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TMI Blog2022 (9) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in order to support and substantiate his claim for the said expenses. Reference to Section 69C made by the AO, therefore, was totally unwarranted and it appears that the reference to Section 69C was made by the AO through inadvertent mistake. In our opinion, such inadvertent reference made by the Assessing Officer to Section 69C could not or should not come in a way to sustain the disallowance in question made by the Assessing Officer which otherwise was justifiably made on account of unverifiable elements involved in the direct expenses claimed by the assessee. As such, considering all the facts of the case, we are of the view that the disallowance made by the AO out of direct expenses was fully justified and there was no infirmity in the order of the CIT(A) in confirming the same. We, therefore, uphold the impugned order of the CIT(A) on this issue and dismiss this appeal filed by the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee as well as the material available on record including the remand report submitted by the Assessing Officer, the learned CIT(A) proceeded to confirm the addition of Rs.2,08,17,445/- made by the Assessing Officer out of direct expenses for the following reasons given in paragraph Nos. 2.3 to 2.8 of his impugned order:- "2.3. I have carefully considered the facts mentioned in the assessment order and the submission of the appellant. The AO has observed that on verification of the submission of the appellant the whole business is found to be fictitious as he has failed to maintain any record of accounts. The contention of the appellant is not believable that a person whose turnover amounts to as high as Rs. 6,33,77,482/- will not maintain any accounts or as simple as diary or a kind of book wherein details of persons [to whom payment(s) have been made or persons/entities from whom payment(s) have been received] is maintained. No bank statements has been submitted by the appellant. The submission made by the appellant does not even mention about bank details. It is also observed by the AO that vide submission dated 16/11/2016 the appellant had admitted his inability to provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank statements were verified by the AO. 2.5. The submission has been treated as additional evidences under Rule 46A of the IT Act vide assessee letter dated 31.01.2018, which has been admitted and forwarded to the AO vide this office letter dated 02.02.2018 for his comments, it is submitted by the AO in Remand Report "that in pursuance to your directions vide above referred letter, the assessee was requested [vide this office letter No.ITO,3(2)(3)/Remand Report/MP/2017-18 dated 06.02.2018] to furnish requisite details in order to verify the facts contended by him. However, no reply by post/email or in person has been submitted till date. The telephonic efforts to contact his AR has also been ineffective. In this scenario, the verifications of documents and financial transaction neither been completed till date nor seems any compliance". 2.6. After going through the facts of the case, it is seen that appellate is net maintaining any books of accounts. The AO has given sufficient opportunities to submit the details of the expenditure incurred by the appellant The appellant has net submitted the same and in fact he has shown the inability to produce the same at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory inasmuch as the legislature had used the word "May" in the provision. Therefore, the Assessing Officer has full discretion to add or not to add any such expenditure or any part thereof in the income of the assessee for the financial year in question even if no explanation has been offered or if offered is not found to be satisfactory provided the discretion is exercised in a judicious manner. 2.8. There is no dispute that in pursuance to the notice requiring the assessee to submit explanation regarding the aforesaid expenditure, the assessee had not furnished any explanation whatsoever. From the above discussions with AR from time to time and extending numerous opportunities of being heard and given natural justice, the assessee could not support his claims with any kind of documentary evidences during the whole assessment proceeding that lasted around a year. The assessee has not even submitted its bank transaction (s) details to authenticate his claim of "payment by online transfer to data entry job workers" and admitted his inability to provide any documentary evidence. The nature of business of the assessee that is related to Information Technology and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the assessee, therefore, could not be represented properly before the Assessing Officer which resulted in the non-compliance; iv) The summary of bank account of the assessee would show that the gross receipts for the entire year under consideration were only Rs.41,75,757/- while the net profit earned during the year under consideration from business was Rs.22,78,825/-. 6. The learned DR, on the other hand, strongly relied on the orders of the authorities below in support of the Revenue's case on the issue under consideration. 7. We have considered the rival submissions and also perused the relevant material available on record. It is observed that total direct expenses amounting to Rs.6,24,52,337/- were claimed by the assessee for the year under consideration as reported in AIR as well as shown by the assessee himself in Schedule P2 annexed to the return of income. Since the assessee failed to file the relevant details and documents to support and substantiate its claim for the said expenses in spite of proper and adequate opportunity given during the course of assessment proceedings, the Assessing Officer disallowed 30% of the said expenses. Although additional evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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