SMT. NILAM KESHAN,KOLKATA vs. ITO, WARD - 51(4), KOLKATA, KOLKATA

The assessee is an individual and is engaged in the business of retail and wholesale trade of thread and yarn. She filed her return of income for the Assessment Year under consideration on 07/09/2011, declaring total income of Rs.6,39,540/-. The first issue that arises before me for adjudication is whether the disallowance made by the Assessing Officer on account of commission expenses, other expenses on adhoc basis as sustained by the ld. CIT(A) is correct in facts and on law.

After hearing rival contentions, I find that the assessee claimed that he had paid an amount of Rs.18,03,600/- as commission during the year. The Assessing Officer disallowed an amount of Rs.3,58,400/-, being commission paid to Shri Rajesh Kochar and A.K. Surana & Co. The assessee has submitted supporting evidence for these payments by way of copies of bills received from these parties.

Assessment Year: 2011-12 Smt. Nilam Keshan The payments were made through banking channels and tax was deducted at source. The Assessing Officer at the time of assessment issued notice u/s 133(6) of the Act, to these parties and these parties have replied to the same confirming the transactions. The only ground on which the Assessing Officer disallowed the claim of the assessee was that he deputed an inspector and the inspector could not meet these two parties. The assessee submitted death certificate of the proprietor of A.K. Surana & Co., but this has not been appreciated by the Department. The assessee explained that in the case of Rajesh Kochar, he was out of station when the inspector went to meet him. This aspect was also not believed by the Department and the addition was made. 3.1. On these facts and circumstances, I am of the considered view that the assessee has discharged the burden of proof that lay on him and has produced all possible evidence in support of the claim that commission has been paid to these two persons. Hence we allow this ground and direct the Assessing Officer to delete the disallowance of Rs.3,58,400/-.

The second issue is on the adhoc disallowance of 10% of the expenditure. 4.1. The assessee relies on the decision of the Co-ordinate Bench of the Tribunal in the case of Gautam Khanna vs. Income Tax Officer in Assessment Year dt. 2008-09, order dt. 31st July, 2014. 4.1.1. The ld. D/R submits that the expenses were made in cash and are supported by self-made vouchers which are not verifiable. He also submits that the expenditure cannot be stated as having been incurred wholly for the purpose of business of the assessee. 4.2. After hearing rival contentions, I am of the considered opinion that the adhoc disallowance of 5% of the cash expenditure claimed would meet the interest of justice. Accordingly, the assessee gets a relief of 5%.

In the result, appeal of the assessee is allowed in part. Kolkata, the 16th day of May, 2018. Sd/- [J. Sudhakar Reddy] Accountant Member Dated: .05.2018 {SC SPS} Assessment Year: 2011-12 Smt. Nilam Keshan Copy of the order forwarded to: 1. Smt. Nilam Keshan 12, Sir Hariram Goenka Street Ground Floor Kolkata – 700 001 2. I.T.O. Ward-51(4), Kolkata Uttarapan Complex Ultadanga Kolkata – 700 054