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TMI Blog2011 (7) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes can not be doubted - The assessee had produced all the relevant correspondence in this regard which has been taken note of by CIT(A) and not rebutted by Department - In favour of assessee. Commission disallowed u/s. 40A(2)(a) - Held that:- The commission had been paid to mother of Director of assessee-company who has been associated with this business for considerable long time as explained by assessee. He has pointed out that commission has been paid for the last 25 years and the lady still manages the outlet. Merely her age being 70 years, cannot be a basis for making disallowance - Her presence itself in the outlet was more than sufficient for making the payment of commission to her as she could manage the affairs effectively merely by sitting at the outlet - Though the Assessing Officer has made disallowance by referring to Section 40A(2)(a), but he has not made disallowance on the ground of the same of being excessive and unreasonable - He has made disallowance observing that it was an accommodation of expenses paid to a person satisfied u/s. 40A(2)(a) - AsO has wrongly referred to Section 40A(2)(a) because u/s. 40A(2)(a), disallowance can be made if the expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer observed that assessee had produced computerized ledger of sales without any cash or other evidences. He did not accept the assessee's contention that it was not possible in this business to issue cash memo for every routine and small retail sales. He, therefore, concluded that sales shown at Rs.30,56,54,251/- during the year was not verifiable. In view of these discrepancies, he invoked the provisions of Section 145(3) doubting the correctness and completeness of the accounts of the assessee and rejected the manufacturing and trading results shown by the assessee. He estimated the sales at Rs.31.00 crores and applied the average G.P. rate of 15.08% being average of [14.287% + 15.879%] on the net turn over of Rs.31.00 crores. He, accordingly, made an addition of Rs.30,78,972/-. The Ld. CIT(A) after considering the assessee's submission confirmed the findings of the Assessing Officer in regard to rejection of books of account. However, he deleted the additions for the following reasons:- (i) Assessing Officer did not bring any evidence to prove any sales outside the books of account and, therefore, the sales as returned by the assessee at Rs.30,56,54,251/- could not be distu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry routine and small details of sales could not be the basis for rejection of turn over returned by the assessee. We find ourselves in complete agreement on this count with the Ld. CIT(A). 7.1 Now, coming to the G.P. rate of 15.08% applied by the Assessing Officer as against 14.28% returned by the assessee, we are of the opinion that since the assessee's book results had been rejected, therefore, it has to be examined as to what extent assessee's G.P. rate of 14.287% could be accepted. The assessee had given an explanation in regard to increase in the price of Cooking Gas which has not yet been rebutted by the Assessing Officer. The other main reason assigned by the Assessing Officer for rejection of books of account that assessee had failed to produce relevant vouchers/bills, invoices in support of cash purchases of milk. The Assessing Officer has rightly observed that onus is on the assessee to prove its claim of expenditure. Hon'ble Supreme Court in the case of CIT vs. Calcutta Agency Limited [1951] 19 ITR 191 (SC) has held that onus lies on the assessee to establish its claim. Under such circumstances, we are of the opinion that it would meet the ends of justice if G.P. rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re Ld. CIT(A), it was pointed out that assessee had filed all evidences, such as, application forms with RBI and the correspondence with Indian High Commission for tour to London of the Director. It was submitted that assessee-company made exports of over Rs.1.00 crore and there was always possibility of increase in exports to other countries considering the nature of product. The Ld. CIT(A) allowed assessee's appeal by observing as under:- "I have gone through the assessment order and submissions of appellant. 1 find that there is nothing very unusual about the visit of director of company to visit London in 2005 in continuation of the visit was undertaken in 2003 with reference to start a company in U.K. I find that the visit of the director to U.K. cannot be called a visit for non business purposes merely on the suspicion that a visit after two years of conception of the plan to start a subsidiary company may not be for the same purpose. Therefore, I hold that the visit of the director of appellant company to London is for business purpose in absence of any evidence contrary to the claim of appellant. The details of air ticket submitted by the appellant show that the directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Kamala Devi Agarwal. The assessee in his submission pointed out that this commission was paid to Smt. Kamala Devi Agarwal @ 1% on turn over of Rs.3,93,36,343/- achieved from outlet at 7, Jagmohan Mallick Lane, Burrabazar, Kolkata-700 007. The amount was paid to her in lieu of services the company was taking for its benefit and growth. The Assessing Officer, however, did not accept the assessee's explanation observing that no service can be rendered by a lady aged more than 70 years of age that too by a member of the families of status of Shri Prabhu Shankar Agarwal. Ld. CIT(A) allowed the assessee's appeal taking note of the fact that in the assessment of Smt. Kamala Devi Agarwal, the commission had been taxed. Further, the responsibility of growth and profitability of a particular retail outlet of assessee-company had been assigned to Smt. Kamala Devi Agarwal for which she was paid commission of 1% on the turn over. He further pointed out that the Assessing Officer had not made any disallowance on the ground of commission being excessive and unreasonable. 13. We have considered the submissions of both the parties and have perused the records of the appeal. The commission had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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