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Nisha synthetics ltd. Versus JCIT, Spl. Range-34,

2012 (10) TMI 1087 - ITAT MUMBAI

Disallow the claim of the assessee on payment of brokerage and commission - commission had only been paid to sister concern and assessee did not produce any evidence from the party to whom the commission is stated to have been paid. - ITA No.5549/Mum/2010 - Dated:- 12-10-2012 - SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI B.R.JAIN (ACCOUNTANT MEMBER) Appellant by : Shri G.S.Pikale Respondent by: Shri V.Krishnamoorthy ORDER Per B.R.Mittal, JM: The assessee has filed this appeal for assessment year 1 .....

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ereby CIT(A) has erred in not directing the AO to delete the additions of expenses amounting to ₹ 35,86,519 paid to M/s. Spectrum synthetics Pvt Ltd., on account of services rendered to the Co in dealings with M/s. Radhika Synthetics Limited. 2. That the Hon ble CIT(A) has erred in not directing the AO to issue summons to M/s. Radhika Synthetics who were under the proceedings of the Debt Recovery Tribunal and to M/s. Spectrum synthetics Pvt Ltd., in whose case the court receiver had been a .....

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tions of the same should have been deleted. 4. That the Hon ble CIT(A) has erred in law and facts of the case in not directing the ld AO to disallow only the amount of Air tickets expenditure incurred on the air ticket of wife of the executive who accompanied him and which ITAT has already set aside vide its order dated 25.4.2006. 5) That the Ho bie CIT (Appeals) should have directed the Learned Assessing Officer to pass an appropriate Order giving effect to the Order of Hon ble ITAT dated 25.4. .....

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of the income Tax Act 1961 which had long been elapsed and hence time barred. 8) That both Hon ble CIT (Appeals) and the Learned Assessing Officer erred in law and facts of the case in not following the provisions of the Income Tax Act whereby to give proper effect to the lTAT s order dated 25.4.2006 in which the entire addition relating to AY. 1996-97 in our case was set aside. 9) That the CIT(A) and AO erred in assuming jurisdiction which was not permissible in terms of section 153(2A) and 153 .....

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377; 35,86,519 to M/s. Spectrum Synthetics Pvt Ltd. 4. This issue is arising pursuant to assessment order passed by AO u/s.254 of the Act on 28.1.2009. 5. The relevant facts are that assessee claimed towards brokerage and commission paid amounting to ₹ 35,86,519 to M/s. M/s. Spectrum Synthetics Pvt Ltd on sale and purchase of yarn/fabrics. The AO stated that said commission and brokerages were made only to sister concern belonging to assessee s group concern and is not genuine or reasonabl .....

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furnishing the required explanation. AO stated that later on assessee furnished an explanation claiming that the said company had introduced it to trading in fabrics which is a new line of business to the assessee and that commission had been paid at 2% in addition to brokerage of 5%, which is a common trade practice. AO did not accept the said explanation of the assessee and claims were disallowed. Assessee filed appeal before ld CIT(A). ld CIT(A) confirmed the action of AO for the reasons sta .....

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ither in the earlier years or in the subsequent years but only in this year. (iv) Appellant could not specify the precise nature of services rendered for which the commission is claimed to have been paid. (v) commission had actually not been paid but only credited to the party s produced and also expect taking the plea that Spectrum Synthetics (p) Ltd. was under the control of Receiver, no evidence in proof of such fact has been furnished. With these observations and holding that for the purpose .....

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ara 7 reads as under: We have considered orders of lower authorities, arguments of the AR and DR and the material on record. It is evident from the orders of AO and CIT (A) that reliance has been placed on the facts that the assessee had claimed payment of commission only in respect of sales/purchases to a sister concern and also that the assessee did not produce any evidence from the party to whom the commission is stated to have paid like account copy, particulars of address, etc. Appellant s .....

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act is not correct, based on the sworn affidavit filed before us. According to us, the assessee s claim that the party to whom the sales have been made in respect of which only commission is claimed to have been paid is not a sister concern and also that the party to whom commission and brokerage have been paid being under recovery proceedings, it is not in a position to furnish required information before the lower authorities, are claims which have to be considered in the proper perspective by .....

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, DR s arguments regarding its validity are not relevant. Appellant is directed that it not having brought on record these facts earlier, that it is its responsibility to furnish the same before the AO in support of its claim without any failure on its part. With this view, this ground is set aside for fresh consideration by heA is treated as allowed only for statistical purposes 7. Pursuant thereto, AO issued a letter dated 15.9.2008 requiring the assessee, inter alia, to furnish the following .....

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ed requisite information but contended before the AO that, proceedings had become time barred and, accordingly, no details were furnished before the AO. AO passed the order dated 28.1.2009 computing the total income, inter alia, disallowing the claim of the assessee of payment of brokerage of ₹ 35,86,519/-. Being aggrieved, assessee filed appeal before ld CIT(A). Ld CIT(A) after considering the submissions of assessee confirmed the action of AO vide para 5 of the impugned order, which read .....

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nt appeal, the CIT(A) vide order dated 8.11.2001 has upheld the conclusion drawn by the AC by observing that despite being given specific opportunity to the appellant for filing confirmation of the said party on the basis of books which were stated to be in the possession of the Court Receiver. In absence of such confirmation, he analysed the facts of the case at length upheld the action of the AO by stating that onus u/s 37(1) which was on the appellant was not discharged by it. Before the ITAT .....

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hetics who were paid commission. The appellant has failed to adduce evidence any regarding the nature of services rendered by Spectrum Synthetics Pvt. Ltd. along with confirmation from the said party together with the name, address, income-tax assessment particulars. Reference to earlier correspondences made and PAN detail of Radhika Synthetics is not relevant to the issue under consideration. Thus, the appellant has failed to comply with the directions of the Hón ble ITAT and in such sit .....

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es 26 to 29 of PB to substantiate his submissions that said companies are not related to assessee company as directors are not common. In reply to a query as to whether ld AR could furnish any other evidence to prove the genuineness of the transactions and claim of payment of brokerage and commission, ld A.R. submitted that matter may be restored back to the file of AO to enable the assessee to give requisite documents. However, ld A.R. could not give any reply as to why the said details were no .....

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restored to the file of AO to consider the issue afresh. On the other hand, assessee made an attempt to thwart the proceedings by not furnishing the details. He submitted that even if the concern parties are not available, onus is on the assessee to establish the genuineness of the payments and/or rendering services by payee of the commission or brokerage. 12. We have considered submissions of ld representatives of parties and orders of authorities below. 13. We find considerable force in the su .....

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