Non-Mention of Agents’ Names on Bills Not Sufficient to Disallow Commission: ITAT Deletes ₹20.4 Lakh Addition [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the absence of agents’ names on bills alone cannot justify disallowance of commission or brokerage expenditure, particularly when the assessee has provided corroborative evidence to substantiate the payments.

The AO had disallowed the commission and brokerage expenditure claimed by the assessee, Truform Techno Products Private Limited on the ground that the bills did not carry the names of the agents to whom the payments were made.

However, the assessee had furnished complete details during the assessment, including names and addresses of the agents, PAN details, the quantum of commission paid, and proof of tax deduction at source (TDS) wherever applicable. Payments were also reflected in the assessee’s bank account, thereby demonstrating the genuineness of the expenditure.

The Commissioner of Income Tax (Appeals) [CIT(A)] accepted the assessee’s contention and deleted the addition, noting that the documentary evidence filed was sufficient to establish the genuineness of the payments. On further appeal, the Revenue argued that the AO was correct in questioning the claim because the bills themselves lacked agent identification.

The Tribunal observed that if the AO was unconvinced about the claim, he was duty-bound to conduct independent inquiries with the parties concerned. Disallowance merely because of non-mention of agents’ names on the face of the bills was held to be arbitrary and unsustainable.

The bench of Sanjay Garg (Judicial member) and Narendra Prasad Sinha (Accountant Member) stated that the assessee had discharged its onus by producing bank records and TDS details to prove the payments. In the absence of any contrary material or inquiry by the AO, the claim could not be disallowed.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates