- (1.) This instant appeal under s. 260A of the IT Act, for the asst. yr. 1998-99 has been preferred by the appellant herein assailing the order dt. 20th May, 2011, passed by the learned Income-tax Appellate Tribunal, Jaipur Bench 'B' Jaipur (in short, Tribunal) sustaining the disallowance to the extent of Rs. 19,93,474 which was the amount claimed as commission paid/payable to the sub-brokers by the appellant. The brief facts of the case are summarised hereinbelow: The appellant-assessee was a del credere selling agent of M/s. Hind Spinners and M/s. Hind Syntex Ltd., Dewas, pursuant to the agreements for selling of the yarn manufactured by these companies in the territory of District of Bhilwara, Rajasthan; the appellant received commission to the extent of Rs. 45,81,710 and a sum of Rs. 19,93,474 was claimed as brokerage payable on the sale effected through sub-brokers. The appellant accordingly claimed the said amount of Rs. 19,93,474 as had been paid/payable to various sub-brokers, who acted as sub-brokers; the appellant claimed that they in fact, provided services and were paid accordingly.
(2.) The learned Dy. CIT, Circle, Bhilwara, called for the relevant details from the appellant-assessee and vide order dt. 30th March, 2001 disallowed the commission/brokerage claimed by the appellant. The learned AO, during the course of hearing, however required the appellant to : (i) furnish the details of sales effected through sub-brokers; (ii) lead evidence to the fact that the sales were made through sub-brokers; (iii) details of outstanding from the parties to whom sales of yarn were made through sub-brokers; and (iv) to provide sub-brokers with their books of accounts and record to verify the genuineness of the brokerage paid to the sub-brokers.
(3.) It is stated by the learned AO in the order that neither the appellant-assessee produced the account books of sub-brokers till the conclusion of proceedings nor any evidence had been led to show that any sales were made through the said sub-brokers. The learned AO further observed that not a single penny was paid to the brokers as brokerage and the amount was simply credited in their respective accounts. In fact, he observed that not even amount of this year but even commission of earlier years was not paid to the said sub-brokers and for years together. It was further observed by him that how the small time sub-brokers would work for the appellant-assessee without even receiving any amount towards the services they claimed to have rendered and accordingly came to the conclusion that the appellant-assessee did not incur the said expenditure; it was merely claimed but no services were rendered by the said sub-brokers.;