J Kumar Infraprojects Ltd Vs DCIT (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai has delivered its decision in the case of J. Kumar Infraprojects Ltd. v. DCIT (ITA Nos. 4147 to 4153 & 4585 to 4593/Mum/2024, dated 3 July 2025) for assessment years 2016–17 to 2022–23, covering multiple issues including disallowances of expenditure, additions for unexplained money, and validity of reassessment proceedings.
1. Disallowance of Salary to Spouses of Employees and Professional Fees – Section 37(1)
The Assessing Officer (AO) had disallowed salaries paid to employees’ spouses, along with certain professional fees. The Commissioner of Income Tax (Appeals) [CIT(A)] restricted the disallowance to 30% of gross receipts. On appeal, the Tribunal upheld this restriction, holding it to be reasonable in the circumstances.
2. Unexplained Money – Cash Sales of Scrap and Piling Business – Section 69A
During assessment, the AO made additions of ₹1.03 crore, representing alleged unaccounted cash sales from scrap and piling activities, based on search statements and seized materials. The assessee argued that only the profit element from such turnover should be taxed, since related expenses had already been booked.
The CIT(A) estimated profit at an average pre-tax margin of 8.56%, reducing the additions to ₹2.20 lakh (scrap) and ₹6.63 lakh (piling). The ITAT agreed, holding that:
