2019 (2) TMI 538 - HC - Income Tax

Disallowance of brokerage charges - Held that - For multiple reasons, this appeal cannot be entertained. Firstly, as noted, during the remand proceedings, the assessee was confronted with material suggesting that the brokerage payments were not genuine. The assessee gave a statement conceding to the same and later on before the CIT(A) withdrew the entire claim. Once having withdrawn the claim from the appellate authority, it was not open for her to challenge the order based on said concession, before the Tribunal. In the appeal memo also, no grounds are made out suggesting any mistake of law on facts which led the assessee to give such concession. When the assessee by withdrawing the claim did not invite any decision from CIT(A), we wonder under what circumstances, she could have filed appeal against the order of the CIT(A) recording that such ground is not required to be examined on merits. Even independently, the Tribunal has examined the material on record leading to the concession given by the assessee and granted limited relief to the extent on the basis of remand report, it was found that the prescribed claim was not bogus. Thus, despite, the assessee giving up the entire claim of brokerage charges, the Tribunal has granted limited relief to the extent evidence on record favoured the assessee s claim of such payment. No question of law arises

Summary

Issues:
1. Disallowance of brokerage charges by the Assessing Officer.
2. Dispute regarding the addition of brokerage charges.
3. Appeal challenging the correctness of disallowance of brokerage charges.
4. Tribunal's decision on the disallowance of brokerage charges.

Issue 1: Disallowance of brokerage charges by the Assessing Officer

The Assessing Officer made an addition of &8377; 89.19 lacs towards disallowance of brokerage charges paid by the assessee during the scrutiny assessment for the assessment year 2009-10. Another addition of &8377; 12.01 crore towards purchases was also made. The CIT(A) called for a remand report in which it was revealed that the assessee had conceded before the Assessing Officer that the claim of payment of brokerage charges was not genuine. Consequently, the assessee withdrew the dispute with respect to the addition of &8377; 89.19 lacs.

Issue 2: Dispute regarding the addition of brokerage charges

The CIT(A) granted full relief to the assessee concerning the addition of &8377; 12.01 crore on account of purchases. However, with respect to the addition of &8377; 89.19 lacs towards brokerage charges, the CIT(A) dismissed the ground due to the assessee's withdrawal of the same. The appellate order noted the assessee's withdrawal of the appeal against the addition of brokerage charges and confirmed the addition, granting partial relief to the appellant.

Issue 3: Appeal challenging the correctness of disallowance of brokerage charges

The assessee filed an appeal before the Tribunal challenging the correctness of the disallowance of the addition of &8377; 89.19 lacs as brokerage expenses. The Tribunal observed that the Assessing Officer's remand report indicated that the prescribed demand of &8377; 61.71 lacs was not genuine. Despite the assessee's withdrawal of the claim before the CIT(A) and providing explanations, the Tribunal granted limited relief of &8377; 27.48 lacs and retained the addition of &8377; 61.71 lacs, as per the report of the Assessing Officer.

Issue 4: Tribunal's decision on the disallowance of brokerage charges

The Tribunal dismissed the appeal challenging the disallowance of brokerage charges for various reasons. Firstly, the assessee had withdrawn the claim before the CIT(A) after being confronted with evidence suggesting the payments were not genuine. The Tribunal found no grounds in the appeal memo suggesting any legal mistake that led to the concession. Additionally, the Tribunal independently examined the material on record and granted limited relief based on the remand report, which indicated that the prescribed claim was not entirely bogus. Consequently, the Tribunal concluded that no question of law arose, and the appeal was dismissed.

This detailed analysis of the judgment highlights the issues involved, the decisions made by the authorities, and the Tribunal's final ruling on the disallowance of brokerage charges.