TaxTMI 
TaxTMI 
2026 (6) TMI 347
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....he Ld. AR of the assessee appeared on 21.11.2024, when he sought adjournment. Thereafter, also the case was fixed for hearing on three more occasions, when none appeared on behalf of the assessee. This case was last fixed on 20.02.2026 after serving notice on all the address available as per records, but again none appeared on behalf of the assessee. Therefore, this appeal being an old appeal was heard after hearing the Revenue and on the basis of material available on record. 3. Brief facts of the case: The assessee company during the year was engaged in the business of real estate. Return declaring income of Rs. 12,50,20,046/- and deemed total income under section 115JB of Rs. 10,36,41,013/- (under MAT) was e-filed by the assessee company on 31.03.2015. The return was processed u/s 143(1) of the Act and the case was selected for scrutiny. Notice u/s 143(2) of the I.T. Act, 1961 dated 28.08.2015 was issued and served upon the assessee. 3.1 In this case, the assessee was initially represented by Shri A.L. Sehgal, Chartered Accountant / Authorized Representative (AR) of the assessee, who attended the proceedings with two attendance and furnished few details / information. Ther....
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....y submitted the ledger account of the commission expenses which does not in any way prove the genuineness of such expenditure. Also, the nature of services provided by parties and the expertise of such parties in proving the said services has not been explained by the assessee. Moreover, the assessee has not submitted the TDS payment challans which will prove that TDS has been deposited in respect of the commission expenses paid. If the documents were submitted before the assessing officer during the assessment proceedings the assessing officer could have made third party enquiries to establish whether the commission expenditure is genuine or not. The quantum of expenditure under commission expenses being huge i.e. Rs. 12,14,03,645/- and most of it is seen to be paid to individuals and HUFs, the genuineness of expenditure could not be verified during the assessment proceedings because of the non-compliance to the notices served upon the assessee. 2) Revising of TDS return by the deductor The assessee has only filed a one page documents which in no way proves that the return of the deductor has been revised in respect of the assessee company. Such evidence being incomplete ....
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....fore the AO at the time of assessment. ii. Mr. Sehgal CA/AR of the assessee company attended the proceedings for two attendance and subsequently withdrawn his power of attorney vide letter dated 05.03.2016, for which company has no information. On 28.03.2016 first time company has received notice for fixation of the mater. Immediately after, on 31.03.2016 Learned Assessing officer passed the order, without giving proper opportunity of being heart to the assessee company. It is well settled law that assessee cannot be made to suffer on account of the fault of the CA/ AR of the assessee. Accordingly the given circumstances it is well fall within the purview for accepting additional as condition mentioned in Rule 46A(1) '(c) and (d) reproduced as under:- (c) where the appellant was prevented by sufficient cause from producing before the Income-tax Officer any evidence which is relevant to any ground of appeal; or (d) where the Income-tax Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. Hence Ld Assessing Officer was Not Justified In De....
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....with that of the Income-tax Officer. He can do what the Income-tax Officer can do. He can also direct the Income-tax Officer to do what he failed to do. The power conferred on the Appellate Assistant Commissioner under Sub-section (4) of Section 250 being a quasi-judicial power, it is incumbent on him to exercise the same if the facts and circumstances justify. If the Appellate Assistant Commissioner fails to exercise his discretion judicially, and arbitrarily refuses to make enquiry in a case where the facts and circumstances so demand, his action would be open for correction by a higher authority. 6. On a conjoint reading of Section 250 of the Act and Rule 46A of the Rules, it is clear that the restrictions placed on the appellant to produce evidence do not affect the powers of the Appellate Assistant Commissioner under Sub-section (4) of Section 250 of the Act. The purpose of Rule 46A appears to be to ensure that evidence is primarily led before the Income-tax Officer. 7. We are supported in our above conclusion by the decision of the Orissa High Court in B. L. Choudhury v. CIT [1976] 105 ITR 371 in which it was held (page 376): "Wide provision has thu....
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....w his power of attorney vide letter dated 05.03.2016, for which company had no information. It was further submitted that on 28.03.2016 for the first time the assessee company had received notice for fixation of the matter and immediately after, on 31.03.2016 the Assessing officer passed the order, without giving proper opportunity of being heard to the assessee company. Further, it was submitted by the Ld. AR that no opportunity was provided by the AO to the assessee during the course of remand proceedings. Therefore, in the given facts of the case, no interference is called for in the order of the Ld. CIT(A) in accepting the admission of the above additional evidences. Hence, ground no. 1 of the appeal is dismissed. 7. In respect of disallowance of Rs. 1,82,10,547/-, contested by the Revenue in ground no. 2 of the appeal which is reproduced as under: "2. The Ld. CIT(A) erred in restricting the addition to Rs. 28,10,000/- made by AO as against of Rs. 182,10,547/- on account of commission paid solely on the basis of TDS returns and ignoring other corroborative factors. " 7.1 The AO made the disallowance as under: "1. During the year the assessee has debited ....
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....e ld. CIT(A) deleted the said addition and the relevant extract of the ld. CIT(A) is reproduced as under: "4.4 Ground no. 2: That the learned Assistant Commissioner of Income Tax has grossly erred in making adhoc disallowance by applying mechanically rate of 15% of the Commission paid Rs. 12,14,03,645/- i.e. Rs. 1,82,10,547/-without there being any basis for the same. 4.4.1 The AR has submitted that: "That the learned Assessing Officer, has grossly erred in making adhoc disallowances by applying mechanically rate of 15% of the Commission. During the year assessee has debited commission and brokerage paid amounting to Rs. 12,14,03,645/- in its P & L Account. The assessee company has providing herewith complete copy of ledgers account along with TDS certificates, as perceived from the document submitted herewith all expenditure are made for the business purpose of the assessee and no disallowances should be made in this regard. We have provided complete details however for Rs. 28,10,000/-no document found. Kindly please delete the addition made by the learned Assessing Officer, that is purely applying mechanically rate, which is unsustaina....
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.... brokerages paid to various parties. A perusal of the Remand Report filed by the AO reveals that the AO has ignored and omitted the TDS Certificates by stating that the Appellant has not submitted the TDS payment challans which will prove that the TDS has been deposited in respect of the commission expense. The Appellant has argued that the TDS certificates have been downloaded from NSDL sites. In view of the above discussion and the details filed by the appellant, the addition with regard to Rs, 11,85,93,645/- is deleted. However, the Appellant has stated that for Rs. 28,10,000/- no documents can be filed and therefore, the addition of Rs. 28,10,000/- are upheld. The percentage method of making ad hoc disallowance by the AO, is held to be routine and without any basis. The addition on this ground is restricted to Rs. 28,10,000/- Appeal on this ground is partly allowed." 7.5 The ld. Sr. DR supported the order of the AO and grounds of appeal filed by the Revenue. 7.6 We have heard both the parties and perused the material available on record. In this case, the AO had made an ad hoc disallowance of Rs. 1,82,10,547 being 15% of commission of Rs. 12,14,03,645/-. The Ld. CIT(A) no....
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....ent, it is not clear whether the assessee has simultaneously made some other expenditure entry in relation to the same debit note. 8.3 The assessee submitted its rejoinder to the Remand Report as under: 4. Additional Evidences in respect of Grounds of Appeal-4: In the A.O. Remand report Ld. A.O. has not discussed for the matter for considering Income from form 26AS. Merely in point no. 2 Ld. A.O. just given assessee has only filed a one page document which in no way proves that return of the deductor has been revised.. Further In A.O. Remand report point no. 3 debit note of Jaiprakash Associates limited not accepted just by saying that not clear whether the assessee has simultaneously made some other expenditure entry in relation to the same debit note. Our view, how it is possible as the assessee has shown commission income as per form 26AS refer income reconciliation again produced the same Annexure-2 But we have duly been submitted Income Reconciliation with form 26AS statement. In fact the difference of Rs. 7,72,29,746/- is by reason of :- 1. Service tax portion 4,35,34,442/- As this portion pertain to service tax payable by the assesse....
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....d profits embedded in the turnover can only be taxed. The assessee did not produce vouchers / bills to support the increase in expenditure in his revised P & L account. Therefore, instead of 8% of turnover to be included as profits on undisclosed turnover, we hold that an amount equivalent to 12% of turnover be included in the income of assessee. In view of the above, the A.O. is directed to delete the addition on account of unrecorded turnover.. Income Tax Appellate Tribunal Delhi, Kayyum Ahamed, Meerut vs Assessee on 22 May, 2015- Annexure-4 2. Delhi High Court in Court On its Own Motion v. UOI and Ors-2013-TIOL- 207-HC-DEL-IT in its judgement dated 14.03.2013 Apex Court in the above referred case, started with these words, Whether computerisation and Central Processing of Income Tax Returns is a boon or bane is rather simple to answer, as benefits of computerisation easily outweigh and outscore any argument to the contrary. Computerization does away with human or manual element and the frailties attached and ensures transparency besides being quick and fool proof. Alas, it is a human element and frailties which have resulted in the present Public Interest Litigation. Th....
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.... Assessing Officer, we pray before your goodself for deletion." 8.4 The ld. CIT(A) deleted the said addition and the relevant extract of the ld. CIT(A) is reproduced as under: "4.6. Ground no 4: That the learned Assistant Commissioner of Income Tax has erred both in law and facts treating total revenue of Rs. 42,83,56,417/- in spite of correct revenue of Rs. 35,11,26,671/- and therefore mere fact non-3 reconciled revenue with form 26AS could not be a ground to bring income chargeable to tax under the Act. 4.6.1. The AR has submitted that: "That the learned Assessing officer has erred both in law and facts treating total revenue of Rs. 42,83,56,417/- in spite of correct revenue of Rs. 35,11,26,671/- and therefore mere fact non-reconciled revenue with form 26AS could not be around to bring income chargeable to tax under the Act. As per form 26AS (At that time) gross amount on which TDS deducted by Real Estate companies (customer) on their Brokerage expense. Gross amount show is Rs. 42,83,56,417/-Whereas the assessee company has credited total revenue income amounting to Rs. 35,11,26,671/- in its Profit and Loss account. The learned asse....
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....emand report of the AO dated 08.01.2018, the appellant has submitted basis of difference of Rs. 7,72,29,746/- in form 26AS and the Income disclosed in profit and loss a/c. The appellant has contended that as the company has maintained regular books of accounts and is audited u/s. 44AB, all the income is credited in P & L a/c may duly be accepted and has submitted that it is totally unjustified to consider income as referred in form 26AS. 4.6.3.3. The appellant has submitted the basis of difference of Rs. 7,72,29,746/- in form 26AS and the income disclosed in profit and loss a/c. The same is reproduced below: (1) Service Tax portion (Rs. 4,35,34,442/-):-As this portion pertains to service tax payable by the appellant company, it should not be considered as income because the Deductor has deducted TDS on the gross part inclusive of Servicetax as charged by the appellant. As this portion pertain to service tax payable by the appellant company. Payable (Credit) portion of Service tax cannot be treated as Income. As the company is a broker of various real estate company, the Real Estate companies used to deduct TDS, but showed gross amount (Inclusive of service tax) in....
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....m 26AS of the appellant, which cannot be termed as income. As this portion pertains to service tax. Further, the appellant Company has relied upon the following case laws: (1) Hon'ble Gujarat High Court (CIT Vs President Industries 250 ITR 654.} (ii) Income Tax Appellate Tribunal - Delhi, Kayyum Ahamed, Meerut vs Assessee on 22 May, 2015, ITA No. 2410/Del/2013 (iii) Delhi High Court in Court On its Own Motion v. UOI and Ors - 2013-TIOL- 207-HC-DEL-IT dated 14.03.2013 M/s. Lord Krishna Realinfra Pvt. Ltd. Appeal No. 56/2017-18 (iv) ITA No.121/Mds/2016 P.K. Rajasekar Vs. I.T.O. Chennai ITAT. (v) Ι.Τ.Α. No. 4157/Del/2011, ITO Vs. Sh. Pankaj Vij, Rohtak. (vi) ITO vs. Ch. Atchaiah (1966) 218 ITR 239 (SC). 4.6.3.4. The Appellant Company has submitted as these differences have been reconciled and have been explained, merely based upon reporting in the form 26AS, the addition to income cannot be made. This addition for Rs. 7,72,29,746/- has been made without any substantive evidence except for Rs. 6,64,597/-, which has been admitted by the Appellant to be unsubstantiated. The submissions fil....