2016 (11) TMI 1623 - AT - Income Tax

Disallowance of commission expenses - assessee argued that the assessee wanted to adduce the additional evidence in support of his claim, therefore, the assessee should be allowed to produce the evidence before the AO in the interest of justice - HELD THAT - No doubt these documents were not produced before the AO as well as before the CIT(A). But these documents seems relevant to decide the matter of controversy and to achieve the target of justice, therefore, in view of the said circumstances we allowed the additional evidence and direct the AO to consider the claim of the assessee accordingly by giving an opportunity of being heard to the assessee in accordance with law. Accordingly, the finding of the CIT(A) on this issue has been ordered to be set aside and issue is directed to be restored to the file of AO to decide the matter a fresh in view of the above said observations and in accordance with law.- Appeal filed by the assessee allowed for statistical purpose.

Summary

Issues:
1. Disallowance of commission expenses amounting to ?1,47,45,000.

Analysis:

Issue NO.1:
The appeal was against the disallowance of commission expenses by the Commissioner of Income Tax (Appeals) relevant to the A.Y. 2008-09. The Assessing Officer and CIT(A) had declined the claim of commission expenses, stating that no middleman was permitted for transactions with government organizations and public sectors. The assessee sought to produce additional evidence in the form of confirmations from Denetto International and related documents to support the claim. Although these documents were not presented before the lower authorities, the Tribunal allowed the additional evidence. The Tribunal directed the Assessing Officer to reconsider the claim in light of the new evidence and provide the assessee with a hearing opportunity. Consequently, the findings of the CIT(A) were set aside, and the issue was remanded to the Assessing Officer for fresh consideration in accordance with the law. The appeal by the assessee was allowed for statistical purposes.

This judgment highlights the importance of allowing additional evidence to ensure justice and fairness in tax assessments. It also underscores the need for proper documentation to substantiate expense claims and the right of the assessee to present relevant evidence even at later stages of the proceedings.