2018 (4) TMI 424 - AT - Income Tax

Addition under the head salary & wages - assessee failed to discharge his onus of proving the genuineness of the claim of expenditure with proper supporting evidence - Held that - Addition on account of undisclosed profits by way of enhancement and sustaining disallowance of 5% of salaries and wages. These grounds were also directed to be examined by the Tribunal if it becomes necessary. Since the issues that arises for consideration on remand by Tribunal of assessee s appeal and the grounds of appeal in this appeal are same, we are of the view that the grounds raised by the revenue in this appeal should also be directed to be considered by CIT(A). We accordingly set aside the order of the CIT(A) and remand the issues raised by the revenue in this appeal before us for fresh consideration along with the issues remanded by the Tribunal in the assessee s appeal. For statistical purposes the appeal is treated as allowed. - Appeal by the revenue is allowed for statistical purposes.

Summary

Issues:
1. Allowance of expenses under the head salary & wages without proper evidence.
2. Estimation of net profit on undisclosed receipt and additional expenses.
3. Tax treatment of entire undisclosed receipt.

Analysis:
1. The appeal by the Revenue challenged the order of C.I.T.(A)-XXXVI, Kolkata for A.Y.2009-10 regarding the allowance of expenses under the head salary & wages without proper evidence. The Assessee, an individual deriving income from acting as a labor contractor, filed a return disclosing total income. During assessment proceedings, the AO noted gross receipts and net profit discrepancies. The AO disallowed 50% of salaries and wages claimed by the Assessee due to lack of supporting evidence. Similarly, a claim under Power and Fuel was disallowed as well.

2. The CIT(A) enhanced the total income by adding 10% of the undisclosed contract receipts, resulting in an addition to the total income. The disallowance of expenses made by the AO was reviewed, and the CIT(A) reduced the disallowance of salaries and wages to 5%. Moreover, the disallowance of power and fuel expenses was deleted upon production of bills and vouchers during remand proceedings.

3. The Tribunal remanded the matter to the file of CIT(A) for deciding certain grounds raised by the Assessee. The Tribunal directed the CIT(A) to reconsider the issues raised by the Revenue in the present appeal along with the issues remanded in the Assessee's appeal. Consequently, the order of the CIT(A) was set aside, and the appeal by the Revenue was allowed for statistical purposes.

In conclusion, the judgment addressed the issues related to the allowance of expenses, estimation of net profit, and tax treatment of undisclosed receipts. The Tribunal remanded the matter for further consideration by the CIT(A) based on the grounds raised by both the Assessee and the Revenue, ensuring a comprehensive review of the assessment.