Print Plus Private Limited Vs ITO (ITAT Mumbai)
Brief facts is that the AO noticed from perusal of Tax Audit Report that the appellant/assessee had paid remuneration to directors amounting to Rs. 23,26,200/-. However, it was noticed that an amount of Rs.36,00,600/- was debited to Profit & Loss account instead of Rs. 23,26,200/-. On a query, the assessee explained that the difference of Rs.12,74,400/- pertained to reimbursement of expenses incurred by the directors. And in support, sample cash vouchers for Rs.2,33,900/- were filed. The AO noted that all the vouchers were signed by Mr. Desai mentioning expenses of revenue & travelling. However, the AO noted that appellant could not produce any corroborative evidence in the form of bills/receipts, show the availability of cash balance with directors, nature of expenses (whether related to the business), ledger accounts, cash flow statement etc. Accordingly, the excess unverifiable deduction claimed by the appellant in the Profit & Loss account of Rs. 12,74,400/- was disallowed u/s 37(1) of the Act.
ITAT notes that the Ld.CIT(A) confirmed the disallowances as made AO because the assessee was not able to produce any bills pertaining to the expenses claimed to the tune of Rs.12,74,400/- (i.e. expenditure incurred by the directors). Before us also the 8 assessee/Ld.AR could not produce any bills other than the self made vouchers which is riddled with infirmities as pointed out by the Ld.CIT(A). Further we note that the assessee had already claimed expenses on various counts VIZ travelling, fuel expenditure and other expenses separately. And further we note that the directors in their return of income has shown only remuneration at a total of Rs.23,26,200/- and since the excess claim of expenditure on behalf of directors could not be proved/supported by relevant bills, we agree with the impugned action of Ld.CIT(A) on this issue and are inclined to confirm the same.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal is preferred by the assessee the against order of the Ld.CIT(A)-13 Mumbai dated 28-02-2020 for AY 2011-12.
2. The Grounds of appeal raised by the assessee are as under:
“1. The Learned CIT Appeals erred in not considering the principles of natural justice while passing the Appellate Order. The Learned CIT has ITA.NO.1719/MUM/2020 AY-2011-12 Print Plus Private Limited overlooked the fact that the name of the Appellant was not appearing as beneficiary of the alleged hawala dealer.
2. On the facts and circumstances of the case, the Learned CIT erred in retaining the addition of Rs. 17,99,061/- (being 25% of the original disallowance of Rs.71,96,242/-).
3. Without prejudice to the Ground No. 2, the Appellant prays that the rate of Gross Profit adopted by the Learned CIT is excessive,
4. On the facts and circumstances of the case, the Learned CIT erred in confirming the addition of Rs. 12,74,400/- being Directors Remuneration.
5. The Appellant craves the leave to add, amend or modify any of the grounds stated above.”
3. The first Ground of appeal of the assessee is against the violation of principle of natural justice by the Ld. CIT(A).
4. In respect of this grounds of appeal of the assessee, the Ld.AR could not demonstrate with the aid of any material or action of Ld.CIT(A) from record to show that there was violation of natural justice. We note that before the Ld.CIT(A), the Ld.AR of the assessee had appeared and his presence has been marked in the caption page of the impugned order. We note that Ld. CIT (A) has reproduced the submissions of the assessee and thereafter has passed a reasoned order. Therefore, we do not find any force in this ground of appeal of the assessee and so it is dismissed.
5. Coming to the ground No.2 of the appeal which is against the action of Ld.CIT(A) restricting the addition to 25% from the original disallowances made by the AO at 100%.
6. Brief facts is that AO noted that the assessee had filed return of income on 30-02-2011, declaring total income of Rs.11,24,720/-. Later the case of the assessee was selected for scrutiny and that he came across the report from the DGIT (investigation) which in-turn was on the basis of an information from Sales Tax Department that assessee was indulging in accepting bogus purchases bills from bogus/hawala bill providers. In this report the AO noted that the assessee has taken such service/ accommodation from the following two companies :-
