The assessee company, engaged in the business of manufacturing and sale of engineering goods had filed return for relevant AY. The AO completed assessment, after making additions of Rs.1,39,41,718/- and allowing depreciation of Rs.16,45,474/-on additions made. Thereafter, assessment proceedings were reopened and notice u/s 148 was issued. The assessee submitted that a survey action u/s 133A was carried out in the case of assessee. In the statement recorded during survey proceedings the assessee disclosed income of Rs. 16,83,000/- on account of unsubstantiated expenditure on payment of commission. The assessee submitted that during relevant FY, the assessee paid commission to Sachin Madanlal Kankani Rs. 6,00,000/-, Sunil Shantilal Oswal Rs.5,13,000/-, Rajesh C. Shah Rs.4,40,000/- and Mukund Madanlal Kankani Rs.1,30,000/- totaling to Rs.16,83,000/- for the services rendered by them. The assessee had produced agreements with the parties for the payment of commission and the commissions were paid by account payee cheque after deduction of tax at source. The AO disbelieved the payment of commission as the assessee failed to substantiate the services rendered by the parties and made the addition. The CIT(A) confirmed disallowance of expenditure upholding the findings of AO without appreciating the fact that the assessee had furnished necessary documents to show that the commission was actually paid to the four persons.

Tribunal held that,

++ as far as disallowance of Rs. 16,83,000/- on account of commission paid to four persons namely Sachin Madanlal Kankani Rs.6,00,000/-, Sunil Shantilal Oswal Rs.5,13,000/-, Rajesh C. Shah Rs.4,40,000/- and Mukund Madanlal Kankani Rs.1,30,000/- aggregating to Rs.16,83,000/-. The authorities below have disallowed assessee's claim of commission expenditure on the ground that the assessee has failed to substantiate the services rendered by the persons. Mere payment of commission through banking channel after deducting tax at source is not sufficient to discharge the onus of proving the services rendered. The assessee was required to substantiate the services rendered by the persons. It was observed that VP Finance of the assessee company in his statement during survey had accepted that he was not in possession of conclusive evidence in order to justify claim of commission. The assessee has failed to do show before the authorities below and even before the Tribunal the nature of services and the services received by assessee in lieu of commission payments. No infirmity was found in the order of Commissioner of Income Tax (Appeals) confirming the disallowance of commission. Accordingly, ground raised in the appeal by the assessee is dismissed.

(See 2019-TIOL-204-ITAT-PUNE)