NOTIONAL CHITS & LOANS PVT LTD,THRISSUR V. ITO WARD 1(1), TRICHUR

ITA 853/COCH/2024

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Notional Chits & Loans Pvt. Ltd., engaged in conducting chits in Thrissur District, filed an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, which confirmed the disallowance of a significant portion of commission expenses claimed in their tax return for the Assessment Year 2018-19. The Income Tax Officer (ITO) had initially disallowed the entire commission payment of Rs. 45,16,845, citing lack of evidence that these expenses were for business purposes. The CIT(A) later allowed 10% of the commission, but the majority was still disallowed. The Tribunal, after hearing the Senior Departmental Representative and in the absence of any representation from the appellant, decided to dismiss the appeal, agreeing with the lower authorities' findings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474703 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM ITA No. 853/Coch/2024 Assessment Year: 2018-19 Notional Chits & Loans Pvt. Ltd. .......... Appellant IX/432, Vadanapilly, Thrissur 680614 [PAN: AABCN4095N] vs. Income Tax Officer .......... Respondent Ward - 1(1), Thrissur Appellant by: ------- None ------- Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 05.02.2025 Date of Pronouncement: 19.02.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 06.08.2024 for Assessment Year (AY) 2018-19. 2. Brief facts of the case are that the assessee is a company incorporated under the provisions of Companies Act, 1956. It is engaged in the business of conducting chits in Thrissur District. The return of income for AY 2018-19 was filed declaring total income of Rs. 4,50,625/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-1(1), Thrissur (hereinafter called \"the AO\") vide order dated 05.03.2021 passed u/s. 143(3) r.w.s 2 ITA No. 853/Coch/2024 Notional Chits & Loans Pvt. Ltd. 143(3A) & 143(3B) of the Income Tax Act, 1961 (the Act) at a total income of Rs. 49,67,470/-. While doing so, the AO disallowed the commission payment of Rs. 45,16,845/- for the failure of the assessee to substantiate that the expenditure was occurred for business purposes. On appeal before the CIT(A), the CIT(A) allowed 10% of the expenditure of commission paid of Rs. 4,51,684/- and the balance addition of Rs.40,65,160/- was confirmed. 3. Being aggrieved, the appellant is in appeal before the Tribunal in the present appeal. 4. When the appeal was called on, nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, I proceeded to dispose of the appeal after hearing the learned Sr. DR. 5. The issue in the present appeal relates to allowability of commission expenditure incurred in conducting the chit business. Form the material on record it is clear that the appellant paid commission of Rs. 46,33,370/-. The appellant earned gross commission of Rs.82,07,425/- during the previous year relevant to the assessment year under consideration, against which the appellant had paid a commission of Rs. 46,33,370/-, which is unreasonably high. A perusal of the orders of the lower authorities clearly shows that the appellant had failed to give party- wise details, to whom the commission is paid, etc. and also failed to substantiate the reasonableness of the commission paid. The CIT(A) rightly allowed 10% of the commission expenditure. The order of the CIT(A) is reasonable and speaking one, requires no interference by this Tribunal. 3 ITA No. 853/Coch/2024 Notional Chits & Loans Pvt. Ltd. 6. In the result, the appeal filed by the assessee stands dismissed. 7. Order pronounced in the open court on 19th February, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 19th February, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin "