DCIT Vs Sobha Chand Bhansali (ITAT Kolkata)
Finance Broker, Not Financier: Only Brokerage Taxable -No Evidence, No Addition- ITAT Rejects Rs.20-Crore Search Disclosure Theory- Search Addition Without Seized Material Unsustainable
Revenue appealed against CIT(A)’s orders restricting additions in block assessments framed u/s 153A pursuant to search on 03.02.2017. AO assessed large undisclosed income solely on the basis of an alleged disclosure of Rs.20 crores said to have been made by Assessee before Investigation Wing.
Assessee denied making such disclosure, retracted immediately after receiving copy of statement, & consistently maintained that he was only a finance broker arranging cash-loan transactions between lenders & borrowers.
CIT(A), after examining seized Rukkas, remand report, third-party confirmations u/s 133(6), assessment records of financier Babulal Bothra, as well as seized papers, held that Assessee acted only as middleman & only brokerage could be taxed. CIT(A) further found that AO brought no corroborative material to support the disclosure & assessed income mechanically on the alleged confession, contrary to CBDT Circular dated 10.03.2003 mandating additions only on evidence. CIT(A) computed undisclosed brokerage based on seized documents at Rs.15,42,994 for AY 2011-12 & applied the same principle for other AYs.
Tribunal upheld CIT(A), noting absence of any seized material supporting Rs.20 crore disclosure, multiple confirmations from borrowers/lenders acknowledging transactions through Assessee, and judicial precedents that only brokerage of a finance intermediary can be brought to tax. All Revenue appeals were dismissed.
