2022 (3) TMI 878 - AT - Income Tax

Addition on account of payment of commission - Assessee has shown expenditure on account of commission paid to various agents - assessee could not produce any concrete evidence against the said payment - addition made by the A.O ex parte of assessee - HELD THAT - On perusal of statement of facts filed along with form No. 35, we note that the assessee pleaded before the CIT(A) that all the payments on account of commission were made through account payee cheques and also pleaded that the assessee is ready to produce such evidence whenever opportunity comes for the same. Therefore, it is clear that the assessee is ready to produce evidence in support of the contention regarding payment of commission and there was no opportunity for him in the first appellate proceedings. Admittedly, the CIT(A) did not dispose of the appeal on merits, but however, he disposed of the case as discussed above, ex parte of assessee. Under sub-section (6) of section 250, the CIT(A) is expected to decide the appeal with reasons determining the points thereon. As we noted above, the appeal was disposed of by the CIT(A) ex parte of assessee. We therefore, deem it proper to remand the matter to the file of the CIT(A) and the assessee is at liberty to file evidence, if any, in support of his claim. Thus, the only ground raised by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Justification of addition made on account of payment of commission in the absence of the assessee.

Analysis:
The appeal was filed by the assessee against the order passed by the CIT(A)-6, Pune for the assessment year 2012-13. The primary issue to be decided was whether the CIT(A) was correct in confirming the addition made on account of payment of commission in the absence of the assessee. The assessee, an individual engaged in agricultural and trading business, had declared a total income of ?1,35,74,303. However, during scrutiny assessment, the Assessing Officer (A.O) determined the income at ?1,56,61,536, including an addition on account of payment of commission. The A.O asked the assessee to provide evidence to justify the commission payment of ?19,90,000. Despite notices for hearing, the assessee did not appear before the CIT(A), leading to the appeal being disposed of ex parte.

Upon review, it was noted that the assessee had claimed all commission payments were made through account payee cheques and was willing to provide evidence when given the opportunity. The CIT(A) did not decide the appeal on merits but upheld the addition made by the A.O. The Income Tax Appellate Tribunal (ITAT) found it appropriate to remand the matter back to the CIT(A) for the assessee to submit evidence in support of the commission payments. The ITAT allowed the ground raised by the assessee for statistical purposes, ultimately allowing the appeal on those grounds.

In conclusion, the ITAT decision focused on the lack of representation by the assessee during the proceedings, the willingness of the assessee to provide evidence supporting the commission payments, and the failure of the CIT(A) to decide the appeal on merits. The matter was remanded back to the CIT(A) for further consideration based on the evidence the assessee might provide, and the appeal was allowed for statistical purposes.