In a recent ruling, the ITAT Delhi bench observed that disallowance of an expenditure without recording any reason is illegal when the veracity of the same is proved before the authority with all the documentary evidence.
The sole grievance of the appellant-assessee was that the Assessing Officer completed assessment by disallowed their claim for expenditure on account of commission on salewithout any basis. The assessee claimed that the amount of commission was paid after deducting tax and the all the documents proving the genuiness of the transaction had submitted before the Assessing Officer and therefore, the addition in respect of the same is not sustainable.
The Judicial Member noted that the genuineness of commission is fully supported and corroborated from various documentary evidences submitted to the Assessing Officer during the assessment proceedings.
Deleting the addition, the Learned Member observed, “I also find that the Assessing Officer has not made any comments in respect of the documentary evidences or even made any enquiry from the concerned parties and as such adverse inference was drawn on illegal and arbitrary basis. The payment being in respect of genuine business requirement after deduction of tax and the fact that the payee was also subjected to tax in respect of such payment of commission, there is no ground or basis for any disallowance, hence, the addition in dispute is deleted.”
Read the full text of the order below.
