TaxTMI 
TaxTMI 
2024 (1) TMI 609
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....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 proceedings, learned AO was not satisfied with the genuineness of the expenditure on account of business establishment expenses, conveyance expenses, Guest House expenses, maintenance expenses, mobile & internet expenses, other expenses, travelling expenses, show room expenses and staff welfare expenses of Rs. 3,39,62,041/- and observed in para 4.3 as follows: "4.3 Disallowance on account of non-maintenance of proper Bills and Vouchers On perusal of Profit and Loss Account for FY 2015-16, it appears that the assessee has debited expenses in Profit & Loss Account under different heads. During the course of assessment proceeding, the assessee was asked to furnished ledgers alongwith supportive bills & vouchers of expenses such as Business Establishment Expenses, Conveyance Expenses, Guest House Expe....
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....isallowed @30% of total expenses: Sl. No. Heads of Expenses Amount of Expenses (in Rs. ) claimed in Profit & Loss Account Disallowance of expenses @ 30% 1 Business Establishment Exp 4585168 1375550.4 2 Conveyance Expenses 881431 264429.3 3 Guest House Expenses 2045831 613749.3 4 Maintenance Expenses 1201142 360342.6 5 Mobile and Internet Exp 1479960 443988 6 Other Expenses 4651598 1395479.4 7 Travelling Expenses 4222645 1266793.5 8 Showroom Expenses 352115 105634.5 9 Staff Welfare Expenses 14542151 4362645.3 Total 33962041 10188612.3 As the above said expenses is unreasonable, 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 e....
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....h 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 September, Rs. 23,500/- on 8th October, guest house expenses: Rs. 72,100/- on 2nd March, kitchen material: Rs. 26,726/- on 19th November, Rs. 20,000/- on 26th August, repair and maintenance of guest house: Rs. 21,495/-, on 4th August, daily use product: Rs. 26,000/- on 21 August similarly, miscellaneous expenses have been broken down on 26.11.2016 into several payments of Rs. 17,500/- and so on). The appellant has also booked expenses as "advance to staff (petty cash)" in each of head expenditure on several occasions. The advances given to staff cannot be booked as expense unless they are actually incurred and supported by bills and vouchers. The appellant failed to substantiate of the advances to staff were eventually incurred expenditure. The appellant has not been able to counter the findings of the AO that the expenses booked under various heads are not supported by proper bills and vouchers and that the vouchers are not signed by the receivers, bills are not in proper format etc. In these circumstances, 1 find that the appellant has....
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....t be the basis for making ad hoc disallowance. It was submitted that cash expenses were primarily on day to day expenses on food etc. and in fact in the Auditor's report suo motu made disallowance of such cash expenses which have not been considered. It was submitted that advance to staff was for staff expenditure and such advance was adjusted 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 expenses are excessive and unreasonable so as to disallow to the extent of 30%. The order of learned tax autho....