RAJNISH KUMAR JATWANI,CHANDIGARH vs. ITO, WARD 2(1), CHANDIGARH

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ITA 1688/CHANDI/2025Status: DisposedITAT Chandigarh01 September 2026AY 2018-194 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the AO's addition was not sustainable as the assessee had offered gross commission income as business income and claimed business expenditure against it. The genuineness of the expenditure was not doubted, and the AO's reasoning that deductions should be reflected by the paying entities was illogical.

What were the facts?

The Assessing Officer (AO) added Rs. 7,04,628 to the assessee's income, alleging a shortfall in commission income based on a comparison with Form 26AS. The AO's reasoning was that deductions claimed by the assessee were not reflected in the ledgers of the two entities from which commission was received.

What were the issues?

Whether the AO can add commission income based on a discrepancy in deductions not reflected by the payer entities, when the expenditure claimed by the assessee is not doubted.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH

Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI RAJESH DAMODARLAL SHARMA, JM

आदेश / O R D E R MANOJ KUMAR AGGARWAL (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2018-19 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 16.09.2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) r.w.s. 144B of the Act on 19.04.2021. The registry has noted delay of 11 days in this appeal which stands condoned. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.

2.

During assessment proceedings, Ld. AO noted that the assessee reflected commission income from two entities. The data received from these two entities was compared with the commission as reflected in Form 26AS. The same was extracted as under: - Amount (In Rs.) No. Name of the Party Amount of Gross Commission expenses Amount Net Commission Commission claimed on account of Written-off as Income as shown Income as shown deduction as claimed claimed by the by the assessee by the assessee by the assessee assessee 1. Omaxe Chandigarh 23,75,237/- 10,42,250/- 6,00,000/- 7,32,987/- Extension Developers (P) Ltd. 2. Bhanu Infrabuild (P) 3,76,222/- 3,59,865/- 1,50,996/- -1,34,639/- Ltd. Total 5,98,348/- The commission paid by these two entities, as per Form 26AS was Rs.9,75,826/- and Rs.3,27,150/- respectively which aggregated to Rs.13,02,976/-. The Ld. AO accordingly alleged that the assessee reflected short commission to the extent of Rs.7,04,628/- (Rs.13,02,976/- Less Rs.5,98,348/-). The said shortfall was added to assessee’s income. The assessee claimed collection expenses of Rs.84,000/- from income from other sources which were disallowed. The assessee paid interest and penalty on GST for Rs.26,710/- which was also disallowed. The Ld. CIT(A) confirmed the assessment against which the assessee is in further appeal before us. 3. Upon perusal of assessee’s financial statements, it could be seen that the assessee has offered commission income of Rs.31,87,713/- which include commission income of Rs.23,75,237/- & Rs.3,76,222/- from these two entities. There are deductions and write-off from the

said claim. The commission expenses has been paid by the assessee for Rs.18,02,115/- and amounts written-off are claimed for Rs.7,72,877/-. The only reasoning of Ld. AO to make the impugned addition of Rs.7,04,628/- is the fact that said deductions have not been reflected in the ledgers of these two entities. However, the gross commission income has been offered as ‘business income’ against which the assessee has claimed business expenditure. The said expense claim has not been doubted by Ld. AO rather the addition has been made merely on the ground that these deductions are not reflected by these two entities overlooking the fact that the deductions are claimed as business expenditure which may not be reflected by these two entities in their respective ledgers. The assessee has to compute its income as per statutory provisions and the assessee is entitled to claim all permissible business expenditure. When no doubt has been expressed on genuineness of expenditure, the addition so made by Ld. AO could not be sustained. The reasoning of Ld. AO is not found to be logical one. Therefore, the addition of Rs.7,04,628/- stand deleted. The other two additions do not call for any interference on our part. 4. The appeal stand partly allowed. Order pronounced on 01st September, 2026 -Sd- -Sd- (RAJESH DAMODARLAL SHARMA) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AS Dated: 01-09-2026

आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KENDRIYA SADAN, SECTOR – 9A CHANDIGARH

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