Sharad Kumar Choradia Vs ACIT (ITAT Jaipur)
Seized Records Prove Brokerage, Yet Income Must Be Realistic– ITAT Jaipur Grants Relief- Remands for Re-Work
Assessee was covered in search on Oswal Soap Group on 06.09.2018. Based on seized material from his residence & Oswal premises, AO held that Assessee was engaged as a finance broker, arranging unaccounted loans of M/s Uttam Chand Deshraj & others, charging commission of ₹100 per lakh. AO estimated brokerage income for six years aggregating to ₹39,22,106 & taxed the entire receipts without allowance of expenses. CIT(A) confirmed the additions in full.
Before Tribunal, Assessee argued that additions were based on third-party documents, hence unsustainable u/s 153A in view of Supreme Court decision in Abhisar Buildwell Pvt. Ltd.. It was further submitted that AO had made mechanical year-wide estimations ignoring actual transaction dates & had taxed gross brokerage without allowing expenses. It was also pleaded that approval u/s 153D was mechanical.
Tribunal noted that incriminating material was indeed found from Assessee’s own premises & that the Assessee himself had admitted to earning commission of ₹100 per lakh as finance broker. Thus, additions u/s 153A were legally sustainable. However, Tribunal found force in the contention that brokerage estimation was excessive & not worked out realistically. It therefore directed AO to recompute brokerage income reasonably, keeping in view actual duration & nature of loans, & also allow deduction of related expenses.
