ANSHU BANSAL,LUCKNOW vs. ITO- 1(1), LUCKNOW-NEW, LUCKNOW

ITA 842/LKW/2025Status: DisposedITAT Lucknow24 September 2026AY 2018-1911 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the AO made the disallowance of Rs. 1,65,20,000/- under Section 40(a)(ia), not Section 37(1). The CIT(A) erred by assuming the disallowance was under Section 37(1) without giving the assessee a proper opportunity to respond to this altered charge. The Tribunal noted that the CIT(A) did not address whether the assessee could be penalized for the recipient's failure to file a return in the correct format if the receipts were offered to tax. Consequently, the addition of Rs. 1,65,20,000/- could not be sustained. The Tribunal also found that the CIT(A) had not addressed the issues regarding salary and Chapter VI-A deductions. Therefore, the matter was restored to the file of the AO for reconsideration of these issues and to consider fresh evidence the assessee might present for salary expenses and deductions under Chapter VI-A. The AO was directed to pass a fresh order after considering the highlighted issues and presented evidence. The Tribunal did not decide the specific allowability of salary and LIC premium but remanded them for fresh adjudication.

What were the facts?

The assessee, Anshu Bansal, filed an appeal against the order of the CIT(A) dated 03.09.2025, which upheld the Assessing Officer's (AO) order dated 31.03.2021 for Assessment Year (AY) 2018-19. The AO had made additions totaling Rs. 1,65,20,000/- on account of commission expenses, Rs. 1,80,500/- for salary expenses, and Rs. 85,933/- for LIC premium. The assessee argued that the AO and CIT(A) erred in disallowing commission paid to Mr. Asim Arif, as he had shown the income under Section 44AD. The assessee also contended that salary and LIC premium were allowable expenses. The CIT(A) dismissed the assessee's appeal ex-parte due to non-compliance with notices. The assessee's appeal to the ITAT raised grounds including lack of proper opportunity, incorrect disallowance of commission, salary, and LIC premium, and reliance solely on the AO's order.

What were the issues?

1. Whether the CIT(A) erred in law by not referring the matter back to the AO, given the short time between the draft order issuance (24/03/2021) and the case's time-barring date (31/03/2021), precluding a video conference opportunity for the assessee? 2. Whether the AO and CIT(A) erred in disallowing commission paid amounting to Rs. 1,65,20,000/- on the presumption that the recipient, Mr. Asim Arif, had shown income under Section 44AD, when the disallowance should be considered under Section 37 of the Income Tax Act, 1961? 3. Whether the CIT(A) erred in disallowing salary paid amounting to Rs. 1,80,500/- by invoking Section 40A(3) without appreciating that it was an allowable expense? 4. Whether the CIT(A) erred in disallowing LIC premium paid amounting to Rs. 85,933/-, despite the assessee furnishing the receipt? Assessee's Contentions: - The CIT(A) should have remanded the case due to insufficient time for a video conference before the assessment became time-barred. - The commission expense was incurred wholly and exclusively for business purposes and should be allowed under Section 37. The disallowance was illegal as the recipient had shown income and paid tax, and the assessee had complied with the second proviso to Section 40(a)(ia) read with the first proviso to Section 201(1). - Salary paid to employees assisting in business income is an allowable expense and not covered by Section 40A(3). - LIC premium paid is an allowable deduction under Chapter VI-A, and the receipt was furnished. - The CIT(A) erred by solely relying on the AO's order and overlooking documents submitted during appellate proceedings. Revenue's Contentions: - The assessee was non-compliant during assessment and before the CIT(A). - The assessee failed to deduct tax at source and prove the genuineness of payments to Mr. Asim Arif, justifying the addition under Section 40(a)(ia). - The AO was justified in disallowing salary and Chapter VI-A deductions due to the assessee's failure to provide evidence.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 44AD,Section 37,Section 40(a)(ia),Section 40A(3),Section 201(1),Section 80C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW ‘A’ BENCH, LUCKNOW

Hearing: 29.07.2026Pronounced: 24.09.2026

PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the assessee against the order of the ld. CIT(A) dated 3.09.2025, wherein the ld. CIT(A) has dismissed the appeal of the assessee against the order passed by the ld. Assessing Officer for the assessment year 2018-19, under section 143(3) of the Income Tax Act, 1961 on 31.03.2021. The grounds of appeal are as under:- “1. That the Ld. CIT(A) has erred in law by not referring the matter back to the file of the Ld. AO even after seeing that the Draft order was issued on 24/03/2021 and the time given was 30/03/2021 and the time barring of the case was 31/03/2021 which leaves the assessee as well as the Ld. AO with no time for the video conference option which was per se not activated owing to this re

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 44AD

All 2,222 judgments and leading authorities on Section 44AD →

Recent GST High Court judgments

Search GST case law →