Sh. Subhash Chander Malik, Chandigarh V. DCIT, Chandigarh

ITA 1107/CHANDI/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57656 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-01-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 26-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: ASHOK KUMAR SOOD
• Keywords: Bogus purchase; Business expenditure; Commercial expediency
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.1107/CHD/2010 ASSESSMENT YEAR: 2007-08 SHRI SUBHASH CHANDER MALIK, V DCIT, C-1(1), SCO 32, SECTOR 8-B, CHANDIGARH. CHANDIGARH. PAN: AETPM-3295A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHOK KUMAR SOOD RESPONDENT BY : SMT. JAISHREE SHARMA DATE OF HEARING : 23.01.2012 DATE OF PRONOUNCEMENT : 17.02.2012 ORDER PER MEHAR SINGH, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) PASSED U/S 250(6) OF TH E INCOME-TAX ACT,1961 (IN SHORT 'THE ACT') DATED 17.06.2010 RELATING TO ASSESSMENT YEAR 2007-08. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) CHANDIGARH ERRED IN LAW AND ON THE FACTS OF THE CASE: A) IN UPHOLDING THE ADDITION OF RS.42,48,003/- ON ACCOUNT OF CASH PURCHASES OF OLD SILVER, MADE BY THE AO HOLDING THE SAME AS BOGUS WITHOUT APPRECIATING THE ASSESSEE'S SUBMISSION SPECIALLY WHEN THE PURCHASES HAD BEEN ACCOUNTED FOR EITHER IN SALES OR IN THE CLOSING STOCK. B) IN UPHOLDING DISALLOWANCE OF RS.10,50,806/- OUT OF TOTAL RENT PAID AT 2 RS.14,40,000/- U/S 40A(2) WITHOUT APPRECIATING THE ASSESSEE'S SUBMISSIONS IN THIS REGARD. C) IN UPHOLDING DISALLOWANCE OF RS.16 LACS AS COMMISSION U/S 40A(2) WITHOUT APPRECIATING ASSESSEE'S SUBMISSIONS IN THIS REGARD. 2. THE ASSESSEE CRAVES LEAVE TO AMEND/ADD ANY GROUND OF APPEAL BEFORE THE SAME IS HEARD. 3. IN GROUND NO.1(A), THE ASSESSEE AGITATED THAT TH E CIT(A), ERRED IN LAW AND ON FACTS IN UPHOLDING THE ADDITION OF RS.42,48,003/- MADE BY THE AO, ON ACCOU NT OF CASH PURCHASES OF OLD SILVER, TREATING THE SAME AS BOGUS PURCHASERS. THE BRIEF FACTS ARE THAT THE AO, FOUND THAT THE ASSESSEE HAD MADE CASH PURCHASES OF RS.42,48,003/-, AND NO PARTICULARS OF SELLERS WERE RECORDED ON THE PURCHASE BILLS. IT WAS OBSERVED BY THE AO ON A FEW PURCHASE BILLS, SOME NAMES HAD BEEN MENTIONED WITHOUT RECORDING OTHER IDENTIFIABLE DETA ILS, SUCH AS ADDRESSES OF THE SELLERS. THE AO GRANTED OPPORTUNITY TO THE ASSESSEE, TO EXPLAIN SUCH TRANSACTIONS OF PURCHASES. HOWEVER, THE ASSESSEE FA ILED TO FILE ANY EXPLANATION. CONSEQUENTLY, SUCH PURCHA SES WERE HELD AS BOGUS/UNVERIFIABLE BY THE AO AND, CONSEQUENTLY, THE IMPUGNED ADDITION WAS MADE. BEFO RE THE CIT(A), ASSESSEE CONTENDED THAT THE RAW MATERIA L, SO PURCHASED BY THE ASSESSEE HAD BEEN SOLD AFTER RE-MAKING THE SAME BY WAY OF UNDERTAKING THE JOB WO RK, IN WHICH JOB CHARGES HAD BEEN DULY PAID. THE ASSESS EE CONTENDED THAT AS THE PURCHASES OF OLD SILVER WERE MADE BY THE ASSESSEE DURING THE YEAR, UNDER A SCHEME TO 3 PROMOTE SALES, THE SAME WERE MADE FROM INDIVIDUAL PERSONS AND PURCHASE BILLS WERE PREPARED IN THE NOR MAL COURSE OF BUSINESS. FURTHER, A PERUSAL OF THE RECOR DS REVEALED THAT SUCH PURCHASES WERE MADE IN SMALL QUANTITIES, THROUGH REGULAR BILL BOOKS AND DULY RECORDED IN STOCK REGISTER AS WELL AS IN THE REGULA R BOOKS OF ACCOUNT. FURTHER, A PERUSAL OF RECORD OF ASSESSMENT REVEALED THAT AO DULY MENTIONED IN THE ORDER THAT IN SOME OF THE CASES, THE NAME OF THE PE RSON FROM WHOM THE PURCHASES WERE MADE, WAS MENTIONED. THE AO DISALLOWED, AN AMOUNT OF RS.42,48,003/- HOLDING THE SAID PURCHASES AS BOGUS. IT WAS CONTEND ED BY THE ASSESSEE THAT THE RAW MATERIAL, SO PURCHASED BY THE ASSESSEE, WAS SOLD AFTER RE-BUILDING THE SAME B Y UNDERTAKING JOB WORK, FOR WHICH JOB CHARGES WERE PA ID. IT WAS FURTHER ARGUED THAT AO EXAMINED THE BOOKS OF ACCOUNT AND HAD ACCEPTED THE SALES ACCOUNT, BOOK RESULTS AND ALSO THE DECLARED PROFIT, WHICH IS MORE THAN THE PREVIOUS YEAR. IT WAS VEHEMENTLY CONTENDED BY THE LD. 'AR' THAT AO HAD NOT GIVEN THE FINDING, AS TO H OW THE SALES WERE CORRECT, IF THE PURCHASES WERE BOGUS. 4. LD. 'DR' PLACED RELIANCE ON THE ORDER OF THE LOW ER AUTHORITIES. 5. THE CIT(A), UPHELD THE ADDITION MADE BY THE AO. 6. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND FIND FORCE, IN THE CONTENTION S, OF THE LD. 'AR', AS DISCUSSED ABOVE. THE AO HAD ACCEP TED 4 THE SALES DECLARED BY THE ASSESSEE, AS GENUINE AND THE SALES ARE ATTRIBUTABLE TO SUCH PURCHASES, WHICH WER E TREATED BY AO, AS BOGUS. THERE IS, FALLACY IN THE FINDINGS OF THE AO, AS WELL AS, THAT OF CIT(A), BY TREATING THE PURCHASES AS BOGUS AND THE SALES EMANATING THEREFROM HAD BEEN ACCEPTED AS GENUINE AN D TAXED ACCORDINGLY. THE AO FAILED TO DEMONSTRATE AND ESTABLISH, HOW SALES COULD HAVE BEEN EFFECTED, IN T HE ABSENCE OF SUCH PURCHASES OF RAW MATERIAL, AS CONTENDED BY THE LD. 'AR'. ACCORDINGLY, THE FINDIN GS OF THE CIT(A) ARE NOT BASED ON CREDIBLE AND COGENT EVIDENCES. IN VIEW OF THIS, WE DO NOT FIND ANY LEGA L OR FACTUAL MERIT IN THE ADDITION MADE BY THE AO AND SUBSEQUENTLY, CONFIRMED BY THE CIT(A). THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN GROUND NO. 1(B), THE ASSESSEE CONTENDED THAT CIT(A), ERRED ON FACTS AND LAW, IN UPHOLDING THE DISALLOWANCE OF RS.10,50,806/-, OUT OF TOTAL RENT P AID OF RS.14,40,000/- U/S 40A(2), WITHOUT APPRECIATING THE FACTS AND SUBMISSIONS IN THE MATTER. THE LD. 'AR' M ERELY JUSTIFIED THE SAID CLAIM. HOWEVER, LD. 'DR' PLACED RELIANCE, ON THE ORDER OF THE LOWER AUTHORITIES. 8. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD PAID RENT OF RS.14,40,0 00/- WHICH WORKED OUT APPROXIMATELY 370% MORE THAN THE RENT PAID, IN THE PRECEDING YEAR, AN INCREASE FROM RS.3,89,194/-, TO RS.14,40,000/-, TO THE SAME THREE 5 PERSONS DEEPAK MALIK, RAMESH MALIM AND MUKESH MALIK. THERE BEING NO AGREEMENT AND NO PLAUSIBLE EXPLANATION, WAS FILED BY THE ASSESSEE, THE AO DISALLOWED THE RENT AMOUNTING TO RS.10,50,806/-. L D. CIT(A) UPHELD THE FINDING OF THE AO VIDE PARA 11 TO 13 OF THE APPELLATE ORDER. THE RELEVANT PART OF THE S AID ORDER IS REPRODUCED HEREUNDER : 11. AFTER HAVING CONSIDERED RIVAL SUBMISSIONS, I FIND THAT 1. THERE IS NO EVIDENCE ON RECORD TO SUPPORT OR PROVE THE CONTENTION OF THE APPELLANT IN THE ABSENCE OF A PROPER RENT AGREEMENT. 2. DEDUCTION OF TDS ON RENT PAID OR THE RENT BEING ASSESSED TO TAX IN RECIPIENTS HANDS IS NOT RELEVANT HERE. 3. EXPANSION OF BUSINESS PREMISES, THOUGH NOT SUBSTANTIATED, CANNOT BE THE ONLY OR EVEN MAJOR REASON FOR INCREASE IN SALE. 4. MULTIPLYING 4.8 LACS X 3 AND A MERE STATEMENT THAT THIS YEAR 1 ST AND 2 ND FLOOR HAVE ALSO BEEN RENTED IS IN ANY CASE QUITE ERRONEOUS SINCE EVEN IF THE FACTS WERE SUBSTANTIATED, 1 ST AND 2 ND FLOOR DO NOT FETCH THE SAME RENT AS GROUND FLOOR. 12. SO THE BOTTOM LINE IS THAT THE ASSESSEE CAN PROVE NOTHING IN THE ABSENCE OF A RENT AGREEMENT AND DEFINITELY THE BURDEN LIES ON HIM TO PROVE EVIDENCE. 13. IN VIEW OF THE ABOVE, THE ADDITION HAS BEEN RIGHTLY MADE AND THEREFORE CONFIRMED, DISMISSING ASSESSEE'S PLEA ON THIS GROUND. 6 9. WE HAVE PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND FOUND THAT THE ASSESSEE HAD FAILED TO ADDUCE ANY COGENT AND CREDIBLE EVIDENCE WITH A VIEW TO ESTABLISHING THE GENUINENESS OF THE IMPUGNED TRANSACTIONS. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE IN COMPLETE AGREEMENT, WITH THE LD. CIT(A) THAT DEDUCTION OF TD S, ON RENT IS NO EVIDENCE FOR GENUINENESS OF THE TRANSACTIONS AND THE CLAIM OF ELIGIBILITY MADE BY T HE ASSESSEE, IN RESPECT OF SUCH PAYMENT OF RENT PAID B Y HIM, TO HIS SONS. IT IS, FURTHER, ADDED THAT THE AS SESSEE FURTHER OPTED TO PAY COMMISSION TO SUCH VERY PERSON S, ALONGWITH ONE OR TWO MORE CLOSE RELATIVES, TO THE T UNE OF RS. 16 LACS. THEREFORE, A CONJOINT READING OF THESE EXPENSES CLAIMED BY ASSESSEE CLEARLY REVEALS THE ASSESSEE RESTORED TO DEVICE TO REDUCE TAXABLE AMOUN T, BY MAKING EXPENDITURE NOT SUPPORTED BY COGENT EVIDENCE. WE HAVE ALSO PERUSED AND CONSIDERED PAGE NO.53 OF THE PAPER BOOK FILED BY THE ASSESSEE. THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS OF ESTABLISHING THE TRANSACTIONS OF RENT AS GENUINE. CONSEQUENTLY, THE DISALLOWANCE MADE BY THE AO AND UPHELD BY THE CIT(A) ARE FACTUALLY AND LEGALLY ON S OUND FOUNDATION. THEREFORE, WE UPHOLD THE SAID DISALLOW ANCE MADE BY THE AO AND UPHELD BY THE CIT(A), WHICH ARE BASED ON NO EVIDENCE. THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 7 10. IN GROUND 1(C), ASSESSEE CONTENDED THAT CIT(A) IN UPHOLDING DISALLOWANCE OF RS.16 LACS PAID AS COMMISSION U/S 40A(2), WITHOUT APPRECIATING THE FAC TS AND SUBMISSIONS IN THIS REGARD. 11. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS AND FOUND THAT SHRI SUBHASH CHANDER MALIK, PROPRIET OR SUBHASH JEWELLERS, SCF 32, SECTOR 8B, CHANDIGARH, H AD CLAIMED EXPENSES IN THE SHAPE OF COMMISSION AMOUNTING TO RS.16 LACS, PAID TO HIS SONS, DAUGHTER -IN- LAW AND DAUGHTER, NAMELY DEEPAK MALIK, RAMESH MALIK AND MUKESH MALIK (SONS) AND SARIKA MALIK, (DAUGHTER - IN-LAW) AND RAMA MALIK (DAUGHTER). THE CH ART INDICATING DETAILS OF SUCH PAYMENTS, IS REPRODUCED, IN PARA 4 OF THE ORDER OF THE CIT(A), WHICH IS REPRODU CED HEREUNDER : COMMISSION ON SALE PAID ON 31.3.2007 NAME GROSS AMOUNT DEEPAK MALIK RS.2,40,000/- RAMESH MALIK RS.2,40,000/- MUKESH MALIK RS.2,40,000/- SARIKA MALIK RS.4,40,000/- RAMA MALIK RS.4,40,000/- TOTAL : RS.16,00,000/- 12. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAD PAID RS.4,80,000/-, AS SALARY, AS ALSO THE IMPUGNED COMMISSION TO EACH OF THE ABOVE CLOSELY RELATED PERSONS. A COMPARISON OF THE COMMISSION PAID VIZ-A- VIZ SALARY PAID BY THE ASSESSEE TO HIS SONS, DAUGHT ER AND DAUGHTER-IN-LAW, CLEARLY INDICATES THAT RS.2,40,000/- AND RS.4,80,000/- RESPECTIVELY, THE 8 ASSESSEE HAD MERELY ADOPTED A DEVICE TO REDUCE HIS TAXABLE INCOME. THE ASSESSEE HAS FAILED TO DISCHARG E THE BURDEN CAST ON HIM TO PROVE THE GENUINENESS OF THE EXPENDITURE CLAIMED AS 3COMMISSION PAID TO SUCH PERSONS 13. IN GROUND NO. 1(C), THE ASSESSEE CONTENDED THAT CIT(A), ERRED IN UPHOLDING DISALLOWANCE OF RS.16 LA CS PAID AS COMMISSION U/S 40A(2) WITHOUT APPRECIATING THE FACTS AND SUBMISSIONS IN THIS REGARD. A PERUSAL OF THE CHART INDICATING COMMISSION ON SALE PAID AS ON 31.3.2007, BY THE ASSESSEE TO HIS SONS, DAUGHTER AN D DAUGHTER-IN-LAW REVEALS THAT TOTAL COMMISSION HAS B EEN PAID AT RS.16 LACS. THE ASSESSEE IS MAKING PAYMENT OF SUCH COMMISSION TO HIS SONS, DAUGHTER AND DAUGHTER- IN-LAW ALONGWITH SALARY OF RS.4,80,000/-, TO SUCH PERSONS. THE ASSESSEE HAS FAILED TO ADDUCE COGENT AND CREDIBLE EVIDENCE, ESTABLISHING THE GENUINENESS OF THE COMMISSION PAID. HE HAS, FURTHER, FAILED TO ADDUCE EVIDENCE REGARDING TECHNICAL QUALIFICATION OF SUCH RECIPIENTS, WHICH MADE THE ASSESSEE TO MAKE SUCH PAYMENTS OF COMMISSION TO HIS SONS, DAUGHTER AND DAUGHTER-IN-LAW. MERE EVIDENCE OF TDS IS NOT ENOUG H TO ESTABLISH THE GENUINENESS OF SUCH CLAIM MADE BY THE ASSESSEE. THE FINDINGS OF THE LD. CIT(A), ON THE ISSUE IN QUESTION, AS CONTAINED IN PARA 7 ARE REPRODUCED HEREUNDER : 7 AFTER HAVING CONSIDERED THE RIVAL CONTENTIONS AN D MATERIAL ON RECORD, I AM INCLINED TO AGREE WITH THE ASSESSING OFFICER. FOLLOWING IS MY JUSTIFICATION FOR AGREEING AFTER RELYING ON THE FOLLOWING 3 CASES : 9 (I) IN THE CASE OF NUND AND SMOUNT CO PVT. LTD. VS . CIT [SC] 78 ITR 268, THE HON'BLE APEX COURT WHILE DEALING THE PROVI SIONS OF SECTION 10(4A), NOW SECTION 40A,.HELD THAT 'IT IS, HOWEVER, FOR THE TAXPAYER TO ESTABLISH -BY EVIDENCE THAT A PARTICULAR ALLOWANCE IS JUSTIFIABLE. APPARENTLY, NO EVIDENCE WAS TENDERED BY THE ASSESSEE RELATING TO THE DUTIES OF THE MANAGING DIRECTOR AND THE DEPUTY MANAGING DIRECTOR, THE SERV ICES RENDERED BY THEM, THE MANNER IN WHICH THE PROFITS EARNED BY THE ASSESSEE WERE ENHANCED BY REASON OF THEIR SPECIAL APTITUDE OR QUA LIFICATIONS, THE LEGITIMATE BUSINESS NEEDS OF THE ASSESSEE AND THE B ENEFIT DERIVED BY OR ACCRUING TO THE ASSESSEE IN CONSEQUENCE OF THE S ERVICES RENDERED BY THE MANAGING DIRECTOR AND THE DEPUTY MANAGING DI RECTOR. IN THE ABSENCE OF ANY SUCH EVIDENCE, THE FINDING RECORDED BY THE INCOME- TAX OFFICER AND CONFIRMED BY THE APPELLATE ASSISTAN T COMMISSIONER AND THE TRIBUNAL MUST BE ACCEPTED. WE ARE UNABLE TO AGREE WITH COUNSEL FOR THE ASSESSEE THAT EVEN IF THE TAXPAYER DOES NOT PRODUCE ANY EVIDENCE IN SUPPORT OF THE CLAIM FOR ALLOWANCE, THE INCOME-TAX OFFICER MUST INDEPENDENTLY COLLECT EVIDENCE AND DEC IDE THAT THE ALLOWANCE CLAIMED IS EXCESSIVE OR UNREASONABLE HAVI NG REGARD TO THE LEGITIMATE BUSINESS NEEDS OF THE ASSESSEE BEFORE TH E POWER UNDER SECTION 10(4A) MAY BE EXERCISED. ' (II) IN THE CASE OF SYNPRO INDS. VS. CIT [1984] 40 CTR 106 [MP], IT HAS BEEN HELD THAT 'BUSINESS EXPENDITURE - DISALLOWANCE U/S 40A(2) -A FIRM PAID COMMISSION OF RS. 12000/- IN ADDITION TO SALARY TO THE HUSBAND OF ONE OF THE PARTNERS. SINCE NO AGREEMENT FOR PAYMENT OF COMMISSION WAS EXECUTED DURING THE PREVIOUS YEAR - DISALLOWANCE WAS HELD TO BE JUSTIFIED. ' (III) IN CASE OF GANESH SOAP WORKS VS. CIT [1987] 5 9 CTR [MP] 109, THE HON'BLE HIGH COURT HELD THAT IF TRIBUNAL FINDS THE AMOUNT CLAIMED AS PAYMENT OF COMMISSION EXCESSIVE OR UNREASONABLE HAV ING REGARD TO SERVICES OR FACILITIES RENDERED TO THE ASSESSEE, DI SALLOWANCE ON THE GROUND THAT IT DOES NOT .SATISFY TEST OF COMMERCIAL EXPEDIENCY IS JUSTIFIED. - THE APPELLANT IS SELLING SILVER JEWELLERY AND UTENS ILS AND NOTHING HAS BEEN PRODUCED EITHER DURING THE ASSESSMENT PROCEEDI NGS OR APPELLATE PROCEEDINGS TO ESTABLISH THE KIND OF SERVICES PROVI DED BY THE PERSONS TO WHOM HUGE AMOUNTS' OF COMMISSION HAVE BE EN PAID. 10 FURTHER THE NATURE OF THE BUSINESS OF THE APPELLANT IS ALSO NOT COMMENSURATE WITH SUCH PAYMENTS SINCE IN JEWELLERY BUSINESS, CUSTOMERS NORMALLY PURCHASES AS PER NEEDS AND DEMAN D. IN A RETAIL BUSINESS OF SELLING SILVER JEWELLERY, THE NEED FOR PAYING COMMISSION TO SPECIFIED PERSONS IS UNCOMPREHENSIBLE. - NO AGREEMENT OF ANY SORT IS ON RECORD TO JUSTIFY SU CH PAYMENTS. - THE APPELLANT'S CONTENTION THAT TAX ON COMMISSION H AS BEEN DULY PAID BY THE RECIPIENTS IS OF NO CONSEQUENCE SINCE AS RIG HTLY POINTED OUT BY THE ASSESSING OFFICER IN THE REMAND REPORT DATED 13 .05.2010 THAT THIS EXPENDITURE HAS BEENBEEN DENIED SINCE IT WAS WHOLLY & EXCLUSIVELY FOR BUSINESS PURPOSE AND NOT BECAUSE THIS WAS NOT TAXED IN THE HANDS OF THE RECIPIENT. 8. IN VIEW OF THE ABOVE DISCUSSION, THIS GROUN D OF THE ASSESSEE IS DISMISSED. 14. IT IS INTERESTING TO NOTE THAT THE ASSESSEE HAD PAID COMMISSION @ RS.2,40,000/-, TO HIS SONS AND @ RS.4,40,000/- TO HIS DAUGHTER AND DAUGHTER-IN-LAW. THE AO HELD THAT PAYMENT OF SUCH CLAIM IS UNREALIST IC AND UNREASONABLE AND INVOKED THE PROVISIONS OF SECT ION 40A(2)(B) OF THE ACT. IT WAS OBSERVED BY THE LD. ' AR' THAT NO REGULAR PAYMENT OF COMMISSION WAS MADE BY T HE ASSESSEE, DURING THE ENTIRE YEAR. IT WAS, FURTHER, FOUND BY THE AO THAT THE COMMISSION HAD BEEN PAID TO THE PERSONS, WHOSE SALARY HAD BEEN INCREASED TO ALMOST DOUBLE WHICH IS QUITE UNREALISTIC AND UNBELIEVABLE. THE ASSESSEE HAD FAILED, TO FILE ANY EXPLANATION OR SUBMISSION BEFORE THE AO. SIMILARLY, NO AGREEMENT O F PAYMENT CREATING OBLIGATION, ON THE PART OF THE ASS ESSEE TO MAKE SUCH PAYMENT HAS BEEN FURNISHED BEFORE THE AO. THE AO, FURTHER, MENTIONED THAT THE ASSESSEE FAILED TO OFFER ANY EXPLANATION REGARDING SPECIFIC QUERY 11 RAISED BY HIM THAT THE COMMISSION HAD BEEN CREATED ON THE LAST DATE OF THE YEAR. THEREFORE, THE AO DISAL LOWED PAYMENT OF SUCH COMMISSION HOLDING THAT SUCH EXPENDITURE HAS NOT BEEN INCURRED FOR WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE LD. C IT(A), PLACED RELIANCE ON THE THREE DECISIONS, AS IS EVIDE NT FROM PERUSAL OF THE RELEVANT PART OF THE FINDINGS O F THE CIT(A), AS REPRODUCED ABOVE, WHEREBY ON SIMILAR FAC TS, DISALLOWANCE MADE WAS JUSTIFIED. THE LD. CIT(A) HA S CATEGORICALLY MENTIONED THAT THE ASSESSEE HAD FAILE D TO HIGHLIGHT OR PROVIDE THE DETAILS OF THE SPECIFIC SE RVICES RENDERED BY HIS SONS, DAUGHTER AND DAUGHTER-IN-LAW OF THE ASSESSEE IN THE BUSINESS OF THE ASSESSEE. FURT HER, IT WAS FOUND BY THE LD. CIT(A) THAT THERE WAS NO SU CH AGREEMENT ON RECORD TO JUSTIFY SUCH PAYMENTS . WE ARE IN COMPLETE AGREEMENT WITH THE FINDINGS OF THE LD. CIT(A) IN THE MATTER. IN VIEW OF THE ABOVE DISCUSS ION, THE, FINDINGS OF THE LD. CIT(A) ARE UPHELD. 15. IN GROUND NO.1(D), THE ASSESSEE CONTENDED THAT CIT(A), ERRED IN UPHOLDING DISALLOWANCE OF RS.68,805/- OUT OF CAR AND TELEPHONE EXPENSES. THE AO, ON PERUSAL OF THE PROFIT & LOSS ACCOUNT FOUND T HAT CERTAIN EXPENSES HAD BEEN INCURRED ON CAR AND TELEPHONE. THE ASSESSEE FAILED TO ESTABLISH THAT THE ENTIRE EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS.CONSEQUENTLY,THE AO DISALLOWED 1/5 TH OF SUCH 12 EXPENSES, TOWARDS PERSONAL USES, WHICH RESULTED INT O ADDITION OF RS.68,805/-. THE CIT(A) UPHELD THE ADDITION MADE BY THE AO. 16. HAVING REGARD TO THE FACTUAL MATRIX OF THE CASE AND NON-JUSTIFICATION ON THE PART OF THE ASSESSEE THAT EACH EXPENSE WAS INCURRED FOR WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, WE DO NOT FIND ANY GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) AND, HENCE, THE SAME ARE UPHELD AND GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEB.,2012. SD/- SD/- (H.L.KARWA) (MEHAR S INGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 17 TH FEB.,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), CIT,DR ASSISTANT REGISTRAR ITAT, CHANDIGARH