Brivan Consultants Private Limited Vs ACIT (ITAT Delhi)
The case concerns cross appeals filed by the assessee and the Revenue against the order dated 21.06.2024 passed by the Commissioner of Income Tax (Appeals) [CIT(A)] arising from an assessment under Section 143(3) of the Income Tax Act, 1961 for Assessment Year 2018–19.
The assessee, a private limited company engaged in financial consultancy services, had undertaken bond trading during the relevant year. The Assessing Officer examined commission payments made to 77 persons for procuring bonds that were sold to U.P. State Bridge Corporation Ltd. EPF Trust. Out of these, only 17 persons responded to notices issued under Section 133(6), while 60 did not respond. Based on this and certain discrepancies in statements and bank transactions, the Assessing Officer doubted the genuineness of the commission payments.
The assessee explained that bond trading was a new activity and it relied on intermediaries and brokers for sourcing and executing transactions due to lack of industry experience. It submitted that payments were made through banking channels after deducting tax at source and that the transactions resulted in sale of bonds worth ₹1,18,75,49,043. However, the Assessing Officer rejected the explanation and treated commission expenses of ₹5,11,63,000 as bogus, alleging a scheme to inflate expenditure and evade tax. Additional disallowances were also made, including ₹58,47,765 for increased expenditure and ₹11,30,000 paid to a party considered non-genuine.
