9911796707
TMI Blog2015 (6) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of alleged fictitious payment of commission to various persons for sums aggregating to Rs. 11,00,000. 3. Brief facts are that the assessee is an indenting agent for various foreign principals and is also engaged in trading in merchandise, chemicals, etc. The assessee has disclosed sales at Rs. 91.20 lakh and has derived commission of Rs. 1.01 crore. The Assessing Officer (A.O.) during the course of assessment proceedings noted that the assessee has debited an amount of Rs. 11 lakh on account of business promotion under the head `Administrative, selling and other expenses'. On verification of these expenses it was found that the same has been claimed on account of payment of commission for the orders procured. The list of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t rendered any service to Indian Commercial Co P Ltd. The payment of Rs. 50,000/- paid by this company to me is nothing but accommodation entry provided by me. Q.No.6 Please explain how this transaction involving accommodation entries were ultimately settled? Ans. As I stated above, I did not know about Indian Commercial Co P Ltd. or any person related with this company. The cheque was brought to me by a broker in the market and after clearing of the cheque, I have returned part of the amount to the broker." 3.1 The aforesaid statement was recorded in the presence of Shri S.M.Mehta, Taxation Manager and the representative of the assesseecompany, who was given an opportunity to cross examine Shri Yogesh Shah. However, the assessee decline ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of business promotion expenses of Rs. 11 lakh was arranged / carried out by the then Vice-President (Marketing) and the Manager (Accounts) of the company, who have left the company as they were found to be engaged in fraud and misappropriation of funds. Later on it came to the knowledge of the company that the said expenses were doubtful in nature and hence in order to buy peace, the said amount was offered for taxation on the understanding that no penalty will be levied. It was further submitted that the company was into the business for more than 66 years and in its entire history no such accommodation transaction has taken place. However, the A.O. rejected the assessee's contention on the ground that it is an admitted fact that the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of the material on record. Accordingly he confirmed the penalty levied by the A.O. 4. Before us the learned Counsel, filed an application for admission of fresh evidence, which is a copy of complaint lodged with the Senior Inspector of Police, Marine Drive Police station, against Mr.Vibhakar and Mr.Vernekar, who have misappropriated the funds of the assessee-company. He submitted that these two employees of the assessee-company had cheated and committed fraud in the account of the assessee-company by inflating the expenses and debiting bogus payments. Immediately when the assessee came to know about such a fraud, they have been terminated from the services. Besides that, he submitted that so far as the assessee is concerned, it was und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain other kinds of misappropriation of funds. Once, it was not a voluntary offer and the assessee's claim has been found to be false and fictitious, then penalty u/s 271(1)(c) has to be levied. Thus, he strongly relied upon the order of the CIT(A). 6. We have heard the rival submissions, perused the relevant findings given in the impugned orders and the material placed on record. The assessee has claimed payment of commission to 11 persons for the order procured by them for a sums aggregating to Rs. 11 lakh not only in the books of account but also in the audited accounts filed along with the return of income as on 31.3.2007. The assessee's case for scrutiny was selected by issuance of notice u/s 143(2) on 13.08.2008. When the assessee cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure / payment for their own benefit. From the additional evidence filed by the assessee, it is noted that the police complaint is dated 18.12.2007 i.e. much before the scrutiny proceedings were undertaken by the A.O. If the assessee was aware of such a misappropriation and cheating by the employees, it could have very well filed either the revised return or could have offered the said payment as income before the commencement of the proceedings. It was only vide letter dated 29.12.2009 i.e. after two years of lodging of police complaint and assessee being aware of such a claim of fictitious expenditure, did not come with a clean hand before the departmental authorities. Only when the A.O. confronted one of the recipients of the payment that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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