TMI Blog2015 (12) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... iability of everyone of the relevant account filed by the assessee. In the absence of any such finding, it was not open to them to pick and chose one receipt or the other, which are more favourable to the revenue. They could accept the assessee's explanation or reject them or they could check the entries therein with reference to the books of account. But they have not done none of these things. Accordingly, the assessee's audit report as filed along with the return of income as audited by M/s. Anurag Mathur & Co. is the correct accounts for the reason that the receipts disclosed therein are matching with the TDS certificates issued by SWDL and also with the bills raised. Accordingly, we delete the addition - Decided in favour of assessee. Disallowance of commission - Held that:- In the immediate preceding year i.e., assessment year 2003-04, the assessee was engaged in the same business and also taken services from the said parties and paid commission to them and no disallowance was made by the AO originally, but again case was reopened by issuing notice u/s. 148 read with section 147 of the Act on the basis of information that one of the parties Umang Credit Capital Ltd., the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this appeal of assessee is against the order of CIT(A) confirming the action of AO in making addition on account of undisclosed receipts of ₹ 78,59,892/-. For this, assessee has raised following ground no.1: That on the facts and in the circumstances of the case the addition on account of undisclosed receipts of ₹ 78,59,892/- is unfair, based on no evidence and based on incongruous factual premises. 3. Briefly stated facts are that the assessee is a partnership firm and earning income from coordination commission received from Shaw Wallace Distilleries Ltd. (in short SWDL). The AO during the course of assessment proceedings noted that during the relevant AY the assessee has filed two audit reports, one along with forwarding letter dated 01.11.2004 which is audited by K. M. Gulgulia of M/s. K. M. Gulgulia Co. dated 30.10.2004 and another audit report by Shri Anurag Mathur of M/s. Anurag Mathur Co. dated 27.10.2004 filed along with the return of income, which was filed on 20.03.2006. According to AO, both the audit reports were signed by the partners. On query from the AO, the assessee requested that the audit report of assessee audited by Shri Anurag Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount received. The appellant submitted that the report dt. 27-10-04 prepared by Mr. Anurag Mathur is correct and be considered. The appellant has not furnished explanation regarding variation in the commission receipt disposed in the audit reports furnished. The amount received disclosed In the return is lower by ₹ 78,59,892/- compared to the audit report dated 30.10.2004 furnished by the appellant. The appellant failed to reconcile the variation in the commission receipt disposed. The appellant failed to offer satisfactory explanation in the variation during assessment proceeding and also during appeal proceedings. The appellant has not obtained any confirmation from M/s. Shaw Wallace Distilleries Ltd. regarding the commission payment made to the appellant. The appellant placed reliance on the TDS certificates submitted. It is seen that the appellant received commission for the service rendered to M/s. Shaw Wallace Distilleries Ltd. In the absence of confirmation from the company regarding the payment made to the appellant and since the appellant failed to reconcile the variation of commission receipt found in the audit report the AO is correct as per law in assessing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. According to Ld. Counsel, SWDL is a highly reputed company and a very big concern from where the AO should have verified the total receipts of the assessee, but AO not chose to carry out that exercise. According to Ld. Counsel, the assessee has discharged its onus by producing all the above mentioned evidences before the AO as well as before CIT(A). When these evidences were available before AO he could not find any mistake in the books of account despite the fact that complete books of account as audited by M/s. A. Mathur Co. was produced before the AO during the course of assessment proceedings. In view of these arguments, Ld. Counsel for the assessee requested the bench to delete the addition. 5. On the other hand, the Ld. Sr. DR Md. Ghayasuddin, JCIT relied on the orders of the lower authorities and stated that when two audit reports are available, AO has taken the highest figure mentioned by assessee as receipts. He stated that the assessee is unable to explain the difference between the two audit reports and according to him, even Shri K. M. Gulgulia of M/s. K. M. Gulgulia Co. admitted to have audited the accounts of the assessee when his statement was recorded. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95/-, the correct receipt seems to be as disclosed by the assessee in its audited accounts as audited by M/s. A. Mathur Co. We are of the view that the AO has never tried to verify the factum correct receipts even though SWDL is a reputed and a big concern from where the AO should have verified the total receipts of the assessee. It is a fact that the assessee has discharged its onus by producing all the above mentioned evidences before the AO as well as before CIT(A) and when these evidences were available before AO, and he could not find any mistake in the books of account, he cannot make any addition on this account. 7. We find that this issue has been dealt with by Hon'ble Supreme Court in the case of Indore Malwa United Mills Ltd. Vs. State of Madhya Pradesh Anr. (1966) 60 ITR 41 (MP), wherein the Hon'ble High Court has held as under: Held, that, as the appellant produced before the assessing authorities all its registers, it was their duty to definitely come to one conclusion or the other in regard to the reliability of every one of the relevant accounts filed by the appellant, and in the absence of any such finding it was not open to them to pick and choo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat party clearly reveals that the total receipts are at ₹ 2,14,70,195/- as against the total receipt adopted by AO ₹ 2,93,30,087/-. The assessee has produced complete bills issued by SWDL and payments are received by cheque through bank accounts. The assessee filed before the authorities concerned all the books of account reflecting the receipts from SWDL and in that case it was the duty of the authorities to definitely come to one conclusion or the other in regard to the reliability of everyone of the relevant account filed by the assessee. In the absence of any such finding, it was not open to them to pick and chose one receipt or the other, which are more favourable to the revenue. They could accept the assessee's explanation or reject them or they could check the entries therein with reference to the books of account. But they have not done none of these things. Accordingly, we are of the view that the assessee's audit report as filed along with the return of income as audited by M/s. Anurag Mathur Co. is the correct accounts for the reason that the receipts disclosed therein are matching with the TDS certificates issued by SWDL and also with the bills ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of these parties. The appellant failed to produce the parties. ii) From the details furnished by the appellant the A.O. obtained the profit and loss account of four of the parties. Copies of these profit and loss account is enclosed to the assessment order as annexure 1,2,3 and 4. It is seen that the commission payment disclosed by the parties are negligible compared to the claim of expenses by the appellant. The A.O called for an explanation for this discrepancy. The appellant failed to offer any explanation regarding the discrepancy noticed by the A.O. It is contended during the appeal proceedings that they are appointed on cost plus remuneration basis and bills are raised periodically. However no evidence is furnished In support of this contention. Further no such explanation given before the A.O. iii) The appellant has not made deduction of tax from the commission payment claimed to have been made. iv) The appellant has not furnished any confirmation from the parties regarding the sub-coordinator commission received. No details regarding the bills raised, services claimed to be rendered by them etc. are furnished. In the absence of such basic information the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spects and acknowledged the services rendered by these parties and allowed the payment of commission except in the case of M/s. Dave Commercial Co. at ₹ 6,99,975/-. In view of this, ld. Counsel for the assessee argued that there is no change in the facts in the present case for the relevant assessment year in comparison to earlier AY 2003-04, as far as this issue is concerned and hence, the revenue should not have taken different conclusion than allowing the payments. On the other hand, Ld. Sr. DR stated that there is no evidence in the present case that these parties have rendered services for receipt of commission and once there is no evidence that these parties have rendered services for accepting coordination commission, the expenses cannot be allowed. 12. We find that assessee was received commission of ₹ 2,14,70,195/- from SWDL for undertaking responsibility to look after all the policy matters for requiring purchase, cordial relationship between SWDL and the buyers, liquor ordering, URC operation etc. and in lieu of this, the SWDL paid commission to the assessee. We find from record that the aforesaid job was executed by the assessee by assigning the work to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f business promotion expenses of ₹ 4,88,704/- is unfair based on no evidence and based on incongruous factual premises. 14. Briefly stated facts are that the assessee incurred expenses on purchase of various presentation items as well as expenses towards payment of hotel bills of guests. The assessee claimed the business promotion expenses of ₹ 8,39,894/-. The AO disallowed the entire business promotion expenses by stating that the aforesaid expenditure is not in the line of assessee's business. The CIT(A) partly allowed i.e. 50% of the business promotion expenses by observing as under: The appellant claimed business promotion expenses of ₹ 8,39,894/-. The ledger copy of the expenditure is furnished. From the ledger copy it is seen that the following expenses are incurred: i) Payment to Stanchart Bank ₹ 2,88,704/- ii) Payment to Rohit Enterprise for purchase of ball pen ₹ 3,04,000/- iii) Cash expenditure is incurred towards hotel bills, guest entertainment Rs.2,41,190 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee had submitted the details of expenditure relating to sponsorship for organizing various events for the promotion of different brands of cigarettes manufactured by it. The assessee had shown the expenditure of ₹ 172.60 crores on account of advertisement expenses which included ₹ 133 lakh as sales promotion expenses. The assessee company had made an expenditure on the sponsorship of various events like golf, polo, football, cricket, racing, badminton, etc. for the purpose of advertisement of its product. The Department had not disputed the identical expenditure in any of the previous year and the auditors had also pointed out that such expenses were not related or incidental to the business needs of the assessee. The action of the Assessing Officer in disallowing 10 per cent of such expenditure without material evidence on record was not justified. From the above, we are of the view that these expenses are allowable expenditure, first on the principles of consistency and even otherwise the CIT(A) has admitted the expenses to be business in nature but disallowed 50% on the basis of estimate. That cannot be the basis for disallowance. Accordingly, we dele ..... X X X X Extracts X X X X X X X X Extracts X X X X
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