JEEVAN SHAKTI CHIT FUND PVT LIMITED,HYDERABAD vs. DCIT, CENTRAL CIRCLE-2(4), HYDERABAD

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B‘ Bench, Hyderabad �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No. 1444/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2016-17) Jeevan Shakti Chit Fund Vs. Dy. CIT Private Limited Central Circle 2(4) Hyderabad Hyderabad PAN: AAACJ5056C (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: Advocate S. Rama Rao राज� व �ारा/Revenue by: Smt. Uppaluri Meena, Sr.AR सुनवाई की तारीख/Date of hearing: 11/06/2026 घोषणा की तारीख/Pronouncement: 17/06/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Jeevan Shakti Chit Fund Private Limited (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals)- 12. Hyderabad, (“Ld. CIT(A)”) dated 10.03.2025 for the A.Y. 2016-17. 2. At the outset, it is noticed that there is a delay of 102 days in filing the present appeal before the Tribunal. To explain the delay, the assessee has filed a petition for condonation of delay along with an affidavit setting out the reasons for the delayed filing of the appeal. The Learned

2 Authorized Representative (“Ld. AR”) submitted that the accountant who was looking after the income-tax matters of the assessee had left the services of the assessee. Thereafter, there was a time gap before a new accountant joined the organization and took charge of the taxation matters. It was submitted that due to the transition and the consequent lack of proper follow-up of the income-tax proceedings, the appeal could not be filed within the prescribed period, resulting in a delay of 102 days. The Ld. AR further submitted that the delay was neither deliberate nor attributable to any mala fide intention on the part of the assessee. He therefore prayed that the delay may be condoned and the appeal may be admitted for adjudication on merits. 3. Per contra, the Learned Departmental Representative (“Ld. DR”) did not raise any serious objection to the condonation of delay. 4. We have considered the rival submissions and perused the material available on record. We find that the delay has occurred on account of the departure of the accountant who was handling the income-tax matters of the assessee and the intervening period before a new accountant assumed charge of such responsibilities. In our considered view, the explanation furnished by the assessee constitutes a reasonable and bona fide cause for the delay. Nothing has been brought on record by the Revenue to demonstrate that the delay was intentional or that the assessee stood to gain any advantage by filing the appeal belatedly. Considering the totality of the facts and circumstances of the case and in the interest of substantial justice, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within the prescribed

3 period. Accordingly, the delay of 102 days in filing the appeal is condoned and the appeal is admitted for adjudication on merits.

“1) The order of the learned CIT (A) is erroneous to the extent it is prejudicial to the interest of the appellant herein; 2) The learned CIT (A) is not justified in disallowing the claim for deduction of Rs.37,72,195/- representing the business promotion expenses; 3) The learned CIT (A) ought to have considered the fact that the said amount represents the expenditure incurred on business promotion and is a business expenditure; 4) The learned CIT (A) ought to have held that the amount is allowable as a deduction under section 37 of the I.T Act. 5) Any other ground(s) that may be urged at the time of hearing”. 6. The brief facts of the case are that the assessee is a company engaged in the business of chit funds. The assessee filed its return of income for Assessment Year 2016-17 on 17.10.2016 declaring total income of Rs.1,71,29,040/-. The case of the assessee was selected for complete scrutiny through CASS and accordingly notice under section 143(2) of the Income-tax Act, 1961 (“the Act”) was issued to the assessee on 17.07.2017. After considering the submissions furnished by the assessee, the Learned Assessing Officer (“Ld.AO”) completed the assessment under section 143(3) of the Act on 28.12.2018 after making an addition of Rs.48,43,575/- on account of subscription amounts written off in respect of chit fund members and a further addition of Rs.37,72,195/- on

4 account of a motor car gifted by the assessee, thereby assessing the total income of the assessee at Rs.2,57,44,810/-. 7. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the addition of Rs.48,43,575/- made by the Ld. AO on account of subscription amounts written off from chit fund members. However, the Ld. CIT(A) sustained the addition of Rs.37,72,195/- relating to the motor car gifted by the assessee. Accordingly, the appeal of the assessee was partly allowed by the Ld. CIT (A). 8. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. At the outset, the Ld. AR submitted that the solitary issue arising out of the grounds of appeal of the assessee relates to the disallowance of Rs.37,72,195/- on account of a motor car gifted by the assessee in connection with its business. The Ld. AR further submitted that the assessee is engaged in the business of chit funds and the growth of its business largely depends upon persons who refer prospective subscribers to the assessee. He submitted that an Audi car, which was originally purchased in Assessment Year 2012-13 at a cost of Rs.72,26,340/- and whose book value during the year under consideration stood at Rs.37,72,195/-, was gifted to Y Sri Ram Reddy in recognition of the business referred by him to the assessee. It was submitted that the vehicle was provided as a business promotion incentive under a scheme formulated by the assessee for encouraging business growth and rewarding top promoters. Therefore, according to the Ld. AR, the value of the car represented a business expenditure incurred wholly and exclusively for the purposes of business and ought to have been

5 allowed as a deduction. He accordingly prayed that the addition sustained by the Ld. CIT(A) be deleted. 9. Per contra, the Ld. DR invited our attention to para no. 4 of the assessment order and submitted that the Ld. AO has categorically recorded a finding that no evidence whatsoever was furnished by the assessee to establish the nature and extent of business allegedly procured by Y Sri Ram Reddy. He further invited our attention to para no. 6.4.4 of the order of the Ld. CIT(A) and submitted that even before the first appellate authority the assessee failed to produce any documentary evidence to substantiate its claim that the vehicle was gifted for business purposes. The Ld. DR submitted that even before the Tribunal no material has been placed on record to demonstrate the business generated by Y Sri Ram Reddy, the details of the referral arrangement, or the terms and conditions of the alleged incentive scheme. She therefore submitted that the addition sustained by the Ld. CIT(A) deserves to be upheld. 10. We have heard the rival submissions and perused the material available on record. We have gone through para no. 4 of the assessment order, which is to the following effect:

6 11. On perusal of the above, we find that the Ld. AO has specifically observed that the assessee failed to produce any relevant documentary evidence in support of its claim that the expenditure represented a business expenditure incurred wholly and exclusively for the purposes of business. We have also carefully examined para no. 6.4.4 of the order of the Ld. CIT(A), which is to the following effect:

7 supporting evidence has been furnished. The assessee has failed to place on record the details of business allegedly referred by Y Sri Ram Reddy, the value of such business, the benefit derived by the assessee therefrom, or any agreement, correspondence or documentary material evidencing the referral arrangement. The assessee has also failed to produce the details of the promotional scheme under which the vehicle was allegedly awarded and the basis on which Y Sri Ram Reddy was selected for receiving such incentive. In the absence of any documentary evidence establishing a nexus between the gift of the vehicle and the business carried on by the assessee, we are unable to accept the contention that the expenditure was incurred wholly and exclusively for the purposes of business. Mere oral submissions unsupported by documentary evidence cannot form the basis for allowing a substantial deduction of Rs.37,72,195/-. Accordingly, we find no infirmity in the order of the Ld. CIT(A) sustaining the disallowance of Rs.37,72,195/-. The same is hereby upheld and the grounds raised by the assessee are dismissed. 13. In the result, the appeal of the assessee is dismissed. Order pronounced in the Open Court on 17th June, 2026. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 17th June, 2026. Vinodan/sps

8 Copy to: S.No Addresses 1 M/s Jeevan Shakti Chit Fund Pvt Limited 207, 2 Floor, PANCOM Business Centre, Ameerpet. Hyderabad-500073 2 Dy. CIT, Central Circle-2(4), Aayakar Bhavan, Basheerbagh Hyderabad 500028 3 Pr. CIT –Central, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order Digitally signed VADREVU by VADREVU PRASADA RAO PRASADA Date: RAO 2026.06.17 17:12:18 +05'30'