THAKUR VAIDYANATH AIYAR & CO.,NEW DELHI vs. ACIT, CIRCLE- 61(1), NEW DELHI

That the amounts payable towards “Other Parties and Staff’ are not on account of provision for expense and cannot be added to the income except for Rs. 31,254.00 which may be added out to the income.

That the ld. Commissioner of Income Tax (Appeal) as well as ld. A. O. have erred in making an addition of Rs. 74,670.00 against TDS payable.

That the amount of TDS Rs. 74,670.00 is paid within the due date and cannot be added to the income.

Alternatively the TDS deducted in the previous year relevant to A.Y. 2014-15 and paid in the previous year relevant to A.Y. 2015-16 be allowed as deduction and appropriate directions be issued to allow deduction in the A.Y. 2016-17 as the same was paid in the previous year relevant to A.Y. 2016- 17.

That the Id. Commissioner of Income Tax (Appeal) has erred in confirming an addition of Rs. 48,528.00 out of the imprest S. Raghunath account.

That all of the above additions to the returned income of the assessee are bad and in law and facts of the case.

That your appellant prays that he may be allowed to add, amend or withdraw any of the above grounds of appeal

In regard to these grounds it was submitted on behalf of the assessee that the ld. Tax Authorities below have failed to take into account that opening balances were reflected in statement of amounts payable to the other parties and staff and the same have been added at page no. 2 of the paper book. The assessee has given the list of sundry creditors and staff account balances. The perusal of same shows that of the total of closing balances Rs. 4, 69,029/- which has been added by Ld. AO, on behalf of the assessee it has been accepted that to the extent of Rs. 31,254/- amount can be added to the returned income as assessee is following cash system of accounting. It can be appreciated that while upholding the addition, the Ld. CIT(A) has not taken into consideration the argument of the assessee and in a very summary manner dealt with it. The Bench is of considered opinion that as assessee has merely carried the opening balances payable to other parties and staff the same could not have been added in the relevant year except to the extent of Rs. 31,254/-. Accordingly the ground no. 1 and 2 are allowed and the AO shall be at liberty to make addition to the extent of Rs. 31,254/- under the head “payable to other Parties and Staff” instead of Rs. 4,69,029/-.

In regard to these grounds it can be observed that in the assessee’s own case for the assessment year 2013-14, and the Assessment Year 2014-15, ITA No. 5990/Del/2018 the Co-ordinate Benches have held that as the TDS has been deposited before due date of filing of the return u/s 139(1) of the act Section 40(a)(ia) of the Act will not be applicable. The ld. DR could not cite any proposition of law or fact to distinguish, therefore, these grounds are decided in favour of the assessee.

In regard to this ground it was submitted on behalf of the assessee that Shri Raghnath is a CA and incharge of the office of the assessee at Chennai. The receipts by him were for meeting daily expenses at Chennai it can be observed that the ld. CIT(A) has dealt with this ground but directing the Assessing officer to add Rs. 48,528/- instead of Rs. 2,85,779/- the detailed statement of imprest to Mr. S. Raghunathan has been filed by the assessee at page no. 11 – 14 of the paper book and the same shows that opening balance was 2,37,251/- and the closing credit balance was 2,85,779/-. Thus, as the assessee is following cash system accounting, there is no error in the findings returned by the Ld. First Appellate Authority. Accordingly this ground requires no intervention, the same is dismissed.

In regard to these grounds it can be observed that the Tax Authorities below have made addition to the extent of 10% of the expenses however, in assessee’s own case for the assessment year 2013-14 & 2014-15 such adhoc disallowances have been set aside by the Co-ordinate Benches of Tribunal. There are no grounds to distinguish as very randomly on the basis of prevention of leakage of revenue ./2019 Thakur Vaidyanath Aiyar & Co. additions have been made. Specially in regard to the telephone expenses it can be observed that expecting professionals to maintain register of telephone calls while using telephone for professional purposes is quite unreasonable. There is no case of revenue that the expenses were disproportionate to the income earned or professional activities. Therefore, these grounds are allowed in favour of the assessee.