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2022 (5) TMI 47 - AT - Income TaxAddition u/s 68 of receipt in advance pertaining to the subsequent year has been treated as income in the year under appeal - whether C.I.T. (Appeal) was not justified in confirming an addition ignoring the relevant documents placed on the record that the amount received has been shown as income in the subsequent year - whether CIT (Appeal) had failed to appreciate the submission that it is practice since from the incorporation of the company that the proportionate receipt had always been carried forward related to the subsequent year? - HELD THAT - It is the submission of the assessee that the AO and the ld. CIT(A) without properly appreciating the nature of business done by the assessee and the accounting method consistently followed has made the addition which is not correct. According to the ld. Counsel for the assessee when the payment is made by Samsung India Electronics Private Limited it becomes revenue expenditure in their hands but if the assessee gives the vouchers over a period of ten months or so and when the advance is received in the month of February, then certain amount is shown as advance received in the hands of the assessee, which is shown as advance from customers in the balance-sheet. It is also his submission that assessee is following this method since past so many years. From the order of the lower authorities, we find the assessee has not even filed the bank statement details to substantiate that the said amount has in fact been received from Samsung India Electronics Private Limited. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the AO with a direction to grant one more opportunity to the assessee to substantiate with evidence to his satisfaction that the amount was in fact received from Samsung India Electronics Private Limited only and not from any other person - Ground allowed for statistical purposes. Addition being commission paid - HELD THAT - We find the AO in the instant case made addition being commission paid to Mr. Mukesh Bathla and Ms. Sangeeta Bathla since, the assessee failed to substantiate with evidence to his satisfaction regarding the above commission. The ld. CIT(A) sustained the addition made by the AO . We do not find any infirmity in the order of the ld. CIT(A) on this issue. We find subsequently when the AO confronted the assessee, the assessee filed the bills raised by above two persons against Samsung. Even the confirmation from the assessee to the above two parties says the commission on sale. The assessee is changing the stand for reasons best known to them. Even though they have received commission for introducing Mr. Uday of Samsung to the assessee, these two persons do not have details of Mr. Uday. Further, Ms. Sangeeta Bathla refused to appear before the AO. The findings given by the AO as well as the ld. CIT(A) could not be controverted by the ld. counsel for the assessee by filing any other evidence before us so as to take a contrary view than the view taken by the lower authorities. Merely stating that the expenditure has been incurred for commercial expediency in our opinion is not sufficient for allowing the commission It is the settled proposition of law that for claiming of any expenditure as allowable, the onus is always on the assessee to substantiate with evidence to the satisfaction of the AO that the same has been incurred wholly and exclusively for the purposes of business. The assessee in the instant case has miserably failed to substantiate the same except by furnishing certain papers which do not substantiate the allowability. - Decided against assessee.
Issues Involved:
1. Addition of Rs.76,62,000/- as income under Section 68. 2. Disallowance of Rs.13,30,000/- commission expenses. Detailed Analysis: 1. Addition of Rs.76,62,000/- as income under Section 68: The assessee, a company engaged in providing holiday vouchers, declared a total income of Rs.37,50,110/- for the Assessment Year 2013-14. The Assessing Officer (AO) questioned the assessee about treating Rs.76.62 lakhs as an advance from Samsung India Electronics Ltd. The assessee explained that the amount was an advance for holiday vouchers with extended validity, a common practice to maintain business relationships. However, the AO was not convinced due to the lack of confirmation from Samsung India Electronics Ltd. and invoked Section 68 of the Income Tax Act, adding the amount to the assessee's income. On appeal, the CIT(A) upheld the AO's decision, emphasizing the absence of independent confirmation from Samsung and the lack of evidence showing the amount as an advance. The CIT(A) noted that the revenue should be recognized in the current year since there was no clause for refunding the amount after the voucher's expiry. The Tribunal, after hearing both sides, noted that the assessee failed to provide bank statements or other evidence to substantiate the receipt of Rs.76.62 lakhs from Samsung. In the interest of justice, the Tribunal restored the issue to the AO, directing the assessee to provide evidence of the receipt and subsequent adjustments of the amount. The AO was instructed to decide the issue based on facts and law after giving the assessee an opportunity to be heard. 2. Disallowance of Rs.13,30,000/- commission expenses: During the assessment proceedings, the AO asked the assessee to justify the commission payments of Rs.13,30,000/- to Mr. Mukesh Bathla and Ms. Sangeeta Bathla. The assessee provided invoices stating the commission was for the sale of Samsung laptops and printers, which was not the assessee's business. The AO recorded Mr. Mukesh Bathla's statement, where he claimed the commission was for introducing a Samsung representative to the assessee's director. However, he failed to provide details of the introduction or the representative. Ms. Sangeeta Bathla refused to appear before the AO. Consequently, the AO disallowed the commission payments, deeming them non-genuine. The CIT(A) upheld the AO's decision, highlighting the lack of evidence for the services rendered by the commission agents and the non-cooperation of Ms. Sangeeta Bathla. The CIT(A) noted that mere acceptance of commission by the recipients does not prove the genuineness of the transaction. The Tribunal, after reviewing the case, agreed with the lower authorities. It emphasized that the assessee failed to provide substantial evidence for the commission payments and noted inconsistencies in the assessee's explanations. The Tribunal upheld the CIT(A)'s order, dismissing the assessee's appeal on this issue. Conclusion: The Tribunal partly allowed the appeal for statistical purposes, directing the AO to re-examine the addition of Rs.76,62,000/- under Section 68 with proper evidence. However, it upheld the disallowance of Rs.13,30,000/- commission expenses due to the lack of substantial evidence.
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