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Facts
The assessee, engaged in providing a money transfer platform, filed its return declaring Nil income. The AO made a disallowance of Rs. 2,40,86,813/- under section 40(a)(ia) for TDS defaults on commission and marketing expenses. The CIT(A) upheld this addition.
Held
The Tribunal, considering the assessee's undertaking to provide missing details and the interest of justice, restored the matter to the CIT(A). One more opportunity was granted to the assessee to furnish necessary details, reconciliation, and evidence regarding TDS shortfalls.
Key Issues
Whether the CIT(A) erred in confirming the disallowance under section 40(a)(ia) without affording sufficient opportunity to the assessee to produce evidence.
Sections Cited
250, 40(a)(i), 40(a)(ia), 143(2), 142(1), 143(3), 144B, 194H, 194I, 194C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANTSHRI SANDEEP SINGH KARHAIL
Date of Hearing – 27/11/2025 Date of Order - 28/11/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned order dated 23.05.2025, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the assessment year 2020-21.
In this appeal, the assessee has raised the following revised ground of appeal, which is reproduced as follows: -
“1. The Commissioner of Income Tax (Appeals) – National Faceless Appeal Center, (hereinafter referred to as CIT(A) erred in confirming the addition under section 40(a)(i) of the Income Tax Act 1961 amounting to Rs.2,40,86,813/-.”
The only grievance of the assessee is against the addition made under section 40(a)(ia) of the Act.
We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is engaged in the business of a fast, reliable and convenient platform to transfer money domestically to the beneficiary via an interbank NEFT transaction. For the year under consideration, the assessee filed its return of income on 15.02.2021, declaring a total income of Rs. Nil. The return filed by the assessee was selected for scrutiny, and statutory notices under sections 143(2) and 142(1) were issued and served on the assessee. During the assessment proceedings, it was observed that the assessee had made a TDS default of a sum of Rs. 7,67,47,858/-. The Assessing Officer (“AO”) vide order dated 21.09.2022 passed under section 143(3) read with section 144B of the Act made a disallowance to the extent of 30% amounting to Rs.2,40,86,813/- under section 40(a)(ia) of the Act. In its appeal before the learned CIT(A), the assessee submitted that in respect of the expenses on commission and other marketing and promotional expenses, the amount of TDS which was required to be remitted was Rs.93,43,171/- as against Rs.51,15,366/- remitted by the assessee. Thus, the assessee submitted that there was a shortfall only to the extent of Rs. 42,27,805/- under section 194H of the Act. In the absence of any explanation, reconciliation, or any other supporting document to prove that the TDS shortfall of Rs. 43,03,448/- taken by the AO under section 194H is wrong, the learned CIT(A) upheld the findings of the AO. Further, in respect of TDS default under section 194I and 194C, the learned CIT(A) rejected the contention of the assessee that there was no shortfall in the absence of any explanation, reconciliation or supporting document. Accordingly, for want of cogent evidence, an addition of Rs. 2,40,86,813/- made by the AO under section 40(a)(ia) of the Act was upheld by the learned CIT(A). Being aggrieved, the assessee is in appeal before us.
During the hearing, the learned Authorised Representative submitted that due to failure on the part of the earlier consultant, these details could not be furnished before the learned CIT(A) and undertook to provide all the details in respect of the claim of the assessee, if another opportunity is granted. In this regard, the learned Authorised Representative filed the letter of undertaking as follows: - “ 27th November, 2025 The Hon Members, ‘E’ Bench, Income Tax Appellate Tribunal, Mumbai, M.K. Marg, Mumbai – 400020 Dear Sir, Sub: Letter of Undertaking Ref: ITA 4584/MUM/2025 – Assessment Year 2020-21 – Equity Capital Advisors (India) P. Ltd. We refer to the hearing today of the above referred appeal for our Client M/s. Equity Capital Advisors (India) P. Ltd. As agreed at the hearing today, we hereby confirm to provide the details, reconciliation and evidences to support the claims of our clients before the Commissioner of Income Tax (Appeals). Thanking you Yours Faithfully For Patel Sunil & Associates
Sd/- Sunil H Patel Proprietor”
Having considering the submissions of both sides and perused the material available on record and undertaking given by the learned Authorized Representative, we are of the considered view that in the interest of justice and fair play one more opportunity should be granted to the assessee to furnish necessary details regarding its claim of reduced or Nil short fall of TDS under section 194I / 194C /194H. Accordingly, we restore this matter to the file of the learned CIT(A) on this issue with a direction to the assessee to furnish all the details, reconciliation and evidence in respect of its claim. Consequently, the impugned order is set aside, and the sole ground raised before us is allowed for statistical purposes. Needless to mention, no order shall be passed without affording reasonable and adequate opportunity to the assessee.
In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 28/11/2025