TMI Blog2019 (6) TMI 1497X X X X Extracts X X X X X X X X Extracts X X X X ..... elf had agreed for the disallowance on estimation basis at 10% of the turnover. Therefore, disallowance of 10% of the purchases on account of possibility of inflation is to be confirmed. As regards salaries are concerned assessee company being registered with ESI, cannot inflate the expenditure on account of salaries because number of employees and the salaries claimed by the assessee have to tally with the ESI returns filed by the assessee. Therefore, AO is directed to verify the same and if the claim made by the assessee on number of employees to whom salary is allegedly paid is matching with the number of employees mentioned in ESI return, no disallowance is to be made. As regards other administrative expenses all such expenses can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r AY 2007-08. He also observed that assessee has disclosed only loss in both the AYs and the administrative expenditure was nearly 69% with reference to gross sales for the AY 2007-08 as against 75% for the AY 2008-09. He also observed that gross turnover for AY 2007-08 was 15.53% as against 22.35% for the AY 2008-09. Therefore, he was of the opinion that the assessee has substantially inflated various expenses, particularly, salaries paid, house keeping charges, staff food allowance, repairs and maintenance etc. He also observed that apart from the regular business loss, assessee has admitted additional income of ₹ 30,00,000/- on account of search and survey. According to the AO, the above facts reveal that the assessee company could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 36,71,026 2. Salaries ₹ 26,60,061 3. Other administrative expenses ₹ 37,40,354 Total ₹ 1,00,71,441 =========== He submitted that purchases were mainly regular supplies to the hotels such as vegetables and other items, which are necessary for making food in the restaurant and they are purchased on daily basis and, therefore, assessee cannot maintain vouchers and bills for the same. He also submitted that since most of the purchases are from vegetable markets from small vendors and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees to whom salaries are alleged to have been paid by bearer cheques were employed with the assessee. He submitted that assessee has not been able to establish along with necessary evidence, the genuineness of the expenditure and, therefore, disallowance of 1/3rd of such expenses by CIT(A) is to be sustained. He placed reliance on the decision of the coordinate bench in the case of M/s Sree Rayalaseema Green Energy Vs. DCIT in ITA No. 485/Hyd/2012 dated 31/07/2012 to the effect that the onus is on the assessee to substantiate its claim. 6. Having regard to the rival contentions and the material on record, I find that the purchases are of vegetables for the daily requirement of the assessee company and as rightly pointed out by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53576 3 Vehicle Maintenance 18818 4 House Keeping charges 753177 5 Conveyance charges 5922 6 Discount 809625 7 General expenses 80792 8 Printing and stationery charges 235760 9 Magazines Newspaper charges 31875 10 Fire instruments (Gas refilling) 6201 11 Travelling expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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