Excess Claim of Expenditure not be proved by relevant Bills: ITAT confirms Income Tax Addition. [Read Order]

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), confirmed addition as the excess claim of expenditure not be proved by relevant bills.

The AO noticed from perusal of Tax Audit Report that the assessee, Print Plus Private Limitedhad paid remuneration to directors amounting to Rs23 lakhs. However, it was noticed that an amount of Rs.36 lakhs was debited to Profit and Loss account instead of Rs. 23 lakhs.

On a query, the assessee explained that the difference of Rs.12 lakhs pertained to reimbursement of expenses incurred by the directors. And in support, sample cash vouchers were filed. 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 and Loss account of Rs. 12 lakhs were disallowed u/s 37(1) of the Income Tax Act. Aggrieved, the assessee preferred an appeal before the CIT(A) who was pleased to confirm the action of AO.

The CIT(A) noted that the appellant has not been able to furnish any plausible explanation as to why such expenses could not be debited to the respective heads of expenses in the Profit and Loss account. Further, the contention of the appellant that no bills are available for these expenses is not an acceptable one.

A Coram consisting of Aby T Varkey, Judicial Member and Om Prakash Kant, Accountant Member observed that “The assessee had already claimed expenses on various counts VIZ travelling, fuel expenditure and other expenses separately and the directors in their return of income has shown only remuneration at a total of Rs.23 lakhs and since the excess claim of expenditure on behalf of directors could not be provedby relevant bills, we agree with the impugned action of the CIT(A) on this issue and are inclined to confirm the same.”

To Read the full text of the Order CLICK HERE

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