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Facts
The assessee filed an income tax return for A.Y. 2014-15 declaring Rs.33,98,080/-, which was selected for scrutiny. The Assessing Officer made additions, including disallowance of commission expenses, interest, labour expenses, and under Section 14A, completing the assessment at Rs.57,75,980/-. The First Appellate Authority partly allowed the appeal, reducing the commission disallowance.
Held
The Tribunal partly allowed the appeal. It allowed the disallowance of commission of Rs.2,02,750/- and Rs.55,700/- paid to two parties, finding that sales were made through them and TDS was deducted. However, it upheld the disallowance of Rs.57,308/- and Rs.35,980/- paid to two other parties, as no sales were effected through them and no fresh evidence was presented. The ground regarding lack of video conferencing opportunity was dismissed as adequate opportunity was provided.
Key Issues
Whether the disallowance of commission expenses was justified; Whether the assessee was provided adequate opportunity of being heard via video conferencing.
Sections Cited
143(3), 14A
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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
O R D E R
PER SHRI NARENDRA PRASAD SINHA, AM:
This appeal is filed by the assessee against the order of the Additional/Joint Commissioner of Income Tax (A)-3, Bengaluru (in short “the Addl. CIT(A)”) dated 06.12.2024 for the Assessment Year (A.Y.) 2014-15 in the proceeding under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The brief facts of the case are that the assessee had filed his return of income for the A.Y. 2014-15 on 11.11.2014 declaring total income of Rs.33,98,080/-. The case was selected for complete scrutiny under CASS. In the course of assessment, the Assessing Officer had examined (Assessment Year: 2014-15) Ashish Subodhbhai Shah vs DCIT Page 2 of 6 various expenses claimed by the assessee. Not convinced with the explanation of the assessee, the Assessing Officer had made the additions on account of disallowance of commission expenses, disallowance of interest, disallowance of labour expenses and addition under Section 14A of the Act. The assessment was completed under Section 143(3) of the Act on 17.11.2016 at a total income of Rs.57,75,980/-.
3. Aggrieved with the order of the Assessing Officer, the assessee filed an appeal before the First Appellate Authority, which was decided by the Ld. Addl.CIT(A) vide the impugned order and the appeal of the assessee was partly allowed.
Now the assessee is in second appeal before us. The following grounds have been taken in this appeal: -
“1. The order passed by the Ld. CIT(A) is against basic principles of law, equity & justice as it had not provided opportunity for hearing through video conferencing though sought.
2 The Ld. CIT(A)d has erred in law and facts of case in disallowing commission expenses of Rs.3,51,738/-.
The appellant craves liberty to add, amend, alter or modify all or any grounds of appeal before final appeal.”
5. The only ground taken by the assessee in this appeal pertains to disallowance of commission expenses. The Assessing Officer had made addition of Rs.13,81,400/- on account of commission expenses which was reduced to Rs.3,51,738/- by the Ld. Addl.CIT(A). Shri Siddharth Shah, Ld. AR of the assessee, explained that the assessee is running business in (Assessment Year: 2014-15) Ashish Subodhbhai Shah vs DCIT Page 3 of 6 the name of proprietary concern M/s. G.N. Textiles which is involved in trading of knitted fabrics. He explained that the payment of commission is a regular feature of business of the assessee and the rate of commission paid varies from the person to person from 1% to 4.25%. The Ld. Addl. CIT(A) had upheld disallowance of the commission paid to different persons for the reason that no commission was paid to two persons in the preceding year and that the corroborative proof that the persons to whom the commission was paid had offered the same as their income was not brought on record. The Ld. AR explained that the assessee had deducted TDS on all payments of commission. Further, merely because no commission was paid to two of the persons in the preceding year that does not preclude the assessee from payment of commission in the current year. The Ld. AR has also drawn our attention to the evidences filed in the paper-book in support of the fact that the commission income was duly disclosed by the recipients in their return of income.
7. Per contra, Smt. Mamta Singh, Ld. Sr. DR, submitted that the assessee did not explain as to why commission was paid to two persons when no such commission was made to them in the past. Further that in respect of other two persons, the assessee had disclosed Nil sales made through them and in spite of that fact, the commission was paid to them. She, therefore, strongly supported the order of the Ld. Addl. CIT(A). She further submitted that the assessee has filed certain fresh evidences before the Tribunal which was not available either before the Assessing Officer or before the Ld. Addl. CIT(A).
(Assessment Year: 2014-15) Ashish Subodhbhai Shah vs DCIT Page 4 of 6 8. We have considered the rival submissions. The Ld. Addl. CIT(A) had upheld the disallowance of commission paid to Shri Dharini N. Mehta and Shari Darshanaben J. Patel for the reason that no commission was paid to them in the immediately preceding year. Merely because no commission was paid in the earlier year, this does not preclude the assessee from payment of commission in the current year. What is relevant to consider is whether any services were rendered by these two persons, for which the commission was paid to them. From the details of sales and commission paid, as reproduced in the assessment order, it is found that sales were made through these two parties in respect of which commission was paid to them. The Revenue has not disputed the sales made through Shri Dharni N. Mehta and Shari Darshanaben J. Patel. In view of this fact, the Ld. Addl. CIT(A) was not correct in disallowing the commission paid to these two parties on the ground that no commission was paid to them in the preceding year. The assessee had duly deducted TDS on the commission paid to Shri Dharini N. Mehta and Shri Darshanaben J. Patel. Accordingly, the commission of Rs.2,02,750/- and Rs.55,700/- paid to Shri Dharni N. Mehta and Shari Darshanaben J. Patel respectively, are allowed.
8.1 As regarding commission of Rs.57,308/- and Rs.35,980/- paid to Shri Deepakbhai P. Thakkar and Shri Devendra Anubhai Shah respectively, the Assessing Officer had noted that no sales were made through these two parties, still commission was paid to them. The Ld. Addl. CIT(A) had upheld the disallowance of commission paid to these two parties for the reason that no sales were effected to them. Though the assessee had now submitted that sales were effected through these two parties, this submission is found to be contrary to the facts available (Assessment Year: 2014-15) Ashish Subodhbhai Shah vs DCIT Page 5 of 6 on record. The assessee has also not filed any application for submission of any fresh evidence before us. Therefore, the contention of the assessee cannot be accepted. The Revenue had rightly disallowed the commission of Rs.57,308/- and 35,980/- paid to Shri Deepakbhai P. Thakkar and Shri Devendra Anubhai Shah for the reason that no sales were effected through them. The amount of sales and commission paid thereon, as reproduced in the assessment order, was furnished by the assessee himself. Therefore, the disallowance of commission of Rs.57,308/- and Rs.35,980/- paid to Shri Deepakbhai P. Thakkar and Shri Devendra Anubhai Shah is upheld. The ground of the assessee is partly allowed.
The assessee has also taken a ground that no opportunity was provided by the Ld. Addl. CIT(A) for hearing through video conferencing. It is found that the assessee had made a request for hearing through video conferencing in response to notice dated 17.04.2023 issued by the Ld. Addl. CIT(A). Thereafter, the Ld. Addl. CIT(A) had allowed another opportunity to the assessee vide notice dated 15.02.2024 to which the assessee had complied. Once having complied to the subsequent notice of the Ld. Addl. CIT(A), the assessee cannot take a plea that he was not allowed proper opportunity of being heard. The assessee has also not pointed out as to what additional submission he wanted to make through video conferencing. Since the assessee was allowed proper opportunity of being heard by the Ld. Addl. CIT(A), the ground taken by the assessee is dismissed.
Order pronounced in the open Court on this 26th November, 2025.