2022 (6) TMI 337 - AT - Income Tax

Disallowing consultancy expenses - addition was sustained on account of non-furnishing of original evidences - addition was sustained in the absence of the requisite evidences - contention of the assessee is that payment is genuine - HELD THAT - The tax has been deducted by the Department which is available on Income Tax Portal. The issue is restored to the file of Ld.CIT(A) to verify the claim of the assessee regarding payment of professional charges and deduction of tax thereof. Therefore, the assessee is directed to produce the original copy of confirmation given by the four parties namely i M.K.Soil Testing Laboratory, ii Balaji Hydro Mech Experts, iii Chaudhari Construction and iv Ujwal Systems. If the Ld.CIT(A) finds that the assessee has deducted tax on the professional charges paid to afore-mentioned parties and produce original confirmation from the parties, he would delete the addition. Ground raised by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Disallowance of consultancy expenses.
2. Non-furnishing of original evidences for consultancy charges.

Analysis:

Issue 1: Disallowance of consultancy expenses
The appellant filed an appeal against the order of Ld. CIT(A) regarding the disallowance of consultancy charges amounting to Rs.28,86,607. The Assessing Officer (AO) observed an increase in professional charges compared to the previous year and sought explanations. Despite issuing notices, no satisfactory replies were received from certain parties. Consequently, the AO made additions totaling Rs.28,86,607. The Ld.CIT(A) partly allowed the appeal, deleting some additions but sustaining the disallowance of Rs.28,86,607. The Tribunal considered the submissions of the appellant, who provided photocopies of confirmation certificates from consultants and original certificates for verification. The Tribunal directed the Ld.CIT(A) to verify the deduction of tax on professional charges and original confirmations from the parties. The issue was restored to the file of Ld.CIT(A) for further examination.

Issue 2: Non-furnishing of original evidences for consultancy charges
The Ld.CIT(A) upheld the addition of consultancy charges due to the appellant's failure to produce original confirmations and supporting evidence. The Tribunal noted that while the appellant submitted copies of confirmations allegedly signed by the parties, original confirmations were not provided for verification. The appellant's inability to explain the exact TDS deducted or provide proof thereof led to the dismissal of the appeal on this ground. The Tribunal directed the appellant to produce original confirmations from the concerned parties to substantiate the claim of genuine payments and tax deductions, allowing the appeal for statistical purposes.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of providing original evidences to support claims and deductions in tax assessments. The case highlights the significance of thorough documentation and compliance with tax regulations to avoid disallowances and additions in income assessments.