JOINT COMMISSIONER OF INCOME TAX (OSD), CHENNAI vs. S.V. BALASUBRAMANI HUF, CHENNAI

आयकर अपीलीय अिधकरण, ‘ए’ �यायपीठ, चे�ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ी महावीर �सह, उपा�य� एवं एवं �ी मंजुनाथ. जी, लेखा सद�य के सम� BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI MANJUNATHA. G, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 570/Chny/2023 िनधा�रण वष� / Assessment Year: 2013-14 Joint Commissioner of Income Tax S.V. Balasubramani HUF, (OSD), v. 21-C, Thandavarayan Street, Room no.6, Ground Floor, Income Old Washermenpet, Tax Investigation Building, Chennai – 600 021. 46, Mahatma Gandhi Road, [PAN: AADHB-9595-A] Chennai – 600 034. (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : None : Shri. AR V Sreenivasan, Addl. CIT ��यथ� क� ओर से/Respondent by सुनवाई क� तारीख/Date of Hearing : 01.11.2023 घोषणा क� तारीख/Date of Pronouncement : 01.11.2023 आदेश /O R D E R PER MANJUNATHA. G, ACCOUNTANT MEMBER:

This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-18, Chennai, dated 08.02.2023 and pertains to assessment year 2013-14.

:-2-: ITA. No: 570/Chny/2023 2. The Ld. CIT(A) erred in restricting the unproved bonus payments claim disallowed amounting to Rs. 30,67,765/- to 20% of the disallowance on estimation basis, when the assessee could not furnish any details either before the AO or the CIT(A) establishing the said bonus payments in its entirety. 2.1 The Ld. CIT(A) erred in deleting addition made towards unproved bonus payment claims on the finding that due to lapse of time the records could not be produced by the assessee is misplaced since the assessee had not established the bonus payments even during the assessment proceeding before the Assessing Officer and the onus is on the assessee to prove all the expenses claims with supporting documents. 2.2 The Ld. CIT(A) erred in deleting addition made towards unproved bonus payment claims on the finding that the Assessing Officer had not disputed the bonus payment claims as high and exorbitant in the assessment order, without appreciating the findings of the Assessing Officer in para No. 3.3 of the assessment order, wherein it was clearly stated that the bonus claims amounts to 40% of the salary claims, which is abnormally high and exorbitant.

4. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of Id. CIT(A) may be set aside and that of the Assessing Officer be restored.”

:-3-: ITA. No: 570/Chny/2023 3. The brief facts of the case are that, the assessee is engaged in the business of Textiles and readymade garments in the name and style of M/s. Veera’s Creations. The assessee has filed its return of income for the assessment year 2013-14 on 30.09.2013, admitting total income of Rs. 1,97,95,800/-. The assessment has been completed u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) on 30.09.2021 and determined total income of Rs. 2,73,15,680/- by inter alia, making additions towards adhoc disallowance of bonus paid to staff and disallowance of expenditure incurred in cash in excess of prescribed limit u/s. 40A(3) of the Act. The assessee carried the matter in appeal before the first appellate authority and the ld. CIT(A), for the reasons stated in their appellant order dated 08.02.2023, partly allowed appeal filed by the assessee, where the ld. CIT(A) restricted disallowance of bonus paid to staff to 20% of expenditure, without any supporting evidence and sustained additions to the extent of Rs. 6,13,557/- and deleted balance addition of Rs.24,54,228/-. The ld. CIT(A), had also deleted additions made by the Assessing Officer towards disallowance of bonus paid in cash u/s. 40A(3) of the Act, on the ground that the Assessing Officer has disallowed expenses u/s. 40A(3) of the Act, on :-4-: ITA. No: 570/Chny/2023 vague ground without ascertaining as to how payments made for bonus comes under the provisions of section 40A(3) of the Act. Aggrieved by the ld. CIT(A) order, the revenue is in appeal before us.

5. None appeared for the assessee. We have heard the ld. DR and perused material available on record and gone through orders of the authorities below. Admittedly, the assessee could not produce necessary supporting evidence for balance amount of bonus paid to staff amounting to Rs. 30,67,785/-. It was the explanation of the assessee before the Assessing Officer that, due to lapse of time he could not file necessary :-5-: ITA. No: 570/Chny/2023 evidence to justify payment of bonus, but fact remains that he had paid bonus to staff on two occasions. The ld. CIT(A), after considering relevant facts has recorded categorical finding that, because of lapse of time for more than 8 years, the assessee could not able to gather necessary evidences. Therefore, taking into account totality of facts and circumstances of the case, and also to meet the ends of justice, restricted disallowance to the extent of 20% of amount disallowed by the Assessing Officer. Although, the revenue has challenged findings of the ld. CIT(A) on adhoc disallowance of expenses, but could not adduce any evidence to counter the findings or facts recorded by the ld. CIT(A). Therefore, we are of the considered view that, there is no error in the reasons given by the ld. CIT(A) to restrict disallowance of bonus to the extent of 20% on actual expenditure disallowed by the Assessing Officer and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the revenue.