2015 (2) TMI 725 - HC - Income Tax

Unaccounted services rendered by brokers - CIT(A) allowed the claim of assessee - ITAT reversing the said order of CIT(A) has held that the appellant has failed to discharge the burden cast upon him by law - Held that - For Suvidha Realtors the Assessing Officer came to the conclusion that the bills are suspicious as the total bill raised including the service tax and education cess came to ₹ 11,20,385. However, the bank statement of M/s. Suvidha Realtors and Constructions Pvt. Ltd. indicated that the amount credited in the said bank account of M/s. Suvidha Realtors was subsequently transferred to the account of M/s. Suvidha Realtors, another entity. For M/s. Panjon Pharma AO noted as not in the business of providing any services in the past. This was the first order in which huge commission is shown to have been paid and received from the assessee-appellant before us. The Assessing Officer was surprised, therefore, and rightly as to how the company in the pharmaceutical business could render services in connection with sale of cement and procurement of order for supply of cement. M/s. Panjon Pharma had huge brought forward business loss which was set off against the commission income received from the assessee. The Assessing Officer also noticed that the commission amount was credited in the account of Panjon Pharma in the HDFC Bank and the next entry was to transfer this sum to another account, for the reasons which were disclosed to the Assessing Officer. Therefore, ITAT did not commit any error and rather applied the correct test in reversing the order of the CIT(Appeals). The appellant has not been able to discharge the burden and it is not impossible. It is a primary onus and which was to be discharged and which has been held as not discharged by providing the requisite details. We do not find that the reasons assigned by the Tribunal consistent with the material produced are vitiated by perversity or an error of law apparent on the face of the record which would enable us to exercise our powers under section 260A of the Act. - Decided against assessee.

Summary

Issues Involved:
1. Whether the primary onus of proving the nature of transactions and services rendered was discharged by the appellant-assessee.
2. Whether the Income-tax Appellate Tribunal erred in reversing the order of the Commissioner of Income-tax (Appeals).
3. Whether the appeal raises any substantial question of law.

Detailed Analysis:

1. Primary Onus of Proving Transactions and Services Rendered:
The appellant-assessee argued that it had discharged its primary onus by providing details of transactions, identification of parties, and the nature of dealings. The appellant contended that once this onus was discharged, the burden shifted to the Revenue to prove otherwise. The appellant provided details of sub-agents, M/s. Panjon Pharma Ltd. and M/s. Suvidha Realtors and Construction (P.) Ltd., who allegedly assisted in procuring business. However, the Assessing Officer found that M/s. Panjon Pharma was a pharmaceutical company and not involved in trading cement, raising doubts about the nature of services rendered. Similarly, the Assessing Officer found the bills raised by M/s. Suvidha Realtors suspicious as the postal authorities could not trace the site mentioned. The Tribunal upheld these findings, noting that the appellant failed to provide sufficient evidence of services rendered by these entities.

2. Reversal of the Commissioner of Income-tax (Appeals) Order:
The Commissioner of Income-tax (Appeals) had initially set aside the Assessing Officer's order, accepting the appellant's claims. However, the Tribunal reversed this, stating that the appellant had not discharged the burden of proof. The Tribunal meticulously scrutinized the details and found that the appellant did not provide adequate evidence of the services rendered by the sub-agents. The Tribunal noted that the explanations provided by the appellant were insufficient and did not substantiate the claims made.

3. Substantial Question of Law:
The appellant argued that the Tribunal's reversal of the Commissioner of Income-tax (Appeals) order raised a substantial question of law. However, the respondent contended that the appeal was an attempt to re-appreciate factual material, which is improper. The court agreed with the respondent, stating that the Tribunal's findings were based on a meticulous examination of the evidence and were not perverse. The court held that the Tribunal applied the correct test in determining whether the primary onus was discharged and found that it was not. The court concluded that no substantial question of law arose from the Tribunal's order.

Conclusion:
The court dismissed the appeal, holding that the appellant failed to discharge the primary onus of proving the nature of transactions and services rendered. The Tribunal's findings were based on a thorough examination of evidence and were not perverse. The court found no substantial question of law in the appeal and upheld the Tribunal's order.