TUKARAM GENU JADHAV,MUMBAI vs. THE INCOME TAX OFFICER FACELESS ASSESSMENT UNIT, ASSESSMENT UNIT

This appeal filed by the assessee is directed against the order dated 05.03.2026 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“CIT(A)”], for the assessment year 2020-21. The impugned appellate order arises from the assessment order dated 21.09.2022 passed under section 143(3) read with section 144B of the Income-tax Act, 1961 (“the Act”).

The assessee has raised the following grounds of appeal:

Brief facts of the case are that the assessee is an individual carrying on business as a Direct Sales Agent and commission agent under the proprietary concern, M/s Lata Enterprises. The assessee filed his return of income on 28.12.2020 declaring total income of Rs.5,79,170/-. During the year, the assessee had shown turnover of Rs.59.99 lakh and claimed commission expenditure of Rs.39,51,444/-. The Assessing Officer required the assessee to furnish documentary evidence in support of the

The learned CIT(A) observed that the payments were reflected in the bank account, but the assessee had not established the business nexus between the payments and the services allegedly rendered by the recipients. According to the learned CIT(A), the assessee had neither explained its business model nor furnished agreements, rate of commission, nature of services rendered, proof of business generated through the agents or evidence of deduction of tax at source. The learned CIT(A), therefore, upheld the disallowance and dismissed the appeal.

The learned Authorised Representative submitted that the assessee is engaged in the business of a Direct Sales Agent and receives commission from banks. For procuring business, the assessee engages other agents and pays commission to them through banking channels. It was submitted that the relevant bank statements, commission vouchers, DSA documents and other supporting evidence were furnished before the authorities below. The authorities below, however, did not properly appreciate the documents or the manner in which the assessee’s business was conducted. The learned Authorised Representative, therefore, prayed that the disallowance be deleted. Alternatively, it was submitted that the assessee may be granted an opportunity to furnish complete evidence before the jurisdictional Assessing Officer.

The learned Departmental Representative supported the orders of the authorities below. He submitted that mere payment through banking channels does not establish that the expenditure was incurred wholly and exclusively for the purposes of business. The assessee had failed to furnish evidence regarding the services rendered by the alleged recipients, the basis for determining the commission and the corresponding business generated by them. He, therefore, submitted that the learned CIT(A) was justified in sustaining the disallowance.

We have heard the rival submissions and perused the material available on record. The assessee has claimed that all the relevant documents had been furnished before the authorities below. However, from the orders passed by the authorities below, we find that the respective orders were passed, more or less, in the absence of complete details and supporting evidence concerning the commission expenditure.

The assessee is engaged in the business of a Direct Sales Agent and commission agent. The claim of commission expenditure can be examined properly only after considering the assessee’s business model, the identity of the recipients, the nature of services rendered by them, the basis and rate of commission, the payments made through banking channels and the corresponding business generated through such agents. These aspects have not been verified with reference to complete supporting evidence.

Though we are not inclined to enter into the controversy regarding the alleged filing or non-consideration of the documents at this stage, for a just and proper decision of the case and in the interest of substantial justice, we consider it appropriate to restore the issue to the file of the jurisdictional Assessing Officer for fresh verification.

Accordingly, the impugned order of the learned CIT(A) on this issue is set aside and the matter is restored to the file of the jurisdictional Assessing Officer. The Assessing Officer shall examine the relevant documents and decide the allowability of the commission expenditure in accordance with law after granting a reasonable opportunity of being heard to the assessee. It is clarified that the remand is only for verification of the assessee’s claim on the basis of the relevant material and not for conducting any roving enquiry.

The assessee is directed to furnish before the jurisdictional Assessing Officer all the relevant documents, complete details of the commission recipients and a proper explanation of the modus operandi of its business model, as and when called upon, without delay or default. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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

Order pronounced in the open court on 29/07/2026.