Income-tax Appeal Partially Allowed, Section 68 Addition Deleted, Ad Hoc Disallowance Upheld

The Tribunal partly allowed the appeal, deleting the addition made under section 68 of the Income-tax Act, 1961, due to the genuineness of the transaction being proven. However, the confirmation of an ad hoc disallowance of expenses amounting to Rs. 25,000 was upheld as the assessee had agreed to it during assessment. The impugned order was upheld, and the judgment was pronounced on February 7, 2020.

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Issues:
1. Confirmation of addition made by the Assessing Officer under section 68 of the Income-tax Act, 1961.
2. Confirmation of ad hoc disallowance of expenses.

Issue 1:
The appeal challenged the addition of Rs. 2,69,000 made by the Assessing Officer under section 68 of the Income-tax Act, 1961. The assessee, a civil contractor, had sundry creditors of Rs. 50,86,860 in the Balance Sheet. The AO required confirmations from creditors, and the assessee failed to provide one from M/s. Yashoda Construction for Rs. 2,69,000 within the short time limit. The assessee later submitted the Profit and Loss Account and Balance Sheet of M/s. Yashoda Construction, showing the assessee as a debtor for the amount. The AO invoked Rule 46A of the Income-tax Rules, 1962, for rejecting additional evidence. The CIT(A) confirmed the addition based on a remand report and the absence of necessary records from the AO of M/s. Yashoda Construction. However, the Tribunal found that since the creditor acknowledged the transaction and reflected it in their accounts, the genuineness was proven. The addition was deleted as there was no doubt raised by the AO of the creditor.

Issue 2:
The second ground of appeal was against the confirmation of an ad hoc disallowance of Rs. 25,000 out of expenses. The assessee had recorded Rs. 92,65,070 towards salary to laborers, but the expenses lacked proper external vouchers. During assessment, the assessee agreed to an ad hoc disallowance of Rs. 25,000 due to unsupported expenses. The Tribunal noted that the assessee's admission during assessment cannot be challenged in appellate proceedings unless it is against the law. As the agreed addition was based on factual aspects without any legal issues, the Tribunal upheld the confirmation of the ad hoc disallowance. The appeal on this ground failed, and the impugned order was upheld.

In conclusion, the Tribunal partly allowed the appeal, deleting the addition under section 68 but upholding the confirmation of the ad hoc disallowance of expenses. The judgment was pronounced on February 7, 2020.

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