2022 (11) TMI 1020 - AT - Income Tax

Disallowance of Commission paid to 13 persons for a single land deal - Transaction between parent company and subsidiary company - AO has noted that despite various opportunities, assessee could not justify the payment of commission - as per CIT-A assessee company did not corroborate with supporting documentary evidences and justification of the commission paid to different persons on the sale of project - HELD THAT - Assessee company did not appear despite sending notices through Speed Post which have been returned by the postal authorities with the remarks Refused to receive the envelope . We notice that when the appeal is filed before the Tribunal by the assessee company itself against the orders of the lower authorities, it is expected that the assessee company may put forth some documentary evidences in support of its contentions to decide the appeal as it is the duty of the assessee company to lead evidence in support of its claim and for the adjudicating authority to decide upon the sustainability of the claim on the basis of the evidence led by the parties before it. No material has been placed by assessee to controvert the findings of lower authorities. We find no reason to interfere with the order of CIT(A) and thus we dismiss the grounds of the assessee.

Summary

Issues:
Challenge to disallowance of commission expenses for Rs.1,16,24,445; Justification of commission paid to different parties; Reasonableness of commission paid on a single land transaction; Department's authority to decide commercial expediency of expenditure; Non-cooperation of assessee in pursuing appeal effectively.

Analysis:
The appeal pertains to the assessment year 2013-2014 where the Assessee, a company engaged in Builders & Developers business, filed a return declaring NIL income, but the Assessing Officer (A.O.) noted a gross turnover of Rs.18 crores from a single land transaction. The A.O. disallowed commission expenses of Rs.1,16,24,445 paid to 13 parties, leading to an addition in the assessment. The Assessee challenged this disallowance before the Ld. CIT(A), who upheld the A.O.'s decision.

The Assessee raised multiple grounds challenging the disallowance of commission expenses, arguing against the findings of the A.O. and the Ld. CIT(A). The Assessee contended that the department cannot determine the reasonableness of commercial expenses and disputed the findings regarding the commission paid on a single land transaction. Despite the grounds raised, the Assessee failed to provide proper documentary evidence and justification for the commission paid during the assessment proceedings and the first appeal.

The Tribunal noted the non-cooperation of the Assessee in pursuing the appeal effectively, as evidenced by the refusal to receive hearing notices. The Tribunal proceeded ex-parte due to the Assessee's negligent approach. The A.O.'s addition of Rs.1,16,24,445 was based on the lack of proper justification for the commission paid, a stance upheld by the Ld. CIT(A) and supported by the Departmental Representative (D.R.). The Tribunal found no material placed by the Assessee to counter the findings of the lower authorities, leading to the dismissal of the appeal.

In conclusion, the Tribunal dismissed the Assessee's appeal, upholding the addition of commission expenses made by the A.O. and confirmed by the Ld. CIT(A). The decision was based on the lack of evidence and non-cooperation from the Assessee throughout the proceedings, ultimately leading to the rejection of the grounds raised in the appeal.