2016 (2) TMI 1216 - AT - Income Tax

Tribunal allows appeal partially, upholding disallowance of brokerage payment. Importance of accurate details emphasized.

Smt. Puja C. Khandelwal Versus Asstt. Director of Income Tax Mumbai

The Tribunal partially allowed the appeal, upholding the disallowance of Rs. 61,71,082 out of the total brokerage payment of Rs. 89,19,677. The assessee ... Addition towards deduction claimed on account of payment of brokerage - neither the assessee could prove the genuineness of such payment, nor any of the parties to whom such brokerage payments was made responded to the notices issued under section 133(6) - Held that:- When the assessee was not only assisted by a professional well acquainted with provisions of the Act, not only before the AO in the course of remand proceeding but also before the first appellate authority. Assessee has not retracted her statement given under section 131 at any stage. In these circumstances, we are unable to accept assessee’s claim with regard to dismissal of its ground against brokerage payment by the learned Commissioner (Appeals). When the assessee was not only assisted by a professional well acquainted with provisions of the Act, not only before the Assessing Officer in the course of remand proceeding but also before the first appellate authority. Assessee has not retracted her statement given under section 131 at any stage. In these circumstances, we are unable to accept assessee’s claim with regard to dismissal of its ground against brokerage payment by the Commissioner (Appeals). Having held so, we proceed to examine assessee’s alternative claim, if at all, any disallowance is to be made it should be restricted to ₹ 61,71,082. As far as the quantum of disallowance is concerned, we find merit in the submissions of the learned counsel. As could be seen in the remand report, the Assessing Officer on the basis of statement recorded from the parties as well as other information had accepted that brokerage payment to the tune of ₹ 61,71,082 to be non–genuine and recommended for addition of the said amount. On a perusal of the impugned order of the learned Commissioner (Appeals), it is noticed that in letter dated 29th August 2013, filed by the assessee, she had accepted that brokerage payment to the tune of ₹ 61,71,082 are actually accommodation entries. In view of the aforesaid factual position, which is also accepted by the Assessing Officer in the remand report, we are of the considered opinion that out of the total brokerage payment of ₹ 89,19,677, an amount of ₹ 61,71,082 deserves to be disallowed being non–genuine as per the facts and material available on record. Thus, assessee gets relief of ₹ 27,48,595. - decided partly in favour of assessee. Issues:Challenge to addition of brokerage payment deduction.Analysis:1. The appeal was against the addition of Rs. 89,19,677 towards deduction claimed for brokerage payment. The Assessing Officer found discrepancies in the brokerage payment details provided by the assessee during the assessment proceedings.2. The assessee initially failed to provide satisfactory details regarding the parties to whom brokerage was paid and the nature of services rendered. Subsequently, during the remand proceedings, the assessee admitted that certain brokerage payments were accommodation entries and that some bills were bogus.3. The Assessing Officer recommended disallowance of the brokerage payment based on information obtained from various parties. The assessee withdrew the challenge against the addition of Rs. 89,19,677 before the first appellate authority.4. The assessee later claimed that she was misled by the Assessing Officer regarding the responses from the parties to whom brokerage was paid. However, the Tribunal did not agree with this claim, noting that the parties admitted to providing accommodation bills only.5. The Tribunal found that out of the total brokerage payment, Rs. 61,71,082 was non-genuine and deserved to be disallowed. The assessee was granted relief of Rs. 27,48,595, as the disallowed amount was reduced from the total brokerage payment.6. The Tribunal partially allowed the appeal, concluding that the disallowance of Rs. 61,71,082 was justified based on the facts and materials available on record.This detailed analysis of the judgment highlights the issues involved, the findings of the Assessing Officer, the admission by the assessee during the remand proceedings, and the final decision of the Tribunal to partially allow the appeal by reducing the disallowed amount of brokerage payment.