Salil Sadanand Phadte Vs ITO (ITAT Mumbai)
ITAT Mumbai: Employer Advances Can’t Be Branded as Unexplained Money Without Proper Verification; Matter Sent Back for Limited Remand
Assessee, an employee, received substantial amounts from employer M/s Sanda Wellbeing Pvt. Ltd., which were claimed as advances for customer acquisition & business promotion expenses. AO treated ₹1.20 crore as unexplained money u/s 69A, mainly due to absence of vouchers & cash withdrawals, & CIT(A) confirmed the addition.
Tribunal noted that employer’s own letters & books treated the sums as “advances” & not salary, Form 16 showed limited salary income, while Form 26AS reflected NIL TDS, indicating serious inconsistencies not examined by AO. ITAT held that addition u/s 69A cannot rest on suspicion alone without establishing ownership of unexplained money & that, where vouchers are partly missing, Revenue should resort to reasonable estimation rather than taxing the entire advance. Considering gaps in verification relating to TDS reversal, employer’s response u/s 133(6), treatment of advances in employer’s books & cash component reconciliation, Tribunal restored the matter to AO for limited & specific verification with clear directions, including estimation of disallowance for unsupported cash expenses instead of full addition. Appeal allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
