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TMI Blog2019 (7) TMI 1325X X X X Extracts X X X X X X X X Extracts X X X X ..... 131. Three from the list of ten persons replied. None of these individuals, in fact, appeared before the AO for verification and inquiry. Even the replies by the three parties were unsatisfactory. On this aspect, this Court notice that CIT(A) has extracted relevant details with respect to the concerned parties which shows, prima facie, that the amounts were deposited on a particular date and within two day the same or marginally higher amounts were withdrawn. This Court is of the opinion that all three authorities i.e. AO, CIT(A) and ITAT scrutinized the record and held that the commission claimed, was not supportable in law and therefore, disallowed the deduction claimed, the only ground on which the court could, if at all entertain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 260A of the Income Tax Act, is that the disallowance to the tune of ₹97,98,305/- is unsupportable, as it was made entirely on an arbitrary basis without rationale. 2. The assessee, inter alia, carries on business in pipes and sanitary wares and other fittings used in the construction of buildings. The company is also engaged in trading of irrigation pipes and fittings. In the Assessment Year (AY) 2013-14, the assessee declared its total income as ₹ 46,08,958/-. The AO who carried scrutiny under Section 143(c), assessed the income as ₹1,43,79,630/- and disallowed commission expenditure to the tune of ₹ 97,98,305/-. The assessee s appeal was rejected by the CIT(A). It approached the ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n these circumstances could not be found fault with. Lastly, the learned counsel for the assessee relied upon the rule of consistency and cited Radhasoami Satsang vs. Commissioner of Income Tax, (1991) 193 ITR 327 . 6. At the outset, this Court notices that the issue of disallowance has been consistently and concurrently ruled against the assessee. The CIT(A) in this regard noticed that the assessee was impressed upon with the need for verification of commission expenses repeatedly in December, 2016 and January, 2017. Despite this, the assessee did not produce a single witness. Summons were issued to ten witnesses under Section 131. Three from the list of ten persons replied. None of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be verified that for which sales they have been paid commission. f. The commission paid varied from 4% to 8%. g. Commission has alleged to have been paid on sales to individuals also. 5.5 Though there cannot be strait-jacket formula for the percentage of commission, sales which may or may not carry commission expenses, and reasonable and justifiable level of commission expenses, the verification exercise intended and undertaken by the AO was precisely to come at right conclusion on above aspects. It is precisely the failure of the appellant in producing witness of commission expenses the AO was under compulsion to make certain adverse observations as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siphoned out. Since Shri Ashok Kumar Baid had not attended personally therefore, nature of work done by him cannot be verified. Withdrawal of ₹ 3,00,000/- on 04.01.2013 cannot be verified. 2. Sri Sanjay Kumar Harlalka:- He did not attend the office on requisite date. He submitted reply on 26.02.2016 stating that he had received commission of ₹ 4,37,974/- from Shree Govind Bildneed Pvt. Ltd. he filed copy of ITR-V for the A.Y. 2013-14 and copy of Bank account was furnished. Gross total income of assessee was ₹ 6,58,727/- this includes commission or not verifiable. On verification of bank account it was found that ₹ 3,94,177/- was deposited on 07.03.2013 and on very next day ₹ 4,00,000/- was tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure when called upon by the AO. In this case there is visibly failure to do so by the appellant. I am surprised to note that none of above is present to defend the appellant and justify the ever increasing commission expenses. This is required of appellant when this issue is getting attention of the department since last three/four years. Therefore, the decision of the AO to not consider such unverifiable expenses is confirmed. In my considered view, the commission expenses claimed of ₹ 97,58,305 is non-genuine and hence the same is confirmed. 8. This Court is of the opinion that all three authorities i.e. AO, CIT(A) and ITAT scrutinized the record and held that the commission claimed, was not support ..... X X X X Extracts X X X X X X X X Extracts X X X X
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