2012 (10) TMI 1087 - AT - Income Tax

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.

Issues Involved:
1. Disallowance of brokerage/commission expenses.
2. Issuance of summons to involved parties.
3. Relationship between appellant company and involved parties.
4. Disallowance of air ticket expenditure.
5. Direction to AO to pass an order in accordance with ITAT's previous order.
6. Timeliness of assessment completion.
7. Jurisdiction of CIT(A) and AO.

Detailed Analysis:

1. Disallowance of Brokerage/Commission Expenses:
The primary issue was whether the CIT(A) was justified in confirming the AO's action of disallowing brokerage/commission expenses amounting to Rs. 35,86,519 paid to M/s. Spectrum Synthetics Pvt. Ltd. The AO disallowed the expenses on the grounds that the payments were made to a sister concern and were not genuine or reasonable. The assessee failed to provide evidence of the services rendered by Spectrum Synthetics Pvt. Ltd. and could not furnish confirmation from the said party. Despite being given opportunities, the assessee did not establish the business necessity of the payments under Section 37(1) of the Income Tax Act. The Tribunal upheld the CIT(A)'s decision, noting that the assessee did not produce any documents to support the claim of brokerage and commission payments.

2. Issuance of Summons to Involved Parties:
The assessee argued that the CIT(A) erred by not directing the AO to issue summons to M/s. Radhika Synthetics and M/s. Spectrum Synthetics Pvt. Ltd. for confirmation of transactions and services rendered. However, this ground was not pressed during the hearing, and thus, it was rejected.

3. Relationship Between Appellant Company and Involved Parties:
The assessee contended that there was no special relationship between the appellant company and M/s. Radhika Synthetics Pvt. Ltd., and thus, the commission payments were genuine. The Tribunal noted that the assessee failed to prove the lack of relationship and did not provide sufficient evidence to support the genuineness of the transactions.

4. Disallowance of Air Ticket Expenditure:
The CIT(A) was criticized for not directing the AO to disallow only the amount incurred on the air ticket of the executive's wife. This ground was not pressed during the hearing and was rejected.

5. Direction to AO to Pass an Order in Accordance with ITAT's Previous Order:
The assessee argued that the CIT(A) should have directed the AO to pass an appropriate order giving effect to the ITAT's previous order dated 25.4.2006. This ground was also not pressed and was rejected.

6. Timeliness of Assessment Completion:
The assessee claimed that the assessment was time-barred as per Section 153(2A) of the Income Tax Act. This ground was not pressed during the hearing and was rejected.

7. Jurisdiction of CIT(A) and AO:
The assessee argued that the CIT(A) and AO erred in assuming jurisdiction in a time-barred assessment matter. This ground was not pressed and was rejected.

Conclusion:
The Tribunal found that the assessee did not provide necessary evidence to support the claim of brokerage and commission payments. The CIT(A)'s decision to confirm the AO's disallowance of Rs. 35,86,519 was upheld. The appeal filed by the assessee was dismissed.

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