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2021 (3) TMI 589 - AT - Income TaxUnexplained expenditure - Additions u/s 69C - commission paid by account payee cheques - HELD THAT - The assessee was required to justify the payment of commission expenses. The Assessing Officer pointed out discrepancy in the information filed by the assessee on behalf of those persons and asked the assessee to produce those parties for verification of the services rendered by them for which they were given commission by the assessee. We find that no such details of the property, which has been sold through those persons, have been filed by the assessee to justify the services rendered by them despite due opportunity provided to the assessee. The assessee failed to discharge its obligation, and therefore, on such circumstances, the learned CIT(A) is justified in sustaining the disallowance. Decided against the assessee.
Issues Involved:
1. Applicability of Section 69C of the Income-tax Act for disallowance of commission expenses. 2. Justification of commission expenses and the burden of proof on the assessee. 3. Procedural aspects and jurisdictional validity concerning the mention of incorrect sections in the assessment order. Issue-Wise Detailed Analysis: 1. Applicability of Section 69C of the Income-tax Act for disallowance of commission expenses: The assessee argued that the source of the commission paid through account payee cheques was duly accounted for in the books and should not be covered under Section 69C of the IT Act. The assessee contended that since the payments were made through cheques and subjected to TDS and service tax, there was no doubt on the source of expenditure. The authorities, however, found discrepancies in the information provided and observed that the assessee failed to produce the payees for verification. The learned CIT(A) upheld the disallowance, stating that mere payment through account payee cheques does not prove the genuineness of the transaction. The Tribunal agreed, noting that the assessee failed to justify the services rendered for the commission paid. 2. Justification of commission expenses and the burden of proof on the assessee: The assessee claimed commission expenses amounting to ?1,58,66,893/-, out of which ?48,07,109/- was disallowed by the Assessing Officer. The assessee was required to justify these expenses by providing details of the services rendered by the payees. The Assessing Officer issued notices under Section 133(6) and summons under Section 131, but the payees either did not respond or the responses were inadequate. The assessee's failure to produce the payees or provide satisfactory evidence led to the disallowance being upheld by the learned CIT(A) and the Tribunal. The Tribunal emphasized that the burden of proof lies on the assessee to substantiate its claim, which was not met in this case. 3. Procedural aspects and jurisdictional validity concerning the mention of incorrect sections in the assessment order: The assessee argued that the disallowance under Section 69 was not sustainable as it should have been under Section 69C. The learned CIT(A) and the Tribunal referred to Section 292B of the Act, which states that mentioning a wrong section does not invalidate an order if the authority had the requisite jurisdiction. The Tribunal cited various judicial precedents to support this position, concluding that the assessment order could not be quashed solely on the ground of quoting the wrong section. The Tribunal upheld the disallowance, emphasizing that the substance and intent of the law were maintained, and the procedural error did not affect the jurisdiction or the validity of the assessment. Conclusion: The Tribunal dismissed the appeal of the assessee, upholding the disallowance of ?48,07,109/- on account of commission expenses. The Tribunal found no infirmity in the order of the learned CIT(A) and concluded that the assessee failed to discharge its burden of proof regarding the genuineness of the commission payments. The procedural aspect of quoting the wrong section was deemed non-fatal to the validity of the assessment order, as per Section 292B of the Act. The appeal was decided ex-parte due to non-compliance and non-appearance by the assessee.
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