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2023 (12) TMI 102 - ITAT CHENNAIUnproved bonus payment - disallowance of bonus paid to employees - HELD THAT:- As explained by assessee before the AO that, due to lapse of time he could not file necessary evidence to justify payment of bonus, but fact remains that he had paid bonus to staff on two occasions. CIT(A), after considering relevant facts has recorded categorical finding that, because of lapse of time for more than 8 years, the assessee could not able to gather necessary evidences. Therefore, taking into account totality of facts and circumstances of the case, and also to meet the ends of justice, restricted disallowance to the extent of 20% of amount disallowed by the AO. Although, the revenue has challenged findings of the CIT(A) on adhoc disallowance of expenses, but could not adduce any evidence to counter the findings or facts recorded by the CIT(A). Therefore, there is no error in the reasons given by the CIT(A) to restrict disallowance of bonus to the extent of 20% on actual expenditure disallowed by the AO and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the revenue. Disallowance of expenditure u/s. 40A(3) - Payment of bonus on the ground that the appellant has paid bonus in cash exceeding Rs. 20,000/- to a person in a day, contrary to provisions of section 40A(3) - HELD THAT:- CIT(A), after considering relevant facts and also taking note of fact that, the tax auditor has not made any comments on cash payments in excess of prescribed limit contrary to section 40A(3), observed that the AO without verifying necessary cash book to ascertain the quantum of payments has simply made disallowance with a vague observation on the basis of bonus register, ignoring the arguments of the assessee that cash payment in a single day to any person does not exceeded the prescribed limit as per the provisions of section 40A(3). The findings of the facts referred by the ld. CIT(A) are uncontroverted by the revenue, except stating that the CIT(A) has given relief on the basis of presumption and unqualified report from the tax auditor. When the Assessing Officer has failed to make out a case of disallowance of expenditure u/s. 40A(3) with proper reasons, no fault can be attributed to the findings of the ld. CIT(A), which is based on evidences filed by the assessee. Therefore, we are of the considered view that there is no error in the reasons given by the ld. CIT(A) to delete additions made towards disallowance of expenditure incurred in cash u/s. 40A(3). Appeal filed by the revenue is dismissed.
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