2023 (5) TMI 683 - AT - Income Tax

Enhancement of income by CIT-A - claim made in the revised return rejected - amount claimed as deduction having been paid as brokerage denied on the ground that the revised return is nonest and invalid - addition made by the Ld. CIT(A) challenged on the ground that this addition being not part of the assessment order has been made without issuing any notice of enhancement to the assessee and that the assessee has paid the amount to M/s. Alliance Intermediaries Network Pvt. Ltd. on account of commission through banking channel and that one of the directors of that company has admitted the receipt of said commission amount which is liable to be allowed as deductable expenses - whether the claim of the assessee made in the revised return has rightly been considered by the Ld. CIT(A) without having any findings on it returned by the AO? - second round of litigation - HELD THAT - We are of the considered view that when factual aspect qua claim made by the assessee has not been examined by the AO the Ld. CIT(A) without issuing notice to the assessee or without calling any remand report from the AO could not have decided the same. A.Rs for the parties to the appeal have unanimously contended that in such circumstances to decide the issue once for all the issue should be remitted back to the AO to decide the claim of the assessee afresh after providing opportunity of being heard by considering the revised return as a valid one. However, rest of the addition made by the AO and confirmed by the Ld. CIT(A) are not to be disturbed. In view of what has been discussed above, impugned order passed by the Ld. CIT(A) is hereby set aside to the extent of addition claimed as deduction by the assessee and case is remitted back to the AO to decide afresh to that extent in view of the findings returned hereinabove - Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues involved:
The issues involved in the judgment include the validity of the order passed by the Commissioner of Income Tax (Appeals), Mumbai, regarding disallowance of a commission payment, the treatment of revised income returns, and the addition of a commission payment to M/s. Alliance Intermediaries & Network Pvt. Ltd.

Validity of CIT(A) Order:
The appellant sought to set aside the order passed by the Commissioner of Income Tax (Appeals) on the grounds that it was bad in law and against the principles of natural justice. The appellant argued that the order was based on surmises and unnatural assumptions. The appellant also contended that the CIT(A) erred in disallowing the payment of commission to M/s. Alliance Intermediaries & Network Pvt. Ltd. and in confirming the addition of the commission paid. The appellant presented evidence, including account payee cheques and an affidavit, to support the deduction of the commission payment.

Assessment Proceedings and Tribunal Decision:
The assessment proceedings involved a survey action resulting in additional income declared by the assessee. The Assessing Officer (AO) framed the assessment, which was challenged before the CIT(A) and subsequently the Tribunal. The Tribunal directed the AO to make a fresh assessment after providing an opportunity for cross-examination. The AO then passed an order assessing the total income. The CIT(A) partly allowed the appeal, leading to the present appeal before the Tribunal.

CIT(A) Decision and Tribunal Ruling:
The CIT(A) partly allowed the appeal, considering the revised return filed by the assessee and making adjustments to the assessed income. The Tribunal heard arguments from both parties and reviewed the orders of the lower revenue authorities. The CIT(A) was found to have made an enhancement without issuing a notice to the assessee, specifically regarding the addition of a commission payment. The Tribunal set aside the CIT(A) order on this particular issue and remitted it back to the AO for fresh assessment.

In conclusion, the Tribunal allowed the appeal for statistical purposes, setting aside the CIT(A) order regarding the addition of a commission payment and remitting the issue back to the AO for further consideration.