2023 (5) TMI 831 - AT - Income Tax

Disallowance being commission paid - allowable business expenditure or not? - CIT(A) dismissed the appeal of the assessee primarily holding that the communication sent from the office of the first appellate authority for furnishing the written submission were not complied by the assessee and the assessee has not provided any evidence to substantiate his grounds of appeal before him - HELD THAT - The assessee had made enquiries and ascertained that majority of the parties had moved their residences and present residing in places other than the addresses as provided to the A.O. during the assessment year 2016-2017, along with the details of the bank statements, TDS details etc. The assessee had filed confirmations from all the recipients of the commission payment with new addresses and the same are placed on record. The assessee has also made TDS deduction with respect to the commission payment made by him. The bank statements are also provided. Since the first appellate authority s order is an ex parte order, in the interest of justice and equity, we are of the view that one more opportunity ought to be provided to the assessee to prove that commission payments as genuine payment and necessary expenditure for the purpose of his business. Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
The judgment addresses the issue of disallowance of commission paid by the assessee, focusing on the justification of the CIT(A) in confirming the disallowance.

Summary:

Issue 1: Disallowance of Commission Paid
The case involved the disallowance of Rs.93,53,500 being commission paid by the assessee, who is a proprietor of a business dealing in medical equipment. The Assessing Officer disallowed the commission as the assessee failed to produce documentary evidence supporting the services rendered by the commission agents. The CIT(A) affirmed this disallowance, citing non-compliance by the assessee in providing evidence. The Tribunal noted that the assessee had submitted written submissions and documents supporting the commission payments, but the CIT(A) did not consider them. As the assessee had provided confirmations from commission recipients with new addresses, the Tribunal directed a fresh examination by the Assessing Officer, allowing the assessee another opportunity to prove the genuineness of the commission payments.

This judgment highlights the importance of providing documentary evidence to support business expenditures and the need for authorities to consider all relevant submissions before making decisions. The Tribunal's decision to grant the assessee another chance to substantiate the commission payments emphasizes the principles of justice and fairness in tax assessments.