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Facts
The assessee's appeal was against the order of the National Faceless Appeal Centre (NFAC), Delhi, which disallowed contract fees of Rs. 40,50,000/- and commission of Rs. 17,26,345/-, paid to M/s Onscreen Broadcast and Entertainment Private Ltd. The assessee failed to provide necessary documentation to substantiate these expenses during assessment and appellate proceedings. The assessee also did not appear for hearings.
Held
The Tribunal noted that the assessee was repeatedly provided opportunities for hearing but failed to appear and did not submit required documents. Therefore, the matter was disposed of ex-parte. The Tribunal upheld the disallowance of expenses due to the lack of evidence from the assessee.
Key Issues
Whether the disallowance of contract fees and commission expenses was justified due to the assessee's failure to provide supporting documents and appear for hearings?
Sections Cited
Section 250, Section 143(3), Section 143(3A), Section 143(3B)
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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI OMKARESHWAR CHIDARA
Instant appeal of the assessee was filed against the order of the Learned National Faceless Appeal Centre (NFAC), Delhi *in short, ‘Ld.CIT(A)+ passed under section 250 of the Income-tax Act, 1961(in short, ‘the Act’),for Assessment Year 2018-19, date of order 17/01/2024. The impugned order was emanated from the order of the National e-Assessment Centre, Delhi, (in short, “ld. AO”) order passed Mahinder Pal Singh under section 143(3)r.w.s. 143(3A) & 143(3B) of the Act, date of order 15/02/2021.
The assessee has taken the following grounds:- “ 1. That the Ld. Commissioner of Income Tax (Appeal) erred in affirming the decision of Ld. AO for disallowing contract fees of Rs. 40,50,000/- paid to M/s Onscreen Broadcast and Entertainment Private Ltd without appreciating the fact that expenditure was incurred wholly and exclusively for the purpose of business.
2. That the Ld. Commissioner of Income Tax (Appeal) erred in affirming the decision of Ld. AO for disallowing commission of Rs. 17,26,345/- paid to M/s Onscreen Broadcast and Entertainment Private Ltd without appreciating the fact that expenditure was incurred wholly and exclusively for the purpose of business.
3. The appellant craves leave to add to, alter, to delete from or substantiate the above ground of appeal.”
When the appeal was called for hearing, none was present on behalf of the assessee. No adjournment petition was filed. The assessee was allowed thedate of hearing twice by the Bench, but none appeared. We find that the assessee was allowed a reasonable opportunity for hearing. We proceed to dispose of the matter exparte qua for assessee after hearing, the ld.DR.
We heard the ld.DR, considered the documents available in the record and perused the orders of the revenue authorities. The additions were challenged related to disallowance of expenses related to the contract fees amount of Rs.40,50,000/- paid to M/s Onscreen Broadcast & Entertainment Pvt Ltd and the disallowance of commission amount to Rs.17,26,345/- paid to M/s On-screen Broadcast & Entertainment Pvt Ltd. The ld. DR invited our attention in impugned assessment order page 4. On perusal of impugned assessment order,we find that the same amount was debited and credited in the Profit & Loss Account& total Mahinder Pal Singh balances are equal in both the side of P & L A/c.The ld.DR invited our attention in impugned appeal order pages 2 & 3, which are reproduced as under: - “4.1 As per the Assessment order, the AO held that the assessee has debited contract fees of rs. 40,50,000/- and commission of Rs. 17,26,345/- in his return of income, It is further held that on verification of the PS L account, it is noticed that the assessee has paid contract fees of Rs. 40,50,000/- and debited in his profit and loss account whereas other side, the assessee has shown as received lesioning fees of Rs. 40,50,000/-and credit in his P & L account. Further, the assessee has paid Rs 17,26,345/- as received commission and debited Rs. 17,26,345/- as commission fees. The AD concluded that the assessee has debited mount and credited the same amount and shows profit and gains from business at NIL. Therefore, the claim of contract fees of Rs. 40,50,000/- and commission of Rs. 17,26,345/- is disallowed and added to the income of the assessee.
4.2 During the course of appellate proceedings, the appellant has not made any submissions on this issue. 4.3.0 I have gone through the grounds of appeal and statement of facts, assessment order. It appears that after filing of appeal against the assessment order, the appellant is not serious in pursuing the appeal. In the appellate proceedings, burden of proof lies on the assessee to prove that facts and findings of the AO are incorrect. If the assessee fails to prove or rebut with cogent evidence against such facts and findings, no interference is required with assessment order. In this case, it appears that the appellant had no evidence or say or explanation against the order of the AO.
4.3.1 From the assessment order it is seen that in reply to show cause notice the appellant with regard to Rs. 40,50,000/- and Rs. 17,26,345/- held that the above amounts were paid to M/s. Onscreen broadcast and Entertainment P Ltd. for their services and the same amount is paid to the company excluding GST. However, through several opportunities were provided the appellant had not filed single document during the course of assessment proceedings. Payment of GST and filing of the GSTR is not the basis for deciding whether the expenditure is allowable or not. The appellant has to prove the genuineness of the claim by submitting the details and documents of contract fees and commission debited in the P & L account such as copy of agreements, bank details, details of TDS etc.
Mahinder Pal Singh 4.3.2 In these circumstances and in view of the foregoing facts, I am of the opinion that no interference is required in the assessment order. Hence, the addition is upheld and the ground No. 1 and 2 are dismissed.”
We find that the assessee was unable to submit the relevant documents before the ld.CIT(A). The ld.CIT(A) passed a speaking order, but order was passed without considering the evidence from the end of the assessee. The assessee failed to submit all the relevant documents before the ld.CIT(A) after issuance of several notices. We find from the registry that the assessee did not appear before the Bench during the hearing date. The assessee is a habitual defaulter before the appellate authorities. We are of the view that the assessee should be imposed a cost in order to make him understand the importance of income tax proceedings. Accordingly, we impose the cost amount of Rs.5,000/- (Rupees five thousand only) upon the assessee which shall be paid to the credit of Income Tax Department within two months from the date of receipt of this order. Subject to the payment of above cost which shall be verified by the ld. CIT(A). We remand the matter in the file of the ld. CIT(A) for adjudication de novo. We are not expressing our view on the merit of the case which will impair the appeal of the assessee. Needless to say, the assessee should get a reasonable opportunity of hearing before the ld.CIT(A). On the other hand, the assessee is directed to be diligent and co-operative before the ld.CIT(A)inset aside appeal proceedings.