2019 (3) TMI 1727 - AT - Income Tax

Disallowance of site expenses and consumables - HELD THAT - Some of the vouchers in claim of the expenditures were missing. However, as per Section 37 of the Act, the deduction is allowed when the expenditure is incurred wholly and exclusively for the purpose of business / profession. The primary onus of proving such expense are incurred wholly and exclusively for the purpose of the business lies on the assessee. In this case some of the bills/ vouchers were not produced during the assessment proceedings. AO is justified in disallowing a fraction of these expenditures for want of proper verification. Hence, the case law cited by the Ld. Counsel for the assessee are on distinguished facts. It is further noted that AO has only disallowed ₹ 5 lacs out of ₹ 2.10 crore claimed as site expenses and ₹ 3 lakhs out of ₹ 1.24 crore claimed as expenses on account of consumables, hence, the amount of disallowances are quite justified and accordingly, the Ld. CIT(A) has correctly confirmed the additions on these counts, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on these additions and accordingly, the ground no. 1 raised by the assessee stand dismissed. Addition u/s. 68 - differences in the receipts declared by the assessee and the receipts shown in Form 26AS - HELD THAT - Difference is mainly on account of mobilization advance which is taken into receipts as and when settled. However, the assessee has not filed any such details. In absence of proper reconciliation, the AO was justified in making the addition on account of difference as compared to the Form 26AS. Accordingly, Ld. CIT(A) has rightly did not interfere in the findings of the AO and upheld his action by dismissing the issue raised by the Assessee before him. In our considered opinion, the action of the Ld. CIT(A) in confirming the addition in dispute does not require any interference, on our part, hence, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the ground no. 2 raised by the Assessee.

Summary

Issues:
1. Disallowance of expenses under Site Expenses and Consumable heads.
2. Addition under section 68 of the Act.
3. Overall appeal against the orders of the authorities below.

Issue 1: Disallowance of expenses under Site Expenses and Consumable heads:

The assessee filed an appeal against the Ld. CIT(A)'s order confirming the disallowance of expenses claimed under Site Expenses and Consumable heads. The AO had disallowed a fraction of these expenditures due to missing vouchers, totaling ?5 lakhs for Site Expenses and ?3 lakhs for Consumables. The primary burden of proving that the expenses were incurred wholly and exclusively for business purposes lies with the assessee. Since some bills/vouchers were not produced during assessment, the disallowances were justified. The ITAT upheld the Ld. CIT(A)'s decision, stating that the disallowances were justified based on the evidence presented, and dismissed the appeal on this ground.

Issue 2: Addition under section 68 of the Act:

The addition of ?3,18,279 under section 68 of the Act was due to differences in receipts declared by the assessee and those shown in Form 26AS, mainly related to mobilization advance. The assessee failed to provide proper reconciliation for these differences. The AO's addition based on the variance with Form 26AS was deemed justified. The ITAT agreed with the Ld. CIT(A)'s decision not to interfere with the AO's findings, upholding the addition. The ITAT rejected the assessee's appeal on this ground as well.

Issue 3: Overall appeal against the orders of the authorities below:

The assessee's overall appeal against the orders of the authorities below, challenging the disallowances and additions made by the AO, was dismissed by the ITAT. The ITAT found that the decisions of the lower authorities were well-reasoned and did not require any interference. The ITAT upheld the Ld. CIT(A)'s decisions on the disallowances and additions, concluding that the actions taken were justified based on the facts and circumstances of the case.

In conclusion, the ITAT upheld the decisions of the lower authorities regarding the disallowances of expenses and the addition under section 68 of the Act, dismissing the assessee's appeal. The ITAT found that the disallowances and additions were justified based on the evidence presented and the relevant provisions of the Income Tax Act, 1961.