), assessee contended that the raw material, so purchased by the assessee had been sold after re-making the same by way of undertaking the job work, in which job ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A), erred on facts and law, in upholding the disallowance of ₹ 10,50,806/-, out of total rent paid of ₹ 14,40,000/- u/s 40A(2), without appreciating the facts and submissions in the matter. The ld. 'AR' merely justified the said claim. However, Ld. 'DR' placed reliance, on the order of the lower authorities. 8. In the course of assessment proceedings, the AO found that the assessee had paid rent of ₹ 14,40,000/- which worked out approximately 370% more than the rent paid, in the preceding year, an increase from ₹ 3,89,194/-, to ₹ 14,40,000/-, to the same three persons - Deepak Malik, Ramesh Malim and Mukesh Malik. There being no agreement and no plausible explanation, was filed by the assessee, the AO disallowed the rent amounting to ₹ 10,50,806/-. Ld. CIT(A) upheld the finding of the AO vide para 11 to 13 of the appellate order. The relevant part of the said order is reproduced hereunder : 11. After having considered rival submissions, I find that 1. There is no evidence on record to support or prove the contention of the appellant in the absence of a proper rent agreement. 2. Deduction of TDS on rent paid or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oprietor Subhash Jewellers, SCF 32, Sector 8B, Chandigarh, had claimed expenses in the shape of commission amounting to ₹ 16 lacs, paid to his sons, daughter-in- law and daughter, namely Deepak Malik, Ramesh Malik and Mukesh Malik (sons) and Sarika Malik, (daughter- in-law) and Rama Malik (daughter). The chart indicating details of such payments, is reproduced, in para 4 of the order of the CIT(A), which is reproduced hereunder : COMMISSION ON SALE PAID ON 31.3.2007 Name Gross amount Deepak Malik Rs.2,40,000/- Ramesh Malik Rs.2,40,000/- Mukesh Malik Rs.2,40,000/- Sarika Malik Rs.4,40,000/- Rama Malik Rs.4,40,000/- Total : Rs.16,00,000/ - 12. It is undisputed fact that the assessee had paid ₹ 4,80,000/-, as salary, as also the impugned commission to each of the above closely related persons. A comparison of the commission paid viz-a- viz salary paid by the assessee to his son ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the absence of any such evidence, the finding recorded by the Income- tax Officer and confirmed by the Appellate Assistant Commissioner and the Tribunal must be accepted. We are unable to agree with counsel for the assessee that even if the taxpayer does not produce any evidence in support of the claim for allowance, the Income-tax Officer must independently collect evidence and decide that the allowance claimed is excessive or unreasonable having regard to the legitimate business needs of the assessee before the power under section 10(4A) may be exercised. (ii) In the case of Synpro Inds. Vs. CIT [1984] 40 CTR 106 [mp], it has been held that Business expenditure - Disallowance u/s 40A(2) -A firm paid commission of ₹ 12000/- in addition to salary to the husband of one of the partners. Since no agreement for payment of commission was executed during the previous year - Disallowance was held to be justified. (iii) In case of Ganesh Soap Works vs. CIT [1987] 59 CTR [mp] 109, the Hon'ble High Court held that if Tribunal finds the amount claimed as payment of commission excessive or unreasonable having regard to services or facilities rendered to the assessee, disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee decisions, as is evident from perusal of the relevant part of the findings of the CIT(A), as reproduced above, whereby on similar facts, disallowance made was justified. The ld. CIT(A) has categorically mentioned that the assessee had failed to highlight or provide the details of the specific services rendered by his sons, daughter and daughter-in-law of the assessee in the business of the assessee. Further, it was found by the ld. CIT(A) that there was no such agreement on record to justify such payments . We are in complete agreement with the findings of the ld. CIT(A) in the matter. In view of the above discussion, the, findings of the ld. CIT(A) are upheld. 15. In Ground No.1(d), the assessee contended that CIT(A), erred in upholding disallowance of ₹ 68,805/- out of car and telephone expenses. The AO, on perusal of the Profit Loss Account found that certain expenses had been incurred on car and telephone. The assessee failed to establish that the entire expenses were incurred for the purpose of business.Consequently,the AO disallowed 1/5th of such expenses, towards personal uses, which resulted into addition of ₹ 68,805/-. The CIT(A) upheld the addition mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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