Robin Bhamboo Vs ITO (ITAT Jaipur)
Salary Claim Doubtful, But Employees Cannot Be Imaginary in a Running Cement Business: ITAT Rejects 100% Disallowance & Directs Reasonable Estimation
Entire Salary Expenditure Disallowed for Want of Evidence
The assessee was engaged in the business of wholesale and retail distribution of cement. While computing his business income for AY 2018-19, he claimed salary expenditure aggregating to ₹32,53,500.
The AO disallowed the entire expenditure on the ground that the assessee had failed to substantiate the genuineness of the salary payments with sufficient documentary evidence.
The CIT(A) confirmed the disallowance. Although the assessee had furnished the ledger accounts showing salary paid to employees, PAN details and bank account particulars were available only in respect of some employees. The assessee had also failed to furnish the relevant bank statements for the year under consideration to establish payment of salaries through banking channels.
The bank statements produced before the appellate authority related to the succeeding assessment year, namely AY 2019-20, whereas the year under appeal was AY 2018-19. The CIT(A) further noticed that a substantial part of the salary was stated to have been paid in cash.
On these facts, the CIT(A) held that the assessee had not discharged the burden of proving the genuineness of the expenditure and consequently sustained the entire disallowance.
