2016 (5) TMI 1270 - HC - Income Tax

Disallowance from the commission received from the BSNL out of an amount as commission paid - Held that - The examples were taken of certain bills bearing No. 4877 dated 19.1.2006 in the name of Shri Raj Kumar Samna, No. 5018 dated nil in the name of Tanisk Singla, Sirhind, bill No. 4992 dated 21.10.2006 in the name of Aggarwal Enterprises, Patiala etc. where complete addresses of the retail customer/sub dealers had not been mentioned so that the same could be verified and it was also recorded that in view of the incomplete particulars, the parties were not locatable in such big cities. It was in the totality of facts and circumstances that the addition of ₹ 50,000/- was sustained by the Tribunal. The view taken by the Tribunal in the given facts and circumstances is plausible and also reasonable in upholding the addition of ₹ 50,000/- only.

Summary

Issues:
1. Appeal against Tribunal order under Section 260A of the Income Tax Act, 1961 for assessment year 2007-08.
2. Sustainability of Tribunal order making estimated additions and returning unreasonable findings.
3. Reasonableness of Tribunal conclusions in comparison to assessment order and CIT (A) order.
4. Disallowance of commission received from BSNL.

Analysis:
1. The appellant filed an appeal against the Income Tax Appellate Tribunal's order for the assessment year 2007-08. The substantial questions of law included the sustainability of the Tribunal order making estimated additions and returning unreasonable findings, along with the reasonableness of the Tribunal conclusions compared to the assessment order and CIT (A) order.

2. The appellant, a proprietor of a gas service, had distributorship for LPG and BSNL products. The dispute arose regarding the disallowance of commission received from BSNL. The Assessing Officer disallowed a portion of the commission, which was partly upheld by the CIT(A) and further reduced by the Tribunal to &8377; 50,000. The core issue was the disallowance of this amount from the commission received from BSNL.

3. The CIT(A) noted discrepancies in the bills produced by the appellant, stating incomplete addresses of retail customers/sub-dealers and payments shown as received in cash. The Tribunal, while affirming the CIT(A)'s findings, reduced the disallowance to &8377; 50,000 considering the evidence presented by the appellant, including bills and stock registers. The Tribunal found merit in the appellant's claim and restricted the disallowance to &8377; 50,000 to prevent revenue leakage.

4. The Tribunal's decision to sustain the addition of &8377; 50,000 was based on the incomplete particulars in the bills and the inability to verify the retail customers/sub-dealers due to missing addresses. The Tribunal's view was considered plausible and reasonable in the given circumstances. Since the finding was not demonstrated to be erroneous or perverse, the Court dismissed the appeal, finding no merit for interference.

This comprehensive analysis covers the issues involved in the legal judgment, detailing the arguments presented, decisions made by the authorities, and the final outcome of the appeal.