The Income Tax Appellate Authority ( ITAT ) has held that if the assesse failed to discharge the onus under section 68 of the Act, there is no escape for the assesse from the clutches of section 68 of the Act.
The appellant, M/s Anandtex international (P) Ltd is a company and filed the return of income for the assessment year 2013-14 declaring an income of Rs. 4, 37, 43, 060/-. Assessment under section 143(3) of the Income Tax Act, 1961 was complete by making an addition of Rs. 3.96 crores under section 68 of the Act, Rs. 6 Lakhs on account of disallowance of labor charges, loading and unloading expenses, missionary repair and maintenance etc, Rs. 19, 29, 050/-on account of disallowance of festival, telephone, travelling and sales promotion expenses and a sum of Rs. 7, 94, 315/-on account of disallowance of repair and maintenance expenses. Assesse preferred appeal before the CIT (A) challenging all the four additions but the CIT (A), by way of impugned order confirmed all the additions and dismissed the appeal of the assesse. Hence, the assesse filed appeal before ITAT.
When the matter is called, neither the assesse nor any authorized representative entered appearance. It was submitted by DR, Mrs. Kirti Sankratyayan, that, when the learned AO felt it necessary to verify the things beyond the pale of papers, it is incumbent upon the assesse to cooperate with the learned Assessing Officer in dispelling the doubts, which the circumstances raised in the mind of the learned AO.
Orders of the authorities below reveal that the assesse has not complied with the requirements of the learned Assessing Officer in the exercise of forming satisfaction as to the creditworthiness of the share applicants or the genuineness of the transaction. Mere paperwork by the assesse does not take the authorities anywhere, when the learned AO suspected the existence of the entities in question and insisted that a higher degree of proof is required in that respect.
The Coram of Sri K.Narasimha Chary, Judicial Member given reliance to the decision of the Hon’ble jurisdictional High Court and Hon’ble Supreme Court in the case of NDR Promotors Pvt. Ltd. (supra) and the decision of the Apex Court in the case of NRA Iron and Steel (P) Ltd (supra) held that “we are of the considered opinion that the action of the learned Assessing Officer was legal and non-production of the persons summoned had rightly led to the inference that the assesse had routed their own money in the books of accounts through the conduit of investor companies. On this premise, we agree with the authorities below and uphold the addition made under section 68 of the Act”.
Coming to the addition of Rs. 6 Lakhs it was made by the learned Assessing Officer by making certain portion of the labor charges, loading and unloading expenses and missionary repair and maintenance charges, according to the learned Assessing
Officer such payments were made in cash and bills were not properly vouched and therefore such expenses remained unverifiable. Precisely for this reason, CIT (A) also confirmed the same. ITAT held that “No reasons are forthcoming before us to take a different view. We, therefore, do not find any reason to interfere with the findings of the CIT (A)”.
The next addition challenged is in respect of Rs. 1,19, 29, 050/-towards the disallowance of 1/8thportion of the expenditure met further car expenses, conveyance, festival expenses, telephone expense, travelling expense and sales promotion expenses. On this aspect AO recorded that the log books of car and complete details of telephone calls were not produced by the assesse and according to the assesse is not feasible to produce the same because the vehicles are almost under the direct control of the management. CIT (A) recorded that the explanation offered by the assesse was only superficial and log books are maintained mandated really in any concern of whatever the size. On this aspect also, no submissions are forthcoming from the side of the assesse to take a different view. Therefore, ITAT do not propose to interfere with the findings of CIT (A) in the impugned order.
Lastly addition of Rs. 7, 94, 315/-, it represents the disallowance of a part of the expense under the head repair and maintenance on the ground that the bills in respect of the amounts paid in cash were not properly vouched. CIT (A) recorded that the assesse sought to take shelter under the fact that certain vendors do not maintain printed bills and expenses are internally vouched. According to the CIT (A) in the absence of any non-availability of the expense disallowance of a portion of the same is justifiable.
It was held by the ITAT that “In the absence of any material or reason before us to take a contrary view. We decline to interfere with the same. In the result, appeal of the assesse is dismissed.
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