No disallowance merely on non-disclosure of mode of payment of salary to security guards

Neetu Juneja Vs ITO (ITAT Delhi)

Conclusion:  Merely because assessee had not disclosed mode of payment of salary i.e. either by cheque or cash, the same should not doubted especially when such salary to security guards came to Rs.27,000/- per month for four persons. Even, if the payment was made in cash, there would be no violation of section 40A(3).

Held: AO disallowed an amount of the salary paid to the security guards on the ground that such payments had been made to the contractor without deducting tax under section 194-C. It was held that assessee in the instant case was a small assessee and had produced confirmation of the persons on the letter head of its firm as proof of payment of salary to these persons. Merely because assessee had not disclosed mode of payment of salary i.e. either by cheque or cash, the same should not doubted by CIT(A) especially when such salary to security guards came to Rs.27,000/- per month for four persons. Even, if the payment was made in cash, there would be no violation of section 40A(3). Therefore, CIT(A) was not justified in sustaining the addition of Rs.3,24,000/- paid to four individual persons towards salary to security guards.

FULL TEXT OF THE ORDER OF ITAT DELHI

This appeal filed by the assessee is directed against the order dated 20.06.2018 of the learned CIT(A), Karnal, relating to AY-2012-13.

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