2016 (4) TMI 700 - AT - Income Tax

Disallowance of expenses - Genuineness of the transaction of the labour expenses not proved - Held that - The assessee was given sufficient opportunity to furnish the evidences in support of its claim of expenses. The authorities below have recorded that no evidences were furnished. Even before this Tribunal also, no paper-book is filed by the assessee enclosing the evidences related to expenditure claimed. - Decided against assessee.

Summary

Issues:
1. Disallowance of expenses under section 80P(2)(vi) of the Income Tax Act
2. Failure to provide supporting evidence for claimed expenses

Issue 1: Disallowance of expenses under section 80P(2)(vi) of the Income Tax Act:
The appellant contested the disallowance of expenses totaling Rs. 8,33,192/-, claiming that the income from the collective disposal of labor of its members should be deductible under section 80P(2)(vi) of the Income Tax Act. The Assessing Officer (AO) had made the addition due to lack of evidence supporting the claim. The appellant's appeal to the Commissioner of Income Tax (Appeals) was dismissed on the grounds of insufficient details provided. The appellant argued that they were not given adequate opportunity to present their case. However, the Senior Departmental Representative supported the lower authorities' decisions, emphasizing the appellant's failure to substantiate the claimed expenses.

Issue 2: Failure to provide supporting evidence for claimed expenses:
The AO found that the labor expenses claimed were unsupported by evidence, and the appellant failed to provide necessary documentation despite multiple opportunities. The Commissioner of Income Tax (Appeals) noted the appellant's lack of cooperation in furnishing details and supporting documents. The appellant's explanation for non-furnishing of evidence due to external circumstances was not accepted as sufficient justification. The appellate tribunal upheld the lower authorities' decisions, emphasizing the appellant's failure to provide the required evidence, leading to the dismissal of the appeal.

In conclusion, the appeal by the Assessee was dismissed by the Appellate Tribunal due to the lack of evidence supporting the claimed expenses, leading to the disallowance under section 80P(2)(vi) of the Income Tax Act. The tribunal found that the appellant did not substantiate the expenses adequately, despite multiple opportunities provided by the authorities. The judgment highlighted the importance of providing supporting evidence to substantiate claims during tax assessments.