The Income Tax Appellate Tribunal ( ITAT ) Delhi, in an appeal by the assessee against the order of the Commissioner of Income-tax (Appeals), held that disallowance of a sum for non-submission of documents and non-deduction of TDS on reimbursements made on account of Petrol, Drivers’ Salary and Mobile Expenses are sustainable.
Facts of the case are that the assessee company was engaged in the business of providing consultancy in the medical field. The assessee filed the return of income for the year under consideration, declaring loss which was further revised due to inadvertent claim of excess TDS. The case was selected for scrutiny and assessment under section 143(3) of the Income-tax Act, 1961 was completed at an assessed loss after making the addition. The addition was made on account of the excessive claim of the salary in the name of Dr. Rajen Ghadiok and Ms. Rachna Karma. The addition was made for non-deduction of tax at source on the difference of amount in salary debited in profit and loss account and salary amount appearing in form No. 16 in case of the four persons. On further appeal, before the learned CIT(A), the difference was found in salary claimed in books of account and salary shown in Form No. 16A in case of both the employees. The assessee explained that the amount was reimbursed to the employees towards driver salary, petrol expenses and mobile expenses, on which no tax was deductible at source, and therefore, same did not appear in form No. 16A issued to the employees.
In view of the absence of any documentation to support the alleged reimbursement, the CIT(A) sustained that amount for both the employees, namely, Dr. Rajen Ghadiok and Ms Rachna Kamra. The disallowance on account of non-deduction of TDS in case of other four employees was also sustained. Aggrieved with the disallowance sustained by the CIT(A), the assessee is in appeal before this Tribunal.
The CIT(A) submitted that the amount of reimbursement claimed for expenses was fixed in case of all employees, despite differential payment under different heads during the year. Also observed that only ledger accounts of driver’s salary, petrol and mobile reimbursement were filed and no evidence by way of vouchers submitted by the concerned employees, evidencing payments to claim the alleged reimbursement, was furnished. So the alleged reimbursement was nothing but a fixed amount being paid in cash to the employees, which being in the nature of the salary/fixed allowance, on which TDS was deductible.
While dismissing the appeal, the Tribunal bench comprising of Judicial Member H.S. Sidhuand Shri Accountant Member O.P. Kant held that the CIT(A) has sustained the disallowance mainly on the ground of non-production of details of evidence, therefore, to support its ground of appeal, the onus was on to the assessee to produce those relevant documents before the Tribunal. Before this court, the assessee did not produce any such vouchers of incurring expenses by those employees and claimed as reimbursement. In the absence of any documentary evidence of incurring of expenditure by the concerned employees, the issue, whether the amounts are reimbursement to the employees, cannot be examined. Moreover, being an identical amount to all the employees, the payments appear in the nature of allowance rather than reimbursement of actual expenses incurred on behalf of the assessee. In such circumstances, the court not find any error in the order of the learned CIT(A) on the issue in dispute and accordingly, uphold the disallowance sustained by the learned CIT(A).
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