Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Per CHANDRA POOJARI, AM:
This appeal filed by the assessee is directed against the order of the CIT(A),
Kottayam dated 27/07/2018 and pertain to the assessment year 2014-15.
The first ground is with regard to addition of 10% of selected expenditure for
deficiency in gross profit and net profit.
The facts of the case are that vide notice u/s. 142(1) of the Act and
subsequent letters, the assessee was required to furnish supporting
documents/vouchers to substantiate the various expenses claimed other than
I.T.A. No.395/Coch/2018
that of purchase of liquor which was covered by TCS. According to the Assessing
Officer even after affording several opportunities, the assessee had not produced
any evidence in support of various expenses till date. Considering the very low
NP and possibility of inflated expenses under the head vegetables and fruits
(Rs.4,81,431), general purchase (Rs.1,34,752), repair and maintenance
(Rs.1,74,109), fish beef, egg etc. (Rs.7,51,319), provisions (Rs.7,33,308), the
Assessing Officer disallowed 10% of the above expenses in the absence of
proper complete evidence. Accordingly, the Assessing Officer disallowed the
amount of Rs.2,27,490/- and added to the returned income under the head
business.
On appeal, the CIT(A) observed that during the appellate proceedings also
the assessee failed to produce any evidence in support of the expenses and
confirmed the addition made by the Assessing Officer. Against this, the assessee
is in appeal before us.
We have heard the rival submissions and perused the record. The assessee
is engaged in the business of running a bar, hotel and restaurant which is an
unorganized sector. In our opinion, full fledged vouchers in respect of vegetables
and fruits, general purchase, repairs and maintenance, fish, beef, egg and other
provisions cannot be collected. Being so, the assessee maintains self made
vouchers with recipient signatures. Hence, there may be chances of inflating
I.T.A. No.395/Coch/2018
expenditure. In view of this, to meet the ends of justice, we direct the Assessing
Officer to restrict the disallowance to the extent of 5% instead of 10% made by
the Assessing Officer. Accordingly, this ground of appeal of the assessee is
partly allowed.
Ground No. 2 regarding disallowance of medical expenses towards personal
use and Ground No. 4 regarding treatment of deposits with Federal Bank as
unexplained investment u/s. 69B of the Act, which were not pressed before us,
hence, these grounds are dismissed as not pressed.
Ground No. 3 is with regard to disallowance u/s. 36(1)(va) in respect of EPF
and ESI paid beyond the due date.
7.1 The facts of the case are that the Assessing Officer disallowed an amount of
Rs.1,01,748 u/s. 36(1)(va) of the Act on the ground that the assessee had not
deposited the contribution of the employees towards EPF and ESI before the due
date, specified in those acts.
7.2 On appeal, the CIT(A) held that the issue is covered against the assessee
by the judgment of the Jurisdictional High Court in the case of Merchem Ltd. (61
taxmann.com 119). Hence, the CIT(A) dismissed the ground of appeal raised by
I.T.A. No.395/Coch/2018
the assessee on the issue of deduction of contribution of employees u/s.
36(1)(va) of the Act. Against this, the assessee is in appeal before us.
7.3 As rightly held by the CIT(A), this issue is squarely covered against the
assessee by the judgment of the Jurisdictional High Court in the case of
Merchem Ltd. (61 taxmann.com 119). Hence, we do not find any infirmity in the
order of the CIT(A) and same is confirmed. Hence, this ground of appeal of the
assessee is dismissed.
In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on this 29th November, 2018.
sd/- sd/- (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER
Place: Kochi Dated: 29th November, 2018 GJ Copy to: 1. Shri Padmakumar K.P., Komalavilas, Zilla Court Ward, Thathampally, Alappuzha-688 013. 2. The Income Tax Officer, Ward-3, Alappuzha. 3. The Commissioner of Income-tax(Appeals), Kottayam. 4. The Pr. Commissioner of Income-tax, Kottayam. 5. D.R., I.T.A.T., Cochin Bench, Cochin. 6. Guard File. By Order
(ASSISTANT REGISTRAR)
I.T.A. No.395/Coch/2018
I.T.A.T., Cochin