TaxTMI 
TaxTMI 
2024 (1) TMI 609
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....3(3) of the Income-tax Act, 1961 (hereinafter referred as the "Act"), passed by the ACIT, Circle Exemption 1(1), Delhi, hereinafter referred to as the "AO"). 2. The assessee is a private limited company, registered under the Companies Act, 2013 and engaged in the business of distributorship of OPPO Mobiles India Private Ltd. The assessee's return of income at loss was selected for scrutiny to examine the following issues: 1. Low income in comparison to high loans/advances/Investment in shares, appearing in Balance Sheet. 2. High Revenue from operations (including other income) and no scrutiny in preceding 5 assessment years. 3. Large refund claimed out of advance tax. 4. Large value claim of refund. 3. During assessment proceeding....
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....ome the claim didn't match with evidence. 4. It is settled law that assessee has to maintain proper bills and vouchers of the expenses in order to make it amenable to verification. 5. Further, it is found that assessee has made payment to meet the above expenses mostly in cash below the threshold limit of Rs. 20,000/- 6. So, genuineness of above expenses for business purpose remained unverified in absence of supporting evidences. In this situation, the inflation of expenses can't be ruled out. 7. Few expenses such as Guest House Expenses, Mobile and Internet Expenses claimed by the assessee, which is something personal in nature, 8. Mostly bills and vouchers were devoid of receiver signature, 9. Proper name and address o....
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.... excessive, few are personal in nature and wholly and exclusively is not utilized for the business purpose as per section 37(1) of Income Tax Act, 1961 and is hereby added back to the total income of the assessee." 4. Learned CIT(A) sustained the addition with following relevant finding in para 7: "7. I have carefully examined the assessment order and the submissions of the appellant. The Assessing Officer in the assessment order has observed that the expenses claimed by the appellant under various heads are not adequately supported by bills and vouchers. The AO verified the ledgers, bills and vouchers submitted by the appellant during the assessment proceeding and remarked that the proper bills and vouchers are not maintained by the app....
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....usively incurred for the purposes of business and no otherwise. During the appellate proceedings the appellant has submitted ledger of various heads of expenditure which have been called by the AO for verification. Total expenditure under these heads amount to Rs. 3,39,62,014/-. On cursory perusal of these ledgers, it may be noted that more than 90% of these expenses are incurred in cash. There are several instances in which the cash payments have been made by the appellant in excess of Rs. 20,000/- in contravention of provision of Section 40A(3) (for instance: under the head business dinner: cash payment of Rs. 35,464/-on 4 October, gift for DB: Rs. 31,500/- on 4th October, business dinner: Rs. 30,172/- on 28.08.2016, Rs. 22,500/- on 24th ....
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....ed where the expenses were incurred in violation of provisions of Section 40A(3). Some of them have been mentioned supra. In these circumstances, I find that the disallowance made by AO @ 30% subsuming all such violations/anomalies is very fair and reasonable. Accordingly addition of Rs. 1,01,88,612/- made by AO is confirmed." 5. The assessee is in appeal, raising following grounds: "1. For that the Id CIT(A) is erred in dismissed the appeal against assessment order, which disallowed 30% of the Expenditure under the head different head of expenditure on ad hoc basis amounting Rs. 1,01,88,612/- in spite of all bills and vouchers which is genuine business expenditure. that the order of the Id CIT(A) is bad in law as well as in facts. 2. ....
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....djusted in the expenditure head once the bill was submitted. Learned AR also took the Bench across various vouchers produced in the paper book to submit that all expenditure are duly supported by vouchers. 8. Learned DR, on the other hand, relied on the orders of learned tax authorities below and submitted that the assessee had failed to justify the expenses which are more in the nature of personal expenditure, like food and beverages. It was submitted that in any case matter may be restored to AO for verification of the vouchers etc. 9. We have given thoughtful consideration to the material on record and observe that the learned tax authorities without actually pointing out any deficiency in the books of account have inferred that the ex....