TMI Blog2021 (10) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee does not hold good. Assessee has furnished additional evidences before the learned CIT (A) in the form of credit card statements which was containing the details of the websites through which the tickets were booked such as makemy trip, cleartrip, specific airlines etc. However, in our understanding, these details alone do not justify that such travelling expenses were incurred for the purpose of the business. Even before us, assessee has not filed any evidence to justify the travelling undertaken in a foreign country. It was only submitted that the foreign trip was undertaken to participate in a fashion show in London without any supporting evidence. In the absence of necessary supporting evidence it is not possible to establish that the expenses were incurred for the purpose of the business especially in the case of international travelling expenses - Decided against assessee. Disallowance on account of salary expenses - HELD THAT:- Salary expenses have increased more in proportion to the increase in the value of the sales i.e. 24.92% of sales in immediate preceding year to 26.2% in current year. Thus, a cumulative reading of all these facts create a doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Year 2011-2012. 2. The assessee has raised the following grounds of appeal: 1. That on facts, and in law, the learned CIT(A) has grievously erred in not admitting the additional evidence filed in term of Rule 46A of the IT Rules. 2. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the disallowance of ₹ 11,11,349/- on account of travelling expenses. 3. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the disallowance of ₹ 4,50,000/- on account of salary expenses. 4. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the disallowance made u/s.40(a)(ia) of the Act of ₹ 82,200/- on account of advertisement expenses, ₹ 92,800/- on account of embroidery expenses and ₹ 78,595/- on account of fashion show expenses. The appellant craves leave to add, alter, amend any ground of appeal. 3. The 1st issue raised by the assessee in ground No. 1 and 2 is interconnected and therefore we have clubbed both of them together. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not fall in the circumstances specified under Rule 46A for the admission of additional evidences. Accordingly the learned CIT (A) rejected the contention of the assessee. 7. Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. 8. The learned AR before us submitted that the assessee could not file supporting evidences during the assessment proceedings due to unavoidable circumstances. As such, the case of the assessee falls within the parameters specified under rule 46A of Income Tax Rules. Accordingly the learned AR requested to restore the issue to the file of the AO for fresh adjudication as per the provisions of law. 9. On the other hand the learned DR contended that the assessee cannot take the benefit provided under rule 46A of Income Tax Rules as a matter of right. There were various opportunities granted by the AO during the assessment proceedings but the assessee failed to avail the same. The learned DR vehemently supported the order of the authorities below. 10. We have heard the rival contentions of both the parties and perused the materials available on record. Under the provisions of Rule 46A, there are certain circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 3 is that the learned CIT (A) erred in confirming the disallowance made by the AO for ₹ 4,50,000/- on account of salary expenses. 12. The assessee in the year under consideration has claimed salary expenses amounting to ₹ 76,24,000/- only. Most of the salary was paid by the assessee in cash except a sum of ₹ 3,65,000/- which was paid through the banking channel. However, the AO during the assessment proceedings observed certain defects as highlighted below: i. In many cases vouchers were not signed by the payees. ii. In some of the cases, the salary vouchers were not available for verification. iii. The Auditor in his Audit Report has also recorded the aforesaid facts. 12.1 In view of the above defects the AO was of the opinion that it was not possible to verify the genuineness of salary expenses. On question by the AO, the assessee agreed for the disallowance of salary expenses in part. Accordingly the AO made disallowance of ₹ 4,50,000/- and added to the total income of the assessee. 13. Aggrieved assessee preferred an appeal to the Ld. CIT(A), who confirmed the order of the AO by observing as under: 6.2 I have considered the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of ₹ 76,24,000/-. iv. The assessee during the assessment proceedings himself admitted to the disallowances made by the AO for ₹ 4,50,000/- only. 17.2 Besides the above, we have perused the comparative chart furnished by the assessee showing the salary expenses over a period of 3 years which is placed on page 62 of the paper book. It was noticed that the assessee in the immediate preceding year has claimed salary expenses amounting to ₹ 49,73,140/- against the sales of ₹ 1,99,55,006/- whereas in the under consideration the assessee has claimed salary expenses amounting to ₹ 76,24,000/- against the sales of ₹ 2,90,91,928/-. Admittedly, the sales and the salary expenses shown by the assessee in the year under consideration have increased in comparison to the immediate preceding assessment year. However, the salary expenses have increased more in proportion to the increase in the value of the sales i.e. 24.92% of sales in immediate preceding year to 26.2% in current year. Thus, a cumulative reading of all these facts create a doubt on the genuineness of the expenses shown by the assessee. The learned AR at the time of hearing has not brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted by him. The disallowance made u/s. 40(a)(ia) on account of non deduction of tax is therefore confirmed and the ground of appeal No, 3 is dismissed. 21. Being aggrieved by the of the order of Ld. CIT(A), the assessee is in appeal before us. 22. The Ld. AR before us submitted that the matter can be restore to the file of the AO in view of the 2nd proviso to section 40(a)(ia) of the Act. As such the payees have included the amount received from the assessee in their respective books of accounts and offered the same to tax. 23. On the contrary the Ld. DR, vehemently supported the order of the authorities below. 24. We have heard the rival contentions of both the parties and perused the materials available on record. The controversy in the present case relates to the disallowance of the expenses on account of non-deduction of TDS under the provisions of section 40(a)(ia) of the Act. However, the learned AR at the time of hearing before us has submitted that the payees have already included the amount received from the assessee in their financial statements and paid the due taxes thereon. This fact can be verified by the AO from the respective parties. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the payee has included the income in return and paid taxes thereof. 24.5 The CBDT has prescribed Form No. 26A for CA certificate to be obtained and furnished by payer evidencing compliance by payee. 24.6 From the above discussion, it is transpired that the assessee can be granted immunity from disallowances of expenses on account of non/short deduction of taxes provided that the assessee (payer) furnishes the certificate in the prescribed form. Thus the onus is upon the assessee. However we find that assessee has not furnished the necessary certificate in form 26A prescribed by the CBDT. 24.7 We also find that similar prayer was also made by the assessee before the learned CIT (A) but the same was rejected by him by observing that the assessee has not complied the conditions as specified under the provisions of law i.e. furnishing the certificate of the CA. 24.8 Now at the time of hearing before us, the learned AR has also not furnished any certificate in form 26A prescribed by CBDT. Now the issue arises, can the matter be set aside to the file of the AO for collecting the necessary evidences from the respective payees to ensure that such payees have paid the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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