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Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-34, Mumbai and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the ‘Act’). 2. The grounds of appeal filed by the assessee read as under: -
1. On the facts and in the circumstances of the case and in law the CIT(Appeals) was not justified in rejecting the request of adjournment of the appellant and passing the order without calling for the material in the possession of the Assessing Officer by assuming the appellant was not interested in representing the appeal thereby ignoring material evidence in the appellant's favour in the possession of the Assessing Officer.
2. On the facts and in the circumstances of the case and in law the Commissioner of Income Tax (Appeals) was not justified in confirming the order of the Assessing Officer and sustaining the addition of Rs.51,82,836/- being brokerage expenses claimed by the appellant.
3. The appellant submits that once the summons have been served, the responsibility of the appellant ends and it becomes the duty of the department to enforce attendance and hence the CIT(A) ought to have held the Assessing Officer failed in his duty and as such the additions ought to have been deleted.
4. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have deleted the addition in respect of the 30 parties where the appellant had filed the confirmations.
5. On the facts and in the circumstances of the case and in law the Assessing Officer has violated the principles of natural justice and has violated the fundamental rights of the appellant by not disclosing that statements of many parties have been recorded in Bhilwara many of who have confirmed the work done by them for the appellant thereby concealing the evidence in favour of the appellant and making additions of brokerage amounts as bogus.
6. On the facts and in the circumstances of the case and in law, the CIT(A) erred in merely relying on the statement of the appellant without conducting proper enquiries in respect of the various evidence filed by the appellant during the assessment proceedings and also failing to call for the case records and looking into the material evidence not disclosed by the Assessing Officer.
7. The appellant submits that the claim of brokerage is genuine and the same be allowed in full.
The Assessing Officer (AO) noticed during the course of assessment proceedings that the assessee had debited Rs.79,68,057/- by way of brokerage paid. In order to verify the transactions, the AO issued notice u/s 133(6) to the parties to whom the assessee claimed to have paid the brokerage. The AO received replies in some cases. The AO also conducted discrete inquires at Bhilwara, Rajasthan as per the address given by the assessee. He found that the parties had merely issued accommodation entries. In response to the summons issued by the AO, the assessee appeared before him. In the statement recorded on oath on 01.02.2013 vide question no. 22 and 24, the assessee admitted that ‘we accept that the commission transactions in Bhilwara are not genuine one’. Further in answer to question no. 23, the assessee stated that ‘yes, we accept that the address of commission parties to whom we have shown as brokerage paid in Bhilwara has been either non-existent or have just given accommodation entry to us’. Further in answer to question no. 25 and 26, the assessee admitted that ‘I have taken accommodation entries by means of paying commission/brokerage to all such parties located at Bhilwara and few parties in Mumbai too’.
The commission accommodation entries made by the assessee for the year under consideration as found out by the AO is enumerated below:
A.Y.2010-11 Sr. No. Name of the person providing City Amount(Rs.) City accommodation entries to assessee 1. Admire Suitings Bhilwara 1,98,060 2. Anil Kumar Mundra Bhilwara 2,89,970 3. Anil Kumar Mundra HUF Bhilwara 1,99,864 4. Ankur Mathur Bhilwara 1,50,585 5. Ashish Sharma Bhilwara 2,00,746 6. Ayush Agarwal Bhilwara 1,50,345 7. Bimal Patodi HUF Bhilwara 1,02,833 8. Binod KurnarAgarwal Bhilwara 3,50,625 9. Jawari Lai Babel Bhilwara 2,53,104 10. Jawari Lai Babel HUF Bhilwara 1,96,728 11. Krishna Totala Bhilwara 1,27,296 12. Madan Gopal Sharma Bhilwara 3,33,960 13. Mangi Ram Choudhry Bhilwara 1,99,185 14. M.G. Sharma HUF Bhilwara 1,25,286 15. MinakshiMundra Bhilwara 1,50,248 16. MohanlalHinger Bhilwara 2,05,163 17. Mohd. Salim Bhilwara 1,83,511 18. Neelam Agarwal Bhilwara 1,11,300 19. PawanTotala Bhilwara 1,04,437 20. PiyushAgarwal Bhilwara 1,50,780
Priyanka Agarwal Bhilwara 98,010 22. Raju Devi Mundra Bhilwara 1,44,788 23. Ram RatanJagetia HUF Bhilwara 99,143 24. Sakir Solanki Bhilwara 1,59,928 25. Shahnaz Bano Bhilwara 2,06,192 26. S. L. Sharma HUF Bhilwara 1,23,298 27. Shanta Devi Babel Bhilwara 2,02,640 28. Suresh Agarwal HUF Bhilwara 1,74,615 29. Susheela Sharma Bhilwara 1,29,664 30. UshaChoudhary Bhilwara 1,50,532 Total 51,82,836 In view of the above fact that the assessee in her statement recorded on oath on 01.02.2013 had admitted that the amount of Rs.51,82,836/- was accommodation entries for commission/brokerage, the AO made an addition of the above sum to the total income shown by the assessee. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). We find that there was no compliance by the assessee or her authorized representative to the notice issued by the Ld. CIT(A) fixing the case for hearing on different dates. A perusal of the record indicates that these notices were served on the assessee or her authorized representative. We refer here to page 2 to 4 of the appellate order dated 28.01.2015 passed by the Ld. CIT(A). As there was no compliance by the assessee, the Ld. CIT(A) relied on the relevant record and confirmed the disallowance of Rs.51,82,836/- made by the AO.
Before us, the Ld. Counsel of the assessee files a Paper Book (P/B) containing (i) statement given at Bhilwara by persons who have accepted and received commission, (ii) statement given at Bhilwara by persons who received commission but the main person is deceased, (iii) statement given at Bhilwara by persons who received summons, (iv) totally denied statements given at Bhilwara by persons who received summons and (v) adjournment filed at Bhilwara by persons who received summons.
On the other hand, the Ld. DR relies on the order of the Ld. CIT(A). He specifically refers to the statement given by the assessee before the AO on 01.02.2013. The Ld. DR thus submits that the assessee in the above statement has admitted Rs.51,82,836/- being accommodation entries for commission/brokerage. Therefore, the AO has rightly made an addition of the above sum. 7. We have heard the rival submissions and perused the relevant materials on record. We find that none appeared for the assessee during the appellate proceedings before the Ld. CIT(A). We are of the considered view that the documents filed before us as enumerated at para 5 here-in- above have a bearing on the issues at hand. The same could not be examined by the Ld. CIT(A) because of non-compliance by the assessee. In view of the above, we set aside the order of the Ld. CIT(A) and restore the matter to him to examine the issue on the basis of documents and after giving reasonable opportunity of being heard to the assessee. We also direct the assessee to file the relevant details before the Ld. CIT(A).