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TMI Blog2013 (7) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- "1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs.69,06,732/- on account of commission paid to M/s Tridev Agencies (P) Ltd., M/s Vidhata Agencies (P) Ltd. and M/s Twinkle Vanijya (P) Ltd. and the impugned disallowance has been made by recording incorrect facts and findings. 2. That in any case and any view of the matter, action of Ld. CIT(A) in not reversing the action of Ld. AO in making the impugned disallowance and framing the impugned assessment order which is contrary to law and facts, void ab initio, beyond jurisdiction, and without giving adequate opportunity of hearing, by recording incorrect facts and findings and the same is not sustainable on various legal and factual grounds. 3. That in am case and in any view of the matter, action of Ld. CIT(A) in not providing all the adverse material used against the assessee and further erred in not granting the opportunity of cross examination despite specific request made by the appellant in this regard. 4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. counsel of the assessee also contended that the action of Commissioner of Income Tax(A), in not providing all the adverse material used against the assessee and not granting opportunity of cross-examination despite specific request by the assessee in this regard, is not justified. The counsel concluded his argument with a last submission that the first appellate authority passed impugned order without affording adequate opportunity of hearing, without providing material and information used against the assessee and also not granting opportunity of cross-examination to the assessee despite the fact that there was a specific request by the assessee for the same. 4. Replying to the above, ld. DR submitted that the assessee is an insurance broker/commission agent and has earned commission income during the year. The DR further submitted that the Assessing Officer rightly noticed that the assessee has claimed expenses amounting to Rs.69,06,732/- paid as commission to the aforementioned three companies. The DR pointed out that the authorities below provided adequate opportunity to the assessee to offer explanation in support of his claim pertaining to the impugned payment of comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paper Book wherein letter of the assessee dated 26.04.2012 addressed to Commissioner of Income Tax(A) shows that the Senior Vice President and CFO of M/s Hero Motocorp Ltd. (the investor) Mr. Ravi Sud has deposed (Affidavit page 198) that the representative of these three companies to whom commission was paid by the assessee approached the investor and recommended to make investments. 7. Replying to the above, ld. DR placed his reliance on the judgment of Hon'ble Jurisdictional High Court of Delhi in the case of Precision Electronics Ltd. vs DCIT in ITA No.1773 1774/2006 dated 02.05.2007 wherein it has been held that when the assessee had failed to explain that the expenditure in question was made wholly and exclusively for the purpose of business of the assessee, then the revenue authorities were justified in disallowing the claim of the assessee. 8. On behalf of the assessee, it has been contended that the Commissioner of Income Tax (A) passed the impugned order without giving adequate opportunity of hearing to the assessee and by recording incorrect facts and findings. In ground no.3 of the assessee, it has also been contended that the Commissioner of Income Tax(A) used ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the assessee could have done the same. It is also quite impractical and impossible that the three Kolkata based companies, who has no business activities in Delhi and who has no exposure to the business of mutual funds could be involved in rendering any type of service to the assessee as claimed by the assessee. It is also against the all human probability that the three Kolkata based companies would have been engaged by the assessee for the investments made by a single client i.e. Hero Honda Motors Ltd. It was also noted by the AD in the order that the three Kolkata based companies did not have any employees for procuring the investment from Hero Honda Motors Ltd. The AO also noted that the three Kalkata based companies could not submit any evidence of any travel documents to show that any of the employees of the company ever travelled to Delhi for the purpose of procuring the investment from Hero Honda Motors Ltd or for liasoning with the assessee. After considering order of the AO and all these facts it was very much apparent that there was no genmneness for the claim of commission payments to the three Kolkata based companies and accordingly, it was decided to refer the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I am of the view that there is no merit in the submission of the assessee regarding the genuineness of the alleged commission payments and it is apparent that the assessee has claimed the bogus commission payments and has taken the bogus bills and accommodation entries from the three Kolkata based Jama-kharchi companies to reduce his taxable income. It is also apparent that the alleged commission payments cannot be allowed as an expenditure as the same are bogus and the same are not expended wholly and exclusively for the purpose of business or profession as provided u/s 3 7(1)." 11. From the above operative part of order, we observe that the Commissioner of Income Tax(A) relied on the inquiry report of DIT(Inv), Kolkata,inter alia statements of Shri Abhishek Chokhani, Shri Malay Kumar Das and Shri Ranjeet Pathak. The Commissioner of Income Tax(A) has held that the confirmation report from Hero Motocorp Ltd. and other three companies and reconfirmation from disputed Kolkata based three companies has no meaning because these are stereotyped and self-serving documents. 12. In view of above, we observe that the Commissioner of Income Tax(A) has not followed the principles of natur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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