ITAT rejects Fake Claim for Deduction of Salary paid to Husband and Daughter [Read Order]

The Ahmedabad bench of the ITAT, in Smt.Kantaben Ramjibhai Chaudhari versus ITO, Ward-2, disallowed a fake claim for income tax deduction of salary paid to Husband and daughter.

In the instant case, the Assessee was in the business of cotton balls and seeds, filed his return of income declaring an amount of 8lakhs. The Company achieved a greater turnover and disclosed a net profit which is far less in comparison with previous net profit. The same has questioned by AO and highlighted various discrepancies, rejected the various books results and enhanced the demand. The first appellate authority, while confirming the addition opinioned that fall in net profit rate would be one corroborative circumstance for rejecting book results amongst others.

Aggrieved with the order, the Assessee approached ITAT along with the details on the comparative table and pointed out that the AO noticed discrepancies on eight counts. Out of that, most of the discrepancies have been reconciled and accepted by the CIT (A). So, the said addition ought to have not confirmed. He further disallowed Salary of Rs. 2,16,000/- paid to husband Ramjibhai M. Chaudhary.

The counsel for the assessee pressed a contention that mere decline in net profit is not a ground for rejecting audited books of accounts and presented various tribunal decision on which they can rely upon.

Rejecting the claim of the assessee, the Judicial member noted that “the assessee failed to demonstrate as to what services have been rendered by her husband or the daughter to whom salaries have been paid. Therefore, the salary claimed by the assessee towards husband and daughter deserves to be disallowed.”