ITAT deletes Additions made on account of Salary Payment in Cash without having any Documents [Read Order]

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition made on account of salary in cash without having any documents

The assessee Vaibhav Jain one of the directors of M/s Jindal Bullion Ltd. ( JBL ). It was noted by the AO that during the course of search action on JBL Group on 05.01.2017 , large quantum of incriminating data pertaining to the FYs 2014- 15, 2015-16 and 2016-17, in the form of digital data and loose sheets, was seized.

While concluding the assessment order of the assessee the AO determined that  two sets of accounts have been prepared, one in Hazir Johri software and another in Tally software. Hazir Johri software was nothing but a parallel set of accounts prepared in the regular course of business of JBL Group. Assessee maintained the Hazir Johri software.

Further AO also analyzed in detail the explanation furnished by the appellant with regard to the entries found recorded in Hazir Johri ledger accounts of appellant namely ‘Vaibhav ji’ and ‘Vaibhav ji Capital’. On the basis of the detailed analysis, the AO made addition on account of salary Payment in Cash to the employees due to failure to reflect in accounts.

Aggrieved, the assessee filed an appeal before the CIT(A) who confirmed the addition made by the AO. Thus the assessee filed another appeal before the tribunal.

The tribunal during the adjudication observed that Salary of Rs.1,00 ,000/- has been regularly paid from every month by cheque. Since 01.10 .2016 an amount of Rs.1 ,00,000/- each has been paid and reflected in the books. Thereafter, there was no salary payment owing to termination of the employee.

Thus entry made on the date of 01.11.2015 was notional and no salary has been paid in cash as the employee has been terminated

Therefore the two-member bench Of Dr. B. R. R. Kumar, ( Accountant member ) and Yogesh Kumar US, ( Judicial Member ) deleted the addition made on account of salary in cash without having any documents .

Mayank Patawari, counsel appeared for assessee and Sapna Bhatia, counsel appeared for revenue.

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