NARAYAN DAS TALREJA,N.S.M. , AZADPUR, DELHI vs. ITO WARD 36(1),, NEW DELHI

ITA 2564/DEL/2023Status: DisposedITAT Delhi18 December 2024AY 2018-2019Bench: the CIT(A), but remained unsuccessful, hence, the present appeal.9 pages
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What did the Tribunal hold?

The additional ground challenging the order's validity against a deceased person was dismissed as the assessee's Legal Representatives failed to inform the CIT(A) about the death. Under Section 40A(3), disallowances for bonus to Kapil Talreja, Chowkidar payments, Diwali expenses, Phad expenses, and travel expenditure were deleted. However, the disallowance for cash salary payments was upheld. The disallowance for excess commission to the son under Section 40A(2) was deleted because the AO failed to determine the fair market value of services.

What were the facts?

The assessee, a commission agent trading in fresh fruits, faced disallowances under sections 40A(3) for various cash payments (bonus, chowkidar, Diwali, Phad, salary, travel) totaling Rs. 13,53,860/-, and under section 40A(2) for Rs. 16,81,754/- due to excess commission paid to a relative (son). The assessee's appeal to CIT(A) was unsuccessful, leading to the present appeal before the ITAT. An additional ground was raised regarding the validity of the CIT(A)'s order passed in the name of a deceased person.

What were the issues?

1. Whether an order passed by the CIT(A) against a deceased person is null and void when the Legal Representatives failed to notify the death. 2. Whether various cash payments for bonus, Chowkidar, Diwali expenses, Phad expenses, salaries, and travel expenditures were correctly disallowed under Section 40A(3). 3. Whether disallowance for excess commission paid to a relative was justified under Section 40A(2) without determining fair market value.

Which sections of the Income-tax Act were involved?

Income Tax Act, 1961: Section 40A(3), Income Tax Act, 1961: Section 40A(2), Income Tax Act, 1961: Section 2(41), Income Tax (Appellate Tribunal) Rules 1963: Rule 11

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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, DELHI

Hearing: 19/09/2024

PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as 'the CIT(A)') dated 19.07.2023, for assessment year 2018-19. 2. The facts of the case in brief as emanating from records are: The assessee is a commission agent and is engaged in trading of fresh fruits. The assessee filed its return of income for the impugned assessment year declaring income of Rs.9,3

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