FARLIN COMMODITIES PRIVATE LIMITED,MUMBAI V. DCIT, CIRCLE 1(3)(1), MUMBAI

ITA 5035/MUM/2025

AI Insights

The case involves M/s Farlin Commodities Pvt. Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi, for the assessment year 2021-22. The primary contention was regarding the addition of Rs. 58,60,583 as undisclosed business income, which included commission income, interest income, and differential amounts in trade receivables. The Assessing Officer had made these additions following a scrutiny assessment, which the assessee contested, claiming that the income was already declared and the discrepancies were due to different treatments of GST. The Tribunal found that the lower authorities had not adequately considered the assessee's submissions and evidence, leading to a decision to remand the matter back for a thorough examination.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 831556 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: misc
• Appeal Filed On: 13-08-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK PERAMPURNA
• Assessee Lawyers: AAKASH KUMAR
• Keywords: Set aside; Business income; Opportunity of being heard; Principle of natural justice; Assessment record
• Section: 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 5035/MUM/2025 Assessment Year: 2021-22 M/s Farlin Commodities Pvt. Ltd., Office-609, Bonanza, Sahar Plaza, M.V. Road, Nr. Hotel Kohinoor, J.B. Nagar, Mumbai-400059. Vs. DCIT, Circle 1(3)(1), Aayakar Bhavan, Mumbai-400020. PAN NO. AACCF 1144 R Appellant Respondent Assessee by : Mr. Aakash Kumar Revenue by : Mr. Vivek Perampurna, CIT-DR Date of Hearing : 19/11/2025 Date of pronouncement : 20/01/2026 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by the assessee against order dated 13.06.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2021-22, raising following grounds: 1. On the facts and circumstances of the case and in law, the learned CIT (A) erred in dismissing the appeal w.r.t addition of Rs. 58,60,583/- as undisclosed business income without taking into consideration the submitted supporting Printed from counselvise.com documents and facts of the The bifurcation of addition made by the Ld AO and confirmed by the CIT (A) is as below: Sr. No. 1 Commission Income as undisclosed business income 2 Interest income from Punjab National Bank as Income from other 3 Differential amount between opening and closing trade receivable after deducting sales amount declared in ITR. Total Additions 2. Briefly stated, facts of the case are that assessee filed return of income for the year under consideration on 19.07.2021 declaring loss for the current year amounting to Rs.( return of income filed by the assessee was selected for scru assessment and notice u/s 143(2) (in short ‘the Act’) was issued and served upon the assessee. However, the assessee did not comply to the s issued u/s 142(1) of the Act on 28.06.2022, 05.08.2022, 14.10.2022 and 07.11.2022. The Assessing Officer then finally issued a show cause notice dated 07.12.2022 which was partly complied by the assessee. On verification of the assessment records, the Assessing Officer found that as per the form No. 26AS tax deducted at source on Rs.44,04,037/- and Rs.4,64,845/ Coal Pvt. Ltd. and also Rs.90,133/- received by the assessee The Assessing Officer a Rs.1,37,62,293/- added during the year M/s Farlin Commodities Pvt. Ltd. ITA No. 5035/MUM/2025 documents and facts of the case. The bifurcation of addition made by the Ld AO and confirmed by the CIT (A) is as below: Particulars Amounts Commission Income as undisclosed business income Rs. 44,04,037/ Interest income from Punjab National Bank as Income from other sources Rs. 90,133/ Differential amount between opening and closing trade receivable after deducting sales amount declared in ITR. Rs. 13,66,413/ Total Additions Rs. 58,60,583/ Briefly stated, facts of the case are that assessee filed return of income for the year under consideration on 19.07.2021 declaring loss for the current year amounting to Rs.(-)4,83,37,535/ return of income filed by the assessee was selected for scru notice u/s 143(2) under the Income (in short ‘the Act’) was issued and served upon the assessee. However, the assessee did not comply to the subsequent notices (1) of the Act on 28.06.2022, 05.08.2022, .2022 and 07.11.2022. The Assessing Officer then finally issued a show cause notice dated 07.12.2022 which was partly complied by the assessee. On verification of the assessment records, the Assessing Officer found that as per the form No. 26AS d at source on commission income u/s 194H of and Rs.4,64,845/- was deducted by M/s Samdani Coal Pvt. Ltd. and also tax was deducted on interest income of received by the assessee from Punjab National Bank The Assessing Officer also observed net trade receivable of added during the year as against the sales done of M/s Farlin Commodities Pvt. Ltd. 2 ITA No. 5035/MUM/2025 The bifurcation of addition made by the Ld AO and confirmed by Amounts Rs. 44,04,037/- Rs. 90,133/- Rs. 13,66,413/- Rs. 58,60,583/- Briefly stated, facts of the case are that assessee filed return of income for the year under consideration on 19.07.2021 declaring )4,83,37,535/-. The return of income filed by the assessee was selected for scrutiny under the Income-tax Act, 1961 (in short ‘the Act’) was issued and served upon the assessee. ubsequent notices (1) of the Act on 28.06.2022, 05.08.2022, .2022 and 07.11.2022. The Assessing Officer then finally issued a show cause notice dated 07.12.2022 which was partly complied by the assessee. On verification of the assessment records, the Assessing Officer found that as per the form No. 26AS commission income u/s 194H of was deducted by M/s Samdani interest income of from Punjab National Bank. trade receivable of as against the sales done of Printed from counselvise.com Rs.1,23,94,880/-. The Assessing Officer accordingly asked the assessee regarding variation of Rs.13,66,413/ receivable added during the reported in profit and loss account. submissions, but however the Assessing Officer did not consider the submission of the assessee and made addition of Rs.58,60,583/ for three additions as unde Sr. No. 1 Commission Income as undisclosed business income 2 Interest income from Punjab National Bank as Income from other sources 3 Differential amount between opening and closing trade receivable deducting sales amount declared in ITR. Total Additions 3. On further appeal also the Ld. CIT(A) without verifying the claim of the assessee simply sustained the addition made by the AO. 4. Before us, the Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 166. 5. We have heard rival submissions of the parties and perused the relevant materials on record the assessee has claimed that sa commission income of Rs.1,23,95,880/ Samdani Coal Pvt. Ltd. and which sale of services i.e. commission income under the head ‘business M/s Farlin Commodities Pvt. Ltd. ITA No. 5035/MUM/2025 . The Assessing Officer accordingly asked the assessee regarding variation of Rs.13,66,413/- receivable added during the year under consideration and sales reported in profit and loss account. Though the assessee filed but however the Assessing Officer did not consider the submission of the assessee and made addition of Rs.58,60,583/ for three additions as under: Particulars Amounts Commission Income as undisclosed business income Rs. 44,04,037/ Interest income from Punjab National Bank as Income from other sources Rs. 90,133/ Differential amount between opening and closing trade receivable after deducting sales amount declared in ITR. Rs. 13,66,413/ Total Additions Rs. 58,60,583/ On further appeal also the Ld. CIT(A) without verifying the claim of the assessee simply sustained the addition made by the Before us, the Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 166. We have heard rival submissions of the parties and perused the relevant materials on record. Regarding the commission income, the assessee has claimed that said income is already part of the commission income of Rs.1,23,95,880/- received from M/s Samdani Coal Pvt. Ltd. and which has been offered for tax rvices i.e. commission income under the head ‘business M/s Farlin Commodities Pvt. Ltd. 3 ITA No. 5035/MUM/2025 . The Assessing Officer accordingly asked the between trade year under consideration and sales Though the assessee filed but however the Assessing Officer did not consider the submission of the assessee and made addition of Rs.58,60,583/- Amounts Rs. 44,04,037/- Rs. 90,133/- Rs. 13,66,413/- Rs. 58,60,583/- On further appeal also the Ld. CIT(A) without verifying the claim of the assessee simply sustained the addition made by the Before us, the Ld. counsel for the assessee has filed a Paper We have heard rival submissions of the parties and perused . Regarding the commission income, id income is already part of the received from M/s been offered for tax under rvices i.e. commission income under the head ‘business Printed from counselvise.com and profession’. Regarding the interes the assessee submitted that total interest income of Rs. which comprised of interest of Rs.90,133/ tax refund of Rs.2,25,598/ income’ under the head ‘business and profession’ in the Income Return. Regarding the variation loss account and the trade receivable assessee submitted that same was due to the treatment of GST by M/s Samdani Coal Pvt. Ltd. as inclusive of GST, however, whereas the assessee has taken exclusive of the GST. 5.1 Having heard the submission of the opinion that it is a matter of only verification of the commission income appearing in Form No. 26AS with the commission income reported by the assessee in its books of accounts. Similarly, the interest income from PNB is also reported by the assessee the other income and need verification at the Officer. Regarding the issue of variation in sales as compared to the increased in trade receivable also the Assessing Officer need to verify the claim of the assessee rather than outright rejecting. We find that both the authorities have the assessee and rejected the claim of the assessee judicial authorities, t follow principles of natural justice and assessee in the light of documentary evidences M/s Farlin Commodities Pvt. Ltd. ITA No. 5035/MUM/2025 and profession’. Regarding the interest from Punjab National Bank, the assessee submitted that total interest income of Rs. which comprised of interest of Rs.90,133/- from PNB and income 2,25,598/- and same was offered to tax as under the head ‘business and profession’ in the Income Return. Regarding the variation in sales declared in the profit and loss account and the trade receivable added during the year assessee submitted that same was due to the treatment of GST by M/s Samdani Coal Pvt. Ltd. as inclusive of GST, however, whereas the assessee has taken exclusive of the GST. Having heard the submission of the both parties opinion that it is a matter of only verification of the commission aring in Form No. 26AS with the commission income reported by the assessee in its books of accounts. Similarly, the interest income from PNB is also reported by the assessee the other income and need verification at the end of the Assessing cer. Regarding the issue of variation in sales as compared to the increased in trade receivable also the Assessing Officer need to verify the claim of the assessee rather than outright rejecting. We nd that both the authorities have not considered the su the assessee and rejected the claim of the assessee judicial authorities, the Income-tax Authorities are required to follow principles of natural justice and examine the claim of the in the light of documentary evidences. As the ld CIT(A) and M/s Farlin Commodities Pvt. Ltd. 4 ITA No. 5035/MUM/2025 t from Punjab National Bank, the assessee submitted that total interest income of Rs.3,15,731/- from PNB and income- and same was offered to tax as ‘other under the head ‘business and profession’ in the Income-tax sales declared in the profit and added during the year, the assessee submitted that same was due to the treatment of GST by M/s Samdani Coal Pvt. Ltd. as inclusive of GST, however, whereas both parties, we are of the opinion that it is a matter of only verification of the commission aring in Form No. 26AS with the commission income reported by the assessee in its books of accounts. Similarly, the interest income from PNB is also reported by the assessee as part of of the Assessing cer. Regarding the issue of variation in sales as compared to the increased in trade receivable also the Assessing Officer need to verify the claim of the assessee rather than outright rejecting. We not considered the submission of the assessee and rejected the claim of the assessee. As quasi tax Authorities are required to examine the claim of the the ld CIT(A) and Printed from counselvise.com the ld AO has failed to properly , we set aside the orde matter back to the file of the Assessing Officer with the direction to verify the claim of the assessee rela with income-tax return, financial statement of the assessee and then decide in accordance with law. It is needless to mention that assessee shall be afforded adequate opportunity of being heard. of the assessee is allowed for statistical purposes. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on Sd/- (SANDEEP GOSAIN JUDICIAL MEMBER Mumbai; Dated: 20/01/2026 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// M/s Farlin Commodities Pvt. Ltd. ITA No. 5035/MUM/2025 the ld AO has failed to examine the documents of the assessee we set aside the order of the Ld. CIT(A) and restore matter back to the file of the Assessing Officer with the direction to claim of the assessee related to addition under dispute tax return, financial statements and books of accounts of the assessee and then decide in accordance with law. It is needless to mention that assessee shall be afforded adequate opportunity of being heard. Accordingly, the sole ground of appeal of the assessee is allowed for statistical purposes. In the result, the appeal of the assessee is allowed for statistical purposes. ounced in the open Court on 20/01/2026. - Sd/ (SANDEEP GOSAIN) (OM PRAKASH JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai M/s Farlin Commodities Pvt. Ltd. 5 ITA No. 5035/MUM/2025 examine the documents of the assessee r of the Ld. CIT(A) and restore the matter back to the file of the Assessing Officer with the direction to addition under dispute and books of accounts of the assessee and then decide in accordance with law. It is needless to mention that assessee shall be afforded adequate he sole ground of appeal In the result, the appeal of the assessee is allowed for /01/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "