SHREE KRISHNA DEVELOPERS,DHULE V. ITO, WARD 2, DHULE, DHULE

ITA 414/PUN/2024

AI Insights

The case involves Shree Krishna Developers, a partnership firm, appealing against the order of the CIT(A), National Faceless Appeal Centre, Delhi, which confirmed the disallowance of Rs. 67,50,000 towards commission paid for a contract executed. The primary contention was that the commission was a business necessity to obtain a contract from M/s. Shree Krupa Group and Construction, and was paid through banking channels after deducting TDS. The Assessing Officer had initially disallowed the commission expense due to lack of necessary details and its substantial amount relative to contract receipts. The Tribunal, after considering the additional evidence presented, decided to remand the matter back to the Assessing Officer for a thorough examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 36193 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHILPA N C; ADDITIONAL
• Assessee Lawyers: SANKET M JOSHI
• Keywords: Additional evidence; TDS

Judgement Text

"आयकर अपीलीय अधिकरण \"ए\" न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL \"A\" BENCH, PUNE BEFORE Dr. MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.414/PUN/2024 धििाारण वषा / Assessment Year: 2016-2017 Shree Krishna Developers, Hall No. A-5, Second Floor, Garud Complex, Sakri Road, Dhule-424001 Maharashtra PAN-ACHFS7744L Vs. ITO, Ward 2, Dhule अपीलार्थी / Appellant प्रत्यर्थी/Respondent Assessee by: Shri Sanket M Joshi Department by: Ms Shilpa N C, Additional- CIT Date of hearing: 21-01-2025 Date of Pronouncement: 05-03-2025 आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER: This appeal by the assessee pertaining to Assessment Year 2016-17 is directed against the order dated 07.12.2023 passed by CIT(A), National Faceless Appeal Centre, Delhi (NFAC) u/s 250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) which in turn is arising out of the Assessment Order passed u/s.143(3) dated 31.12.2018. 2. The Assessee has raised following grounds of appeal:- 1] The learned CIT(A) erred in confirming the disallowance of Rs. 67,50,000 towards commission paid in relation to contract executed by the appellant on the ground that the appellant was not able to prove the business expediency in making the above commission payment without appreciating that the said disallowance was not justified on facts and in law. 2] The learned CIT(A) failed to appreciate that the impugned payment of Rs.67,50,000 was bound to make the above payment as a condition to obtain the contract work from M/s. Shree Krupa Group and Construction and therefore, there was no reason to disallow the said payment 2 ITA No.414/PUN/2024 which made through banking channel after deducting TDS and which was also offered to tax in hands of the recipients. 3] The learned CIT(A) ought to have appreciated that the payees were third parties and were not in any way related to the appellant u/s 40А(2) ог otherwise, and therefore, the question of making the said payments as part of tax planning device as alleged by A.O. did not arise at all in absence of any material on record to show that the said payments were received back by the appellant. 4] The learned CIT(A) erred in not appreciating that the A.O. could not sit in the armchair of businessman and dictate terms of business to the appellant and once the genuineness of the said payment made through banking channel was proved, then the said payment could not have been disallowed merely by judging the business propriety of the said payment. 5] The appellant craves leave to add/ alter/ amend any of the grounds of appeal. 3. At the outset, Ld. counsel for the assessee referring to the application under rule 46A requesting for admission of additional evidence prayed for restoring the issue on merit to the file of the lower authorities. 4. Facts in brief relating to the issue raised in the instant appeal regarding disallowing of the commission expenditure of Rs. 67,50,000/- is that assessee is a Partnership Firm and in the profit and loss account for A.Y. 2016-17 it has claimed commission expense of Rs. 67,50,000/- paid to nine HUF parties. The Assessing Officer while carrying out the limited scrutiny for A.Y. 2016-17 did not allow the claim of commission expense for want of necessary details and also observing that the commission paid is almost 50% of the contract receipts, Ld. AO added the alleged commission expenditure to the income of assessee against which assessee went in appeal before Ld. CIT(A) but failed to succeed. Now the assessee is in appeal before this Tribunal alongwith placing additional evidence and requesting false setting aside the issue to lower authorities. 5. On the other hand Ld. DR supported the order of lower authorities but did not object to the admission of additional evidence. 3 ITA No.414/PUN/2024 6. We have heard the rival contentions and perused the record placed before us. Issue before us is regarding the claim of genuineness of commission expense of Rs. 67,50,000/- paid to nine HUF which apparently seems to be HUF of relatives of the Partners of assessee firm. 6. However, for the commission service rendered by the nine HUF no details of proof of service rendered by Karta of HUF were given. Even the name of Karta was also not given. The assessee had failed to prove the genuineness of commission expenditure before the lower authorities for want of necessary details. Before us the assessee has filed an application for admission of additional evidence which are placed in the paper book at page No. 1-22 containing the details of Karta of HUF, confirmation letters, agreement dated 15.05.2015 between assessee firm and Narayani Family Members. 7. Since the additional evidence goes to the root cause of the impugned disallowance, under the given facts and circumstances and that the Ld. DR having no objection to the admission of additional evidence, deem it proper to restore the issue on merit about alleged commission expense of Rs. 67,50,000/- to the file of Ld. Jurisdictional Officer to examine the veracity of additional evidence and then decide the issue in accordance with law. Ld. Jurisdictional Assessing Officer shall afford reasonable opportunity of hearing to the assessee. Further the assessee is directed to place necessary details on the date of hearing and should not take unnecessary adjournment unless otherwise required for reasonable clause. Assessee is also directed to ensure that its correct email address and Mobile No. are updated on the Income Tax Website (In case they are changed). Effective grounds of appeal are allowed for statistical purposes. 4 ITA No.414/PUN/2024 8. In the result appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 05th day of March, 2025. Sd/- Sd/- (VINAY BHAMORE) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Pune, Dated :-05th March, 2025. Neeta आदेश की प्रधिधलधप अग्रेधषि / Copy of the Order forwarded to: 1. The Appellant. 2. The Respondent. 3. The CIT, Pune. 4. DR, ITAT, \"A\" Bench, Pune. 5. Guard File. //True Copy// //By Order// Senior Private Secretary आयकर अपीलीय अधिकरण, पुणे / ITAT, Pune. "