TMI Blog2007 (12) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ember 18, 2003, by framing the following substantial questions of law: "1. Whether the learned Income-tax Appellate Tribunal had mate rial and were right in law in sustaining disallowance of Rs. 3,03,475 being commission paid to M/s. Laxmi Stone Pvt. Ltd. ? 2. Whether the finding that the appellant could not give specific evidence regarding nature of services rendered by the said company is without evidence and contrary to the evidence on records, are per verse and have vitiated the conclusion ?" 3.The precise controversy relates to the disallowance of the commission paid by the assessee to M/s. Laxmi Stone Pvt. Ltd., in the three relevant assessment years. The claim of the assessee had been, that when the company was formed, an India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding the nature and extent of ser vices provided by M/s. Laxmi Storte (P.) Ltd. in order to earn the alleged commission. (3) The entry of the commission payment in the journal of M/s. Laxmi Stone (P.) Ltd., which was found in the premises of the appellant- firm at the time of survey, has been apparently made in a suspicious manner and not during the normal course of business. (4) M/s. Laxmi Stone (P.) Ltd. is a connected family concern. It has filed loss returns for various assessment years including the assessment year under consideration. It is clear that the appellant-firm has diverted part of its profit in the form of bogus commission to be adjusted against the losses declared by M/s. Laxmi Stone (P.) Ltd." 6 After so catalog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s' time was given to him, and considered the reasons given by the Commissioner of Income -tax for discussing, and in paragraph 25, only proceeded to hold that the appellant could, not give specific evidence regarding nature of services rendered by the appellant before the lower authorities, and purporting to have regard to the entire facts and circumstances of the case, proceeded to confirm the action of the Assessing Officer, and that of the Commissioner of Income-tax. .8.It is significant to note, that in this paragraph 25 itself, it was further held by the learned Tribunal, that there was no need for any written agreement for the payment of commission, for the services rendered. 9.Assailing the impugned order, learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch, in the books of account of the company, entry clearly looked to be clandestinely made between two lines, and was not an act done in the regular course of business, and, therefore, it is clear, that the profits of the assessee were simply attempted to be diverted to the company, and has rightly been disallowed by the learned authorities below. It was also contended that the I assessee has failed to produce any material to show that any services were rendered by the company, which entitled the company to receive the com mission. May be, that the written agreement may not be necessary, but then, the evidence was required to be led by the assessee, and despite I opportunities being given by the Assessing Officer, the assessee did not lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he entry being there in the books of account inserted in clandestine manner between two lines. 12.Then, so far as the finding of the learned Tribunal about the assessee having not led any specific evidence, regarding nature of services rendered by the company before the authorities below is concerned, true it is that the assessee did not lead any evidence before the authorities below, as contemplated by the learned Tribunal, but then, at least he had led his own evidence, by deposing to the effect, that at the time when the company was formed, an Indian machine was installed which were previously imported, and there was an understanding between the firm, and the shareholders, that in case the machine is successful, more plants will be sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly deposed that all purchased machines, as detailed in each affidavit, for different prices, and vide different bill numbers, mentioned in the affidavits, and they had so purchased it, being inspired by performance of the machine installed in the business premises of the company, and on the advise, and with the cooperation of Parvinder Singh, who is the key person in the company; apart from the fact that this Parvinder Singh himself has also corroborated it by filing his own affidavit. 14.Thus, the finding recorded by the learned Tribunal is vitiated on account of non-reading of the material available on record as well. 15.Thus, in our view, it cannot be said that the learned Tribunal or the authorities below were correct in disallowin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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