Smt. Suman Prakash Utekar Vs ACIT (ITAT Mumbai)
The Mumbai ITAT set aside the disallowance of ₹95.81 lakh commission expenditure, holding that mere non-response to notices u/s 133(6) cannot justify addition without proper verification, and restored the matter to the AO for fresh examination.
The AO had:
- Disallowed commission expenses u/s 68 due to non-response by parties,
- Ignored that payments were made through banking channels with TDS deduction u/s 194H,
- Made further ad-hoc disallowances @20% on various expenses.
The CIT(A) upheld the additions, stating that:
- Cheque payments and TDS do not prove genuineness,
- Assessee failed to establish identity and business purpose of payees.
However, the ITAT observed:
- Books were audited and not rejected,
- Assessee had shown substantial profit (40%),
- AO failed to properly consider documentary evidence and explanations,
- Natural justice requires opportunity to substantiate claim.
Accordingly:
- Issue of commission disallowance was remanded to AO for fresh verification,
- Assessee directed to furnish supporting evidence and cooperate.
On ad-hoc disallowances:
- ITAT held 20% excessive and arbitrary,
- Restricted disallowance to 10%, balancing lack of full evidence with business reality.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2011-12, date of order 04.12.2025. The impugned order emanated from the order of the Ld. Assistant Commissioner of Income Tax Circle 21(3), Mumbai (for brevity the ‘Ld. AO’) order passed under section 143(3) r.w.s. 147 of the Act date of order 24.12.2018.
