Assessing Officer's Unjustified Additions Overturned, Genuine Expenses Upheld

The Tribunal found the additions by the Assessing Officer unjustified as genuine expenses were made in subsequent years as per agreements. Consequently, the additions were deleted, and the appeal of the assessee was allowed.

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Issues:
1. Addition of Rs.2,33,800/- u/s 68 on account of non-confirmation of credit balances.
2. Disallowance of provision for internal audit fees and leave and pension contribution.

Analysis:

Issue 1: Addition of Rs.2,33,800/- u/s 68 on account of non-confirmation of credit balances:
The assessee, a company engaged in toll road construction, filed its return for A.Y. 2016-17 showing a loss. The AO made additions of Rs.99,000/- and Rs.1,34,880/- based on non-confirmation of credit balances with M/s. T. R. Chadha & Co. and M/s. P. Meera Anusha, respectively. The CIT(A) upheld the AO's order. The AR argued that the provision for audit fees and payments to M/s. T. R. Chadha & Co. were made in subsequent years, supported by ledger accounts. Similarly, regarding M/s. P. Meera Anusha, it was contended that payments were made in the subsequent year as per the agreement. The Tribunal found the AO's additions unjustified as no evidence of expenses being bogus was presented by the Revenue. Consequently, the additions were deleted, and the appeal was allowed.

Issue 2: Disallowance of provision for internal audit fees and leave and pension contribution:
Regarding the provision for internal audit fees and leave and pension contribution, the AR argued that the payments were made in subsequent years as per agreements with M/s. T. R. Chadha & Co. and M/s. P. Meera Anusha, respectively. The AR provided supporting documents showing the payments were genuine and made as per agreements. The Tribunal observed that the Revenue failed to demonstrate any evidence to suggest the payments were bogus. Consequently, the Tribunal directed the deletion of the disallowance, allowing the appeal of the assessee.

In conclusion, the Tribunal found the additions made by the AO unjustified as the expenses were genuine and made in subsequent years as per agreements. The Tribunal directed the deletion of the additions and allowed the appeal of the assessee.

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