TaxTMI 
TaxTMI 
2025 (3) TMI 1680
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....udice to ground no. 1, The CIT(A) erred in confirming: [a] The disallowance of Rs. 1,30,27,822/- out of sub contract expenses, as bogus expenses. The disallowance is not justified. [b] The disallowance of Rs. 1,66,600/- out of salary paid to partners. [c] The disallowance of Rs. 4,30,808/- on ad hoc basis out of various expenses as expenses of personal nature, [d] The disallowance of Rs. 12,600/- under the provisions of section 40(a)(ia) of the Act. The disallowance is not justified, [e] The disallowance of Rs. 69,40,248/- being 20% on ad hoc basis out of direct expenses. The disallowance is not justified." 3. The first grievance of the assessee, is that the ld.CIT(A) has erred in confirming the disallowance made by the assessing officer to the tune of Rs. 1,30,27,822/-, out of sub-contract expenses, as bogus expenses. 4. Succinct facts qua the issue are that assessee`s case was selected for Complete Scrutiny assessment under the E-assessment Scheme, 2019 for verification of Contract Receipts/ Fees. The assessee filed Income Tax Return, for the assessment year under consideration, on 27.10.2018, declaring income of Rs. 1,98,94,820/....
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.... sub-contract expenditure is bogus expenditure, therefore, expenditure of Rs. 1,30,27,822/- was disallowed u/s.37(1) of the Income Tax Act, 1961, being not expended wholly and exclusively for business purposes. 6. Aggrieved by the order of the assessing officer (assessing officer), the assessee carried the matter in appeal before the ld.CIT(A), who has confirmed the addition made by the assessing officer. The ld CIT(A) noticed that the parties are not registered as per GST but TDS was made. However, the same alone cannot prove the genuineness of the transactions. The assessing officer was specific in his assessment proceedings with regard to the payments made and the timing of such payments made and as to why said disallowance was made. Therefore the contentions of the assessee in this regard was rejected by ld CIT(A) and thus confirmed the findings of the assessing officer. 7. Aggrieved by the order of the ld.CIT(A), the assessee is in further appeal before us. 8. Shri R.D. Lalchandani, Learned Counsel for the assessee, vehemently argued that the assessee has made payment of sub-contract expenses and while making such payment, the assessee has deducted TDS and transaction....
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....ion of the ld. Counsel for the assessee is that GST was not mandatory, as it is reflected only in respect of those registered under the GST law. However, the assessee claimed that as per the nature of the transaction, the assessee deducted and paid TDS on all the related payments and TDS credit was also available to the concerned parties. Hence, the above disallowance is completely unjustified and arbitrary. We also find merit in the submissions of ld. Counsel for the assessee, to the effect that the assessee has made payment of sub- contract expenses and while making such payment, the assessee has deducted TDS and transactions were through banking channel. During the assessment proceedings, the assessee submitted a TDS- chart showing party-wise TDS deducted, which is placed at paper book Page no.178C, which is self- explanatory, therefore, the assessee has demonstrated that the payment of sub- contract expenses were made through account payee cheques, and TDS, as applicable, as per the Act, has also been deducted therefore, genuineness of these sub-contract expenses, should not be doubted. Based on these facts and circumstances of the case, we delete the addition. 13. In the re....
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....artners, Sh.Kirti Kumar B. Patel, has shown household drawing at Rs. NIL and Sh. Haresh Kumar B. Kalsariya has shown drawings of Rs. 2,50,000/- only. Vide notice u/s 142(1) of the Income Tax Act, 1961, dated 09.12.2020, assessee- firm was asked to furnish details of family members and justification of household withdrawals and any other source of income of the partners. In reply to this, the assessee has furnished copy of computation of income of both the partners. As per computation of income, source of income of partner Sh.Haresh Kumar B. Kalsariya is only income from salary, profit and interest from the firm. From the above, facts, the assessing officer was of the view that it can be safely concluded that element of expenditure of personal nature claimed on account of maintenance of vehicles cannot be ruled out. During the year, assessee has purchased one luxury car (Toyota Fortuner) for Rs. 34,98,461/- in the name of partner Sh. Kirti Bhai B. Patel. Assessee firm has claimed following expenses on vehicles (other than commercial vehicle): Depreciation Rs. 11,34,701/- Petrol Rs. 1,97,340/- Insurance Rs. 1,57,593/- Repair Rs. 1,94,988/- Intt. On Car loan....
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....e heard both the parties. We accept the prayer of the ld. Counsel for the assessee and therefore we direct the assessing officer to confirm the addition of Rs. 12,600/- in the hands of the assessee. 25. In the result, ground no.2(d) of the assessee is dismissed. 26. Next ground no.2(e) raised by the assessee relates to disallowance of Rs. 69,40,248/- being 20% on ad-hoc basis out of direct expenses. 27. Brief facts qua the issue are that during the assessment proceedings, the assessing officer noticed that in the Profit &Loss account, the assessee has shown following direct expenses: a) To Direct Expenses i) Goods @GST 12% Rs. 23,482/- ii) Goods @GST 18% Rs. 68,67,987/- iii) Goods @GST 28% Rs. 1,55,54,658/- iv) Goods @GST 5% Rs. 14,03,032/- v) Goods @Composition Rs. 6,65,493/- vi) Cement Rs. 67,66,594/- vii) Goods @ 15% Composition Rs. 6,96,438/- viii) Goods @ 5% Composition Rs. 9,81,457/- ix) Goods @URD Rs. 86,200/- Total Rs. 3,30,45,341 b) Direct expenses (as per schedule A) Rs. 42,76,40,2....