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Judgment
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
This appeal arises from order dated 13.11.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by NFAC.
In this case, the AO passed an order dated 26.08.2021, through which commission payment amounting to Rs.128,68,549/- was disallowed on account of non-deduction of tax at source and another addition of Rs.119,41,155/- was made on account of an alleged difference in export sales as shown in the profit and loss account as against the figure mentioned in export to customers’ account.
The assessee approached the Ld. CIT(A) whereby he could succeed in getting relief on the addition on account of non-deduction of tax at source on commission paid to agent, but the addition on account of an alleged difference in export sales was confirmed.
The aggrieved assessee has approached the ITAT with grounds which challenge the action of Ld. CIT(A) and also grounds challenging the levy of interest u/s 234A/B/C of the Act and initiating penalty proceedings u/s 271AAC of the Act.
Before us the Ld. AR argued with the help of detailed paper books and written synopsis. It was the submission that the assessee has recorded the export sales at gross value and has debited the profit and loss account with export commission to agent which is being paid by the export customers and the assessee was receiving only the net consideration i.e. gross sales as reduced by the commission paid. It was pointed out by the Ld. AR that detailed documents regarding this accounting process was filed before the authorities below. It was the submission that the assessee cannot be taxed at more than what he has received. It was the submission that the value of gross sales has been substantiated by the shipping bills and invoices. It was also pointed out that this was an accounting principle which had been consistently followed. The Ld. AR demonstrated as a sample regarding the account of one Nigitalex International Limited, where the receipts were less of commission paid, whereby the export sales were recorded at gross value with the profit and loss account being debited with the export commission to agent. Thereafter, the Ld. AR relied on several orders of Coordinate Benches which supported the Ld. AR’s contention. The Ld. AR also pointed out that considerable documentation was filed before the Ld. CIT(A) through which fresh evidence under Rule 46A was requested to be admitted. Such details included party wise invoices and shipping bills pertaining to export sales and stock summary disclosing purchases made and export sales made.
The Ld. DR relied on the finding of Ld. AO and the finding of Ld. CIT(A) and stated that there is a clear finding on page 26 of the impugned order that the case was selected for complete scrutiny to verify the quantitative details of the export income of the assessee, about which he had consistently failed to provide the details as asked for by the authorities below.
We have considered the rival submissions and have gone through the records before us. We find that the assessee has submitted considerable details as proof of export turnover and the method of accounting followed by him. We find that through specific instances of customer’s account the assessee demonstrated the finer details of accounting principle followed by him. It appears to be a bit unjustified when the Ld. CIT(A) writes that required details were not filed by the assessee, even when a host of details were filed under Rule 46A. We find that there has been no attempt to consider the evidence filed by the assessee and at this stage we have analyzed the account statement filed before us and there is no hesitation in holding that the addition on account of alleged difference in export turnover is not merited. The addition sustained by the Ld. CIT(A) is directed to be deleted.
In the result, the appeal of the assessee is allowed.