2013 (1) TMI 996 - AT - Income Tax

Summary

Issues Involved: Assessment u/s.143(3) for the Assessment Year 2007-08, disallowance of expenditure accounted under Suspense Account, disallowance of Labour Charges, disallowance of certain expenditure u/s.40(a)(ia) for non deduction of tax at source.

Assessment u/s.143(3) for the Assessment Year 2007-08:
The Assessing Officer disallowed a sum on the ground that entries for these expenditure were made in the Suspense Account. The CIT(A) held that as the amounts debited to suspense account have been subsequently transferred to respective accounts, the disallowance is not sustainable. However, on appeal, the Revenue raised a specific ground that the assessee had not provided adequate details for verification. The Tribunal set aside the issue to the Assessing Officer for further examination based on the assessee's submissions and evidences before CIT(A).

Disallowance of Labour Charges:
The Assessing Officer found that all vouchers for labour charges were self-made. The CIT(A) reduced the disallowance from 15% to 5% of the total expenditure. The Revenue appealed, arguing that the assessee's AR had accepted a 15% disallowance. The Tribunal referred to a High Court decision emphasizing the burden of proof on the taxpayer to justify deductions. Consequently, the Tribunal confirmed the 15% disallowance of the claimed expenditure.

Disallowance of Expenditure u/s.40(a)(ia) for non deduction of tax at source:
The Assessing Officer disallowed certain expenditure for non-deduction of tax at source, citing lack of details about the parties involved. The CIT(A) noted that necessary details were not furnished or examined by the Assessing Officer. The Tribunal directed the Assessing Officer to verify specific payments and certificates provided by the assessee to determine the applicability of tax deduction requirements under the Income Tax Act. The issue was remitted back to the Assessing Officer for further examination.

In conclusion, the Tribunal partially allowed the department's appeal for statistical purposes, directing further verification and examination by the Assessing Officer on the issues of disallowances related to Suspense Account entries, Labour Charges, and non-deduction of tax at source for specific expenditures.