ITAT directs AO to delete Section 40A(3) additions, sundry creditors discrepancies, rental expenses, architect fee.

The ITAT ruled in favor of the appellant, directing the AO to delete additions related to Section 40A(3) payments exceeding Rs. 20,000, discrepancies in closing balances of sundry creditors, and rental expenses discrepancy of Rs. 35,000. The appeal was partly allowed, with the architect fee addition of Rs. 20,000 being dismissed due to its small amount.

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Issues:
1. General appeal against the order of the Ld. Commissioner of Income Tax(Appeals) for AY 2014-15.
2. Challenge of addition under Section 40A(3) for payments exceeding Rs. 20,000.
3. Discrepancy in closing balances of sundry creditors leading to additions.
4. Dispute regarding rental expenses difference of Rs. 35,000.
5. Confirmation of architect fee addition of Rs. 20,000.

Analysis:
1. The appellant challenged the addition under Section 40A(3) for payments exceeding Rs. 20,000. The AO disallowed payments exceeding Rs. 20,000, leading to an addition of Rs. 23,17,568. The Ld. CIT(A) upheld this decision. The appellant argued that all payments were below Rs. 20,000, supported by evidence. The ITAT noted that all payments were indeed below Rs. 20,000, and provisions of Section 40A(3) were not attracted. The ITAT directed the AO to delete the addition.

2. The next issue involved discrepancies in closing balances of sundry creditors. The AO made additions based on differences in closing balances with various creditors. The Ld. CIT(A) confirmed these additions. Upon examination, the ITAT found that payments were made through cheques, and discrepancies were unfounded. The ITAT directed the AO to delete the additions related to closing balances of sundry creditors.

3. Another issue was the discrepancy in rental expenses of Rs. 35,000. The AO added this amount to the income due to differences in claimed and actual expenses. The Ld. CIT(A) upheld this addition. The ITAT observed that room rent and car parking rent were not considered, leading to the discrepancy. The ITAT directed the AO to delete the addition of Rs. 35,000.

4. Lastly, the challenge against the confirmation of architect fee addition of Rs. 20,000 was dismissed due to the small amount. The ITAT partly allowed the appeal, setting aside the additions related to Section 40A(3), closing balances of sundry creditors, and rental expenses discrepancy. The architect fee addition was not pressed and dismissed.

In conclusion, the ITAT ruled in favor of the appellant on issues related to Section 40A(3), closing balances of sundry creditors, and rental expenses discrepancy, directing the AO to delete the additions. The appeal was partly allowed, with the architect fee addition being dismissed due to the small amount.

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