LAKSHMINARAYANA NANDIGAM,NELLORE vs. ITO, WARD-1, NELLORE

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ITA 302/HYD/2026Status: DisposedITAT Hyderabad17 June 2026AY 2013-149 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that while the assessee failed to substantiate expenditure with documentary evidence, earning substantial commission income without any expenditure was unrealistic. The Tribunal estimated expenditure at 20% of gross commission receipts, considering the facts and circumstances.

What were the facts?

The assessee did not file a return of income for AY 2013-14. The AO reopened the case and found that the assessee received commission income but offered less than what was reflected in Form 26AS, and claimed deductions without evidence. The CIT(A) deleted the Section 80C disallowance but estimated expenditure at 10% of gross commission.

What were the issues?

The primary issue was the quantum of expenditure allowable against commission income earned without documentary evidence. The secondary issue was the disallowance of deduction under Section 80C.

Which sections of the Income-tax Act were involved?

Section 139,Section 147,Section 148,Section 80C,Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘SMC‘ Bench, Hyderabad

Before: Shri Ravish SoodShri Madhusudan Sawdia

Hearing: 09/06/2026

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SMC‘ 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. 302/Hyd/2026 (िनधा�रण वष�/Assessment Year: 2013-14) Shri Lakshminarayana Vs. ITO Nandigam, Nellore Ward – 1 PAN: ABEPN8606L Nellore (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: Shri K.A. Sai Prasad, CA राज� व �ारा/Revenue by: Shri Vamshi Krishna, Sr. AR सुनवाई की तारीख/Date of hearing: 09/06/2026 घोषणा की तारीख/Pronouncement: 17/06/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Shri Lakshminarayana Nandigam, (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) (“Ld. CIT(A)”) dated 03.12.2025 for the A.Y. 2013-14. 2. The assessee has raised the following grounds of appeal:

3.

The brief facts of the case are that the assessee is an individual who had not filed any return of income for Assessment Year 2013-14 under section 139 of the Income Tax Act, 1961 (“the Act”). Based on the information available with the department, the Learned Assessing Officer (“Ld. AO”) observed that the assessee had received commission income

amounting to Rs.9,68,850/- from M/s. GGR Housing Pvt. Ltd. during the year under consideration. Since no return of income had been filed by the assessee, the case was reopened by the Ld. AO under section 147 of the Act and notice under section 148 of the Act was issued on 15.03.2021. In response to the notice issued under section 148 of the Act, the assessee filed a return of income on 29.03.2021 declaring gross total income of Rs.9,17,724/-. During the course of reassessment proceedings, the Ld. AO observed that against the gross commission receipts of Rs.9,68,850/- reflected in Form No. 26AS, the assessee had disclosed commission income of only Rs.4,89,900/-. In the absence of supporting documentary evidence on account of the expenditure of Rs.4,78,950/- incurred by the assessee towards the commission income, the Ld. AO treated the entire commission receipt of Rs.9,68,850/- as taxable income and accordingly made an addition of Rs.4,78,950/- being the difference between the commission income reflected in Form No. 26AS and the income offered by the assessee. The Ld. AO further observed that the assessee had claimed deduction under section 80C of the Act amounting to Rs.58,659/- on account of LIC premium payment. Since no documentary evidence was furnished in support of the claim, the same was disallowed. Accordingly, the reassessment was completed by the Ld. AO under section 147 read with section 144B of the Act vide order dated 22.03.2022 by making an addition of Rs.4,78,950/- on account of commission income and disallowing deduction under section 80C of the Act amounting to Rs.58,659/-, thereby assessing the total income of the assessee at Rs.13,52,449/-.

4.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). During the appellate proceedings, the assessee furnished documentary evidence in support of the claim under section 80C of the Act. Upon consideration of the same, the Ld. CIT(A) deleted the disallowance of Rs.58,659/- made under section 80C of the Act. The Ld. CIT(A) further accepted the contention of the assessee that some expenditure must have been incurred for earning the commission income and accordingly allowed expenditure estimated at 10% of the gross commission receipts amounting to Rs.96,885/-. Thus, the appeal of the assessee was partly allowed. 5. Still aggrieved with the order of the Ld. CIT (A), the assessee is in appeal before the Tribunal. The Ld. AR submitted that the assessee is pressing only Ground No. 3 of the appeal, which relates to the quantum of expenditure allowable against the gross commission receipts during the year under consideration. The Ld. AR submitted that during the year under consideration the assessee earned gross commission receipts of Rs.9,68,850/- from M/s. GGR Housing Pvt. Ltd. He submitted that due to the advanced age of the assessee, assistance of certain persons had to be taken for carrying out commission-related activities and various administrative and incidental expenditures had also been incurred. The Ld. AR invited our attention to page no. 15 of the order of the Ld. CIT(A), wherein the working furnished by the assessee showing net commission income of Rs.4,89,900/- after claiming expenditure of Rs.4,78,950/- has been reproduced. The Ld. AR submitted that although the Ld. CIT(A) accepted the proposition that expenditure was incurred for earning the

commission income, he restricted the allowance to only 10% of the gross commission receipts amounting to Rs.96,885/-. According to the Ld. AR, if the expenditure allowed by the Ld. CIT(A) is considered, almost 90% of the gross commission receipts would be taxed as income, which is commercially unrealistic and contrary to normal business practices. The Ld. AR further submitted that practically it is not possible to earn commission income of such magnitude without incurring substantial expenditure. Accordingly, he prayed that the entire expenditure of Rs.4,78,950/- claimed by the assessee be allowed. Alternatively, he requested that at least 30% of the gross commission receipts be allowed as expenditure incurred for earning the commission income. 6. Per contra, the Ld. DR relied upon the order of the Ld. CIT(A). Inviting our attention to page no. 18 of the appellate order, the Ld. DR submitted that during the year under consideration the assessee had withdrawn cash aggregating to Rs.3,74,000/-. Out of the said withdrawals, the assessee had paid LIC premium of Rs.58,659/- and had also incurred household expenses. The Ld. DR submitted that after considering the cash withdrawals, household expenses and other surrounding circumstances, the Ld. CIT(A) had already granted reasonable relief by allowing expenditure at 10% of the gross commission receipts amounting to Rs.96,885/-. The Ld. DR further submitted that the assessee has failed to produce any documentary evidence in support of the expenditure claimed either before the lower authorities or before the Tribunal. Accordingly, he prayed that the order of the Ld. CIT(A) be upheld.

7.

We have heard the rival submissions and perused the material available on record. The assessee has not pressed ground nos.1, 2, 4 and 5 of the appeal. Accordingly, ground nos. 1,2,4 and 5 of the appeal of the assessee are dismissed as not pressed. 8. The only issue pressed by the assessee under ground no. 3 relates to the quantum of expenditure allowable against the gross commission income earned during the year under consideration. In this regard, we have gone through page no. 15 of the order of the Ld. CIT(A), which is to the following effect:

9.

On perusal of the above, we find that the Ld. CIT (A) has reproduced the statement of expenditure claimed by the assessee against the gross commission, wherein the assessee had claimed expenditure of Rs.4,78,950/- against gross commission receipts of Rs.9,68,850/- and had offered net commission income of Rs.4,89,900/- for taxation. We have also gone through para no. 8 of the order of the Ld. CIT(A), which is to the following effect:

10.

On perusal of the above, we find that the Ld. CIT (A) has discussed the availability of cash with the assessee while restricting the expenditure to 10% of the gross commission receipts. The Ld. CIT (A) has also stated that the expenditure incurred by the assessee are not adequately supported by documentary evidence. It is an admitted fact that the assessee has not produced any supporting documentary evidence in respect of the expenditure claimed. Therefore, the claim of expenditure at Rs.4,78,950/- cannot be accepted in its entirety

merely on the basis of assertions made by the assessee. However, at the same time, we are unable to agree with the proposition that the assessee could have earned gross commission income of Rs.9,68,850/- without incurring any substantial expenditure. Looking into the facts and circumstances of the case, the advanced age of the assessee, the nature of commission activities carried on by him, the availability of cash withdrawals during the relevant period and the magnitude of the commission receipts, it cannot be totally assumed that no expenditure, other than the amount estimated by the Ld. CIT(A), might have been incurred by the assessee for earning such commission income. In our considered opinion, some expenditure towards assistance from other persons, administrative expenses and other incidental expenses is inevitable in carrying on commission-related activities. Though the assessee has failed to substantiate the expenditure by producing supporting evidence, the estimation made by the Ld. CIT(A) at 10% of the gross commission receipts appears to be on the lower side considering the peculiar facts of the present case. Considering the totality of the facts, circumstances of the case and availability of cash with the assessee, we deem it fair and reasonable to estimate the expenditure at 20% of the gross commission receipts. Accordingly, we direct the Ld. AO to allow expenditure of Rs.1,93,770/- being 20% of the gross commission receipts of Rs.9,68,850/- and recompute the income of the assessee accordingly. Accordingly, Ground No. 3 raised by the assessee is partly allowed.

11.

In the result, the appeal of the assessee is partly allowed 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 Copy to: S.No Addresses 1 Shri Lakshminarayana Nandigam, C/o Katrapati & Associates, 1-1-298/2/B/3 Sowbhagya Avenue Apartments, 1st Floor, Ashoknagar, Street No.1 Hyderabad 500020 2 Income Tax Officer Ward-1, 24-2-438, 1st Floor, GT Road, NELLORE 524001 3 Pr. CIT –, Tirupati 4 DR, ITAT Hyderabad Benches 5 Guard File By Order VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO Date: 2026.06.17 RAO 17:15:25 +05'30'

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