ITAT Pune Deletes ₹1.66 Crore Adat Commission Disallowance as AO Failed to Prove Bogus Payments

Shobha Sudamrao Tagad Vs ITO (ITAT Pune)

Summary: The Pune Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal for assessment year 2023-24 and deleted the disallowance of Adat commission expenses of ₹1,66,28,204 under Section 37(1) of the Income-tax Act, 1961. The assessee, proprietor of Laxmi Traders, acted as a commission agent in the agricultural produce market, facilitating transactions between farmers and traders. Against Adat income of ₹2,78,74,187, she claimed the disputed expenses for payments to other intermediaries. The Assessing Officer questioned the necessity and genuineness of those payments because the assessee was herself a commission agent, performed the principal market functions and had claimed expenditure representing 59.65% of her commission receipts.

The CIT(A)/NFAC sustained the entire disallowance, emphasising the absence of agreements, invoices, confirmations and contemporaneous evidence identifying the services performed by the alleged sub-agents. It considered banking payments and TDS compliance insufficient by themselves and rejected reliance on earlier years because those returns had been accepted through summary assessments. Before the Tribunal, the assessee explained that agricultural market transactions commonly operate informally and that demanding corporate-style documentation overlooked the practical nature of the business. She relied on audited accounts, bank statements, cash book, ledger accounts, farmer-wise information, and the names, addresses and PAN of sub-agents. She also submitted that payments were made by account payee cheques after deduction of tax under Section 194H, that recipients were identifiable and had offered the income to tax, and that there was no finding that the recipients were fictitious or that payments had returned to her.

The Tribunal accepted that the relevant records had been produced, the accounts were audited under Section 44AB, and neither the auditors had identified defects nor the Assessing Officer had rejected the books. It also noted that similar expenses had been accepted in preceding years, albeit in summary assessments, and those assessments had not subsequently been reopened. Applying the Supreme Court’s ruling in CIT Vs Walchand & Co., the Tribunal held that commercial expediency and the reasonableness of business expenditure must be examined from the businessman’s viewpoint. Considering the supporting records, identifiable recipients, banking payments, TDS compliance and earlier treatment, it held that the entire expenditure could not be disallowed merely on presumptions and surmises. It therefore set aside the CIT(A)/NFAC’s order, directed deletion of the addition and allowed the appeal.

Cases Discussed

• Mangalya Ceramics Vs DCIT; ITA No.546/Ahd/2020; 24.03.2023; Assessment Year 2014-15 (ITAT Ahmedabad). The CIT(A)/NFAC relied on this decision concerning proof of services and the payee’s capacity. The assessee distinguished it by reference to the nature of agricultural market operations and the supporting particulars furnished in the present case.
• M/s. Kachwala Gems Vs JCIT, (2006) 206 CTR (SC) 585 : 288 ITR 10 (Supreme Court). Cited in the reproduced CIT(A)/NFAC findings for the proposition that account payee cheque payments alone do not establish genuineness.
• M/s. Kachwala Gems Vs JCIT; ITA No.134/JP/2002; 10.12.2002 (ITAT Jaipur). The reproduced appellate findings referred to this decision, stated to have been affirmed by the Supreme Court, while questioning whether banking payments established the underlying transactions.
• CIT Vs Bata India Ltd., (1993) 201 ITR 884 (Calcutta High Court). The assessee cited this decision in support of the claimed deductibility of commission and promotional expenditure under Section 37(1).
• Radhasoami Satsang Vs CIT, (1992) 193 ITR 321 (Supreme Court). The assessee invoked the rule of consistency because similar expenditure had been accepted in earlier years.
• CIT Vs Walchand & Co., (1967) 65 ITR 381 (Supreme Court). Applied by the Tribunal to assess commercial expediency and reasonableness from the businessman’s viewpoint rather than that of the Revenue.

FULL TEXT OF THE ORDER OF ITAT PUNE

This appeal filed by the assessee is directed against the order dated 19.11.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2023-24.

2. Facts of the case, in brief, are that the assessee is an individual and has filed her return of income on 26.09.2023 declaring total income of Rs.1,10,36,610/-. The case was selected for scrutiny under CASS for the following reasons:

a. High value cash withdrawals reported in SFT or u/s 194N

b. High income reported in the return and no entry in Schedule Assets and Liabilities of return of income.

3. Accordingly, statutory notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was issued and served on the assessee in response to which the assessee filed various details from time to time. During the course of assessment proceedings the Assessing Officer observed from the Profit and Loss Account filed by the assessee that the assessee has debited Adat expenses amounting to Rs.1,66,28,204/-. On being questioned by the Assessing Officer it was explained that the assessee is the proprietor of Laxmi Traders and she is acting as a commission agent (Adat business). It was explained that the Commission agents act as intermediaries between farmers and traders, facilitating the sale of agricultural products. To substantiate the claim of expenses the assessee submitted copy of discount account, contractor account and Adat expenses.

4. However, the Assessing Officer was not satisfied with the submissions made by the assessee from time to time. He observed that the assessee was purely a commission agent and no goods were sold by the assessee in market on her own name. Farmers bring their agriculture produce (onion) in the market and the assessee receives amount of sale proceed from traders and make payment to farmers and receives commission @ 6%. On going through the Profit and Loss Account he observed that the assessee had shown Adat income of Rs.2,78,74,187/- and also shown Adat expenses at Rs.1,66,28,204/-. He, therefore, asked the assessee to provide complete details and applicability of such Adat expenses. The assessee in her detailed written submission gave explanation on the points – Improved Market Reach, Efficient Logistics, Cost Saving, Enhanced Customer Service, Streamlined Operations, Increased Turnover and profitability.

5. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. He observed that when the assessee received commission income in the form of Adat at Rs.2,78,74,187/- and took all responsibilities and guarantee of payment on behalf of traders, then applicability and genuineness of expenses incurred at Rs.1,66,28,204/- is not genuine which is 59.65% of total income. Further, according to the Assessing Officer the assessee failed to provide proper justification in respect of relation of such expenses with its business activity when she is a commission agent herself and therefore commission expenses paid to other is not justified. According to the Assessing Officer, mere providing the list of persons and TDS deductions from persons to whom payment was made on account of Adat expenses is not a satisfactory documentary evidence in itself. He, therefore, proposed the disallowance of Rs.1,66,28,204/-. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs.1,66,28,204/- to the total income of the assessee by observing as under:

4.4 Point-wise rebuttal of reply of the assessee including analysis of any case law relied upon-

The reply filed by the assessee is carefully considered. On perusal of the reply, as well as documentary evidences, it is found that the assessee repeated the facts submitted earlier and didn’t provide any additional evidence. After consideration of the reply and documents provided by the assessee, it was already communicated in the Show Cause Notice that the assessee was purely commission agent and no good(s) was sold by the assessee in market on her own name. Farmers bring their agriculture produce (Onion) in the market and assessee receives amount of sale proceed from traders and made payment to farmers and received commission @6%. On going through the P&L A/c for the period under consideration, it was observed that the assessee shown Adat Income at Rs. 2,78,74,187 and also shown Adat Expenses at Rs. 1,66,28,204/-. The applicability of Adat Expenses was found under suspicion. In response to the same, the assessee submitted its written submission by giving explanation on the points- Improved Market Reach, Efficient Logistics, Cost Saving, Enhanced Customer Service, Streamlined Operations, Increased Turnover and Profitability. As when the assessee received commission income in the form of Adat at Rs. 2,78,74,187/- and took all the responsibilities and guarantee of payment on behalf of traders, then applicability and genuineness of expenses occurred at on account of commission paid amounting to Rs. 1,66,28,204/- is not found genuine which is 59.65% of total Commission received by the assessee herself. Further, when she is a commission agent herself then commission expenses paid to others is not found justified. The assessee failed to prove its genuineness. Just by providing the list of persons and TDS returns of persons to whom payment was made on account of Adat Expenses is not a satisfactory documentary evidence(s) in itself. Moreover, there is major variations in the rate of commission paid by the assessee to the others are found at very high rate i.e. 20.5% to 28%. Therefore, percentage of commission is also found in suspicion.

All the activity regarding sales of the crop of the farmers was made by the assessee herself and the payment made to the farmers was done through the assessee’s bank account. The expenses regarding loading and unloading, market fees, grading (sorting out the poor/spoiled quality) was also done by the assessee by herself. Therefore, there is no sense of commission payment to others. As it is clear that the assessee made this payment to reduce her income. Hence, as per the above discussion, Adat expenses amounting to Rs. 1,66,28,204/- is not found genuine and being disallowed and proposed to be added back to the income of the assessee. Further, penalty proceedings u/s 270A for under-reporting of income which is inconsequence of mis-reporting thereof is being proposed to be initiated.

4.5 Conclusion drawn:-

As per the discussion made earlier, the assessment is being made as per the variations discussed in the Show Cause Notice dated 05.02.2025 and commission expenses amounting to Rs. 1,66,28,204/- is being disallowed and added back to the income of the assessee. Further, penalty proceedings u/s 270A for under-reporting of income which is inconsequence of mis-reporting thereof is initiated.

6. In appeal the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer by observing as under:

7.4. I have carefully considered the submissions of the appellant, the material placed on record, and the findings of the Assessing Officer. The core issue pertains to the genuineness and business necessity of Adat expenses aggregating to Rs. 1,66,28,204/-, which constitute nearly 60% of the appellant’s own commission income of Rs. 2,78,74,187/-. Such an unusually high scale of payments, by its very nature, casts a heavy burden on the appellant to substantiate not only the identities of the recipients, but also the nature of services rendered, contractual terms, justification of rates, capacity of the alleged agents, and the business rationale for incurring commission of such magnitude. However, except for furnishing a list of names, payments made, and TDS compliance, the appellant has not produced any agreements, invoices, confirmations, correspondence, or other contemporaneous documents to demonstrate what specific services were rendered by these alleged sub-agents, on what terms they were engaged, or how the high rates of Rs. 20.5 to Rs. 28 per bag were mutually determined. No document evidencing the relationship between the appellant and the payees has been furnished, nor has the appellant brought on record any material establishing the capacity, infrastructure, or business involvement of such persons in procuring agricultural produce or facilitating transactions on behalf of the appellant.

7.5. It is further noted that although the appellant repeatedly claimed that such payments were made “as per industry norms,” no market study, trade circular, APMC records, comparative data, or similar-industry instances have been produced to corroborate the assertion. The appellant, being herself a licensed commission agent performing all responsibilities, collection of sale proceeds, distribution of payments to farmers, loading/unloading, grading, arranging bids, maintaining books, and handling market-fee compliance, has not satisfactorily explained why additional intermediaries were required or what incremental value they provided to justify commission payouts nearly equal to three-fifths of her own commission receipts. In the absence of any demonstrable evidence of the actual work done by the recipients or the necessity of engaging them, the mere routing of payments through banking channels and the deduction of TDS cannot establish the genuineness of the expenditure. Judicial precedents have consistently held that bank payments and TDS deduction do not, by themselves, prove that services were rendered. The claim of the appellant regarding transactions undertaken through the banking channel cannot prove the genuineness of the transaction as the payment through banking channel does not give bona fide to the appellant that the claim of genuineness of expenses were genuine. Support is drawn from the decision of the Hon. ITAT, Jaipur in the case of M/s.Kachwala Gems vs. JCIT [ITA No. 134/JP/2002, dated 10.12.2002], affirmed by the Hon’ble Supreme Court in the case of M/s. Kachwala Gems vs. JCIT (2006) 206 CTR (SC) 585 : 288 ITR 10 (SC), wherein it has been held that even payment by account payee cheque is not sufficient to establish the genuineness of transactions. The appellant has not produced any independent corroborative evidence to substantiate the transaction. The lack of evidence clearly demonstrates that the transaction lacks any independent verification or commercial substance, and the appellant has failed to discharge the onus of proving the creditworthiness, and genuineness of the alleged commission paid as mandated under the Act.

7.6. The appellant has also not furnished any confirmations from the alleged commission recipients, nor any statements explaining their role in bringing produce to the appellant or facilitating the trade. No evidence (such as farmer-wise or trader-wise linkage) has been provided to show that these persons acted as sub-agents, nor has any material been brought on record to establish their business capability to undertake such functions. When commission is claimed to have been paid at exceptionally high rates, the absence of documentary evidence regarding the terms of engagement, methodology of computation, and proof of performance is fatal to the claim. As held by the Hon’ble ITAT, Ahmedabad bench in Mangalya Ceramics and connected cases, where the assessee fails to establish (i) the services agreed to be rendered, (ii) the capacity of the payee to render such services, and (iii) the actual rendering of services, the expenditure becomes non-verifiable and is liable for disallowance u/s 37(1) notwithstanding that payments are made through banking channels or that the recipients have offered income to tax.

7.7. Applying the ratio of Mangalya Ceramics (ITAT Ahmedabad) to the present case, it is evident that the appellant has not discharged the primary onus of proving the genuineness of the commission expenditure. The appellant has produced no contemporaneous documentation, and no material showing that the alleged agents procured farmers, arranged transactions, or carried out any activity corresponding to the commission paid. As in Mangalya Ceramics, the absence of service evidence, coupled with disproportionate commission rates, renders the expenditure non-genuine. The Tribunal has categorically held that the AO is not bound to accept commission payments merely because they have been made through banking channels or accepted in earlier years, and that the test of commercial expediency must be satisfied through substantive evidence, not assertions.

7.8. The appellant has also placed reliance on the fact that in earlier years similar Adat expenses were claimed and no adverse inference was drawn by the Department. In support, past year records have been furnished to contend that the expenditure has been consistently accepted. However, on careful examination, it is seen that in none of the earlier years was the case taken up for scrutiny under section 143(3). Hence, the genuineness and business nexus of such expenses were never examined by the Department. A mere acceptance of the return under section 143(1) does not amount to an affirmation of the correctness of the claim. The principle of consistency cannot apply where the issue itself was never subjected to scrutiny. Since the appellant’s Adat expenditure was never scrutinized in earlier years, and current detailed scrutiny has revealed a complete absence of agreements, invoices, confirmations, proof of services, or capacity of alleged sub-agents, the past acceptance of the claim cannot assist the appellant.

7.9. In view of the detailed discussion above, it is clear that the appellant has failed to substantiate the genuineness, necessity, and business nexus of the Adat expenses claimed. No corroborative evidence such as agreements, invoices, confirmations, evidence of actual services rendered, justification for the high commission rates, or proof of capacity of the alleged agents has been furnished. The disproportionately high commission expenditure amounting to Rs. 1,66,28,204/-, being nearly 60% of the appellant’s own commission income, remains wholly unexplained. The Assessing Officer has correctly held the expenditure to be non-genuine and not incurred wholly and exclusively for the purposes of business under section 37(1). Accordingly, the disallowance of adat expenses made by the Assessing Officer is confirmed. Accordingly, the Ground Nos. 1, 2, 3 and 4 are hereby dismissed.

7. Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal by raising the following grounds:

The following grounds are taken without prejudice to each other-

On facts and in law,

1. The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi “the learned CIT(A)”) has erred in law and on facts in passing the order dated 19.11.2025 under section 250 of the Income-tax Act, 1961, which is arbitrary, perverse, contrary to facts on record, and liable to be quashed.

2. The learned CIT(A) erred in confirming the disallowance of Rs.1,66,28,204/ made by the Assessing Officer on account of Adat commission expenses under section 37(1) of the Act. without appreciating that the said expenditure was wholly and exclusively incurred for the purposes of the appellant’s business.

3. The learned CIT(A) failed to appreciate the nature of commission agency (Adat) business in APMC markets, wherein payment of commission to sub-agents, brokers, and facilitators is a recognized and customary trade practice essential for business operations.

4. The learned CIT(A) erred in law and on facts in holding the Adat expenses to be non-genuine without recording any finding that the payments were bogus, sham, fictitious, or returned to the appellant, and merely on suspicion and conjectures.

5. The learned CIT(A) erred in confirming the disallowance primarily on the ground that the expenditure constituted a high percentage of commission income, which is not a legally permissible basis for disallowance under the Act.

6. The learned CIT(A) failed to properly consider and appreciate the documentary evidence placed on record, including:

• • regularly maintained books of account,
  • ledger accounts,
  • bank statements,
  • details of payees,
  • deduction and deposit of TDS,

all of which clearly established the genuineness of the expenditure.

7. The learned CIT(A) erred in law in placing an unwarranted and excessive burden on the appellant by insisting upon production of agreements, invoices, and confirmations, ignoring the practical realities of agricultural market transactions.

8. The learned CIT(A) failed to appreciate that commercial expediency and business necessity are to be judged from the viewpoint of the businessman and not that of the revenue authorities, and wrongly substituted his own judgment for that of the appellant.

9. The learned CIT(A) erred in relying upon judicial precedents which are factually distinguishable, while ignoring settled law that banking-channel payments and TDS compliance cannot be disregarded without contrary evidence.

10. The learned CIT(A) failed to appreciate that the books of account of the appellant were neither rejected under section 145 nor found to be incorrect, rendering the wholesale disallowance unjustified.

11. The learned CIT(A) erred in law in upholding the initiation of penalty proceedings under section 270A of the Act, despite the issue being purely debatable and involving a difference of opinion, with full disclosure of all material facts by the appellant.

12. Without prejudice to the above grounds, the learned CIT(A) erred in confirming the entire disallowance, instead of restricting the same to a reasonable amount, if at all warranted.

13. The appellant craves leave to add, alter, amend, or withdraw any of the above grounds at or before the time of hearing.

8. The Ld. Counsel for the assessee strongly challenged the order of the Ld. CIT(A) / NFAC in confirming the addition made by the Assessing Officer.

9. The Ld. Counsel for the assessee filed the Profit and Loss Account in respect of Laxmi Traders for the years ended 31.03.2019 to 31.03.2024 which are as under:

10. Referring to the above profit and loss account for the preceding and subsequent years he submitted that such Adat expenses debited in the profit and loss account has been allowed.

11. He submitted that the Adat expenses incurred by the assessee are revenue expenditure incurred wholly and exclusively for the purpose of business and books of account of the assessee are audited. The assessee has filed the bank account statements, cash book and ledger accounts, farmer-wise details, sub-agents details along with the names, addresses and PAN. The assessee has deducted due TDS as per the provisions of section 194H of the Act. He submitted that the books of account were audited u/s 44AB and were never rejected u/s 145 of the Act. Further, no specific defect was pointed out by the Assessing Officer who has made 100% disallowance of a particular expense on suspicion which is impermissible. He submitted that all the payments were made by account payee cheques with due TDS compliance and all the recipients are identifiable and their income has been offered to tax. Further, the Assessing Officer has not given any finding that the recipients were fictitious or that the payments were subsequently returned to the assessee. Relying on various decisions, he submitted that since the assessee fulfils all the conditions of section 37(1) of the Act, therefore, the same should be allowed as deduction in full.

12. Referring to the decision of Hon’ble Supreme Court in the case of CIT vs. Walchand & Co. reported in (1967) 65 ITR 381 (SC), he submitted that the Hon’ble Supreme Court in the said decision has laid down that the commercial expediency is to be judged from the prudent businessman/s viewpoint and not the Revenue’s.

13. Referring to the decision of Hon’ble Calcutta High Court in the case of CIT vs. Bata India Ltd. reported in (1993) 201 ITR 884 (Calcutta), he submitted that the Hon’ble High Court in the said decision has held that commission and promotional expenses to maintain and expand the sales network are allowable u/s 37(1) of the Act.

14. So far as the observation of the Ld. CIT(A) / NFAC that the assessee failed to produce agreements, invoices and confirmations from the sub-agents is concerned, he submitted that this demand is contrary to the practical realities of agricultural market operations. He submitted that the transactions in APMC markets particularly with farmers and village level sub-agents are typically conducted informally and do not involve formal written agreements. Therefore, insisting upon such documentation as if dealing with corporate transactions is unrealistic and places an excessive burden on the assessee.

15. So far as various decisions relied upon by the Ld. CIT(A) / NFAC are concerned, he submitted that these are not applicable to the facts of the present case.

16. So far as the decision of the Ahmedabad Bench of the Tribunal in the case of Mangalya Ceramics vs. DCIT vide ITA No.546/Ahd/2020 order dated 24.03.2023 for assessment year 2014-15 relied on by the Ld. CIT(A) / NFAC is concerned, he submitted that the said decision is distinguishable and is not applicable to the facts of the present case. In that case the assessee failed to establish the services agreed to be rendered, the capacity of the payee to render such services and the actual rendering of services. Accordingly it was held that the expenditure is liable to be disallowed. Further, that was a manufacturing concern where the nature of the commission claimed was fundamentally different from Adat expenses in an agricultural commodity market. He submitted that the assessee in the instant case has furnished the names, addresses and PAN of all sub-agents, TDS returns, bank statements and farmer-wise commission details. The sub-agents are identifiable and their income has been offered to tax. Therefore, this case is materially different from a case where the recipients are untraceable. Further, the services rendered by the sub-agents in APMC market cannot be documented in the manner of services in a corporate or industrial context. Therefore, the standard of documentation applied in the case of Mangalya Ceramics vs. DCIT (supra) cannot be imported into agricultural market transactions.

17. The Ld. Counsel for the assessee submitted that in earlier assessment years similar expenses were claimed and has been accepted by the Revenue. The observations of the Ld. CIT(A) / NFAC that none of the earlier years was taken up for scrutiny u/s 143(3) of the Act and therefore, that cannot be the basis for allowing commission for this year cannot be accepted in view of the rule of consistency. He submitted that the expenses incurred year after year in the ordinary course of business is itself a significant indicator of its commercial necessity.

18. Referring to the decision of Hon’ble Supreme Court in the case of Radhasoami Satsang vs. CIT reported in (1992) 193 ITR 321 (SC), he submitted that the Hon’ble Supreme Court in the said decision has held that although res judicata does not strictly apply to income tax proceedings and each assessment year is a separate unit where a fundamental aspect has been found one way or the other and the parties have allowed that position to stand over the years it is not appropriate to permit it to be altered in a later year absent a change in facts or law. He accordingly submitted that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) / NFAC is liable to be deleted.

19. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC.

20. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case disallowed Adat expenses of Rs.1,66,28,204/- u/s 37(1) of the Act on the ground that such payment of huge commission is not genuine which is 59.65% of total income received by herself. According to him, when the assessee herself is a commission agent, then commission expenses paid to others is not justified and the assessee failed to prove its genuineness. We find the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that such expenses were laid down wholly and exclusively for the purpose of business. The books of account of the assessee are audited and the auditors have not pointed out any defect. It is also his submission that in the earlier assessment years such commission expenses have been allowed and no adverse view has been taken by reopening of the assessment. Further, all the payments have been made through proper banking channel after due compliance of TDS provisions and the payees are identifiable and are not fictitious.

21. We find some force in the above arguments of the Ld. Counsel for the assessee. It is an admitted fact that the assessee has produced books of account along with bank statements, cash book, ledger accounts, farmer-wise details, sub-agents details along with the names, addresses, PAN etc. Due TDS has been deducted from the payment of commission. The books of account of the assessee were audited u/s 44AB of the Act and the auditors have not pointed out any defect. The Assessing Officer has also not rejected the books of account but has disallowed the entire expenses. It is an admitted fact that in the preceding assessment years the assessee has debited such type of Adat expenses and the Revenue has accepted the same although in summary assessments. However, it is an admitted fact that after this assessment was completed no reopening of such case has taken place. Under these circumstances, we find some force in the arguments of the Ld. Counsel for the assessee that the Assessing Officer cannot decide the issue by sitting on the chair of the Revenue.

22. We find Hon’ble Supreme Court in the case of CIT vs. Walchand & Co. (supra) has held that in applying the test of commercial expediency for determining whether the expenditure was wholly and exclusively laid out for the purpose of the business, reasonableness of the expenditure must be adjudged from the point of view of the businessman and not of the Revenue. Since in the instant case the assessee has produced all the relevant details including the name of recipients with their complete addresses and PAN, the payments have been made through proper banking channel after due compliance of TDS provisions, in the preceding years such Adat commission expenses have been debited by the assessee in the Profit and Loss Account and has been accepted by the Revenue although in summary assessment and the books of account of the assessee have not been rejected by the Assessing Officer, therefore, we are of the considered opinion that Adat commission expenses incurred by the assessee during the year cannot be disallowed on its entirety merely on the basis of presumptions and surmises. We, therefore, set aside the order of the Ld. CIT(A) / NFAC and direct the Assessing Officer to delete the addition. The grounds raised by the assessee are accordingly allowed.

23. In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open Court on 13th October, 2026.