P.N. VISWANATHAN,NAMAKKAL vs. ACIT,, ERODE

Since identical facts and issues are involved in both appeals, these appeals were heard together and disposed of vide this common order. For the sake of clarity and convenience the facts relevant in ITA No.1027/CHNY/2026 i.e.Quantum Appeal for the Assessment Year 2015-16 are stated herein:

The Assessee raised the following grounds of appeal : “1. The Order of the Commissioner of Income Tax(Appeals) NFAC in so far as it is against the assessee is contrary to law, erroneous and unsustainable on the facts of the case.

Briefly, the facts of the case are that the appellant is a HUF engaged in the business of distribution. The appellant had not filed the Return of Income u/s.139 of the Act for the Assessment Year 2015-16. However, based on the information that the appellant was in receipt of income in the nature of commission or brokerage of Rs.37,65,564/-, the Assessing Officer formed an opinion that income got escaped assessment from tax. Accordingly, a notice u/s.148 of the Act was issued on 29.03.2021. In response to notice u/s.148 of the Act, the appellant Return of Income for the Assessment Year 2015-16 declaring NIL income. Against the said Return of Income, the assessment was completed by e- Assessment Unit of the Department (hereinafter called ‘AO’) vide order dated 27.03.2022 passed u/s. 147 r.w.s 144B of the Act at a total income of Rs.37,65,564/-. While doing so, the Assessing Officer made addition of commission or brokerage income earned from M/s.Aircel Ltd, on which TDS was had deducted tax at source of Rs.3,76,578/- rejecting contention of the submission of the appellant that the appellant had not earned any income from M/s.Aircel Ltd during the previous year relevant to assessment year under consideration and merely because M/s.Aircel Ltd had deducted TDS does not mean that income had accrued to the appellant.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A), who vide impugned order confirmed the action of the Assessing Officer by holding that the addition was made by the Assessing Officer was based on the information contained in Form 26AS and the appellant had failed to produce confirmation from Aircel Ltd.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. The ld.Counsel submits that during the previous year relevant to assessment year under consideration 2015-16, the appellant had not earned any income in the nature of commission or brokerage from M/s.Aircel Ltd merely because M/s.Aircel Ltd had deducted TDS and based on the information contained in Form 26AS, no addition can be made. He further submits that merely because M/s.Aircel Ltd had not responded to the notice issued u/s.133(6) of the Act issued by the Assessing Officer, does not lead to conclusion that the transaction is genuine. He further submits that the drawing our attention to the copies of statements of bank account held by the assessee, that there was no money received from the M/s.Aircel Ltd during the previous year relevant to assessment year under consideration 2015-16.

On the other hand, learned Sr.DR submits that the appellant had failed to submit the confirmation letter from M/s.Aircel Ltd, therefore, in the absence of any confirmation from M/s.Aircel Ltd, the ld.CIT(A) had rightly sustained addition made by the Assessing Officer.

We heard rival submissions and perused the material available on record. The solitary issue that arises for our consideration is whether the ld.CIT(A) was justified in sustaining addition of Rs.37,65,564/-. On mere perusal of the assessment order, it would be evident that the Assessing Officer made addition based on the information that M/s.Aircel Ltd deducted TDS of Rs.3,76,578/- on payment of income in the nature of commission or brokerage. The appellant had denied receipt of any income from M/s.Aircel Ltd during the previous year relevant to assessment year under consideration. 2015-16. In support of it, he also produced the copies of statement of bank account held by him. However, the Assessing Officer merely made addition for the reason that the M/s.Aircel Ltd had not responded to the notices issued u/s.133(6) of the Act issued by the Assessing Officer. It is settled position of law that mere deduction of tax at source by the payer does not lead to the conclusion that income had accrued in hands of payee. The TDS provisions are only tentative provisions for recovery of the tax liability. Merely because the payer had not responded to the notice issued u/s.133(6) of the Act does not lead to the conclusion that the income had accrued in the hands of the appellant, especially in view of the fact that the appellant had not received any money from the M/s.Aircel Ltd as evident from the statement of bank account. Therefore, we are of the considered opinion that the there was no material to hold that the income had accrued in the hands of the appellant, therefore, we direct the Assessing Officer to delete the addition of Rs.37,65,564/-.

In the result, appeal filed by the assessee in ITA No.1027/CHNY/2026 stands allowed. ITA No.1028/CHNY/2026 10. The assessee appeal in ITA No.1027/CHNY/2026 challenging the addition of Rs.37,65,564/- was allowed by us for the reasons stated therein. Since the Assessing Officer levied penalty, in respect of the addition of Rs.37,65,564/-, the penalty is also required to be deleted since the addition was stands deleted by us.

In the result, appeal filed by the assessee in ITA No.1028/CHNY/2026 stands allowed.

To sum up, both appeals filed by the assessee are allowed. Order pronounced in the open Court on 3rd July, 2026.