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TMI Blog2014 (9) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... 24,18,968/- (2) The learned Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the disallowance of Rs. 1,55,400/- out of various other expenses." 2. The assessee was having salary income and commission income from the agency of TATA Indicom. The assessee was engaged as authorized distributor of Tata Tele Services Ltd. for Sikar area and was distributor of post paid mobile connection and rural area based line phone called RTB. It has been claimed before the Assessing Officer that the appellant's nature of business was to distribute the product of M/s Tata Tele Services Ltd. to consumer on commission basis. In process of distribution, the assessee used to take assistance from various private persons, retailers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing person wise for commission payment on pages 4 to 11. The Assessing Officer held that expenses more than 75% remained unverifiable. The enquiry proceeding summarized on page No. 22 of the assessment order is as under:- S. No. Details S. Nos. of the Table Amount (in Rs.) 1 Summons returned 8,10,11,14,16,17,18,23,24, 28, 30,33,34,39,40,41,44 to 49 7,94,386/- 2 Non compliance by the witnesses 1,2,5,20,26,29,31,37 & 42 6,06,215/- 3 Denied of having received any commission 3,9,12,21 3,00,057/- 4 Partially admitted to have received commission 4,6,7,13,15,19,22,25,27,32, 35, 36,38,43 4,11,000/- out of Rs. 7,46,160/- It is held that witnesses have confirmed to receive Rs. 4,11,000/- only that to out of Rs. 7,46,160/- as claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . issued summons to all 49 commission recipients for the requisite verification in this regard. However, the status of compliance of such summons, as mentioned in the assessment order, is found as under:- Sr. No Details Total No. of persons Amount 1. Summons returned back 22 Rs. 7,94,368/- 2. Non compliance of summons 9 Rs. 6,06,215/- 3. Denied of receiving the commission 4 Rs. 3,00,057/- 4. Partially admitted of receiving commission 14 Rs. 4,11,000/- out of Rs. 746160/- In other words, out of total claim of commission expense of Rs. 24,18,968/-, the payment of Rs. 4,11,000/- were only confirmed by 14 sub agent/retailers. Thus, the balance commission payment was remained unverifiable at the assessment level. Accordingly the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in treating such expenses as an inadmissible expenditure, as such. The above views assessee expressed in the following case laws: i. Ram Bhadur Thakur Ltd. 261 ITR 390 (FB) (Ker.) ii. Shahi Bag Entrepreneurs P. Ltd. 215 ITR 810 (Guj.) In the light of the above legal position, it is concluded that since the appellant has not able to substantiate his claim of payment of commission to great extent, therefore, the A.O. was justified in disallowing such expenses to the extent of 75%, as the pattern emerged out of the verification made by him in this regard. Accordingly, I find no reasons to interfere in the conclusion arrived upon by the A.O. on this account and the addition of Rs. 18,1,4,226/- is hereby confirmed. Consequently, this gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer on 16/12/2009 whereas assessment order was passed by the learned Assessing Officer on 24/12/2009. The assessment proceedings pertained to F.Y. 2006-07 whereas scrutiny assessment was made in the month of December, 2009 and business was closed, therefore, the assessee was no touch with these commission recipients. Some of the commission recipients had migrated from Sikar to other part of the country in search of employment. The A.R. claimed that the learned Assessing Officer ignored the evidence furnished by the assessee during the course of assessment proceedings. He drawn our attention on paper book and claimed that in number of cases, supporting evidence in form of producing the persons, furnishing the reply, furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipient of commission. However, he has accepted the income, which was received through account payee cheques after deducting TDS and also number of telephone installed are also available on record from the services rendered by the assessee. There is no comparable case brought on record by the Assessing Officer that he has so much income in the line of this business. If on total receipts of Rs. 33,66,306/-, the net income is assessed at Rs. 25,15,690/-, it will give net profit rate @ 75%, which is not possible in any kind of business. Therefore, we in the interest of justice, allow 80% commission receipt as business expenses and remaining 20% of commission receipt as income including returned income, thus the Assessing Officer is directed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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