HITESH BHUPENDRA SHAH,MUMBAI vs. ITO 27(1)(3), MUMBAI

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ITA 3221/MUM/2018Status: DisposedITAT Mumbai17 June 2019AY 2013-143 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted the additional evidence submitted by the assessee, including third-party confirmations, the father's return, and an affidavit. The matter was set aside and restored to the AO for a fresh decision after considering this evidence.

What were the facts?

The assessee, a proprietor of a chemical reseller business, declared an income of Rs. 13,06,200/-. The Assessing Officer (AO) disallowed Rs. 4,25,000/- of commission paid to the assessee's father, adding it to the income, resulting in an assessed income of Rs. 17,31,200/-. The CIT(A) confirmed the AO's disallowance.

What were the issues?

Whether the commission paid to a relative was excessive and not for business expediency, and whether additional evidence should be admitted at the appellate stage.

Which sections of the Income-tax Act were involved?

Section 40A(2)(b),Section 37(1),Section 143(1),Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH,

Before: SHRI B. R. BASKARAN, AM & SHRI AMARJIT SINGH, JM

Hearing: 09/04/2019Pronounced: 17/06/2019

O R D E R

PER AMARJIT SINGH, JM:

1.

The assessee has filed the present appeal against the order dated 09.03.2018 passed by the Commissioner of Income Tax (Appeals) -25, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2013- 14.

2.

The assessee has raised the following grounds: -

“1. The Ld. Assessing Officer erred in assessing the income at Rs.17,31,200/- instead of the return income of Rs.13,06,200/- and the CIT(A) erred in confirming the same. 2. The Ld. Assessing Officer erred in disallowing Rs.4,25,000/- commission paid to Shri Bhupendra Shah,

ITA No. 3221/M/2018 A.Y.2013-14 assessee’s father, u/s 40(A)(2)(b) r.w. section 37 of the Income Tax Act, 1961 without providing any justification for the expense being excessive and the CIT(A) erred in confirming the same.”

3.

The brief facts of the case are that the assessee filed his return of income on 26.09.2013 declaring total income to the tune of Rs.13,06,200/- for the A.Y. 2013-14. The return was processed u/s 143(1) of the I.T. Act, 1961. Thereafter, the case was selected for scrutiny. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assesse. The assessee is the proprietor of M/s. Hind Rasayan who is engaged in the business of reseller in chemicals. The income of the assessee consists of income from the business and profession. The Assessee claimed commission expenses in sum of Rs.51,39,436/- but failed to substantiate claim in connection with Rs.4,25,000/-, therefore, the same was disallowed u/s 40A(2)(b) of the Act r.w.s. 37(1) of the Act and added to the income of the assessee. The total income of the assessee was assessed to the tune of Rs.17,31,200/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who dismissed the appeal of the assessee, therefore, the assessee has filed the present appeal before us.

4.

We have heard the argument advanced by the Ld. Representative of the parties and perused the record. The assessee did not argue the case on merits. The assessee took the plea by moving the application that he has received the confirmation from third party and also received return of Shri Bhupendra Shah and affidavit of Bhupendra Shah to prove the service provide to him therefore he should be allowed adduce the same in additional evidence. It is on record that all the documents were not produced before the AO as well as CIT(A), therefore, the assessee moved

ITA No. 3221/M/2018 A.Y.2013-14 an application for additional evidence. The assessee wanted to prove the confirmation, return of Bhupendra Shah and affidavit in the shape of additional evidence and the said piece of evidence bearing upon the merits of the case, therefore, we are of the view that the additional evidence is should be admitted in the interest of justice. Accordingly, we admit the additional evidence and set aside the finding of the CIT(A) on this issue and restored the matter of controversy before the AO to decide the matter of controversy afresh in the light of evidence adduced before us by giving an opportunity of being heard to the assessee in accordance with law.

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