SUDHAKAR MOTIRAM KADAM,SOLAPUR vs. INCOME-TAX OFFICER, WARD - 1 (4), PANDHARPUR

This appeal by the assessee is directed against the order passed by the ld. CIT(Appeals)-9, Pune on 17.06.2019 in relation to the assessment year 2007-08. 2. The first issue raised in the appeal is against confirmation of addition of Rs.2,69,000/- made by the Assessing Officer (AO) u/s 68 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟).

I have heard both the parties and perused the relevant material available on record. It is observed that the assessee declared, inter-alia, loan credit of Rs.2,69,000/- in the name of M/s. Yashoda Construction. Though, the relevant evidence was not filed at the assessment stage because of paucity of time, the assessee did furnish copy of return of M/s. Yashoda Construction along with Profit and Loss Account and Balance Sheet, indicating that the said creditor had acknowledged such a balance receivable from the assessee, which was also reflected in his Balance Sheet. Once the creditor had admitted the transaction and also incorporated the same in his accounts, there remained nothing more to prove the genuineness of the transaction, more so, when the AO of the creditor also did not raise any doubt over it. Considering the above facts, I order to delete the addition.

The only other ground is against confirmation of ad hoc disallowance of Rs.25,000/- out of expenses.

The facts apropos this ground are that the assessee debited Rs.92,65,070/- towards Salary to labourers. The AO found certain infirmities in the details furnished in as much as the expenses were mostly backed by self-made vouchers. The assessee agreed for ad hoc disallowance of Rs.25,000/- before the AO, which addition was made and came to be countenanced in the first appeal. Now the assessee is aggrieved by the confirmation of such an addition.

Having heard both the sides and perused the relevant material on record, it is observed that the assessee had recorded Rs.92,65,070/- towards salary to labourers, which expenses were not properly backed by external vouchers. When confronted, the assessee agreed for an ad hoc disallowance of Rs.25,000/- during the course of assessment proceedings by considering the magnitude of total expenses vis-à-vis expenses not properly supported by vouchers. This being a factual admission by the assessee, cannot be raked up in the appellate proceedings. Though, there is no legal bar on challenging an agreed addition, but the fact of the matter is that a valid challenge can be laid before the appellate authorities only if such an admission before the AO was not in consonance with law. If, on the other hand, an admission is based purely on factual matrix, then the assessee cannot challenge the same before the appellate authorities without there being any contrary evidence. The reason is obvious that when an assessee agrees for an addition, the AO does not proceed further in his examination on that issue and closes it by recording the concession of the assessee. The later challenge to such an admission de hors any contrary evidence cannot bring the arms of the clock back enabling the AO to continue from the stage where he left the issue on the assessee agreeing for the surrender. In such a scenario, the assessee cannot be allowed to resile from the agreed addition made before the AO in the backdrop of a pure factual panorama. The extant addition, being an agreed addition on purely factual aspects without any thing contrary, cannot, ergo, be interfered with. I, therefore, countenance the impugned order on this score. This ground fails.

In the result, the appeal is partly allowed. Order pronounced on 7th day of February, 2020.

The CIT (Appeals)-9, Pune.