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2015 (10) TMI 2114 - ITAT PUNE

2015 (10) TMI 2114 - ITAT PUNE - TMI - Disallowance of Commission - stand of the assessee is that in the earlier assessment years i.e. assessment years 2006-07, 2007-08 and 2008-09 the payment of commission has been allowed in scrutiny assessment proceedings - Held that:- The Commissioner of Income Tax (Appeals) in his order has given a finding that the assessee has inflated its brokerage expenses by paying commission to his sons. There is no evidence on record of rendering extra services by son .....

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e had shown credit balances in respect of certain persons/farmers from whom the assessee has allegedly purchased raw cotton. During the course of assessment proceedings the assessee was directed to produce the said creditors. However, none of the persons (alleged creditors) appeared before the Assessing Officer. The assessee filed confirmation letters without any corroborative evidence. Before the Tribunal, the assessee has placed on record photocopies of the transaction receipts to show that th .....

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ealed that the assessee’s sons Nirav Deepak Poldiya has signed on the back side of the cheque suggesting that he received the cash payments. The ld. AR has not been able to controvert this finding of the Commissioner of Income Tax (Appeals). The ld. AR of the assessee has not been able to show as to how the payment made to the persons named in the assessment order as well as the order of Commissioner of Income Tax (Appeals) to whom the alleged payments are made are covered under the exceptions g .....

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Appeals)-II, Nashik dated 19-02-2013 for the assessment year 2009-10. 2. The brief facts of the case are : The assessee is engaged in the business of Ginning and Pressing of Cotton, manufacturing of Cotton Bales, manufacturing and trading of Cotton Seeds, Cotton Seed Cake, Cotton Seed Oil etc. The assessee filed his return of income for the assessment year 2009-10 on 30-09-2009 declaring total income of ₹ 27,51,680/-. The case of the assessee was selected for scrutiny. Accordingly, notice .....

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persons were furnished by the assessee. The Assessing Officer made disallowance of the payment of aforesaid commission/salary. Further, the Assessing Officer held that the credit balances in respect of following persons were not explained: Name of the Person Amount (Rs.) Rupa B. Mahajan Rs.1,38,472/- Chetan Prabhakar Mahajan Rs.1,31,212/- Dnyaneshwar R. Hirwade Rs.90,370/- Ganesh G. Nehete Rs.1,29,150/- Nitin P. Mahajan Rs.1,27,025/- Premchand D. Kurkure Rs.1,22,860/- Total Rs.7,39,089/- None of .....

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tion 40A(3) but are to be regarded as fictions. Aggrieved by the assessment order dated 14-12-2011, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) partly accepted the contentions of the assessee with regard to payments of salary to Ms. Rupal Nirav Poldiya and in respect of commission paid to other persons. The Commissioner of Income Tax (Appeals) confirmed the addition in respect of payment of commission to other persons .....

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ious manners. The entire family of the assessee is involved in the business for the last 15 years. The commission is paid to Amish Deepak Poldiya, Nirav Deepak Poldiya and Urmil Kantilal Poldiya on sale of cotton bales. As far as Rupal Nirav Poldiya is concerned the Commissioner of Income Tax (Appeals) has already granted part relief. In the assessment years 2006-07, 2007-08 and 2008-09, the Revenue has accepted the payment of commission to the aforesaid persons. The ld. AR referred to the broke .....

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n record photocopies of the invoices issued by Krishi Utpann Bazaar Samittee, Yawal, District, Jalgaon to show that the assessee had in fact purchased raw cotton from the aforesaid persons. The ld. AR further submitted that even in the past the assessee has been purchasing cotton from the aforesaid parties on credit and have been making payment after the period of 6-8 months. 3.2 With regard to disallowance u/s. 40A(3), the ld. AR submitted that the payments have been made to farmers through bea .....

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). The ld. DR contented that the assessee could not furnish any document to show that the commissions were in fact paid for extra services rendered by the persons closely related to the assessee. There is no evidence on record to show that the services were at all rendered by Amish Deepak Poldiya, Nirav Deepak Poldiya and Urmil Kantilal Poldiya. The assessee has already paid commission to Adatiya (commission agent) on sale of cotton bales. The Commissioner of Income Tax (Appeals) has given speci .....

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shing these documents either before the Assessing Officer or before the Commissioner of Income Tax (Appeals). At second appellate stage, fresh documents cannot be taken on record. In respect of disallowance u/s. 40A(3), the ld. DR submitted that the payments were made through bearer cheques issued by the assessee. During scrutiny assessment it was found that the cheques were withdrawn by the son of the assessee. The assessee has not brought on record any evidence that payments were actually made .....

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of cotton bales to Amish Deepak Poldiya, Nirav Deepak Poldiya (sons of the assessee) and Urmil Kantilal Poldiya (nephew of the assessee). The stand of the assessee is that in the earlier assessment years i.e. assessment years 2006-07, 2007-08 and 2008-09 the payment of commission has been allowed in scrutiny assessment proceedings. The assessee has placed on record the assessment order for assessment years 2006-07 and 2007-08 in support of his contentions. The Commissioner of Income Tax (Appeal .....

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assessee shall furnish documentary evidence in support of the contentions. On furnishing of the substantive evidence by assessee, the Assessing Officer shall decide this issue de-novo. Accordingly, this ground of appeal of the assessee is allowed for statistical purpose. Disallowance u/s. 68 (ii). The second ground in appeal is with respect to disallowance of unexplained cash credit. The assessee had shown credit balances in respect of certain persons/farmers from whom the assessee has allegedly .....

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