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Income Tax Appellate Tribunal, DELHI BENCH: ‘C/SMC’, NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI PRASHANT MAHARISHI
This appeal by the Assessee has been directed against the order of Ld.CIT(A)-I, New Delhi, dated 12.02.2018 for Assessment Year 2014-15, challenging the order of Ld. CIT(A) in confirming the disallowance of 5% of expenses amounting to Rs. 34,87,730/-.
Briefly the fact of the case are that during the year under consideration, the assessee had debited an amount of Rs. 22,01,127/- (total Miscellaneous expenses of Rs. 28,41,603/- in which Prior Period Expenses –Rs. 3,37,844/- and Capitalized Expenses -Rs. 3,02,630/- has already been disallowed in the computation of total income of the assessee) on account of Miscellaneous Expenses, Rs. 5,76,17,961/- on account of Selling Expenses, Rs. 61,50,203/- on account of Labour Expenses and Rs. 37,85,038/- on account of Travelling Expenses, in toto Rs. 6,97,54,599/-. So, the assessee was asked to substantiate the expenditure on the basis of documentary evidences and invoices in original, since some expenses found of non-verifiable invoices, most of the expenditures paid in cash and some of them are of personal nature. The Ld. Counsel for the assessee was asked to give precise justification on all these expenses on various occasions as per, the Order Sheet. Various documents have been called for justification of every expenditure as mentioned above.
2.1 The Counsel for the assessee appeared on 27 October, 2016 and explained the case but the Counsel could not justify the entire expenditure as business expenditure.
The Counsel has been called for muster rolls of all the labour expenses, but he failed to produce the same. Therefore, proportionate disallowance is warranted. Again the invoices of freight and forwarding expenses under selling expenses have been called for and it was noticed that the expenses were made in cash also. Some invoices were not produced for verification. In case of travelling expenses, foreign tours of Directors and the staff are also included. Some of the tours and payments thereof appear to be personal in nature and cash payments have also been made. The AO accordingly noted that apparently the assessee did not maintain books of accounts and its invoices properly. Therefore, on the basis of non-verifiable expenses, petty cash payments, unjustifiable expenses, etc., the AO considered 5% of the expenses disallowable. The Counsel for the assessee agreed for the additions vide Order Sheet dated 27.10. 2016.
The AO accordingly disallowed 5% of the total expenses and made addition of Rs. 34,87,730/-.
The assessee challenged the additions before the Ld. CIT(A). The submissions of the assessee is reproduced in the Appellate Order in which the assessee briefly explained that the books of accounts, bills and voucher’s details were produced before the AO and therefore no disallowance out of the expenses should have been made.
The Ld. CIT(A) noted in his findings that assessee agreed to the additions vide Order Sheet dated 27.10.2016 and assessee also admitted that there was an element of non- verifiable expenditure claimed under this head. The Ld. CIT(A) therefore noted that, since addition was made on agreed basis which have not been controverted by the Ld. Counsel for the assessee, therefore, addition shall have to be confirmed. The Ld. CIT(A) followed the decision of the Hon’ble Punjab and Haryana High Court in the case of Banta Singh Kartar Singh Vs. CIT, 125 ITR 239 and decision of Kerala High Court in the case of CIT Vs. Vamadevan Bhanu, 330 ITR 559 and dismissed this ground of appeal of the assessee.
After considering the rival submissions, we do not find any merit on this ground of appeal
of the assessee. Ld. Counsel for the assessee sought adjournment, however, considering the facts of the case that addition was agreed before the AO, therefore, request for adjournment was found improper and was rejected. It is a well settled law that no appeal lies on agreed additions. We rely upon the decision of Bomaby High Court in the case of Jivatlal Purtapshi vs Commissioner Of Income-Tax,
65. ITR 261, decision of Kerala High Court in the case of CIT Vs. Vamadevan Bhanu, 330 ITR 559 and decision of Hon’ble Punjab and Haryana High Court in the case of Banta Singh Kartar Singh Vs. CIT, 125 ITR 239. The AO specifically noted in the assessment order that assessee agreed for these additions vide Order Sheet dated 27.10.2016. Further, the assessee could not explain the justification of making the aforesaid expenses. The Counsel for the assessee could not controvert before the Ld. CIT(A) that additions have been made on agreed basis. These facts clearly show that appeal of the assessee was not maintainable before the Ld. CIT(A) as well as before the Tribunal on account of agreed additions. Further, the assessee could not produce the proper documentary evidences and justification for making the expenses. The authorities below were therefore justified in making the additions. There is no merit in appeal of the assessee, same is dismissed.
In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 10/8/2018