SH. BALBIR SINGH CHHABRA,NEW DELHI vs. ACIT, NEW DELHI

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ITA 3058/DEL/2014Status: DisposedITAT Delhi21 June 2016AY 2008-095 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The tribunal reduced the disallowance on commission to Rs. 25,000, considering the vouchers with driver signatures. It also ordered the deletion of the addition for sundry creditors, noting that these were running accounts settled in subsequent years with TDS deducted.

What were the facts?

The assessee, engaged in hotel and gas agency business, claimed commission paid to drivers. The AO disallowed Rs. 50,000 due to lack of confirmations, though the assessee argued no surrender was made. Additionally, Rs. 6,13,814 was added for unconfirmed sundry creditors in the gas business.

What were the issues?

Whether disallowance of commission is justified without proper confirmation from payees, and if unconfirmed sundry creditors can be added without considering settlement in subsequent years and TDS.

Which sections of the Income-tax Act were involved?

Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES : SMC-II : NEW DELHI

Before: SHRI R.S. SYAL

For Appellant: Shri Asis Jaiswal, Advocate
For Respondent: Shri Deepak Garg, Sr. DR
Hearing: 20.06.2016Pronounced: 21.06.2016

ORDER This appeal filed by the assessee is directed against the order passed by the CIT(A) on 28.2.2014 in relation to the assessment year 2008-09.

2.

The first ground is against the confirmation of disallowance of Rs.50,000/- on ad hoc basis out of commission payment.

3.

Briefly stated, the facts of the case are that the assessee is engaged in the business of hotel and gas agency. The assessee claimed deduction for a sum of Rs.2,94,036/- on account of commission paid to drivers for hotel business. The AO made disallowance of Rs.50,000/- by mentioning that the assessee agreed to surrender this amount because of his inability to furnish necessary confirmations from taxi drivers to whom the commission was paid. The assessee challenged the decision of the AO urging that no surrender was made. There was no relief in the first appeal. The assessee is aggrieved against the confirmation of addition.

4.

I have heard the rival submissions and perused the relevant material available on record. It is observed that the assessee paid commission to taxi drivers who brought customers for hotel business.

The AO has accepted the genuineness of payment of commission which is evident from the fact that he allowed deduction of Rs.2.44 lac as against the total payment of Rs.2.94 lac. The main reason for making of the disallowance is that the assessee did not produce necessary confirmations from taxi drivers. Page 36-52 of the paper book are vouchers bearing signatures of the drivers to whom payment was made.

This shows that the payment was made by the assessee after receiving the signatures of drivers on the vouchers. In the absence of the availability of complete details and in these peculiar facts, I am of the considered opinion that it will be reasonable to restrict the disallowance from Rs.50,000/- to Rs.25,000/-. I order accordingly.

5.

The other ground is against the confirmation of disallowance of Rs.6,13,814/-, being the sundry creditors appearing in the business of gas. The assessee had shown certain creditors. The AO issued notices u/s 133(6) to M/s Manjit Kaur, Shri Dharam Singh, M/s Rajat Bulk Carriers, M/s Pawan Bulk Carriers for verification, which was returned undelivered. The AO added Rs.6,13,814/-, being outstanding balance in such unconfirmed accounts. The ld. CIT(A) upheld the disallowance.

6.

After considering the rival submissions and perusing the relevant material on record, it is observed from the paper book that these amounts represent payables to the persons who were having running accounts with the assessee in providing transportation for gas agency. Copies of these accounts are available on record, from which it is discernible that all the outstanding amounts were settled in subsequent years. Payments to these persons were made after due deduction of tax at source. Merely because the creditors did not respond to the AO’s summons u/s 133(6) cannot be a reason for making disallowance, more so, when the confirmations were duly filed and these are the running accounts of the creditors providing transportation in the assessee’s gas agency business.

Under these circumstances, I order for the deletion of addition.

7.

In the result, the appeal is partly allowed.

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