Yogendra Khandelwal Vs ACIT (ITAT Jaipur)
FACTS –
COMMISSION OF SALE AND PURCHASE TO RELATED PARTIES –
During assessment proceeding, AO observed that assessee had paid commission on sale of INR 8,04,234 to Smt. Pushpa, prop. of M/s. Steel Corporation who is wife of the assessee and commission on purchase of INR 7,78,597 to Shri Arpit who is son of the assessee. Notice was issued to the assessee to show cause as to why the commission should not be treated as bogus commission and added to the total income.
With regard to commission on sales paid to Smt. Pusha, assessee submitted that commission was paid on supplies of goods through M/s. Steel Corporation. Audit report mentioned business of M/s Steel as trading in iron and steel does not mean only own purchase and sale, it also covers supplies of iron and steel goods through other parties on commission basis. Payment to relative could not be presumed without any evidences that payment is bogus.
With regard to commission on purchase paid to Shri Arpit assessee submitted that he was actively involved in purchase of goods from Essar Steel and because of him they were able to purchase goods from Essar at competitive rate. Assessee submitted that there was no written agreement between them, however, confirmed that Shri Arpit had paid 22 to 25% tax on commission in his return.
LOAN AND ADVANCES –
Assessee had taken unsecured loan of INR 1,35,66,991 and has paid interest of INR 1,58,28,017. Assessee had advanced INR 42,21,000 to its sister concern without any interest. Notice was issued as to why interest @12% amounting to INR 5,06,520 do not be added to the total income. Assessee submitted that there is a prop. capital of INR 2,52,33,263 and the same is much more than the advance given and since the advance is given sister concern, interest is not charged by us.
HELD –
COMMISSION ON SALE AND PURCHASE TO RELATED PARTIES –
Initial onus is on the assessee to prove the genuineness of the transaction. Assessee had to discharge its initial onus by producing necessary verifiable evidence.
Mere fact that the basis of payment has been specified in payment voucher and payment has been effected during the year or fact that income has been offered in return of recipient doesn’t by itself hold that services have been rendered and expenditure is allowed.
LOAN AND ADVANCES –
Interest free funds available with the assessee is in excess of amount advanced to sister concern. There is no nexus between the interest bearing funds and the money so advanced to sister concern which has been established by AO. In view of the same, a presumption will arise in favour of assessee that interest free funds have been utilized for advancing such advance to sister concern.
