ACIT Vs Tiktok Enterprises (ITAT Mumbai)
In the case of ACIT vs Tiktok Enterprises, the Income Tax Appellate Tribunal (ITAT), Mumbai, adjudicated four appeals filed by the Revenue along with corresponding cross objections filed by the assessee against orders passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. The dispute related to multiple assessment years from 2019–20 to 2022–23, arising out of reassessment proceedings initiated urnder Section 147 of the Income-tax Act.
The primary issue involved deletion of additions made by the Assessing Officer (AO) on account of alleged bogus consultancy expenses and related commission payments. The AO had relied on information received from the Investigation Wing following search and seizure actions conducted on certain third parties, including individuals associated with the ARC Group. Statements recorded during these proceedings suggested that accommodation entries were being provided for bogus transactions. Based on this information, the AO treated certain consultancy payments made by the assessee as unexplained expenditure under Section 37(1) and added commission expenses under Section 69C.
During assessment proceedings, the assessee explained that it was engaged in providing consultancy services to export and import houses and regularly engaged independent professionals such as Chartered Accountants. The assessee submitted detailed documentary evidence, including engagement letters, invoices, ledger accounts, bank statements, and proof of tax deducted at source (TDS), to substantiate the genuineness of the consultancy expenses. It was also contended that some transactions alleged by the AO were not entered into by the assessee.
