2014 (10) TMI 75 - HC - Income Tax

Genuineness of Expenses Commission paid or not - Held that - This is nothing but an attempt of seeking re-appreciation and reappraisal of the factual findings - The Tribunal has rightly found that the total commission of ₹ 85.32 lacs was paid - That is by the Assessee who is in the business of import and export of bullion - The amount included quantum paid to M/s Himneel Breweries Limited. The argument was that the services of Director of this Company, namely, Mr. Laxman Khemka were utilized for purchasing the bullion - if the services of a third person are genuinely utilized, then, the commission has to be allowed - the Assessee stated that no such commission was paid in earlier or later year - the Assessee could have procured the bullion without assistance of any agent - the Tribunal in order to satisfy itself whether any services are rendered by this Company, which is in a distinct business, that the presence of it s Director, namely, Mr. Laxman Khemka was found necessary and it was stated that he was not cooperating. There is no supporting evidence to hold that Silver was imported by the Assessee at a lesser price from M/s Jerad Metal and that was possible only because of the contacts of Mr. Laxman Khemka with that entity and because of intervention of one Mr. Amar Singh, Manager of ICICI Bank - If the services were rendered by Mr. Laxman Khemka the commission ought to be paid to him, but that is not to be found to be the factual position the order of the Tribunal is upheld Decided against assessee.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal confirming findings of Commissioner of Income Tax (Appeals) regarding payment of commission in Assessment Year 2004-2005.

Analysis:
The Assessee contested the Tribunal's decision, arguing that the transaction in question was genuine and not collusive. The Assessee maintained that since the payment was made by cheque, recorded in the company's books, and the parties were identified, the Assessing Officer should have compelled the attendance of the relevant individuals. However, the Tribunal concluded that the Assessee failed to prove the necessity of utilizing the services of a third party for the transaction. The Tribunal specifically highlighted the lack of cooperation from the Director of the company involved in the transaction, which led to doubts regarding the authenticity of the commission payment.

The Tribunal further scrutinized the lack of supporting evidence, such as a confirmation letter from the company, to substantiate the claim that the transaction resulted in importing silver at a lower price. The Tribunal emphasized the importance of verifying the services rendered by the third party involved and found discrepancies in the Assessee's explanations. The Tribunal's decision was based on factual findings and the absence of concrete evidence supporting the Assessee's claims.

In response to the Assessee's reliance on previous judgments, the Court dismissed the applicability of those cases to the present situation. The Court differentiated the circumstances of previous cases where the role of the Assessing Officer in determining reasonableness of expenses was questioned. The Court emphasized that in the current case, the transaction itself was under scrutiny due to doubts regarding its authenticity, making the previous judgments irrelevant to the present matter.

Ultimately, the Court upheld the Tribunal's decision, deeming the findings of fact consistent with the evidence on record and rejecting the Assessee's arguments. The Court concluded that the contentions raised lacked substance, leading to the dismissal of the Appeal without costs.