2016 (5) TMI 236

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....s : "(1) That the learned Commissioner of Income-tax (Appeals) was not justified in law in retaining a disallowance of Rs. 1,00,000 out of the disallowance made under the head 'staff welfare expenses' of Rs. 73,790 and 'repair and maintenance' expenses of Rs. 1,52,736 made by the Assessing Officer totalling to Rs. 2,26,526 even after appreciating that no businessman can be prevented from spending money on the staff member employed by him, and for non-production of bills and vouchers by the assessee or the fact that some of them as produced were not original, were handmade does not mitigate against the fact that these were actually incurred. (2) That once the learned Commissioner of Income-tax (Appeals) foll....

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....the first appeal, the learned Commissioner of Income-tax (Appeals) partly allowed the appeal. 4. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed the expenses of Rs. 73,790 under the head "staff welfare". The Assessing Officer asked the assessee to explain with supporting evidences like bills and vouchers. Since the assessee could not explain the same, the Assessing Officer added Rs. 73,790 to the total income of the assessee. Likewise, the Assessing Officer also noticed that the assessee claimed the expenses of Rs. 15,27,361 under the head "repair and maintenance". The Assessing Officer noticed from the expenditure ledger and bills vouchers that the assessee has not produced the or....

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....nces for all expenses incurred. Suitable evidence depends on various factors like nature of payment, nature of claimant, nature of payee, place of payment, amount of payment, etc. In such an organisation there is suitable internal check and control. Business is carried in a professional manner. There is delegation of powers for incurring of expenditure, approval of the same and then payment is made by authorised cashiers. Therefore, in such a case, disallowance of any expenses is not justified. It is true that there can become personal element of expenses but such expenses are incurred by employees. For example, while entertaining the bank customers with tea and snacks, a bank officer also participate, some phone calls may be made to home b....

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....ons made before the learned Commissioner of Income-tax (Appeals) and also placed reliance in the case of Pushpanjali Dyeing and Printing Mills P. Ltd. v. Joint CIT [2001] 72 TTJ (Ahd) 886 and S. Gurlal Singh Tuli v. Asst. CIT [2000] 73 ITD 365 (Nagpur) and Lavrids Knudsen Maskinfabrik (India) Ltd. v. Addl. CIT [2006] 102 TTJ (Pune) 882. In the case of Pushpanjali Dyeing and Printing Mills P. Ltd. v. Joint CIT [2001] 72 TTJ (Ahd) 886 it was held that the assessee having maintained complete books of account in accordance with the provisions of the Income-tax Act which are audited by the auditor and no adverse observations having been pointed out by the auditor, there was no justification for rejection of books of account merely because there ....