2023 (10) TMI 1241 - AT - Income Tax

Disallowance under the head of salary and wages claimed - AO found that the assessee is paying almost 24% of gross receipt on salary and wages - HELD THAT - The assessee has not produced books of account and other supporting evidence before the AO or CIT(A) to substantiate the expenses claimed under the head of salary and wages. It is the duty of the assessee to produce his books of account and supporting evidence before the A.O. to substantiate the claim of the returned income, it is for the assessee to produce cogent evidence in support of low profit shown in the return of income, failing which the A.O. is the duty bound to make the disallowance. CIT(A) by taking into consideration that the net profit of the Assessee s business after deducting the interest on FDR which is at 15.55% on the gross receipt which is held to be excessive, therefore, rightly restricted the disallowance made by the A.O. under the head of salary from 25,28,872/- to 12,00,000/- and disallowance made under the head of wages of Rs. 22,91,791/- to Rs. 10,00,000/-. Addition on account of low Drawings - Since the assessee received major cash in his business, the A.O. was of the opinion that the assessee used the unaccounted cash for household withdrawal, thus undisclosed household expenses has been added back to the income of the assessee - HELD THAT - It is found that the Ld. A.O. while making the above disallowance considered the various facts such as cost of school fee/college fee/tuition fee, other study related expenses per child, minimum cost of moderate standard of living in a city life Delhi for a family consist of four members and estimated at Rs. 40,000/- per month which is just in the facts and circumstances of the case, therefore we find no merit in the Ground of the assessee. Deduction u/s 80C - AO made addition as the assessee has not furnished any evidence - HELD THAT - Considering the fact that the assessee had claimed the deduction u/s 80C but not produced any iota of document to substantiate his claim, the A.O. rightly made the addition which has been confirmed by the CIT(A), thus we find no merit in Ground of the assessee. Disallowing at 20% under the head of salary, daily allowance and festival expenses and disallowance of 10% of other expenses under the head of telephone, vehicle, general, travelling, business, promotion, staff labor cost of uniform - HELD THAT - Though the assessee claimed that the above expenses have been incurred for the purpose of business, but could not produce the books of accounts and supporting bills and vouchers, therefore, 40% of the above expenses has been added to the income of the assessee due to non verification of expenses. In the Appeal before the CIT(A), the expenses deducted under the daily allowances, festival celebration expenses and establishment expenses have been confirmed to the extent of 20% and further the remaining expenses under the head of telephone expenses, vehicle running and maintenance, general expenses, travelling and conveyance expenses, business promotion, staff and Labour welfare and cost uniform expenses have been restricted at 10% of the expenses. In our considered opinion, the said action of the CIT(A) is reasonable and the same is neither excessive nor erroneous considering the turnover of the assessee. Appeal filed by the Assessee is dismissed.

Summary

Issues Involved:
1. Legality of the assessing officer's order.
2. Confirmation of disallowances and additions by CIT(A).
3. Disallowance under the head Salaries.
4. Disallowance under the head Wages.
5. Addition due to Low Drawings.
6. Denial of deduction under Section 80C.
7. Disallowance of various expenses.

Summary:

1. Legality of the Assessing Officer's Order:
The appellant claimed the order of the assessing officer was "bad in law and against the facts of the case."

2. Confirmation of Disallowances and Additions by CIT(A):
The appellant argued that the CIT(A) wrongly confirmed some disallowances and additions made by the AO.

3. Disallowance under the Head Salaries:
The CIT(A) restricted the disallowance made by the AO under the head of salary from Rs. 25,28,872/- to Rs. 12,00,000/-. The Tribunal found no merit in the appellant's ground, noting the appellant's failure to produce books of account and supporting evidence, thus dismissing the ground.

4. Disallowance under the Head Wages:
Similarly, the CIT(A) restricted the disallowance under the head of wages from Rs. 22,91,791/- to Rs. 10,00,000/-. The Tribunal upheld this decision, emphasizing the appellant's inability to substantiate the expenses claimed.

5. Addition Due to Low Drawings:
The AO added Rs. 4,04,300/- due to low household withdrawals, considering the cost of living and educational expenses. The CIT(A) confirmed this addition, and the Tribunal found no merit in the appellant's ground, dismissing it.

6. Denial of Deduction under Section 80C:
The AO disallowed a deduction of Rs. 1,00,000/- under Section 80C due to lack of evidence, a decision upheld by the CIT(A). The Tribunal found no merit in the appellant's ground, dismissing it.

7. Disallowance of Various Expenses:
The AO disallowed 40% of various expenses due to non-verification, which the CIT(A) partially confirmed at different rates (20% and 10%). The Tribunal found the CIT(A)'s action reasonable and dismissed the appellant's ground.

Conclusion:
The appeal filed by the Assessee was dismissed, with the Tribunal finding no merit in any of the grounds raised. The order was pronounced in open Court on 26th October 2023.