TaxTMI 
TaxTMI 
2017 (5) TMI 366
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.... 142(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act') were issued. In response to notices, the authorized representative of the assessee appeared from time to time and produced the relevant details as called for. During the course of assessment proceedings, the A.O. noticed from the balance sheet filed for the year that the assessee has shown an amount of Rs. 1,17,53,802/- under the head 'current liabilities' as sundry creditors for others. The A.O., to ascertain the nature of liability issued a show cause notice and asked to explain the assessee to furnish details of creditors like partywise breakup of all the creditors, confirmations duly attested in the account copy and bank account of the creditor from whom the credits are shown as outstanding. In response to notice, the assessee vide its reply dated 17.1.2014 submitted that during the financial years 2009-10 to 2011-12, the assessee has participated with the Rajiv Arogya Shree Scheme for treating the patients sponsored by the Government of Andhra Pradesh and accordingly, the hospital has conducted medical camps across the state to identify the patients for the benefit of Arogya Shree Scheme for which it has inc....
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....adhoc disallowance of 10% towards Arogya Shree expenses for the reason that out of total expenditure of Rs. 1,49,63,563/-, a sum of Rs. 32,09,761/- was incurred in cash for which the assessee failed to furnish necessary bills and vouchers. Similarly, the A.O. made additions of Rs. 16,62,503/- u/s 40(a)(ia) of the Act, towards professional charges paid to Doctors for failure to deduct tax at source u/s 194J of the Act. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the A.O. The CIT(A) after considering explanations of the assessee, observed that the amount shown under sundry creditors for others represents outstanding expenditure payable in respect of Arogya Shree expenses because of delay in realization of bills from the Government. The CIT(A) further observed that the assessee has furnished details of expenditure incurred along with ledger extracts. On verification of the ledger extracts filed by the assessee, it was noticed that the assessee has incurred an amount of Rs. 1,49,63,563/- towards Arogya Shree expenses, out of which an amount of Rs. 1,33,13,563/- has been....
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.... that the assessee failed to furnish details of creditors, confirmation from the parties and also bank account details of the creditors proving the identity and genuineness of the transactions. The A.O. was of the opinion that the assessee failed to prove the identity of the creditors, therefore, the question of verification of genuineness of the transactions does not arise, hence, disallowed the entire creditors shown under the head creditors for others. It is the claim of the assessee that the creditors for others shown under the head current liabilities is expenses payable towards reimbursement of expenditure incurred towards Arogya Shree expenses. The assessee further contended that it had incurred various expenditures towards the scheme for conducting medical camps through marketing agents and the same has been reimbursed subsequently as and when the bills are received from the State Government. The assessee has accounted bills submitted by the marketing agents towards expenditure incurred for Arogya Shree schemes, however settled the bills subsequently in the next financial year because of delay in realization of bills from the State Government. The A.O. without examining the....
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....e CIT(A) enhanced the disallowance of expenditure to the extent of 10% adhoc disallowance of total expenditure incurred under the head Arogya Shree schemes as against the disallowance made by the A.O. towards expenditure incurred in cash. The assessee claims that the CIT(A) ought not to have directed the A.O. to disallow 10% expenditure incurred under Arogya Shree schemes, as the assessee has filed necessary bills and vouchers in support of expenditure. We do not find any merits in the arguments of the assessee, for the reason that since the expenditure incurred under the head Arogya Shree schemes mostly remains payable at the end of the year, it is very difficult to ascertain the genuineness of expenditure and also mode of payment, whether the same has been paid by cheque or cash. The A.O. has identified the cash payments and disallowed 10% of such expenditure. In case of the remaining expenditures, because the entire expenditure has been treated as unexplained credits, the A.O. would not have gone into the genuineness of expenditure. The CIT(A) after considering the nature of expenditure and also fact that most of the expenditure are supported by self-made vouchers rightly direct....