DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3, DELHI vs. GAADI WEBPRIVATE LTD. , DELHI

ITA 7992/DEL/2025Status: DisposedITAT Delhi28 September 2026AY 2023-249 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(A) had indeed obtained a remand report from the AO and considered the assessee's rejoinder. The AO's report indicated that for AY 2023-24, a Show Cause Notice (SCN) was issued, and earlier notices under Section 142(1) were also served. The AO acknowledged potential constraints and suggested further opportunity if natural justice was not observed. However, the Tribunal noted that the CIT(A) found the expenditure debited to the P&L account in respect of commission paid to the five parties was Rs. 43,42,602/-, not Rs. 2,43,23,025/- as disallowed. TDS at 5% had been deducted on this amount. The AO had not brought any adverse evidence on record, either during the original assessment or remand proceedings, to prove the expenditure was non-genuine or the parties were non-existent. The Tribunal concluded that the mere fact that parties were non-filers could not be a reason to disallow the expenditure in the hands of the assessee. Therefore, the order of the CIT(A) was considered well-reasoned and justified.

What were the facts?

The Revenue appealed the order of the CIT(A) for Assessment Year 2023-24, which had deleted disallowances made by the Assessing Officer (AO). The AO had disallowed Rs. 90,01,887/- claimed as advertising expenses by the assessee, Gaadi Web Private Ltd., for transactions with JMD Globex Services, deeming them non-genuine due to lack of sub-contractual agreements and proof of service delivery. Additionally, the AO disallowed Rs. 2,43,23,025/- for purchases/expenses from five other parties, citing their non-filer status and alleged non-genuineness. The assessee is engaged in running a used automobile web portal. A survey conducted on other entities revealed they were used for non-genuine transactions. The CIT(A) allowed the assessee's appeal, partly based on a remand report from the AO.

What were the issues?

1. Whether the Ld. CIT(A) erred in deleting the disallowance of Rs. 2,43,23,025/- under Section 37 of the Income Tax Act, 1961, by accepting unverified ledger accounts and submissions without independent verification, and whether non-filing of income-tax returns by parties, absence of confirmations, and lack of proof of service rendered establish the expenditure as non-genuine under Explanation 1 to Section 37. Contentions: Assessee: The CIT(A) had sought and received a remand report from the AO. The assessee provided rejoinder and submissions, which were considered. The expenditure in question was identified as finance commission amounting to Rs. 43,42,602/-, not Rs. 2,43,23,025/-, and TDS was deducted. Merely because recipients did not file returns cannot be held against the assessee. Revenue: The CIT(A) deleted additions based on unverified ledger accounts and submissions without seeking a remand report or conducting independent verification. In the absence of confirmations from non-filing parties and proof of services rendered, the AO's disallowance of Rs. 2,43,23,025/- under Section 37 should be upheld.

Which sections of the Income-tax Act were involved?

Section 37,Section 143(3),Section 143(1),Section 133A,Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH, E: NEW DELHI

Before: MS. KAVITHA RAJAGOPAL & SMT. RENU JAUHRI

For Respondent: Shri Tarun Sharda, Sr. DR
Hearing: 28.07.2026Pronounced: 28.09.2026

Per Renu Jauhri, Accountant Member:

This appeal by the Revenue is directed against the order dated 15.09.2025 of the Ld. Commissioner of Income Tax (Appeals), Delhi-23 [hereinafter referred to as the ‘Ld. CIT(A)] arising out of the assessment order dated 31.03.2025 passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by DCIT, Central Circle-3, Delhi (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (A.Y.) 2023-24. 1

ITA No.- 7992/Del/2025 Gaadi Webprivate Ltd. .

2.

The Revenue has raised the following grounds of appeal:-

“ 1. The Ld. CIT(A) has erred in deleting

The order continues below.

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