SRI SHYAMBABA ELECTRONIC PVT LTD,HYDERABAD V. DCIT., CIRCLE-3(1), HYDERABAD

ITA 453/HYD/2024

AI Insights

The case involves Sri Shyambaba Electronic Pvt. Ltd., which appealed against the order of the CIT(A)-National Faceless Appeal Centre, Delhi, concerning the assessment year 2021-2022. The primary contention was the disallowance of various expenses including commission payments, bogus purchases, and credit card payments totaling significant amounts. The assessee argued that the CIT(A) had not adequately addressed the disallowance of purchases in their appeal, which was crucial as it affected the disallowances of related expenses. The Tribunal found that the CIT(A) had indeed overlooked this issue and thus remanded the case for a thorough examination of the evidence provided by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779931 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2021-2022
• Appeal Filed On: 26-04-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A SRINIVAS
• Keywords: Opportunity of being heard; Business expenditure; Corroborative evidences; Bogus purchase; TDS; Bogus
• Section: 133(6)

Judgement Text

"आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad Įी ͪवजय पाल राव, उपाÚ य¢ एवं Įी मधुसूदन सावͫडया, लेखा सदè य क े सम¢ । BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA No.453/Hyd/2024 िनधाŊरण वषŊ/Assessment Year 2021-2022 Sri Shyambaba Electronic Pvt. Ltd., Hyderabad. PIN – 500 012. Telangana. PAN AAXCS1651F vs. The DCIT, Circle-3(1), Hyderabad. (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: CA A Srinivas राज̾ व Ȫारा/Revenue by:: Dr. Sachin Kumar, Sr. AR सुनवाई की तारीख/Date of hearing: 07.10.2025 घोषणा की तारीख/Pronouncement: 15.10.2025 आदेश/ORDER PER VIJAY PAL RAO, VICE PRESIDENT : This appeal by the assessee is directed against the Order dated 11.03.2024 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2021-2022. Printed from counselvise.com 2 ITA.No.453/Hyd./2024 2. The assessee has raised the following grounds in the instant appeal : 1. “The order of the Appellate Commissioner is contrary to law, facts and circumstances of the case. 2. The Appellate Commissioner erred in confirming the disallowance of Rs.46,15,226, made on account of commission payments 3. The Appellate Commissioner erred in confirming the disallowance of Rs.2,46,88,135/-on account of bogus purchases. 4. The Appellate Commissioner erred in confirming in disallowance of Rs.77,86,411/-on account of payments made by credit cards 5. The Appellate Commissioner erred by dismissing the ground of Assessee that adequate opportunity was not provided to the Assessee. 6. Any other grounds which the Assessee may urge either before or at the time of the hearing.” 3. At the time of hearing, learned Authorised Representative of the assessee has submitted that the Assessing Officer while framing the assessment u/sec.143(3) r.w.s.144B of the Income Tax Act, 1961 [in short \"the Act\"] made various additions on account of disallowance of commission payment, purchases, donation and credit card payments. The assessee challenged the Printed from counselvise.com 3 ITA.No.453/Hyd./2024 action of the Assessing Officer before the learned CIT(A) and raised various grounds. However, in ground no.2 before the learned CIT(A), the assessee has raised a specific issue of disallowance made by the Assessing Officer on account of purchases, but, the amount of disallowance is inadvertently mentioned as same of disallowance of commission expenses. The learned CIT(A) has not adjudicated this ground no.2 raised by the assessee regarding disallowance of purchases made by the Assessing Officer to the tune of Rs.2,46,88,135/- and decided only the ground no.1 on the issue of disallowance of commission payment. He has referred to para 8.1.1 of the learned CIT(A) and submitted that the learned CIT(A) has not adjudicated this issue of disallowance of purchases raised in ground no.2 before the learned CIT(A). Thus, he has submitted that due to the mistake in mentioning the amount of disallowance of the purchases, the learned CIT(A) has not adjudicated this issue raised in ground no.2 of the appeal. He has thus, contended that the assessee filed the entire relevant record in support of the claim of purchases as well as other claims of Printed from counselvise.com 4 ITA.No.453/Hyd./2024 commission payment and credit card payments, but, the learned CIT(A) has not adjudicated the main issue of claim of purchases and consequently, the other two disallowances made by the Assessing Officer are consequent to the issue of purchases. He has pointed-out that the commission payment is directly related to the purchases and similarly, the credit card payments are also made towards purchases. Thus, the other two issues are depending upon the outcome of the issue of disallowance made by the Assessing Officer on account of purchases. He has thus submitted that the matter may be remanded to the record of the Assessing Officer to consider the relevant supporting evidences filed by the assessee in three volumes of the paper book running about 560 pages which requires to be verified and examined. 4. The Learned DR for the Revenue, on the other hand, has fairly submitted that the voluminous record filed by the assessee needs to be verified and examined at the level of the Assessing Officer and, therefore, the matter may Printed from counselvise.com 5 ITA.No.453/Hyd./2024 be remanded to the record of the Assessing Officer for proper verification and examination of the relevant record. 5. We have considered the rival submissions as well as the relevant material on record. The assessee is a Private Limited Company engaged in the business of trading of mobile phones, mobile accessories and electronic goods. The assessee filed its return of income for the year under consideration on 17.01.2022 declaring total income of Rs.76,20,250/-. The assessment was completed on 23.12.2022 u/sec.143(3) r.w.s.144B of the Income Tax Act, 1961 [in short \"the Act\"] whereby the Assessing Officer has made various disallowances including the disallowance on account of commission payment, disallowance of purchases, and disallowance of credit card payments, the details of which are given in para-6 of the assessment order as under: Sl.No. Description Amount in Rs. Amount in Rs. Income as per the Return of income filed/Income as computed u/s 143(1)(a) 76,20,250 Variations made 1. Variation in respect of issue discussed in para 4.1 46,15,226 Printed from counselvise.com 6 ITA.No.453/Hyd./2024 2. Variation in respect of issue discussed in para 4.2 2,46,88,135 3. Variation in respect of issue discussed in para 4.3 50% of the donation (Rs.25,500/-) is considered in Chapter-VIA 51,000 4. Variation in respect of issue discussed in para 4.4 77,86,411 Total of variations made 3,71,40,772 Total income determined as per the above proposal. 4,47,61,022 5.1. Thus, the Assessing Officer made three disallowances in respect of the expenditure incurred by the assessee for purchase commission paid and credit card payment which was challenged by the assessee before the learned CIT(A) by raising the grounds as under : 1. “That on the facts and circumstances of the case the order of Learned. AO is bad in law and the A.O has erred in disallowing entire commission expenses of Rs.45,15,226/- 2. That on the facts and circumstances of the case the order of Learned. A.O is bad in law and the A. O has erred in disallowing Purchases of Rs.45,15,226/- 3. That on the facts and circumstances of the case the order of Learned. A.O is bad in law and the A.O has erred in disallowing the payments for business expenditure of Rs.77,86,411/-made through credit card. 4. That the Learned A.O. has erred on facts and in law in completing the assessment on the basis of assumptions and surmises and totally ignoring the facts in case. Printed from counselvise.com 7 ITA.No.453/Hyd./2024 5. That the Learned A.O, has erred in passing the order without providing sufficient opportunity of being heard as well as opportunity of cross examining the persons those who have not submitted responses to the notices issued u/s 133(6) of the Income Tax Act, 1961. 6. That the appellant craves leave to add/alter any/all grounds of appeal before or at the time of hearing.” 5.2. As it is manifest from these grounds raised by the assessee that the amount of disallowance on account of commission expenses as well as on account of purchases was mentioned in the ground nos.1 and 2 is identical. Therefore, there is an apparent mistake in these grounds as the disallowance for purchases was made by the Assessing Officer to the tune of Rs.2,46,88,135/-, but, mistakenly the assessee has stated in the ground no.2 the said amount as Rs.45,15,226/- which is in fact disallowances made by the Assessing Officer on account of commission expenses. The learned CIT(A) has not adjudicated this ground no.2 of the assessee’s appeal and has decided only the ground no.1 and ground no.3 while passing the impugned order. It is pertinent to note that the learned CIT(A) has reproduced the submissions of the assessee from pages 10 to 23 of the impugned order wherein the assessee has specifically Printed from counselvise.com 8 ITA.No.453/Hyd./2024 mentioned the correct amount of disallowance made by the Assessing Officer on account of purchases giving all the details at pages 17 and 18 as under : “(b) Ground of Appeal : Addition of Rs.2,46,88,135/- on account of alleged ingenuine purchases. Our Submission: The appellant Sri Shyambaba electronics Pvt Ltd. have made purchases from the following mentioned parties as under : Printed from counselvise.com 9 ITA.No.453/Hyd./2024 5.3. Apart from giving the correct details and amount of disallowance, the assessee has also submitted the detailed arguments before the learned CIT(A) against ground no.2 in respect of disallowance of purchases. However, the learned CIT(A) has decided only ground no.1 in para-8.1.1 and 8.1.2 as under : “8.1.1. The AO, after examining the submissions of the assessee was of the view that from the above commission invoices, it was noticed that all the invoices were prepared with same serial number 1 and on the same date i.e 31-03-2021 and no signature. Also, no details of sales on which the commission was paid/ accrued and the details of delivery note etc. were mentioned. Also, said commission payments were not subjected to GST as well. Further, on verification of bank accounts of the assessee it was noticed, that the payments were made well before the date of invoice ie. 31-03-2021 and no payment was made to S.No. 1 (Rajamalla Abhishek) and 6 (Srikantha). Further on verification of the information available with the department, out of these 6 parties, Rajamalla Abhishek, Srikantha and Irshad had not filed their return of income. Thus, the AO was of the view that the assessee had failed to establish that the payment of commissions was incurred wholly and exclusively for the purposes of business. Accordingly, the commission expenditure Rs.46,15,226/- was disallowed by the AO as proposed in the show cause notice. 8.2. It is therefore, clear that the assessee had failed to establish the genuineness of expenses of commission expenditure Printed from counselvise.com 10 ITA.No.453/Hyd./2024 and failed to explain on what account commission had been paid and as to how the assessee's business had benefitted by paying the commission. Merely proving the payment and making the TDS, the payment does not become genuine. The assessee has to establish that it was incurred for the purpose of the business of the assessee. By not doing so the assessee cannot debit the amounts in the P&L account. Therefore the disallowance of commission expenditure Rs.46,15,226/-made by the AO is confirmed. Hence, the grounds of appeal No. 1 & 2 are Dismissed.” 5.4. Thus, the only issue as involved in ground no.1 was decided by the learned CIT(A), whereas in the conclusion it is stated that the grounds of appeal nos.1 and 2 are dismissed. Therefore, it is apparent from the impugned order that the learned CIT(A) has not adjudicated the issue raised by the assessee in ground no.2. Since the assessee has filed voluminous supporting evidences running into about 560 pages and the learned CIT(A) has not adjudicated the main issue of genuineness of the purchases of the assessee, then, in the facts and circumstances of the case and in the interest of justice, the impugned order of the learned CIT(A) is set-aside and the matter is remanded to the record Assessing Officer for proper verification and Printed from counselvise.com 11 ITA.No.453/Hyd./2024 examination of the relevant record filed by the assessee and then, adjudicate these issues as raised in the appeal as per law. Needless to say, the assessee be given reasonable opportunity of hearing before passing the fresh order. 6. In the result, appeal of the Assessee is allowed for statistical purposes. Order pronounced in the open Court on 15th October, 2025. Sd/- Sd/- [MADHUSUDAN SAWDIA] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 15th October, 2025 VBP Copy to : 1. Sri Shyambaba Electronic Pvt. Ltd., 15-7-260/E, Osmania Hospital Road, Muslim Jung Bridge, Begum Bazaar, Hyderabad – 500 012. Telangana. 2. The DCIT, Circle-3(1), Signature Towers, 10th Floor, Opp. Botanical Gardens, Kothaguda, Kondapur, Hyderabad – 500 084. Hyderabad. 3. Pr. CIT, Hyderabad. 4. DR, ITAT “B” Bench, Hyderabad. 5. Guard file. BY ORDER, //True copy// Printed from counselvise.com "