Tribunal upholds disallowances on multiple grounds in assessee's appeal

The Tribunal upheld the disallowances made by lower authorities on all contested grounds, including additions for legal and professional charges, traveling expenses, commission expenses, and alleged low household withdrawals. The appeal of the assessee was dismissed in its entirety, with the decision pronounced on 18th Nov. 2016.

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Issues Involved:
1. Addition of legal and professional charges as excessive payment.
2. Adhoc addition of 1/3rd out of traveling expenses.
3. Adhoc addition out of commission expenses.
4. Addition for alleged low household withdrawals.

Issue 1: Addition of Legal and Professional Charges
The assessee challenged the sustaining of an addition of Rs. 4,00,000 towards legal and professional charges paid to Sh. Rajkumar Jain. The Assessing Officer (AO) disallowed Rs. 4,00,000 out of Rs. 7,81,623 claimed, citing that the expenses were not incidental to running the business. The Commissioner of Income-tax (Appeals) [CIT(A)] upheld the disallowance, noting that Sh. Rajkumar Jain was not professionally or legally qualified to represent the assessee before the Custom Department. The Tribunal found that the assessee failed to provide evidence of services rendered or professional competence of Sh. Rajkumar Jain, and thus upheld the disallowance as reasonable and justified.

Issue 2: Adhoc Addition of 1/3rd Out of Traveling Expenses
The assessee contested the sustaining of disallowance of 1/3rd expenses out of traveling expenses amounting to Rs. 1,56,301. The AO observed foreign traveling expenses of Rs. 4,68,903 and disallowed 2/3rd of the total expenses due to lack of evidence supporting business-related travel. The CIT(A) reduced the disallowance to 1/3rd. The Tribunal upheld the CIT(A)'s decision, noting the absence of evidence from importers, Visa applications, and proof of business-related expenses, thereby dismissing the ground.

Issue 3: Adhoc Addition Out of Commission Expenses
The assessee challenged the sustaining of disallowance of Rs. 10,00,000 out of commission expenses. The AO disallowed the entire commission of Rs. 12,82,840, citing excessive payment and lack of evidence of services rendered. The CIT(A) allowed partial relief, sustaining Rs. 10,00,000 of the disallowance. The Tribunal upheld the CIT(A)'s decision, noting the absence of evidence for services rendered, professional competence of the recipients, and justifiable business purpose, thereby dismissing the ground.

Issue 4: Addition for Alleged Low Household Withdrawals
The assessee contested the sustaining of an addition of Rs. 1,50,000 for low household withdrawals. The AO made an addition of Rs. 3,00,000, observing insufficient cash withdrawals for household expenses. The CIT(A) allowed relief of Rs. 1,50,000, sustaining the balance. The Tribunal upheld the CIT(A)'s decision, noting the lack of evidence of household income and expenditure, thereby dismissing the ground.

Conclusion:
The appeal of the assessee was dismissed in entirety, with the Tribunal upholding the findings and disallowances made by the lower authorities on all contested grounds. The decision was pronounced in the open court on 18th Nov. 2016.

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