AUTO DIGITECH PRIVATE LIMITED(NOW MERGED WITH M/S TVS AUTOMOBILE SOLUTIONS PVT LTD),MUMBAI V. ITO WARD 7(2)(1), MUMBAI

ITA 1526/MUM/2025

AI Insights

The case involves Auto Digitech Private Limited, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2018-19. The primary contention was the addition of Rs. 89,82,784 under section 69C read with section 115BBE of the Income Tax Act, 1961, which the AO claimed were unexplained expenses. The assessee argued that the appeal was dismissed by the CIT(A) due to a misunderstanding, as the grounds of appeal and statement of facts were indeed submitted. The Tribunal found merit in giving the assessee another opportunity to substantiate its claims, leading to the restoration of the matter to the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706824 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 03-03-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ADITYA M. RAI; DR
• Assessee Lawyers: KINJAL BHUTA; AR
• Keywords: Opportunity of being heard; Corroborative evidences; TDS
• Section: 143(3); 69C

Judgement Text

"| आयकर अपील य अ धकरण यायपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER & SHRI SANDEEP SINGH KARHAIL, HON’BLE JUDICIAL MEMBER I.T.A. No. 1526/Mum/2025 Assessment Year: 2018-19 Auto Digitech Private Limited (Now merged with M/s. TVS Automobile Solutions Private Limited) Plot No. Super A8 & A9 Kochar Bliss Thiru. Vi. Ka Industrial Estate Guindy Chennai - 600032 [PAN: AAGCM2267G] Vs ITO, Ward Circle – 7(2)(1) अपीलाथ\u0012/ (Appellant) \u0014\u0015 यथ\u0012/ (Respondent) Assessee by : Shri Kinjal Bhuta, A/R Revenue by : Shri Aditya M. Rai, Sr. D/R सुनवाई क तार ख/Date of Hearing : 07/07/2025 घोषणा क तार ख /Date of Pronouncement: /07/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 05/06/2024 by NFAC, Delhi [hereinafter “the ld. CIT(A)”] pertaining to AY 2018-19. 1.1. There is a delay in filing the appeal. The assessee has explained the cause for the delay in its letter supported by an affidavit. We have carefully perused the contents of the affidavit and are satisfied that the assessee was prevented by reasonable and sufficient cause for not filing the appeal on time. The delay is condoned. 2. The grievance of the assessee reads as under:- “1. The Ld. Assessing Officer (AO) has erred in passing an invalid Assessment Order u/s. 143(3) r.w.s. 144B of the Income Tax Act, 1961, I.T.A. No. 1526/Mum/2025 2 which is beyond the statutory time limit prescribed u/s. 153 of the Income Tax Act, 1961. 2. The Ld. Commissioner of Income Tax Appeals - NFAC erred in dismissing the appeal under a complete misunderstanding that Grounds of Appeals & Statement of Facts are not submitted. That the complete Grounds of Appeal & Statement of Facts are part of the appeal form filed before CIT(A) and the dismissal is arbitrary and not at all justified. 3. The Ld. CIT(A) erred in confirming addition of Rs. 89,82,784/- u/s. 69C r.w.s. 115BBE of the Income Tax Act, 1961, without considering the merits of the case. 4. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal.” 4. Ground No. 1 was not argued before us, therefore, the same is dismissed as not pressed. 5. Representatives of both the sides were heard at length. Case records carefully perused. 6. Briefly stated the facts of the case are that the return of the assessee was selected for limited scrutiny assessment under the E- assessment scheme, 2019 for examining the large sales promotion expenses vis-à-vis gross receipts. The assessee declared total income at Rs. 5,36,52,388/-. During the course of the scrutiny assessment proceedings, the AO interalia asked the assessee to justify its claim of sales promotion expenses and the percentage increase in the quantum in comparison with last year sales promotion expenses and justification for the increase. In compliance, the assessee submitted the following details of persons to whom the payments were made on account of sales promotion expenses during the year:- I.T.A. No. 1526/Mum/2025 3 Sr. No Name Address PAN Base Amount TDS deducted 1 MEDIAEDGE CIA INDIA PRIVATE LIMITED COMMERZ ,8TH FLOOR, INTERNATIONAL B AAACF4315L 4,256,322 87,759 2 SPECTRUM TALENT MANAGEMENT GROUND FLOOR, PLOT NO. C-142 Uttar Pradesh 201301 ABMFS3316G 1,145,313 22,836 3 EVENTZ N MORE office: 14/12 shivpuri colony MUMBAI 400071 AEUPN8966Q 226,850 2,254 4 NETCORE SOLUTIONS PVT LTD 402, peninsula chambers MUMBAI 400013 AAACR2730D 186,571 3,883 5 HANSA RESEARCH GROUP PVT LTD Sahney Business Center A 1 st AAACH9516M 124,580 2,506 6 GETTY IMAGES MEDIA INDIA PVT LTD Indiabulls Finance Ce MUMBAI 400013 AAFCP8968G 46,735 933 7 GLOBAL MERCANTILE SERVICES k.Sion Chaman House CHSG.Near Canar Mumbai 400022 AIFPA4748N 30,100 301 8 NITIN GRAPHICS SHOP NO 2, BDD CHAWL 81,NEAR MAHIND WORLI 400018 AFUPT5343J 23,919 232 9 TIMES PRINTS Office No.7E,1st Floor, MUMBAI 400001 BBNPS4722E 15,900 150 10 POLYVALENT DIGITAL SERVICES 128, 1st Floor, Vipul Trade Center, Gurgaon(Haryana) 122001 AAHCP4643E 12,864 256 I.T.A. No. 1526/Mum/2025 4 11 Other-TDS Applicable 27,337 547 12 Other-TDS Not Applicable 37,829 13 Provision reversal N.A. (1,590,542) - Total Business Promotion Bxpesnes 4,543,777 6.1. And insofar as the increase in the sales promotion expenses is concerned, it was explained that the expenses were incurred during the current year mainly for digital advertisement, lead generation, website optimization, for research on independent Gerage. Further expenses were incurred for outdoor events through outdoor agency as well as contractual employee hired for marketing. 7. The AO made independent enquiry and the following facts were found in relation to sales promotion expenses shown by the assessee:- Sr. No. Name PAN Base Amount Actual Payment Difference 1 MEDIAEDGE CIA INDIA PRIVATE LIMITED AAACF4315L 4,256,322 1,17,82,056/- 75,25,734/- 2 SPECTRUM TALENT MANAGEMENT ABMFS3316G 1,145,313 25,28,061/- 13,82,748/- 3 EVENTZ N MORE AEUPN8966Q 226,850 2,68,768/- 41,918/- 4 HANSA RESEARCH GROUP PVT LTD AAACH9516M 124,580 1,47,003/- 22,423/- I.T.A. No. 1526/Mum/2025 5 5 GETTY IMAGES MEDIA INDIA PVT LTD AAFCP8968G 46,735 48,057/- 1,322 6 GLOBAL MERCANTILE SERVICES AIFPA4748N 30,100 36,883/- 6,783/- 7 TIMES PRINTS BBNPS4722E 15,900 15,900/- Nil 8 POLYVALENT DIGITAL SERVICES AAHCP4643E 12,864 14,720/- 1,856/- Total Business Promotion Expesnes 58,58,664/- Rs. 1,48,41,448/- Rs. 89,82,784/- 8. The AO noticed huge variation in the amount received by Mediaedge CIA India Private Limited, Mumbai and Spectrum Talent Management, New Delhi. On receiving no plausible reply, the AO made the addition of Rs. 89,82,784/-. 8.1. When the additions were challenged before the ld. CIT(A), the proceedings could not be attended and the ld. First Appellate Authority dismissed the appeal on the basis of the material on record. 9. Before us, the ld. Counsel for the assessee vehemently stated that due to some changes in the corporate structure of the assessee, the proceedings could not be attended properly and because of the same, the appeal also could not be filed on time. The ld. Counsel for the assessee pleaded for a second opportunity to furnish necessary details in justification of the claim of expenditure. 10. We are of the considered view that a second opportunity should be given to the assessee. Therefore, we restore the issue to the file of the AO. The assessee is directed to furnish all the necessary details I.T.A. No. 1526/Mum/2025 6 with supporting evidence in support of its claim of sales promotion expenses and the AO is directed to examine the same and decide the issue afresh after affording reasonable and adequate opportunity of being heard to the assessee. 11. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the Court on 8th July, 2025 at Mumbai. Sd/- Sd/- (SANDEEP SINGH KARHAIL) (NARENDRA KUMAR BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 08/07/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs आदेश क \u0016\u0017त\u0018ल\u001aप अ े\u001aषत /Copy of the Order forwarded to : 1. अपीलाथ! / The Appellant 2. \u0016\"यथ! / The Respondent 3. संबं&धत आयकर आयु(त / Concerned Pr. CIT 4. आयकर आयु(त ) अपील ( / The CIT(A)- 5. \u001aवभागीय \u0016\u0017त\u0017न&ध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड. फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपील य अ&धकरण ITAT, Mumbai "