TaxTMI 
TaxTMI 
2026 (8) TMI 1423
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.... on 31.12.2023 by declaring a total income of Rs. 11,35,90,330/-. The case selected for complete scrutiny under CASS. During the course of assessment, the AO disallowed the commission paid of Rs. 32,56,324/- and lorry tips expenses of Rs. 62,30,330/-. Further, the AO also added an amount of Rs. 1 crore as unexplained cash credit on account of loan from Mr.A.Karuppaih u/s. 68 of the Act by passing an assessment order u/s. 143(3) of the Act dated 21.03.2025. 3. Aggrieved by the additions made by the AO, the assessee preferred an appeal before the ld.CIT(A). The assessee filed a detailed submission before the ld.CIT(A) and pleaded that the additions made is not warranted as the assessee had filed the complete details in respect of the impugned additions. Further, the assessee also stated that the loan amount of Rs. 1.00 crore was received from Mr.A.Karuppaiah, who has declared an income of Rs. 1,39,35,010/- during the year and also filed a confirmation letter from the lender. The assessee also filed a certificate from State Bank of India confirming the RTGS received from Mr.A.Karuppaih's bank account to the assessee's account. Therefore, the assessee submitted that the identity, ge....
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....t the authorities have erred in making the disallowance on account of commission, for the sole reason that the recipient has not responded to the notices issued u/s. 133(6) of the Act, which was not under the control of the assessee. In support of the aforesaid contention, reliance is placed on the decision of the Kolkata Bench of the Tribunal in Unique Finance & Securities Private Limited v. ACIT, ITA No.110/Kol/2025, order dated 13.05.2025, wherein the Tribunal, while holding that an addition cannot be sustained merely on account of non-compliance with notices/summons issued under sections 133(6) and 131 of the Act, particularly when the assessee has discharged the initial onus by furnishing the requisite documentary evidences, placed reliance, inter alia, on the following judicial precedents: (i) CIT v. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC); (ii) CIT v. Orchid Industries (P.) Ltd. (2017) 397 ITR 136 (Bom); (iii) Crystal Networks Pvt. Ltd. v. CIT (2013) 353 ITR 171 (Cal); (iv) ITO v. Cygnus Developers India Pvt. Ltd., ITA No.282/Kol/2012; and (v) Joy Consolidated Pvt. Ltd. v. ITO, ITA No.547/Kol/2020, order dated 12.06.20....
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...., the payment of refreshment expenses paid to the drivers and cleaners as tips is a customary practice, which has to be allowed as an admissible business expenditure. 9. In support of the above arguments, the ld.AR relied on the decision of the Hon'ble High Court of Karnataka in the case of Sri.Ganesh Shipping Agency v. ACIT, in ITA No.366 of 2015, dated 06.02.2021, the Hon'ble High Court, having noticed that the books of account maintained by the assessee had been accepted by the Revenue and no specific defects therein had been pointed out, held that an ad hoc disallowance of expenditure merely on the ground that the payments were made in cash and were supported by self-made vouchers could not be sustained. The Hon'ble High Court further took note of the commercial expediency and prevailing trade practice involved in incurring such expenditure and accordingly deleted the estimated disallowance. 10. In view of the above, the ld.AR prayed for deleting all the additions, which were confirmed by the ld.CIT(A) by allowing the appeal of the assessee. 11. Per contra, the ld. DR strongly supported the orders of the lower authorities and submitted that the disallowance made by the....
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....h such notice may constitute a circumstance requiring further verification; however, by itself, it cannot be treated as conclusive evidence that the underlying transaction is non-genuine, particularly when the documentary evidences furnished by the assessee have not been demonstrated to be false or fabricated. 16. It is also relevant that the Revenue has not brought on record any material to demonstrate that the commission payment has flown back to the assessee or that the recipient is a fictitious person. Nor is there any specific finding that the GST records, TDS particulars or banking transactions relied upon by the assessee are false or unreliable. Therefore, the mere non-response of the commission recipient to the notice issued u/s. 133(6) of the Act, in the facts of the present case, cannot override the other contemporaneous documentary evidence furnished by the assessee. 17. The principle that an addition cannot be sustained merely on account of non-compliance by the concerned party with notices issued u/s. 131/133(6) of the Act, when the assessee has discharged the initial evidentiary burden, also finds support from the judicial precedents relied upon by the assessee,....
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....ur notice from the orders of the lower authorities demonstrating that the bank transaction itself was fictitious, that the lender did not possess the stated financial capacity, or that the money transferred by the lender originated from the assessee itself. There is also no finding that the confirmation, income-tax return or bank records furnished in support of the loan transaction were false. In the absence of any such contrary material, the documentary evidences furnished by the assessee cannot be brushed aside merely on suspicion or on the basis of non-compliance by the creditor with departmental notices. 22. In the light of the aforesaid facts, we are satisfied that the assessee has discharged the initial burden cast upon it u/s. 68 of the Act by establishing the identity and prima facie creditworthiness of the lender as well as the genuineness of the transaction through documentary evidence. In the absence of any material brought on record by the Revenue to rebut such evidence, the addition of Rs. 1,00,00,000/- cannot be sustained. We, accordingly, set aside the finding of the ld. CIT(A) on this issue and direct the AO to delete the addition made u/s. 68 of the Act. The cor....
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....T v. Sri Clifford D'Souza and CIT v. Konkan Marine Agencies, 313 ITR 308 (Kar), in support of its contention. 27. Similarly, the Raipur Bench of the Tribunal in M/s Sunita Finlease Limited v. ITO, ITA No.244/RPR/2017, as relied upon by the assessee, has held that an ad hoc disallowance cannot be sustained in the absence of identification of any specific item of expenditure which is unverifiable or unsupported. The principle emerging therefrom is that an addition or disallowance cannot be founded merely on conjecture or general suspicion without pointing out a specific defect in the claim of expenditure. 28. In the present case, the authorities below have not brought on record any material to establish that the expenditure claimed by the assessee was fictitious or that the amount had been diverted for non-business or personal purposes. There is also nothing in the material placed before us to indicate that the books of account have been rejected or that the quantitative particulars concerning the assessee's business operations have been found to be false. The disallowance appears substantially to have proceeded on the ground that supporting documentary evidence/voucher....