AMPD EDUCATION INDIA PVT.LTD.,MUMBAI vs. JT.COMMISSIONER FO INCOME TAX (APPEALS), MYSORE (NFAC), THANE
Facts
The assessee, M/s AMPD Education India Private Limited, filed an appeal against an order confirming an ad-hoc disallowance of 30% of expenses. The Assessing Officer (AO) made this disallowance on an ad-hoc basis as the assessee failed to comply with notices and provide supporting documents for the expenses debited in its profit and loss account for AY 2013-14.
Held
The Tribunal took on record additional evidence submitted by the assessee. It was observed that most expenses were paid via account payee cheques, through banking channels, and with TDS deducted where applicable. However, for 'other sundry expenses', a portion was incurred in cash and deemed unverifiable.
Key Issues
Whether the ad-hoc disallowance of expenses made by the AO and confirmed by the CIT(A) is justified, particularly when additional evidence is produced before the Tribunal.
Sections Cited
u/s.144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL, ‘SMC’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER ITA No. 1017/MUM/2024 (Assessment Year :2013-14) M/s AMPD Education Vs. Jt. Commissioner of India Private Limited Income Tax (Appeals), C/o, Ajay Srivastava, Mysore(NFAC) B-3102, ITO, Ward 1(1), Thane, Gokul Concorde, Room No. 23, 6th Floor, Dattani Park, B-Wing, Ashar IT Park, Mumbai - 400101 Road No. 16Z, Wagale Industrial Estate, Thane West - 400604 PAN/GIR No.AAJCA3588P (Appellant) .. (Respondent) Assessee by Shri Prakash Jotwani Revenue by Ms. Kakoli Ghosh Date of Hearing 26/06/2024 Date of Pronouncement 28/06/2024 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 08/01/2024 passed by Addl./JCIT(A)-Mysore for the quantum of assessment passed u/s.144 for the A.Y.2013-14. 2. The assessee is aggrieved by confirming of adhoc disallowance of 30% of the expenses debited in the profit and loss account by the ld. AO by making the judgment assessment.
2 ITA No. 1017/MUM/2024 M/s AMPD Education India Private Limited 3. The brief facts are that assessee company was incorporated with the object to carrying out in India and abroad all types of education, skill development, learning and training in academic, cultural, computers, music etc., During the year assessee had shown gross receipts of Rs.72,30,743/- being fee from imparting education and incurred expenditure aggregating to Rs.67,70,570/-. The return of income was filed declaring total income of Rs.1,10,100/-. The ld. AO issued various notices to the assessee; however, all these notices remain uncomplied with. Accordingly, ld. AO disallowed 30% of following expenses debited to the profit and loss account on adhoc basis.
Sr. No. Head of Expenses Amount (in Rs.) 1 Salaries and Wages 3658557 2 Advertisement 462195 3 Sales Promotion 121510 4 Travelling Expense 38560 5 Telephone 219586 expenses 6 Audit Fee 12000 7 Other expenses 2258162 TOTAL 6770570
The ld. CIT(A) held that assessee has not submitted any bills, vouchers or any other documents to prove the genuineness of the expenses and has not discharged the onus and accordingly, he confirmed the adhoc disallowance of 30% of the expenses aggregating to Rs.20,31,171/-.
3 ITA No. 1017/MUM/2024 M/s AMPD Education India Private Limited 5. Before us, ld. Counsel for the assessee submitted most of the expenses debited had been paid through account payee cheques and through banking channels and wherever the Act required to deduct TDS assessee is also required to deduct TDS and has to deposit the same to the Government except for details of other sundry expenses and some of the expenses were in petty cash. In support of his contention, he has filed additional evidences before us and also stating the reason for not able to submit those documents before the ld. CIT (A). He further submitted that the books of accounts have been duly audited by the auditor and no such discrepancies have been found. 6. On the other hand ld. DR strongly relied upon the order of the First Appellate Authority and submitted that assessee has not produced any documents or details either before the ld. AO or before the ld. CIT (A). Thus, the order of the ld. CIT(A) should be confirmed. 7. From the perusal of the assessment order, it is seen that the notices sent by the ld. AO remained uncomplied with and even before the ld. CIT (A), the details as required was not furnished. It has been stated before us that at the time when hearing took place assessee was not carrying out any business and it had become dormant company and there are no staff working for the assessee company. Thus, the documents which have been filed before us contains the entire details of all the expenses, details of TDS deducted and copy of ledger accounts in the form of additional evidences. For admission of these evidences assessee
4 ITA No. 1017/MUM/2024 M/s AMPD Education India Private Limited has filed an affidavit stating the reasons as to why these documents cannot be filed. 8. Looking to the fact that the addition has been made by the ld. AO purely on adhoc disallowance by disallowing 30% of the entire expenses debited, therefore we deem fit to take on record these additional evidences. From the perusal of the nature of expenses debited and the details furnished before us, it is seen that in so far as expenses relating to employee/ professional remuneration, details of advertisement expenses assessee has incurred all the expenditure and had made the payment through banking channels and account payee cheques and TDS has been deducted. Apart from that, business promotion expenses, electricity expenses, telephone expenses, travelling expenses and office expenses and audit fees and posting of printing stationery have been all incurred through account payee cheques which are backed by third party bills. Thus, no adhoc disallowance can be made under these heads. It is also only with regard to other sundry expenses for sum aggregating to Rs.22,28,162/-, few of expenses are incurred in cash which at the most can be said to be unverifiable. Thus, under the head ‘other expenses’, it would be reasonable to disallow 10% of such expenses as non- verifiable. Accordingly, the addition is restricted to 10% of other expenses, i.e. 2,25,816/-. The balance addition is deleted.
5 ITA No. 1017/MUM/2024 M/s AMPD Education India Private Limited
In the result, appeal of the assessee is partly allowed.
Order pronounced on 28th Jun, 2024.
Sd/- Sd/- (RATNESH NANDAN SAHAY) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 28/06/2024 KARUNA, sr.ps
Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER,
(Asstt. Registrar) ITAT, Mumbai
