BHANDARI SPINNING MILLS LTD. Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) This appeal was admitted to consider the following substantial question of law:

(2.) The Assessee is a Company which is doing the business of manufacture of yarn. For the assessment year 2001-02, the appellant had filed its return of income on 15.11.2002 declaring a total income of Rs. 5,93,850/-. The returns came to be processed and assessment came to be completed under Section 143(3) on 31.03.2004 wherein the Assessing Authority had disallowed brokerage paid on cotton purchased to the extent of Rs. 20,91,012/-. Aggrieved by the said order, the assessee preferred an appeal. The Appellate Authority on careful examination of the material on record found no ground to interfere with the said order. Aggrieved by the said order, the assessee preferred an appeal to the Tribunal. The Tribunal has discussed the matter in detail. It found, in some cases, brokerage has been paid and therefore, it allowed the deduction. In some cases, it remanded the matter back to the Assessing Authority for proper verification and calculation. In some cases, it declined to interfere. The assessee preferred this appeal challenging those disallowances. Learned counsel appearing for the assessee assailing the impugned order contends, when once evidence is produced to show brokerage was paid and the brokerage was duly acknowledged and the recipient has accounted for it in its books of account and has offered it for tax, it was not open to the Tribunal to doubt the genuineness of the transaction and not extend the benefit of disallowance to the assessee. Though the said argument looks attractive on the face of it, on a careful scrutiny of the order passed by the Tribunal, it is clear that the Tribunal has given cogent reasons why it has not granted benefit to the assessee. The material on record shows the persons to whom the brokerage was paid, who are interested are closely connected to the Directors of the assessee-company. Though book entries were there and the Revenue offered it for tax, on appreciation of the entire material on record, they have recorded a categorical finding that no such brokerage fee was paid. That is the finding recorded by the two Authorities below also. Therefore, when the evidence on record discloses that the amounts paid were not brokerage, merely because the amounts were confirmed that by itself would not enable the assessee to claim the exemption. In that view of the matter, we do not see any merit in this appeal. The substantial question of law is answered in favour of the Revenue and against the assessee. Accordingly, the appeal is dismissed.