2016 (12) TMI 740 - HC - Income Tax

Addition unexplained expenditure under Section 69 (C) - Held that - While confirming the order passed by the Assessing Officer, the CIT (Appeals) gives no reason for rejecting the ground as made by the assessee. It does not deal with the contention of the assessee at all that the assessee was being charged twice for the same amount and this was not justified. The CIT (Appeals) simply confirmed the orders of the assessing authority without recording any reason why it has rejected the contention of the assessee that it amounted to double addition. This issue is, therefore, required reconsideration by the CIT (Appeals). Expenses from meals is concerned, the Tribunal while dealing with the matter has made general statement that ₹ 15 would suffice for a meal of a labourer and has not accepted the contention that it was a cost of ₹ 35. No reason had been given for coming to such a conclusion. There is no examination of any material or evidence on the basis of which it has arrived at such a conclusion. Therefore, the matter requires reconsideration on both the accounts made by the CIT (Appeals). The matter is, therefore, remanded back to the CIT (Appeals) for reconsideration.

Summary

Issues:
1. Disallowance of commission and addition under Section 69(C) of the Income Tax Act.
2. Double addition of disallowed expenses.
3. Disallowance of meal expenses for laborers.

Analysis:
1. The appellant challenged the disallowance of commission paid for commercial expediency, citing a previous court ruling. The appellant argued that the commission was already included in the labor expenses and should not have been added twice. The CIT (Appeals) upheld the disallowance, stating lack of evidence to prove the expenditure was wholly for business purposes. The court found the CIT (Appeals) did not address the appellant's claim of double addition, remanding the issue for reconsideration.

2. The appellant contested the disallowance of meal expenses for laborers, claiming the actual cost was higher than the amount accepted by the Tribunal. The Tribunal determined a lower meal expense without providing reasoning or examining evidence. The court found this decision lacked justification and ordered the matter to be reconsidered by the CIT (Appeals) within three months.

3. The court remanded the case back to the CIT (Appeals) for reconsideration of both issues, emphasizing the need for proper examination and justification in determining the disallowed expenses and meal charges. The CIT (Appeals) was directed to review the case within three months from the date of receiving the court's order. The appeal was disposed of with these directions for further assessment.