Ankit Aggarwal vs CIT(Appeal)

PER MANISH AGARWAL, AM :

The present appeal is filed by assessee against the order dated 02.04.2025 of Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. CIT(A), Delhi-11/10226/2018-19 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 12.12.2018 passed u/s 143(3) of the Act pertaining to Assessment Year 2016-17.

Briefly stated facts are that the assessee is an individual and derived income from salary and business profession and income from other sources. During the course of year under appeal, the assessee was proprietor of FLIVE engaged in the business of providing advertisement services through website www.dare2compete.com. The return of income was filed on 27.01.2017, declaring total income of INR 28,56,100/-. The case of the assessee was selected under limited scrutiny for the reason “whether deduction claimed on account of business expenses as admissible”. The notice u/s 143(2) was issued on 11.07.2017 followed by the notices issued u/s 142(1) of the Act alongwith questionnaires from time to time. In response, assessee has filed certain details before the AO however, AO was of the opinion that expenses on account of commission of INR 18,23,966/- paid to various parties, is not properly explained and therefore, the same was disallowed. Besides this, out of total expenses of INR 22,77,822/- claimed by the assessee, a sum of INR 17,78,219/- were disallowed by holding that the assessee has not filed the details alongwith satisfactory explanation with respect to the expenses incurred wholly and exclusively for the purpose of business and accordingly, the total income was computed at INR 64,58,290/-.

Against the said order, the assessee filed appeal before Ld. CIT(A) who vide impugned order dated 02.04.2025, dismissed the appeal of the assessee thus, the assessee is in appeal before the Tribunal.

Ground of appeal No.1 is general in nature, needs no separate adjudication.

Ground of appeal Nos. 2 to 4 raised by the assessee are with respect to the disallowance of commission expenses of INR 18,23,966/- and other expenses of INR 17,78,219/-.

Before us, Ld.AR for the assessee submits that assessee has filed all the details with respect to the commission expenses and other expenses before Ld.CIT(A). However, Ld.CIT(A) has not gone through any such details and confirmed the additions/disallowances made by the AO. Ld.AR submits that assessee has failed to file the application for admission of additional evidences before Ld. CIT(A) with respect to the documents submitted however, it is submitted that all these documents are crucial in nature therefore, Ld.CIT(A) should have considered the same before deciding the issue. He thus, requested that details so filed by the assessee be admitted as additional evidences and an opportunity be provided to the assessee to represent his case before the lower authorities properly.

On the other hand, Ld. Sr. DR for the Revenue vehemently supported the orders of the lower authorities and submits that the assessee has failed to furnish the details before the AO despite of repeated opportunities provided. He further submits that even notice u/s 271(1)(b) of the Act was issued for non-representation before the AO. Despite all these facts, the assessee has failed to file the relevant details before the AO to substantiate the nature and purpose of the expenses claimed. He therefore, requested for the confirmation of the disallowance made by the AO.

Heard the contentions of both the parties at length and perused the material available on record. From the order of lower authorities, it is observed that before the AO, the assessee has filed certain details with respect to the payments of commission made however, the AO has disallowed the same as neither the confirmation nor other evidences were filed with respect to the payments made to the parties. It is further observed that before Ld.CIT(A), the assessee has filed bank statements of the recipients as well as other details of the commission expenses were claimed. Likewise with respect to the expenditure disallowed, before the AO, the assessee has failed to file the details which were filed before Ld. CIT(A) as additional evidences. Though all these details were not filed before the AO however, in the larger interest of justice, in our considered opinion, one more opportunity should be given to the assessee to establish the purpose of the expenses as incurred wholly and exclusively for the purpose of business. Therefore, we set aside both the orders of the lower authorities and remand the issue to the file of AO with the directions to examine the issue to the file of AO under the head “business or profession” based on the details filed by the assessee and passed the assessment order denovo afresh. The assessee is also directed to appear before the AO and file all the necessary details. With these directions, Grounds of appeal Nos. 2 to 4 raised by the assessee are allowed for statistical purposes.

In the result, appeal of the assessee is allowed for statistical purposes.