Vinod Bhati Vs ITO (ITAT Delhi)
No Evidence? No 100% Addition Either: Tribunal Moderates Commission & Rent Claims- Delhi ITAT Opts for Reasonable Estimate
Assessee, a land-developer operating as Kuber Developers, claimed commission expenses of ₹1.65 crore for 4,317 small-value payments (₹2,000–₹4,800) to local agents engaged in plot-sales, & rental expenses of ₹25.32 lakh for various site offices. AO treated the entire commission as bogus citing lack of identity of recipients, absence of TDS, limited vouchers, & sharp jump in turnover; AO also disallowed ₹12,19,500/- rent for want of agreements. CIT(A) sustained both additions holding evidence insufficient.
Tribunal noted that AO initially proposed only 30% disallowance, but eventually disallowed 100%, which was inconsistent & excessive. Tribunal accepted Assessee’s plea that commission payments in small amounts in real-estate business are customary & below TDS threshold, and that full rejection would be unrealistic. Tribunal therefore held that 20% of commission should be disallowed to cover revenue-leakage concerns. On rent, since ledger & agreements were produced before Tribunal, it restricted disallowance to 50% of ₹12,19,500/- instead of entire amount. Matter was adjudicated finally rather than remanded to avoid prolonged litigation.
Result: Appeal partly allowed; commission disallowance restricted to 20% & rent disallowance restricted to 50%.
