Bharti Enterprise Vs ITO (ITAT Surat)
Summary: The assessee filed an appeal before the ITAT Surat against the order of the National Faceless Appeal Centre, Delhi, dated 22.07.2025 for Assessment Year 2018-19. The dispute concerned a disallowance of business expenditure of Rs.22,41,000/- made by the Assessing Officer under Section 40A(3) of the Income Tax Act, 1961 in respect of salary payments, which was confirmed by the CIT(A).
The assessee was a commission agent of Gujarat Gas Limited and operated a CNG Filling Station. It filed its original return on 06.10.2018 declaring total income of Rs.6,54,710/-. The return was processed under Section 143(1) and subsequently selected for scrutiny under CASS. Notices under Sections 143(2) and 142(1) were issued and the assessee furnished details through the e-filing portal under the faceless assessment scheme.
During assessment, the Assessing Officer asked for party-wise expense details, including names, addresses, PANs, payments made during the year, outstanding balances, payment modes and supporting documents. The assessee furnished ledger extracts. On examination, the Assessing Officer found two ledger accounts for supervisor salary expenses for the same financial year and noted cash payments of Rs.3,45,600/- to supervisors and Rs.35,28,000/- to fillers.
The Assessing Officer also noted differences between details furnished on different dates concerning the names and monthly payments of supervisors. The Assessing Officer observed that monthly salary amounts appeared identical and considered it difficult to accept the salary statements as genuine without supporting documents. The Assessing Officer consequently made an addition of Rs.22,41,000/- under Section 40A(3).
