KRISHNA KRISHNA DESIGN AND MANUFACTURING PRIVATE LIMITED,PUNE vs. INCOME TAX OFFICER WARD 14(1), PUNE

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ITA 1682/PUN/2026Status: DisposedITAT Pune31 July 2026AY 2018-194 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) erred in confirming the AO's action without considering the factual aspects and material evidence. The Tribunal restored the issue to the AO for fresh adjudication.

What were the facts?

The assessee claimed a deduction for bonus/commission paid to employees. The auditor noted this amount was potentially not allowable under Section 36(1)(ii). The Assessing Officer disallowed the amount as the assessee did not provide explanations.

What were the issues?

Whether the CIT(A) erred in confirming the disallowance of bonus/commission without proper verification of evidence and whether the assessee was denied adequate opportunity.

Which sections of the Income-tax Act were involved?

Section 36(1)(ii),Section 44AB,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE

Before: DR. MANISH BORAD & SHRI PAVAN KUMAR GADALE

Hearing: 28.07.2026Pronounced: 31.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE BENCH “A” BEFORE DR. MANISH BORAD, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER I.T.A.No.1682/PUN/2026 (Assessment Year: 2018-19) Krishna Design and ITO, Ward 14(1), manufacturing Pvt. Ltd. 7th floor, Aayakar Flat No. 203, Sadan, Bodhi Tower, Kalpita Apartment, Vs. Decan Gymkhana, 548/2B, Salisbury Pune- 411004 Park, Gultekdi, PAN:- AACCK3993P Pune-411037

अपीलार्थी Appellant प्रत्यर्थी Respondent

For Assessee : Shri Kishor B Phadke.Ld.AR For Revenue : Shri Rajesh Haladkar.Sr.DR

Date of Hearing : 28.07.2026 Date of Pronouncement : 31.07.2026 ORDER PER PAVAN KUMAR GADALE, JUDICIAL MEMBER The assessee has filed the appeal against the order of CIT(A)/NFAC, Delhi passed u/sec144 and u/sec 250 of the Income Tax Act for the Assessment Year 2018-19. The assessee has raised the grounds of appeal challenging the order of the CIT(A) sustaining the disallowance made by the Assessing Officer. 2. The brief facts of the case are that, the assessee is engaged in the business and the assessee has filed the return of income for the A.Y. 2018-19 disclosing a total income of

Rs.69,99,660 on 29.10.2018. Subsequently, the case was selected for scrutiny under E-assessment scheme to verify “the bonus or commission to an employee” The Assessing Officer, on perusal of the audit report under Section 44AB of the Act in form no. 3CD, found that at Sl. No. 20(a) under the clause "Any sum paid to an employee as bonus or commission for services rendered, where such sum was otherwise payable to him as profits or dividend [Section 36(1)(ii)]", an amount of Rs. 6,74,000/- is mentioned. From the above, it is clear that auditor has certified that an amount of Rs. 6,74,000/- is paid to the employees as bonus or commission which was otherwise payable to them as profits or dividend. The said sum as per auditor was not allowable deduction as per provisions of section 36(1)(ii) of the I. T. Act. 3. The A.O. on perusal of the return of income, find the disallowance was certified, by the auditor in the audit report u/s 44AB of the I. T. Act and the assessee should considered while filing the return of income. However, no such disallowance is made in the return of income filed. Accordingly, notice u/sec 142(1) of the 1. T. Act was issued on various dates calling for the details of bonus paid & clarifications and there was no response and also a show cause notice was issued, but there was no compliance. The A.O find that the assessee has not made submissions on the disputed issue in spite of providing adequate opportunities of hearing and finally the A.O considering the information available on record has invoked the provisions of section 144 of the Act and made disallowance of Rs.6,74,000/- u/sec36(1)(ii) of the Act and assessed the total income of Rs.76,73,660/-and passed the order u/sec144 rws143(3A) r.w.s 144(3B) of the Act dated 05.03.2021

4.

Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas the CIT(A) has considered grounds of appeal, statements of facts, submissions, finding of the Ld.AO, but sustained the order of the A.O and dismissed the assessee appeal. Aggrieved by the order of the CIT(A), the assessee has filed the appeal before the Hon'ble Tribunal. 5. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in confirming the action of the AO overlooking the information of filed in the proceedings on claim u/sec36(1)(ii) of the Act. Further the Ld.AR mentioned that the assessee has a good case on merits and shall substantiate with material evidences and prayed for an opportunity before the Lower authorities and relied on the factual paperbook. Per contra, the Ld.DR supported the order of CIT(A). 6. We heard the rival submissions and perused the material on record. The sole crux of the disputed issues envisaged by the Ld AR that the CIT(A) has erred in confirming the action of the assessing officer overlooking material facts. The CIT(A) has erred in not considering the factual aspects of list of bonus payments and bank statements The Ld.AR explained that the assessee has substantiated with the material evidences on the claims but was overlooked and prayed for opportunity to authorities. Accordingly, we explain before the lower considering the facts, circumstances and submissions set-aside the order of the CIT(A) on the disputed issue and to meet the ends of justice, we restore the disputed issues to the file of the Assessing Officer to verify and adjudicate afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. And, we allow

the grounds of appeal of the assessee for statistical purposes.

7.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open Court on 31th July 2026. MANISH BORAD PAVAN KUMAR GADALE (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Pune, Dated: 31st July 2026 Abhishek Mohan Digitally signed by Abhishek Abhishek Mohan Mohan Date: 2026.08.03 12:03:58 +05'30' आदेश की प्रतितिति अग्रेतिि / Copy of the Order forwarded to : अिीिार्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The Pr. CIT concerned. 4. तिभागीय प्रतितिति, आयकर अिीिीय अतिकरण, “A” बेंच, पुणे/ DR, ITAT, “A” Bench, Pune. गार्डफ़ाइि / Guard File. 5. ////

आदेशािुसार / BY ORDER,

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