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2023 (9) TMI 678 - ITAT ALLAHABAD
Disallowance of unpaid service tax liability u/s 43B - assessee is an individual running a concern in the name and style “Mercury Security Services” which provides security guards and manpower to various customers [from inception, the assessee had been registered with service tax authorities and depositing service tax in the relevant Government Account; and following consistently mercantile system of accounting] - HELD THAT:- We countenance the impugned action of Ld. CIT(A)/AO inter-alia for the simple reason that the assessee has not claimed deduction regarding the balance-sheet item - Therefore, the AO/Ld. CIT(A) could not have applied section 43B of the Act to disallow because neither the assessee debited the amount (Rs. 10.92 Lakhs) in the profit and loss account as an expenditure nor did he claim any deduction in respect of this amount; and considering that assessee has been following mercantile system of accounting the judicial precedent cited by Ld. AR in the case of Noble and Hewitt (I) Pvt, Ltd [2007 (9) TMI 238 - DELHI HIGH COURT] is squarely applicable to the facts and circumstances of the present case, and therefore direct the AO to delete disallowance made on this issue.
Disallowance under “Business Promotion Expenses” - relevant bills and vouchers are not produced - HELD THAT:- CIT(A) has noted that the expenses disallowed are not petty expenses and one of such expense itself is to the tune and the other two expenses [i.e. balance expenses] were also disallowed, since assessee failed to produce any supporting evidence. Before this Tribunal also assessee failed to produce supporting evidence of the three expenses which has been disallowed - Therefore, AO/Ld. CIT(A) has rightly disallowed which action of the Ld. CIT(A) does not require any interference. And therefore, action of Ld CIT(A) stands confirmed.
Disallowance incurred under “Conveyance Expenses” - HELD THAT:- CIT(A) while confirming the action of AO observed that these expenses cannot be termed as petty expenses and since the assessee failed to produce any evidence to substantiate the incurrence of such expenses he confirmed the action of the AO. Before this Tribunal, the assessee failed to produce any material to support the expenses therefore, the action of the Ld. CIT(A) is confirmed.
Addition made under the “Travelling Expenses” - part expenses are personal in nature - HELD THAT:- CIT(A) has directed AO to allow expenditure in the event assessee is able to bring supporting evidence and which are not of personal nature. Assessee before me, also could not produce the vouchers/bills which he couldn’t produce before the AO. But the assessee’s accounts are audited and the AO has not rejected the books of assessee. Therefore, in the interest of justice and fair play, we partly allow the assessee’s claim by restricting the disallowance to 5% of the claim made by the assessee. This ground of assessee is partly allowed.