TaxTMI 
TaxTMI 
2025 (12) TMI 1751
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....cording to the AO, the information in the form of complaint of tax evasion dated 10.12.2014 and 12.03.2015 was received in its office making serious allegations on the assessee company and notice u/s 148 of the Act, was issued on 31.03.2015. 3. Against the Notice u/s 148 dated 31.03.2015, the assessee vide letter dated 17.04.2015 submitted that return filed on 28.09.2008 should be treated as its return filed against notice u/s 148 of the Act. The assessee company sought copy of the reasons recorded which was supplied to the assessee company by the AO on 27.04.2015 and at the same time the assessee company was issued notice u/s 143(2) of the IT Act 1961 dated 27.04.2015. Thereafter, assessee vide letter dated 10.06.2015, filed his objection with respect to re-opening of the case on the following grounds: o The contents of complaint on the basis of which the case with reopened cannot be treated as material for reopening the case o The contents of complaint on the basis of which the case was reopened cannot lead to any belief as to escapement of income. o The reopening appears to be mechanical and is non reasoned. o Commission income earned from ....
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....f the Act. However, the Ld. CIT(A) deleted the additions / disallowances made in the assessment order. 3.4 Aggrieved with the said deletion of the additions / disallowances made in the assessment order, the Revenue has filed the present appeal and against the upholding of the proceedings u/s 147 of the Act, the assessee has filed the present cross objection. 4. First, we take up the appeal filed by the Revenue. 4.1 Ground no. 1 of the appeal does not emanate either from the assessment order or from the order of the Ld. CIT(A). Neither the Revenue has made any submission in this regard. Hence, ground of appeal is not considered as relevant and hence dismissed. 5. Ground no. 2 of the appeal is against the deletion of the addition in respect of Rs. 2,19,71,126/- being commission received by the assessee company and the said ground of the appeal is reproduced as under: "2. Whether in facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition in respect of Rs. 21971126/- being commission received." 5.1 The reasons recorded by the AO for reopening the assessment in this case, on this issue along with the finding of the AO in the assessm....
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....- as unexplained amount u/s 68 of the Income Tax Act, 1961. Accordingly, the same is added back to the total income of the assessee company." 5.2 Aggrieved with the said addition, the assessee preferred an appeal before the Ld. CIT(A), who deleted the said addition. The relevant finding of the Ld. CIT(A) is reproduced as under: "Having duly considered the facts on record and the appellant's submissions supported by documentary evidence, it is observed that the commission income has been offered in the respective A.Ys 2009-10 and 2008-09. The A.O's cited reasons such as lack of supporting documents "like banker certificate, copy of shift code etc." for such remittance as the reason for treating the same as unexplained are found to be irrelevant. Section 68 pertains to unexplained credits. In the present case, the credits are not only explained but duly offered to tax. The addition is thus found to be unjustified and is deleted. This ground is allowed." 5.3 We have heard both the parties and perused the material available on record. The AO had disallowed the amount on the ground that the assessee did not submit supporting evidences in support of his claim that ....
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....he Escapement of Income cannot be quantified at this juncture but I have reason to believe that some Income has Escapement Assessment." Relevant extract of the assessment order: " 9. Income escaped from investment of Rs 2,65,734/- in joint Venture in Singapore: On perusal of the balance sheet of the assessee company it is noticed that the assessee company has invested Rs. 265734/- in Joint Venture of Scan Holding Ltd. Singapore. On the basis of the replies submitted by the assessee company it is noticed that no Board Resolution/agreement signed with the other party during the foreign visit are produced for such investments. Hence Rs. 2,65,734/- are added back to the income of the assessee as unexplained expenses u/s 68 IT Act, 1961." 6.2 Aggrieved with the said addition, the assessee preferred an appeal before the Ld. CIT(A), who deleted the said addition. The relevant finding of the Ld. CIT(A) is reproduced as under: "6.3 Ground of appeal No. 7 assails the action of the AO in holding an investment made in earlier years to be unexplained expenditure under section 68. The A.O noted from the balance sheet of the appellant company that i....
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....is case, on this issue along with the finding of the AO, are reproduced as under: Reasons recorded on this issue 4. Bogus and Personal expenses: Information has also been received that the assessee has claimed bogus and personal expenses as business expenses to suppress the income and therefore lowering or avoiding to payment of tax. The same issue was also raised in the AY 2007-08. However, he amount cannot be quantified at this point of time out I have reason to believe that this issue needs to the scrutinized and this type of expenses is liable to be disallowed. 5. Expenditure on account of Foreign Travelling: It is noticed from perusal of P&L Account that the company has debited Rs. 3465948/- as Foreign Travelling in its P&L A/c. The same issue was also raised in the AY 2007-08. However, the amount cannot be quantified at this point of time but I have reason to believe that this issue needs to be scrutinized and this type of expenses is liable to be disallowed." Relevant extract of the assessment order: " 10. Foreign travelling expenses: The assessee company was required to furnish bills/vouchers of foreign....
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....'s submissions I find that the appellant has furnished complete details of the expenses claimed along with supporting evidence such as bills, vouchers, credit card statements, forex bills, and tickets. In such a scenario when there is no reason to doubt the genuineness of the expenses incurred, disallowing a portion of such expenses on estimate basis is not justified. Accordingly, the addition on this account is deleted. With regard to domestic travel, it is noted from the ledger account for domestic travel expenses that there is no cash payment exceeding Rs 20,000/- Documentary evidence in the form of bank statements, bills and vouchers were also produced to support the expenses claimed under this head. This being the case, the addition made by the A.O is found to be unwarranted and is hereby deleted. This ground is allowed." 7.3 We have heard both the parties and perused the material available on record. 7.4 The A.O disallowed 10% of domestic travelling and foreign travelling expenses on an ad-hoc basis, without pointing out any specific reason as to why the expenses claimed by the assessee were not allowable. The Ld. CIT (A) had duly examined the necessary doc....
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....ee preferred an appeal before the Ld. CIT(A), who deleted the said disallowance. The relevant finding of the Ld. CIT(A) is reproduced as under: 6.6 Ground of appeal No. 10 contends that the AO erred in making a disallowance in respect of rent paid to directors Rs. 4,05,000. During the year under consideration, the appellant company had incurred Rs. 4,05,000/-, as rent paid to directors on their property used for business for which there were no formal agreements. Since the appellant could not furnish formal rent agreement, the expenditure of Rs. 4,05,000/- incurred on rent was disallowed and added back to the total income. On consideration of the facts on record, and the appellant's submissions it is pertinent to note that the genuineness of the expense claimed under the head of rent paid to directors nor its allowability as a business expenditure is not in question, Further the appellant has also submitted evidence indicating that such rental income was duly offered for tax by the recipients. In view of the above, the addition made on this ground is found to be unjustified and is hence deleted. This ground is allowed. 8.3 We have heard both partie....
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....ovided supporting evidences, such as Form 16A, pay register, attendance register etc. which could establish that salary has been paid. In the absence of such documents, salary paid to employees/directors of Rs. 68,66,326/- was disallowed and added back to the income of the assessee. Having duly considered the facts on record and the appellant's submissions, it is pertinent to note that the bulk of the salary expenses pertaining to payment-made-to the promoter/ directors was duly evidenced by Form 16 and bank statements. The appellant's contention that it is inconceivable that a company can function without paying salaries is incontrovertible, more so when backed with supporting evidence in the form of salary ledger accounts and bank statements. Accordingly, the addition made on this account is found to be without merit and is deleted. This ground is allowed. 10 We have heard both the parties and perused the material available on record. 10.1 The A.O had made the disallowance on the ground that the assessee had not provided supporting evidences such as Form 16-A, pay register, attendance register to establish that the salary has been paid. The ld. CIT(A), upon....