2019 (6) TMI 1497

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....antran Caterers. During the course of search, assessee's premises was also covered u/s 133A of the Act and certain documentary evidence pertaining to unexplained investment was found and impounded. Assessee offered additional income of Rs. 30,00,000/- during the course of search and survey and accordingly filed return of income. 2.1 During the assessment proceedings, assessee was asked to produce books of account and supporting documents for various expenses claimed in the return of income. AO observed that the assessee has disclosed an amount of Rs. 1,74,36,703/- as sales for the AY 2008-09 as against the sales of Rs. 40,24,851/- for AY 2007-08. He also observed that assessee has disclosed only loss in both the AYs and the administrative ....

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....following grounds of appeal: "1. The Order of the Commissioner (Appeals) of Income Tax is in violation of the provisions of law and hence is bad in law. 2. The Commissioner (Appeals) has erred in directing the Assessing Officer to disallow 1/3rd of purchases, salaries and other administrative expenses claimed. 3. Any other ground that may be urged at the time of hearing." 4. Ld. Counsel for the assessee submitted that CIT(A) has considered only the following three items on which the assessee could have inflated the expenditure: 1. Cost of sales (net purchases) Rs. 36,71,026 2. Salaries Rs. 26,60,061 3. Other administrative expenses Rs. 37,40,354   Total Rs. 1,00,71,441     =========== He submitted that ....

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....so without any basis as the same were incurred for the purpose of business and no defects have been pointed out either by the AO or CIT(A) to disallow the same. Therefore, he prayed that disallowances be deleted. 5. Ld. DR , on the other hand, supported the orders of revenue authorities and submitted that ld. AR has failed to prove that all the employees to whom salaries are alleged to have been paid by bearer cheques were employed with the assessee. He submitted that assessee has not been able to establish along with necessary evidence, the genuineness of the expenditure and, therefore, disallowance of 1/3rd of such expenses by CIT(A) is to be sustained. He placed reliance on the decision of the coordinate bench in the case of M/s Sree Ra....