M/S. RAJESH & CO.,ROURKELA vs. ITO, WARD-2, ROURKELA

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ITA 278/CTK/2016Status: DisposedITAT Cuttack14 December 2017AY 2008-0911 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the disallowance of commission expenses for two agents due to unserved summons and lack of clarity on payment basis. The disallowance of foreign travel expenses was confirmed due to insufficient evidence of business purpose. The disallowance on erection and contract payment was upheld due to contradictions between the agreement and TDS form. The disallowance on other expenses was reduced to 10% by the CIT(A) and confirmed by the Tribunal.

What were the facts?

The assessee claimed commission expenses, foreign travel expenses, erection and contract payments, and other miscellaneous expenses. The Assessing Officer and CIT(A) made disallowances on various grounds, including lack of evidence and discrepancies.

What were the issues?

The primary issues revolved around the genuineness and business expediency of claimed expenses, particularly commission payments, foreign travel, and erection/contract payments, and the adequacy of supporting evidence.

Which sections of the Income-tax Act were involved?

Section 194H,Section 43B,Section 194C,Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK

Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE

For Appellant: Shri Radheshyam Chimanka, AR
For Respondent: Shri S.K.Bandyopadhyay, DR
Hearing: 13/12

per month. In view of this backdrop of the case, the Assessing Officer was

of the opinion that there is a contradiction between the particulars in

Form No.16A and the terms and condition of the agreement. Therefore,

he disallowed Rs.2,61,516/-.

18.

On appeal, the CIT(A) called for a remand report from the Assessing

Officer.. In the remand report, the Assessing Officer has intimated that

the assessee has correctly made the expenditure and pleaded to allow the

expenditure.

19.

The CIT(A) did not satisfy himself with the remand report furnished

by the Assessing Officer as the basic reason for allowing the expenditure

was not explained. He observed that as per agreement, Sri Mandal was to

provide liaisoning services. Therefore, he confirmed the disallowance of

Rs.2,61,515/- made by the Assessing Officer.

20.

Ld A.R. submitted that the expenditure was genuine and the same

should be allowed.

21.

Contra, ld D.R. supported the order of the lower authorities.

22.

We have heard the rival submissions, perused the orders of lower

authorities and materials available on record. We find that there is

9 ITA No . 278/CT K/ 2016 Asse ssment Year : 20 08- 200 9 contradiction in the claim made by the assessee. On one hand, in Form

No.16A issued to contractor, namely Sri Suprabhat Mandal, it is

mentioned that TDS u/s.194C has been made on erection and contract

payment and on the other hand, in the agreement, it is mentioned that

Sri Mandal has rendered service as liasoning agent of the assessee.

Before us also, ld A.R. of the assessee could not explain the reason of

discrepancies shown in Form No.16A and agreement. Therefore, we

uphold the order of the CIT(A) and ground of appeal of the assessee is

dismissed.

23.

The last issue relates to disallowance of Rs.4,95,450/- on account of

other expenses.

24.

The brief facts of the case are that the Assessing Officer found that

the assessee had claimed Rs.22,45,117/- under the head “other

expenses” as under:

1.

Seminar Exp. Rs.4,04,488 2. Petrol & Fuel Exp. Rs 4,89,739 3 Postage & Registration Rs,2,20,377 4. Printing & Stationery Rs.2,75,382 5. Repair & Maintenance Rs. 2,27,772 6. Repair & Maintenance (For computers) Rs. 2,37,778 7. Carriage outward Rs.2,17,273 8. Fees & subscription(foreign magazine) Rs. 83,285 9. Misc. exp. Rs. 89,023 Total : Rs.22,45,117

The Assessing Officer required the assessee to produce the supporting

evidence in support of these expenses. Since the assessee could not

produce any evidence, the Assessing Officer disallowed 20% of the

10 ITA No . 278/CT K/ 2016 Asse ssment Year : 20 08- 200 9 expenses claimed in respect of the above-mentioned heads of expenses,

which comes to Rs.4,49,023/-.

25.

On appeal, the CIT(A) called for a remand report from the Assessing

Officer. In the remand report, the Assessing Officer submitted that since

most of the payments have been made in cash on the basis of self-made

vouchers, the estimation of disallowance is proper. However, the CIT(A)

reduced the disallowance to 10% of the total expenditure on the ground

that estimation is on higher side.

26.

Still aggrieved, the assessee is in appeal before us.

27.

We have heard the rival submissions, perused the materials

available on record and orders of lower authorities. In the instant case,

the Assessing Officer estimated 20% of the expenditure on the ground

that payments are made in cash by self made vouchers and no supporting

evidences were produced by the assessee. The CIT(A) restricted the

disallowance to 10% to meet the ends of justice. Before us, ld A.R. could

not produce any good reason to further restrict the disallowance or to

take any contrary view. Therefore, we concur with the findings of the

CIT(A) and reject this ground of appeal of the assessee.

28.

In the result, appeal filed by the assessee is dismissed.

Order pronounced on 14 /12/2017. Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIALMEMBER Cuttack; Dated 14 /12/2017 B.K.Parida, SPS

11 ITA No . 278/CT K/ 2016 Asse ssment Year : 20 08- 200 9 Copy of the Order forwarded to : 1. The Appellant : M/s. Rajesh & Co. 1st floor, Parmar Building, Kachery Road, Rourkela 2. The Respondent. ITO, Ward-2, Rourkela 3. The CIT(A)- Sambalpur 4. Pr.CIT- Sambalpur 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack

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