Shelender Kumar Jain Vs ACIT (ITAT Delhi)
Verification, Not Estimation – ITAT Delhi Corrects AO’s Approach on Creditors & Expenses-Tribunal Says No to Adhoc Additions: Relief Granted in Newspaper Business Assessment
Assessee, proprietor of M/s Amar Bharti & Rashtriya Besahara Jan (Hindi daily newspaper), appealed against order of CIT(A)-38, New Delhi confirming various disallowances made in assessment framed u/s 143(3)/263.
AO had disallowed Rs.34,20,000/- on account of sundry creditors, alleging that certain payments were in cash & not reflected in bank accounts, thereby invoking s.40A(3). Further, a disallowance of Rs.15,00,218/- was made by applying 10% adhoc disallowance on expenses under “hoarding material purchase”, & Rs.7,50,000/- (15% of Rs.50 lakh) was disallowed from rent expenses on ground of absence of rent agreements & TDS applicability. CIT(A) partly confirmed these disallowances.
Before Tribunal, Assessee produced ledgers, bank statements & argued that creditors had confirmed transactions on oath, hence payments were genuine. It was pointed out that only small amounts like Rs.55,000/- (City Publicity) & Rs.30,000/- + Rs.70,000/- (Forever Advertising) were cash, whereas major payments were through bank. On hoarding material, Assessee contended that once purchases from creditors were verified, adhoc disallowance was unjustified. Regarding rent, Assessee submitted that most agreements were produced & minor rents were below TDS limits; adhoc disallowance without enquiry was arbitrary.
