B.RANGANATHAN,CHENNAI vs. DCIT NON CORPORATE CIRCLE 10(1), CHENNAI

PDF · subscribers
ITA 2592/CHNY/2017Status: DisposedITAT Chennai27 August 2018AY 2011-123 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that ad-hoc disallowances are not permissible unless books of accounts are rejected. The issue was restored to the Assessing Officer for re-adjudication after examining the evidence.

What were the facts?

The assessee appealed against the disallowance of 25% of salary expenses. The CIT(A) restricted the disallowance to Rs. 6.5 lakhs. The assessee argued that all evidence was produced and the expenditure should be allowed.

What were the issues?

Whether ad-hoc disallowances of salary expenses are permissible without rejecting the books of accounts.

Which sections of the Income-tax Act were involved?

Not specified

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘ B’ BENCH : CHENNAI

Before: SHRI GEORGE MATHAN & SHRI A.MOHAN ALANKAMONY

आदेश / O R D E R

PER GEORGE MATHAN, JUDICIAL MEMBER

1.

This is an appeal filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-12,Chennai in appeal No.61/CIT(A)-12/2014-15 dated 11.08.2017 for the assessment year 2011-12.

ITA No.2592/Chny./2017 :- 2 -:

2.

Mr.S.Ramesh represented on behalf of the Assessee, and Ms.Ruby George represented on behalf of the Revenue.

3.

The appeal filed by the assessee is belated by 4 days for which the assessee has filed necessary affidavit for explaining the delay. The reasons given for the delay have not been found to be false. Consequently, the delay in filing of the appeal is condoned and appeal is disposed off on merits.

4.

It was submitted by the ld.A.R that in the assessment order, the ld. Assessing Officer had disallowed 25% of the salary expenses claimed by the assessee claiming that the ld.A.R could not explain the nature of expenses and accepted the expenses as bogus. It was further submitted that on appeal, Ld.CIT(A) had considered the evidences produced and restricted the disallowance to `6.5 lakhs, just to 8.66% of the total wages. It was a prayer that when all the evidences have been produced, the expenditure was liable to be allowed.

5.

In reply, the ld.D.R vehemently supported the orders of ld. Assessing Officer and the Ld.CIT(A).

6.

We have considered the rival submissions. A perusal of the assessment order shows that the ld. Assessing Officer has made an ITA No.2592/Chny./2017 :- 3 -:

adhoc disallowance of 25% of the salary paid by the assessee. A perusal of the order of Ld.CIT(A) shows that the Ld.CIT(A) has made an adhoc disallowance. Perusal of order of Ld.CIT(A) also shows that all the details in respect of salary paid have been produced before him, which were produced before the ld. Assessing Officer. Admittedly, adhoc disallowances are not permissible, unless the books of accounts are rejected. This being so, the issue in this appeal is restored to the file of Assessing Officer for re-adjudication. The Assessing Officer shall examine the evidences produced and shall not resort to any adhoc disallowances, if the evidences are produced.

7.

In the result, the appeal of the assessee is partly allowed for statistical purposes.

Order pronounced in the open court after conclusion of hearing on 27th August, 2018, at Chennai.

Recent GST High Court judgments

Search GST case law →