2018 (6) TMI 1091 - AT - Income Tax

Addition towards commission received - Held that - Before making any addition of commission income on the ground that the assessee is merely providing accommodation entries, it is necessary to make deeper probe and enquiry to ascertain the true nature of transactions between the assessee and concerned parties. The assessee s grievance that it was not given opportunity to cross examine the third parties whose statements were relied upon also needs to be dealt with in accordance with law. In view of the above, we restore the issue to the Assessing Officer for denovo adjudication after due opportunity of being heard to the assessee. Disallowance of rent expenses - Held that - As AR submitted that given an opportunity the assessee will prove the expenditure through proper evidence. In view of the above submissions of the learned Authorised Representative, we restore the issue to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. Addition on account of difference in total income as per the e return and as per computation of income - Held that - AR submitted for an opportunity to be given to the assessee to reconcile the difference. Considering the submissions of the learned Authorised Representative we are inclined to restore the issue to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee to reconcile the difference.

Summary

Issues:
1. Addition of commission received
2. Disallowance of rent expenses
3. Addition due to difference in total income
4. Levy of interest and initiation of penalty proceedings

Analysis:

Issue 1: Addition of Commission Received
The assessee challenged the addition of commission received amounting to ?1,63,29,680. The Assessing Officer concluded that the assessee engaged in accommodation entries with parties, estimating commission income at 1% of the total turnover. The Commissioner (Appeals) upheld the addition. The assessee argued that proper consideration was not given to submissions, and no opportunity for cross-examination was provided. The Tribunal found discrepancies in the transactions and lack of evidence of actual goods movement. It directed a deeper probe and restored the issue to the Assessing Officer for further examination.

Issue 2: Disallowance of Rent Expenses
The disallowance of rent expenses amounting to ?6,000 was challenged by the assessee. The Assessing Officer disallowed the amount due to lack of proof of payment. The Tribunal, considering the submissions, restored the issue to the Assessing Officer for fresh adjudication after providing an opportunity to the assessee to substantiate the expenditure.

Issue 3: Addition Due to Difference in Total Income
An addition of ?3,846 was made due to a variance in total income as per the e-return and computation. The Tribunal allowed the ground for statistical purposes and directed the Assessing Officer to reconcile the difference after providing the assessee with an opportunity to be heard.

Issue 4: Levy of Interest and Penalty Proceedings
The Tribunal declined to entertain the challenge against the levy of interest under sections 234B and 234C, considering it consequential. It also refused to address the initiation of penalty proceedings under section 271(1)(c) at that stage.

In conclusion, the Tribunal partially allowed the appeal for statistical purposes, directing further examination on the issues of commission addition, rent expenses, and total income difference. The interest levy and penalty proceedings were not entertained at that juncture.