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Facts
The assessee's appeal was filed with a delay, which was condoned by the tribunal. The case involves a dispute over sales promotion expenses claimed by the assessee, which were scrutinized by the AO. The AO made an addition based on perceived variations in payments to certain vendors.
Held
The tribunal condoned the delay in filing the appeal. Observing that the assessee was not given a proper opportunity to present details regarding sales promotion expenses, the tribunal restored the issue to the AO for fresh examination after providing a reasonable opportunity of being heard.
Key Issues
Whether the AO's addition was justified without providing sufficient opportunity to the assessee for presenting evidence regarding sales promotion expenses.
Sections Cited
143(3), 144B, 153, 69C, 115BBE
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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HON’BLE & SHRI SANDEEP SINGH KARHAIL, HON’BLE
आदेश/O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the assessee is preferred against the order dated 05/06/2024 by NFAC, Delhi [hereinafter “the ld. CIT(A)”] pertaining to AY 2018-19. 1.1. There is a delay in filing the appeal. The assessee has explained the cause for the delay in its letter supported by an affidavit. We have carefully perused the contents of the affidavit and are satisfied that the assessee was prevented by reasonable and sufficient cause for not filing the appeal on time. The delay is condoned.
The grievance of the assessee reads as under:- “1. The Ld. Assessing Officer (AO) has erred in passing an invalid Assessment Order u/s. 143(3) r.w.s. 144B of the Income Tax Act, 1961, 2 which is beyond the statutory time limit prescribed u/s. 153 of the Income Tax Act, 1961. 2. The Ld. Commissioner of Income Tax Appeals - NFAC erred in dismissing the appeal under a complete misunderstanding that Grounds of Appeals & Statement of Facts are not submitted. That the complete Grounds of Appeal & Statement of Facts are part of the appeal form filed before CIT(A) and the dismissal is arbitrary and not at all justified.
The Ld. CIT(A) erred in confirming addition of Rs. 89,82,784/- u/s. 69C r.w.s. 115BBE of the Income Tax Act, 1961, without considering the merits of the case.
The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal.”
4. Ground No. 1 was not argued before us, therefore, the same is dismissed as not pressed.
Representatives of both the sides were heard at length. Case records carefully perused.
Briefly stated the facts of the case are that the return of the assessee was selected for limited scrutiny assessment under the E- assessment scheme, 2019 for examining the large sales promotion expenses vis-à-vis gross receipts. The assessee declared total income at Rs. 5,36,52,388/-. During the course of the scrutiny assessment proceedings, the AO interalia asked the assessee to justify its claim of sales promotion expenses and the percentage increase in the quantum in comparison with last year sales promotion expenses and justification for the increase. In compliance, the assessee submitted the following details of persons to whom the payments were made on account of sales promotion expenses during the year:-
Base Sr. No Name Address PAN TDS deducted Amount
MEDIAEDGE COMMERZ ,8TH 1 CIA INDIA AAACF4315L 4,256,322 87,759 PRIVATE FLOOR, LIMITED INTERNATIONAL B SPECTRUM GROUND FLOOR, 2 ABMFS3316G 1,145,313 22,836 TALENT PLOT NO. C-142 MANAGEMENT Uttar Pradesh 201301
EVENTZ N office: 14/12 shivpuri 3 AEUPN8966Q 226,850 2,254 colony MUMBAI 400071 MORE NETCORE 402, peninsula 4 AAACR2730D 186,571 3,883 SOLUTIONS PVT chambers MUMBAI 400013
LTD HANSA Sahney Business 5 AAACH9516M 124,580 2,506 RESEARCH GROUP PVT LTD Center A 1 st GETTY IMAGES Indiabulls Finance Ce 6 AAFCP8968G 933 MEDIA INDIA 46,735 MUMBAI 400013 PVT LTD k.Sion Chaman GLOBAL House CHSG.Near 7 AIFPA4748N 30,100 301 MERCANTILE Canar Mumbai SERVICES
400022 SHOP NO 2, BDD NITIN CHAWL 81,NEAR 8 AFUPT5343J 23,919 232 GRAPHICS MAHIND WORLI 400018
Office No.7E,1st 9 TIMES PRINTS BBNPS4722E 15,900 150 Floor, MUMBAI 400001
128, 1st Floor, Vipul POLYVALENT Trade Center, 10 AAHCP4643E 12,864 256 DIGITAL SERVICES Gurgaon(Haryana) 122001 Other-TDS 11 547 27,337 Applicable Other-TDS Not 12 37,829 Applicable 13 N.A. Provision reversal (1,590,542) -
Total Business Promotion 4,543,777 Bxpesnes 6.1. And insofar as the increase in the sales promotion expenses is concerned, it was explained that the expenses were incurred during the current year mainly for digital advertisement, lead generation, website optimization, for research on independent Gerage. Further expenses were incurred for outdoor events through outdoor agency as well as contractual employee hired for marketing.
The AO made independent enquiry and the following facts were found in relation to sales promotion expenses shown by the assessee:-
Sr. No. Name PAN Base Amount Actual Payment Difference
MEDIAEDGE CIA 1 AAACF4315L 4,256,322 1,17,82,056/- 75,25,734/- INDIA PRIVATE LIMITED SPECTRUM TALENT 2 ABMFS3316G 1,145,313 25,28,061/- 13,82,748/- MANAGEMENT EVENTZ N MORE AEUPN8966Q 41,918/- 2,68,768/- 3 226,850 HANSA RESEARCH 4 AAACH9516M 124,580 1,47,003/- 22,423/- GROUP PVT LTD GETTY IMAGES 48,057/- 1,322 5 AAFCP8968G 46,735 MEDIA INDIA PVT LTD
GLOBAL 36,883/- 6,783/- 6 AIFPA4748N 30,100 MERCANTILE SERVICES 7 TIMES PRINTS BBNPS4722E 15,900/- Nil 15,900
POLYVALENT AAHCP4643E 14,720/- 1,856/- DIGITAL SERVICES 8 12,864
Total Business Rs. Rs. 58,58,664/- Promotion Expesnes 1,48,41,448/- 89,82,784/-
The AO noticed huge variation in the amount received by Mediaedge CIA India Private Limited, Mumbai and Spectrum Talent Management, New Delhi. On receiving no plausible reply, the AO made the addition of Rs. 89,82,784/-. 8.1. When the additions were challenged before the ld. CIT(A), the proceedings could not be attended and the ld. First Appellate Authority dismissed the appeal on the basis of the material on record.
Before us, the ld. Counsel for the assessee vehemently stated that due to some changes in the corporate structure of the assessee, the proceedings could not be attended properly and because of the same, the appeal also could not be filed on time. The ld. Counsel for the assessee pleaded for a second opportunity to furnish necessary details in justification of the claim of expenditure.
We are of the considered view that a second opportunity should be given to the assessee. Therefore, we restore the issue to the file of the AO. The assessee is directed to furnish all the necessary details with supporting evidence in support of its claim of sales promotion expenses and the AO is directed to examine the same and decide the issue afresh after affording reasonable and adequate opportunity of being heard to the assessee.