ASHISH SUBODHBHAI SHAH,AHMEDABAD vs. THE DY.CIT, CIRCLE-3(2), AHMEDABAD

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’). 2. 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 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. 4. 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/-. 3. 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. 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. 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. 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 PBN/* Copies to: (1) The appellant (2) The respondent

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The PCIT

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The CIT(A)

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Departmental Representative

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Guard File
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