2019 (4) TMI 1807 - HC - Income Tax

Disallowance in assessment u/s 158BC - undisclosed income determined by the Assessing Officer by disallowing commission payment - HELD THAT - AO made several disallowances of various expenditures such as commission payment, transportation charges etc. The Tribunal, by the impugned Judgment, held that all these expenses were already recorded in the Assessee s books of accounts and that therefore the same should not be subject-matter of disallowance in assessment u/s 158BC of the Act. If the Assessing Officer wanted to disallow the same, he had to do the same in normal assessment. The Tribunal additionally examined evidence on record and came to the conclusion that even otherwise, the disallowances were not justified. Tribunal noted that the disallowances are based only on statements of the Assessee which were not corroborated by any evidence on record. The Tribunal examined every disallowance minutely with reference to the materials on record and held that the disallowances were totally unjustified. No question of law arises

Summary

Issues:
1. Disallowance of undisclosed income based on commission payments without seized material.
2. Justification of directing the Assessing Officer to delete undisclosed income under section 158BB of the IT Act.

Issue 1: Disallowance of undisclosed income based on commission payments without seized material:
The case involved an appeal by the Revenue challenging the Income Tax Appellate Tribunal's judgment. The Tribunal had directed the Assessing Officer to delete the undisclosed income determined by disallowing commission payments, stating that there was no seized material in the Assessee's case. The Revenue contended that the undisclosed income was based on sworn statements from concerned parties. However, the Tribunal found that the disallowances were unjustified as they were not corroborated by any evidence on record. The Tribunal concluded that the disallowances were not justified and dismissed the Appeal on the grounds of the appreciation of materials on record.

Issue 2: Justification of directing the Assessing Officer to delete undisclosed income under section 158BB of the IT Act:
The Assessee, engaged in the shipping business, was subject to assessment proceedings under Section 158BC of the Income Tax Act, 1961. The Assessing Officer had disallowed various expenditures, including commission payments and transportation charges. The Tribunal held that these expenses were already recorded in the Assessee's books of accounts and should not be subject to disallowance under Section 158BC. The Tribunal further examined the evidence on record and found that the disallowances were not justified. The Tribunal noted that the disallowances were based solely on the Assessee's statements without any corroborating evidence. After scrutinizing the materials on record, the Tribunal concluded that the disallowances were unjustified. As no question of law arose in this issue, the Appeal was dismissed based on the appreciation of materials on record.