2019 (12) TMI 749 - AT - Income Tax

Disallowance of reimbursement to two employees - absence of details and nature of expenditure incurred - Non-production of details of evidences - HELD THAT - CIT(A) has sustained the disallowance mainly on the ground of non-production of details of evidences, therefore, to support its ground of appeal, the onus was on to the assessee to produce those relevant documents before the Tribunal. Before us, assessee did not produce any such vouchers of incurring expenses by those employees and claimed as reimbursement. In absence of any documentary evidences of incurring of expenditure by the concerned employees, the issue, whether the amounts are reimbursement to the employees, cannot be examined. Moreover, being the identical amount to all the employees, the payments appear in the nature of allowance rather than reimbursement of actual expenses incurred on behalf of the assessee. No error in the order of the learned CIT(A) on the issue in dispute and accordingly, we uphold the disallowance sustained by the learned CIT(A). The grounds of the appeal of the assessee are accordingly dismissed.

Summary

Issues:
1. Disallowance of expenses for non-submission of documents and non-deduction of TDS on reimbursements made to employees.
2. Disallowance of TDS on salary differences in profit and loss account and Form No. 16.
3. Disallowance of fixed reimbursements to employees without proper documentation.

Analysis:
1. The appellant contested the disallowance of expenses totaling &8377; 5,76,286 and &8377; 11,52,572 for non-submission of documents and non-deduction of TDS on reimbursements made to employees. The CIT(A) found discrepancies in salary amounts claimed versus those in Form No. 16, leading to disallowances. The appellant argued that the differences were reimbursements not subject to TDS. However, the CIT(A) sustained the disallowances due to lack of documentary evidence supporting the reimbursements, treating them as fixed cash payments akin to salary, hence liable for TDS.

2. The second issue involved the disallowance of TDS on salary differences in the profit and loss account and Form No. 16. The CIT(A) upheld the disallowance of &8377; 11,52,572 for four employees due to the absence of evidence supporting the alleged reimbursements. The appellant's claim that the amounts were non-taxable reimbursements was rejected, as no vouchers were provided to substantiate the expenses, leading to the sustained disallowance.

3. The final issue concerned the disallowance of fixed reimbursements to employees without proper documentation. The CIT(A) found that the reimbursements were fixed amounts paid in cash to employees, resembling salary or fixed allowances subject to TDS. The appellant failed to produce vouchers or evidence of actual expenses incurred by employees. The Tribunal upheld the disallowance, emphasizing the lack of evidence and the fixed nature of the payments, indicating they were more akin to allowances rather than genuine reimbursements.

In conclusion, the Tribunal dismissed the appeal, affirming the CIT(A)'s disallowances due to the absence of documentary evidence supporting the nature of the payments as reimbursements. The onus was on the appellant to provide substantiating documents, which, in their absence, led to the sustained disallowances.