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Facts
The assessee is challenging an order that dismissed their appeal against an assessment order. The assessment order had made three additions to the total income: commission receipts not fully offered for taxation, disallowance for non-deduction of TDS on commission paid, and disallowance for non-deduction of TDS on rent paid.
Held
The Tribunal held that the addition for commission receipts not fully offered for taxation was not sustainable as it included GST amounts and directed the Assessing Officer to recalculate. The other two additions regarding TDS on commission paid and rent paid were remitted back to the Assessing Officer for fresh adjudication after providing an opportunity of being heard.
Key Issues
Whether the addition for commission receipts was valid, considering the inclusion of GST; and whether the disallowances for non-deduction of TDS on commission and rent were justified, especially concerning the verification of the nature of payments and TDS compliance.
Sections Cited
143(2), 142(1), 250, 40(a)(ia), 270A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”A-Bench” JAIPUR
Before: SHRI MANISH BORAD, AM & SHRI NARINDER KUMAR, JM
lquokbZ dh rkjh[k@Date of Hearing :02/07/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 03/07/2025 vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER .
Assessee-appellant is feeling dissatisfied with the order dated 22.11.2024, passed by Learned Commissioner of Income Tax (Appeal) [ hereinafter referred to as “CIT(A)”, National Faceless Appeal Centre, Delhi, u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) as Amar Singh Sahu, Jaipur. thereby his appeal challenging assessment order dated 20.09.2021, relating to the assessment year 2019-20 stands dismissed.
Arguments heard. File perused.
Vide assessment order dated 20.09.2021, the Assessing Officer computed total income of the assessee at Rs. 53,97,634/-, while making following three additions:- Commission receipts not fully offered for taxation- Rs. 24,17,829/- Disallowance u/s 40(a)(ia) of the Act for non-deductionof TDS on commission paid- Rs. 4,17,285/- Disallowance u/s 40(a)(ia) of the Act for non-deduction of TDS on rent paid- Rs. 4,03,380/- 4. It may be mentioned here that the case of the assessee was selected for complete scrutiny on the issue of refund claim, due to the following reasons as under:- “(i) High ratio of refund to TDS (reason code:TA03.03) (ii) claim of refund coupled with disclosure of substantially lower receipts in return vis-à-vis 26AS, revision of return, claim of loss form House property or claim of suspicious deduction (Reason code:SL01.03)”
At this stage, the relevant portion of the impugned order regarding the abovesaid three additions needs to be reproduced. The same is reproduced for ready reference and reads as under:-
Amar Singh Sahu, Jaipur. “6. Commission Receipts Not Fully Offered For Taxation: On perusal of Income Tax Return filed by the assessee, it is seen that he has offered commission receipts of Rs.6,15,09,399/- during the year under consideration. Whereas, on verification of Form No.26AS, it is found that the assessee has received commission of Rs. 6,39,27, 228/- during the year under consideration. Accordingly, it is determined that the assessee has offered less commission receipts of Rs 24,17,829/- to the tax in his ITR. Therefore. Rs.24,17,829/- is hereby added to the total income of the assessee. Penalty proceedings u/s 270A of the Act is being initiated separately for under reporting of income in consequence of misreporting of income. (Addition Rs.24,17,829/-) 7. Disallowance U/s 40(a)(ia) of the Act for Non deduction of TDS on Commission paid: On perusal of the profit and loss account shown in ITR filed by the assessee, it is seen that the assessee has shown expenses of Rs 4,34.99,376/- as commission paid. However, on perusal of statement of commission paid and TDS deducted thereon, as submitted by the assessee in his submission dated 17/08/2021, it is revealed that the assessee has made TDS on commission expenses of Rs. 4,21,08,426/- only. Hence it is clear that the assessee has failed to deduct/ deposit to the Govt account of TDS on commission expenses of Rs. 13,90,950/- (Rs 4,34,99,376/-(-) Rs.4, 21,08,4264) Accordingly, an amount of Rs. 4,17,285/-(30% of Rs. 13,90,950/-) is hereby disallowed u/s 40(a)(ia) of the Act and added to the total income of the assessee. Penalty proceedings u/s 270A of the Act is being initiated separately for under reporting of income in consequence of misreporting of income. (Addition Rs.4,17,285/-)
Disallowance U/s 40(a)(ia) of the Act for Non deduction of TDS on Rent paid: On perusal of the profit and loss account shown in ITR filed by the assessee, it is seen that the assessee has shown expenses of Rs. 13,44,602/- as rent paid. However, on perusal of tax audit report in Form 3CD, it is revealed that the Amar Singh Sahu, Jaipur. assessee has not made TDS on such rent expenses of Rs. 13,44,602/-. Hence it is clear that the assessee has failed to deduct TDS and deposit the same to the Govt account on rent expenses of Rs. 13,44,602/-. Accordingly, an amount of Rs 4,03,380-(30% of Rs. 13,44,602/-) is hereby disallowed u/s 40(a)(ia) of the Act and added to the total income of the assessee Penalty proceedings u/s 270A of the Act is being initiated separately for under reporting of income in consequence of misreporting of income. (Addition Rs. 4,03,380/-)”
When the assessment order came to be challenged by the assessee by way of appeal, Learned CIT(A) dismissed all the three grounds raised
in the grounds of appeal, and as a result, the assessee-appellant could not get any respite from Learned CIT(A). Proceedings before the Assessing Officer
7. A perusal of assessment order would reveal that notice u/s 143(2) of the Act, issued by the Assessing Officer on 31.03.2021 was duly served, but, the assessee did not submit any reply thereto. Thereafter, notice u/s 142(1) of the Act, were issued to the assessee, on 11.06.2021, followed by another notice issued on 08.11.2021. Again the assessee did not respond to the first mentioned notice. As regards, second mentioned notice dated 11.08.2021, the assessee submitted only partial submission on 17.08.2021.
Amar Singh Sahu, Jaipur. As finds mentioned in para 5 of the assessment order, the assessee submitted financials, Form 26AS, details of Commission account, loan account, office expenses and agricultural account. Contentions 8. Learned counsel for the assessee -appellant has submitted that when the above said material was made available to the Assessing Officer, he should have considered the same and only then proceeded to pass assessment order, but, a perusal of the assessment order would reveal that the Assessing Officer did not discuss the documents submitted by the assessee, while the Assessing Officer was passing the assessment order and making additions. Another submission is that even Learned CIT(A) did not consider the material submitted by the assessee in appeal proceedings, and just upheld the additions made by the Assessing Officer.
On the other hand, Ld. DR for the department has referred to para nos. 4, 5 and 9 of the assessment order and submitted that same reflect that the assessee failed to furnish any response to the notice dated 31.03.2021, 11.06.2021 and also the show cause notice dated 01.09.2021, and contended that in this situation, the Assessing Officer had no option, but to proceed further.
Amar Singh Sahu, Jaipur. Ld. DR has further submitted that in the assessment order, the Assessing Officer referred to the relevant information made available by the assessee and only then passed the assessment order. As regards the impugned order passed by Learned CIT(A), Ld. DR has submitted that while dismissing the appeal filed by the assessee, Learned CIT(A) also took into consideration information/material made available in respect of all the three additions and only then rejected all three grounds raised in the grounds of appeal. Therefore, Ld. DR has urged that the appeal deserves to be dismissed. Discussion
10. Notably, in the meanwhile, on behalf of the appellant, a Paper Book came to be presented before Registry. As per the certificate appended to the index of the Paper Book, except copy of TDS return and copies of notices issued u/s 143(2) and 142(1) of the Act, all the documents mentioned therein are stated to have been made available to the department-Assessing Officer and the First Appellate Authority. Now, we proceed to take up and deal with the respective contentions as regards each addition, one-by-one. Entire income pertaining to Commission receipts not offered for Taxation Amar Singh Sahu, Jaipur.
11. As regards this addition made by the Assessing Officer and confirmed by Learned CIT(A), as noticed above, it was observed by the authorities below that the assessee offered less income of commission receipts to the tune of Rs. 24,17,829/- for the purpose of tax, while furnishing Income Tax Return. As observed by the Assessing Officer on verification of Form 26AS, it was found that the assessee had received commission of Rs. 3,39,27,228/-.
12. Learned counsel for the appellant has submitted that facts were not correctly considered by the Assessing Officer and Learned CIT(A). In this regard, Ld. Counsel for the appellant has submitted that in the return of income, the appellant furnished commission receipts of Rs. 6,15,06,399/- and excluded the amount towards GST tax. As further submitted, there was gross receipt of Rs. 2,55,011/- towards pension from State Bank of India, which the assessee clearly declared in the return of income and for which, requisite tax was paid. In this regard, reliance has been placed on computation available at page 1 to 3 of the paper book which is stated to have also been available before the authorities-Learned CIT(A) and the Assessing Officer.
Amar Singh Sahu, Jaipur.
When the above said amount of gross receipts of pension is excluded, the amount of commission receipts comes to Rs. 21,62,080/-, as further submitted by Learned AR. Reliance has also been placed at pages 42 and 43 of the paper book i.e. copy of sales registered and reconciliation of the commission received. As per this document, a total sum of Rs. 30,02,240.45 was towards GST, which is stated to have been deposited by the assessee. The last column depicts total sum of Rs. 6,45,29,639.99 i.e. towards brokerage and GST. When the above said material was also submitted by the assessee before the authorities below, the same was required to be considered. Had the material been considered, as rightly submitted before us, the amounts shown towards GST paid by the assessee could not have been treated as part of the income of the assessee. Having regard to all this, first mentioned addition of Rs. 24,17,829/-, as it is, cannot be sustained when the amount of GST was also included in making said addition. It is ordered accordingly. Assessing Officer to make recalculations in accordance with law. Disallowance u/s 40(a)(ia) of the Act for Non deduction of TDS on Commission paid:-
Amar Singh Sahu, Jaipur.
In the assessment order, the Assessing Officer observed that the assessee had shown expenses to the tune of Rs. 4,34,99,376/- by way of commission paid, but, when the statement of commission paid was duly compared with the figure of TDS deducted, submitted by the assessee alongwith statement dated 17.08.2021, it transpired that he had made deductions towards TDS on this account only to the tune of Rs. 4,21,08,426/-, and as such, there was a difference of Rs. 13,90,950/-, which led to making of the addition.
Learned counsel for the appellant-assessee has placed reliance on the statement relating commission paid, relating to the period from 01.04.2018 to 31.03.2019, and pointed out that from the gross total sum of Rs. 4,50,04,842.09, a deduction of Rs. 15,05,466/- was made as regards the commission for the financial year 2017-18, but these facts were not taken into consideration by the Revenue authorities.
We have gone through the above said document relied on by Learned counsel for the appellant. We have also gone through the written submission put forth on behalf of the assessee as to the accounting practice that was being followed/adopted by the assessee.
Amar Singh Sahu, Jaipur.
On the other hand, on this issue, Ld. DR for the department has rightly submitted that the above said claim of the appellant as regards the accounting practice followed needs to be verified by the Assessing Officer on going through the entire relevant record to find out as to the accounting practice followed in the previous years, and also to find out as to whether the same accounting practice was followed in the subsequent year, especially when the assessee did not file reply to certain notices issued by the Assessing Officer and even to the show cause notice.
In the given facts and circumstances, finding merit in the contention raised by the Ld. DR for the department, we deem it a fit case, to remit this issue for determination of the Assessing Officer after providing reasonable opportunity of being heard to the assessee. Disallowance u/s 40(a)(ia) of the Act for Non deduction of TDS on rent paid:- 19. In this assessment order, the Assessing Officer observed that in the Profit and Loss Account as reflected by the assessee in his return of income, a sum of Rs. 13,44,602/- was shown towards expenses by way of rent paid, but, from the tax audit report available in Form 3CD, revealed that no deduction towards TDS was made on said expenses, and as such, Amar Singh Sahu, Jaipur. said addition i.e. @ 30% of the above said amount was made by disallowing a sum of Rs. 4,03,380/-.
On this issue, Learned counsel for the appellant assessee has submitted that the assessee being tenant as regards different offices at different places, in different cities, under different landlords, rent was paid at different rates, for different premises taken on rent for business purpose. Further, Learned AR has submitted that payment made to single landlord did not exceed Rs. 1,80,000/-,and that is why, it was not at all required to make deduction by way of TDS on the amount of rent paid, and as a result, said disallowance deserves to be set aside.
In support of his contention, Ld. Counsel for the appellant assessee has relied on the statement depicting various amounts of rent paid, as per information available at page 79 to 81 of the paper book.
On the other hand, Ld. DR for the department has rightly submitted that the statement relied on behalf of the assessee needs verification of various facts, so as to arrive at a just conclusion that the amount of rent paid to each landlord did not exceed Rs. 1,80,000/-. Ld. DR has tried to explain that there may be instances of single landlord having leased out various properties to the assessee , and that simply from the above figure provided by the assessee, this fact cannot be verified, and as such, the Amar Singh Sahu, Jaipur. matter needs to be enquired by the Assessing Officer, taking into consideration all the relevant documents, particularly when the assessee did not furnish reply to various notices, including show cause notice dated 01.09.2021, issued by the Assessing Officer.
We find merit in the contention raised by Learned DR for the department that only from the statement for the period from 01.04.2018 to 31.03.2019, this issue cannot be adjudicated. All the relevant material needs to be produced before the Assessing Officer for decision on this issue afresh, particularly when the assessee failed to furnish reply to the notices, as mentioned above, and put forth statement only in part on 17.08.2021.
As a result, this issue also deserves to be remitted to the Assessing Officer for decision afresh after providing reasonable opportunity of being heard to the assessee. Result 25. In view of the above findings, this appeal is partly allowed, granting relief to the appellant assessee only as regards the first mentioned addition relating to commission receipts, in the manner and to the extent indicated above, and while directing the Assessing Officer to make recalculations in view of the findings recorded by this Bench.