The Tax Publishers2020 TaxPub(DT) 5428 (Del-Trib)

INCOME TAX ACT, 1961

Section 143(3)

Where assessee was a simple dealer in grains and obviously did not have any big brand name of his own but simply purchasing and selling grains through 'Mandi', the same could have been done by family members (who were doing business through assessee) three persons also, since transactions in the name of the family members appeared to be sham transaction and it was a clear case of the income of the assessee being diverted in the name of family members.

Assessment - Addition on account of diversion of income - Transactions in name of the family members -

AO made addition on account of diversion of income to three persons family members who were doing business through the assessee and assessee was purchasing and selling goods on their behalf. Therefore, whatever commission income was earned by these persons was given to them. However, AO was of the firm belief that assessee was diverting his profit to his family members and accordingly made the additions. Held:<./i> It could not be understood as to why the family members were doing business through assessee when they could have done commission business in their own name. Assessee was a simple dealer in grains and obviously did not have any big brand name of his own but simply purchasing and selling grains through 'Mandi', the same could have been done by family members (who were doing business through assessee) three persons also. These transactions in the name of the family members of assessee raise doubts on genuineness of transactions. Transactions in the name of family members appeared to be sham transaction and it was a clear case of the income of the assessee being diverted in the name of family members.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2009-10


INCOME TAX ACT, 1961

Section 145

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