The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) directed a fresh assessment in a case involving the disallowance of commission payments for non-deduction of TDS under Section 40(a)(ia) of the Income Tax Act,1961, considering additional evidence submitted under Rule 29 of the ITAT Rules, which was previously unavailable due to financial difficulties and legal proceedings related to loan defaults. Kokila Cotton Export Ltd,appellant-assessee,filed appeals against ex-parte appellate orders for the Assessment Years ( AY )s 2013-14, 2014-15, and 2015-16. Due to liquidity issues and legal proceedings related to loan defaults with the State Bank of India, the assessee was unable to present relevant documents during the assessment.

Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here The legal matter was settled, and a No Due Certificate was issued in 2018. The assessee submitted additional documents under Rule 29 of the ITAT Rules, requesting their admission in the interest of justice, citing a Gujarat High Court ruling. The assessee’s counsel said that for the AY 2014-15, the Commissioner of Income Tax (Appeals)[CIT(A)] did not fully consider the documents, leading to the confirmation of the additions.

The counsel asked for another chance to present the case before the Assessing Officer ( AO ), along with the other two years. The Senior Revenue Counsel, Shri Rignesh Das, had no objection to sending the matter back to the Assessing Officer to review the additional evidence. The tribunal considered the submissions and reviewed the documents presented. The key issue was the disallowance under section 40(a)(ia) for non-deduction of TDS on commission payments to foreign agents. It was acknowledged that the assessee had been in the export business for several years, and the commission payments were recurring. Due to financial difficulties and loan recovery actions by the State Bank of India, the assessee could not attend the appellate hearings. However, the required documents such as ledger accounts, bank advice, invoices, sales contracts, debit notes, Chartered Accountant certificates, and bank statements were now submitted under Rule 29 of the ITAT Rules.

Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here The appellate tribunal referred to the principles set by the Gujarat High Court in the Pari Mangaldas Girdhardas case for admitting additional evidence. It accepted the explanation provided by the assessee regarding the financial issues and allowed the new documents. The two member bench comprising T.R.Senthil Kumar ( Judicial Member ) and Narendra Prasad Sinha ( Accountant Member ) decided to remand the case to the AO, directing them to review the additional documents and pass a fresh assessment order in accordance with the law, giving the assessee a fair opportunity to be heard. The assessee was instructed to cooperate and provide all relevant documents for a proper decision. In short, the appeal filed by the assessee was allowed for statistical purposes. To Read the full text of the Order CLICK HERE