ABDUL RAOOF,JAIPUR vs. INCOME TAX OFFICER, WARD-4(1), JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI T. R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No.1867/JPR/2025 (Assessment Year:2016-17)

Abdul Raoof Vs. ITO Prop M/s Friends Ward 4(1) Creation, 3508, Laldas Ka Jaipur Akhada, Nahargarh Road, Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No:AGLPR 9665F Appellant .. Respondent Assessee by : Sh. Sauravh Harsh & Sh. Muzaffar Iqbal, Adv. Departmentby : Mrs. Arti Rawat, JCIT Date of Hearing 29.07.2026 Date of Pronouncement 28.10.2026 O R D E R Per Annapurna Gupta, AM:- The present appeal has been filed by the assessee against the order passed by the Office of the Commissioner of Income Tax, Appeal Addl/JCIT(A)-01, Nashik (hereinafter referred to as “Ld. CIT(A)”), dated

P a g e | 2 ITA No.1867/JPR/2025 Abdul Raoof 23.10.2025 under Section 250of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 2. The grounds raised by the assessee read as under:- 1. That in law and in the facts and in circumstances of the case, the ld. CIT(Appeals) grossly erred in arbitrarily dismissing the application filed under Rule 46A of the Income-tax Rules, 1962 for taking additional documents on records and in not deciding the appeal on merits. 2. That in law and in the facts and in circumstances of the case, the Id. CIT(Appeals) grossly erred in not remanding back the case to ld. Assessing Officer for fresh assessment in compliance to newly inserted provision of section 251(1)(a) of the Act. 3. That in law and in the facts and in circumstances of the case, the Id. Assessing Officergrossly erred in disallowing Rs. 3,61,368/- out of total wages and salary expenses of Rs. 18,06,839/- claimed by the assessee appellant. 4. That in law and in the facts and in circumstances of the case, the ld. Assessing Officer grosslyerred in disallowing Rs. 2,98,758/- out of total commission on sales of Rs. 14,93,790/- paid by the assessee appellant. 5. That in law and in the facts and in circumstances of the case, the ld. Assessing Officer grossly erred in disallowing Rs. 33,945/- out of total discount of Rs. 1,69,727/- given by the assessee appellant. 6. That in law and in the facts and in circumstances of the case, the Id. Assessing Officer grosslyerred in disallowing Rs. 1,04,000/- out of total exhibition expenses of Rs. 5,20,000/- claimed by the assessee appellant. 7. That in law and in the facts and in circumstances of the case, the ld. Assessing Officer grosslyerred in disallowing Rs. 48,000/- out of total rent of Rs. 2,40,000/- paid by the assessee appellant. 8. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing. 3. Brief facts relating to the case are that the assessee for the impugned year had filed return of income declaring income of Rs.3,71,210/-. The case of the assessee was picked up for limited scrutinyfor the reason that

P a g e | 3 ITA No.1867/JPR/2025 Abdul Raoof  Whether deduction claimed on account of expenditure includes expenses of personal nature  Whether deduction claimed on account of business expenses is admissible. 4. Thereafter, since the assessee did not comply with any notices issued during assessment proceedings, ex parte assessment was framed and all expenses claimed by the assessee on account of wages and salary, commission on sales, discount, exhibition rent were disallowed to the extent of 20% thereof in the absence of any substantiation of the said claims made by the assessee and to cover up the possible leakage of Revenue. Thus expenses totaling Rs.42,30,355/- were considered for disallowance and 20% thereof amounting to Rs.8,46,071/- was disallowed by the AO. The breakup of expenses considered for disallowance included thefollowing:-  Wages and salary Rs.18,06,839/-  Commission on sales Rs.14,93,790/-  Discount Rs.1,69,727/-  Exhibition Expenses Rs.5,20,000/-  Rent Expenses Rs.2,40,000/- 5. Before the Ld. CIT(A) the assessee participated and gave reasons for not appearing before the AO. Further, he explained the genuineness of claim of expenses and also furnished evidences to substantiate his explanation, but the Ld. CIT(A) refused to entertain the evidences furnished by the assessee stating that no sufficient reasons has been given

P a g e | 4 ITA No.1867/JPR/2025 Abdul Raoof by the assessee for not furnishing the same before the AO .Invoking Rule 46A of the Income Tax Rules, 1962,the Ld.CIT(A) refused to entertain the additional evidences furnished by the assessee and accordingly therefore confirmed the order of the AO. His findings are contained at para 7.4 to 7.7 of his order as under:- …… 7.4 In the instant case, I have gone through Form No.35, submission of the assessee, grounds of appeal, statement of facts and assessment order u/s 144. On going through the facts, it is seen that the AO had made an addition. Assessee's contention was to the effect that addition for the relevant financial year as applicable in terms with the Finance Act.

7.5 In this instant case the assessee filed its ROI at Rs. 3,71,210/- for A.Y. 2016-17. Subsequently, the case was selected for limited scrutiny under CASS and statutory notices were issued but the assessee failed to submit or compliance with the assessment proceeding. In the assessment order the AO clearly mentioned that the assessee has failed to file any submission in response to the various notices were issued by the AO.

7.6 It is evident from the assessment order and submissions made by the assessee that the assessee failed to produce the documentary evidences during assessment proceedings for the claims made by him. Further, as per AO, in his assessment order it is mentioned that the assessee has not submitted bills/voucher or any supporting documents in support of its expenditure. The assessee has claimed expenses of Rs. 42,30,355/-. The assessee has failed to furnish the copy of bills/vouchers, ledger and any other supporting documents to substantiate the genuineness of expenses.

7.7 As the assessee submitted additional evidence in the stage of appeal in accordance with Rule 46A of the IT. Act, 1961 the AO was directed to submit remand report. The AO has mentioned in his remand report that the assessee failed to furnish the complete information and books of accounts for examination.

The appellant has not submitted any details to prove that he was prevented by convincing reason for not submitting the evidence during the original assessment proceedings. The reason that he was not aware of scrutiny proceedings or the failure to comply pertains to counsel is not acceptable reason. The AO has provided fair and sufficient opportunity to the appellant to present the submissions during the assessment proceedings. Thus, adhering to the condition of Rule 46A the additional evidence filed by the appellant is not acceptable. Therefore, the additional evidence furnished by the assessee may not be acceptable. Hence, the contention made by the appellant in additional evidence in the stage of appeal is duly addressed and hence not acceptable.

P a g e | 5 ITA No.1867/JPR/2025 Abdul Raoof In view of the above facts, circumstances, and the legal position, the appellant is notentitled to submit fresh evidence/grounds under Rule 46A The relevant Rule 46A is reproduced hereunder. "46A. (1) The appellant shall not be entitled to produce before the [Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances, namely:- 1. where the Assessing Officer has refused to admit evidence which ought to have been admitted; or 2. where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer, or 3. where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal; or 4. where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. Therefore, in light of Rule 46A, the appellant is not entitled to submit fresh evidence/grounds. To sum up, it is held that the AO has correctly passed the assessment order. It is also held that the action of the AO in making an addition of Rs. 8,46,071/- as per the Act is correct and needs no interference. Further, the assessment order u/s 144 passed by the AO needs no action. The contention made by the appellant is not acceptable. 7.7 Therefore, I don't find any infirmity in the action of the Assessing Officer of making an addition and passed assessment order u/s 144 of the Income Tax Act. The action of the Assessing Officer does not warrant any interference. ….. 6. We have heard both the parties and have gone through the order of the Ld. CIT(A). 7. The assessee had submitted before him that he was a small trader and manufacturer of handloom products such as quilts, sanaganeri print bedsheets, pillow covers etc. He had stated that he was not aware of the proceedings before the AO, since he was dependent upon his counsel for the same. That he was mostly out from his residence, for work of business

P a g e | 6 ITA No.1867/JPR/2025 Abdul Raoof and therefore was not regularly in contact with his counsel. That therefore there was non-compliance before the AO and it was only when the demand notice was served upon him that he became aware of the order passed by the AO ex parte. And at the first opportunity thereafter, he filed appeal before the Ld. CIT(A), his contention in this regard are reproduced at page 6 of the Ld. CIT(A)’s order as under:- …….. 2. The assessee was not aware of the proceedings as he was depending upon his counsel for income-tax proceedings. That mostly he was out from his residence for work of business due to that he did not regularly in contact with his counsel and the assessment was completed ex-parte. When first time for demand notice served upon the assesseeappellant, then he came to note that some order u/s 143(3) has been passed till then he was fully unaware regarding the proceedings. He thereafter at the first opportunity has filed this appeal. ……. 8. Further, the assessee clarified that all expenses incurred were genuine. He explained that he conducted his business of selling handloom products through Handcrafts Emporium owned by M/s Rajasthali (a unit of the Rajasthan Small Industries Corporation Ltd.) situated at New Delhi and Kolkata. That he had entered into a license agreement with M/s Rajasthali for the said arrangement and copies of the agreement were filed to the ld. CIT(A).He contended that his books of accounts were audited and he had filed his return of income declaring income of Rs.3,71,210/-. Copy of audit report was furnished. He further pointed out that as per the agreement with Rajasthali, the assessee had paid commission, exhibition expenses and rent to Rajasthali. He had explained the modus operandi as of sales bills being issued to customers by Rajasthali at their respective counters and at the end of every month the total sale amount was paid to the assessee after deducting commission,

P a g e | 7 ITA No.1867/JPR/2025 Abdul Raoof license fees, service tax etc. The assessee had explained that no single invoice was issued by the assessee to the customers and the transactions of sales were made by Rajasthali only. That as per the agreement month- wise amountof sale statement was given by Rajasthali to the assessee mentioning the amount of total sale, the deduction on account of commission, license fee, service tax etc, and copies of the month-wise account statement issued by Delhi and Calcutta Branch were furnished to the Ld. CIT(A). Ld. Counsel for the assessee pointed out that all claims on account of commission, discount, rent etc was in accordance with these account statements submitted by Rajasthali. The assessee also furnished a letter / certificate issued by Rajasthali confirming the amount of commission, license fee and rent paid by the assessee to it. The assessee also stated that exhibition expenses of Rs.5,20,000/- were incurred for participating in various exhibitions and they were all incurred through banking channels. As for the wages paid to labourers, the assessee had stated that since the labourers all belong to unorganized sector, they were engaged on daily basis commission from small villages and town and therefore wages/salary was paid to them in cash. Copies of vouchers along with Aadhar cards of the labourers were also furnished as evidence. The submission of the assessee in this regard are reproduced at page 7 to 8 of the order as under:- WRITTEN SUBMISSIN FOR GROUND NO 1 TO 5 4. We wish to submit that the assessee appellant is a trader and manufacturer of handloom products such as quilts, sanganeri print bedsheets, pillow covers etc. He has license to sold its products on two counters in Handicrafts Emporium owned by the M/s. Rajasthali (A Unit of The Rajasthan Small Industries Corporation Ltd.) situated at New

P a g e | 8 ITA No.1867/JPR/2025 Abdul Raoof Delhi and Kolkata vide agreements dated 30.06.2014 and 19.03.2015 are enclosed herewith and marked as Annexure 1. 5. That the books of account of the assessee appellant were audited by the Chartered Accountant and thereafter he has filed its return of income declaring total income of Rs. 3,71,210/-. Copy of audit report is annexed herewith and marked as Annexure 2.

P a g e | 9 ITA No.1867/JPR/2025 Abdul Raoof Therefore, the assessee appellant has paid daily wages or salary to respective labourer's in cash. In support thereof we are enclosing herewith copies of vouchers along with Adhar card of the labourer and marked as Annexure 7. With this background, we request your honour to take stock of the situation a lenient and human approach towards the in totality, take appellant and admit the afore-saidevidences. The assessee appellant was prevented by good sufficient & reasonable causes in not placing the above documents before the close of the assessment proceedings. The evidence deserves to be admitted. The assessee appellant deserves his right to file detailed ground wise written submissions after allowing of the present application. 9. It is evident from the above that the assessee had furnished adequate reasons for not appearing before the AO and furnishing all evidences to prove the genuineness of the claim of expenses. That before the Ld. CIT(A) the assessee had furnished all possible evidences to substantiate his claim of the expenses claimed being genuine. He had explained that he was a license holder of M/s Rajasthali (a unit of the Rajasthan Small Industries Corporation Ltd.)and was selling his products through two counters of Rajasthali, one in Delhi and other in Calcutta. He had furnished copies of sales statement for sales done by Rajasthali from their counter, which statement was furnished by M/s Rajasthali every month to the assessee reflecting sales done through their counter and deducting therefrom commission, license fee, rent etc payable for the month by the assessee to M/s Rajasthali. Copies of the accounts statements for all the months was furnished to the Ld. CIT(A). The assessee had also furnished a certificate from Rajasthali confirming the claim of commission, license fee, rent expenses paid by the assessee to it in the course of carrying out its business. Even the sale statements given

P a g e | 10 ITA No.1867/JPR/2025 Abdul Raoof by Rajasthali to the assessee every month corroborated the claim of expenses incurred by the assessee on account of commission, license fee, rent etc. For exhibition expenses, the assessee had claimed that they were incurred through banking channels and had furnished copy of bank account. Also for the claim of salary and wages the assessee had furnished vouchers coupled with the Aadhar card of labourers to whom the payment in cash was made for salary and wages explaining that in the handloom sector the labourers were from the unorganized sector coming from poor backgrounds and from small villages and did not having banking facility and therefore all payments were made in cash. The assessee had therefore furnished all possible evidences to establish the genuineness of its claim. 10. Noting the facts emanating as above from the order of the Ld.CIT(A),  that the assessee had given sufficient reasons for not appearing before the AO and no falsity was found in the same by the Ld.CIT(A), and  had furnished all evidences to prove the genuineness of the claim,

P a g e | 11 ITA No.1867/JPR/2025 Abdul Raoof consultant for this work and mostly remained out of town for his business and therefore missed out on receiving the notices of hearing. 12. In the light of the above, we set aside the order passed by the Ld. CIT(A) and we direct him to entertain the additional evidences furnished by the assessee. The Ld.CIT(A) is directed to verify the additional evidences furnished by the assessee and seek all information necessary for determining the true income liable to tax as per law, after affording due opportunity of hearing to the assessee 13. In effect, the appeal of the assessee is accordingly allowed for statistical purposes. Order pronounced in the Open Court on 28.10.2026

Sd/- Sd/- (T.R. Senthil Kumar) (Annapurna Gupta) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 28.10.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Mittali Digitally signed by: Mittali Asst. Registrar DN: CN = Mittali email = ITAT, Jaipur mittaligupta34671@gmail.com C = IN O = Personal Date: 2026.10.30 12:45:26 +05'30'