2022 (6) TMI 507 - AT - Income Tax

Reopening of assessment u/s 147 - Bogus accommodation entry receipts - HELD THAT - Assessee has engaged into bogus penny stock transaction, and after our disclosure of amount has not duly honoured the same. CIT(A) as well as A.O. have passed a reasonable and well reasoned order after duly complying with earlier ITAT direction. Nothing is on record on behalf of assessee to rebut the finding that it has engaged into bogus penny stock transaction. Thereafter, after again having made the disclosure, the assessee tried to cover the amount by claim of expenditure, which were totally an afterthought and assessee could not support the same despite opportunity. Moreover, the new plank raised in set aside proceedings has also been correctly rejected by the ld. CIT(A). Firstly, the assessee could not have made a fresh claim and moreover the same also was only ipse dixit, without proper corroborative material. Appeal filed by the assessee is dismissed.

Summary

Issues:
1. Disallowance of commission payment to M/s. Alliance Intermediaries & Network Pvt. Ltd.
2. Disallowance of claimed salaries to employees.

Issue 1: Disallowance of commission payment to M/s. Alliance Intermediaries & Network Pvt. Ltd.:
The appellant contested the disallowance of a commission payment to M/s. Alliance Intermediaries & Network Pvt. Ltd., arguing that the payment was genuine and supported by evidence such as account payee cheques and an affidavit from one of the directors. However, the AO found the transaction dubious and disallowed the claim. The ITAT directed the AO to allow cross-examination of a key witness, Shri Mukesh Choksi. Despite the opportunity, the appellant did not sufficiently challenge the witness's statements, leading to the AO's reaffirmation of the disallowance. The CIT(A) upheld this decision, noting the lack of evidence to support the genuineness of the payment. The appellant's additional argument regarding another director's affidavit was deemed irrelevant, as it did not alter the overall assessment of the transaction's legitimacy. The ITAT ultimately dismissed the appeal, confirming the disallowance based on the lack of substantial evidence supporting the commission payment.

Issue 2: Disallowance of claimed salaries to employees:
The appellant also disputed the disallowance of claimed salaries to employees, contending that the expenses were genuine despite discrepancies in how the recipients reported the income. The AO investigated the matter and found inconsistencies, including an employee who had stopped working and others reporting business income instead of salary. These findings led to the disallowance of the entire salary claim. The CIT(A) supported the AO's decision, emphasizing the lack of verifiable evidence to substantiate the claimed expenses. The appellant's argument that the nature of income disclosure should not affect the legitimacy of the expenses was rejected, as the focus remained on the genuineness of the payments. The ITAT upheld the disallowance, citing the absence of conclusive proof supporting the claimed salaries. Despite the appellant's assertions, the ITAT found no grounds to overturn the decision, leading to the dismissal of the appeal.

This detailed analysis of the judgment highlights the issues surrounding the disallowance of commission payments and claimed salaries, the arguments presented by the appellant, the findings of the AO and CIT(A), and the final decision of the ITAT.