M/S. FOCUSSED SOLUTIONS INC.,ERNAKULAM V. THE ITO, NON-CORPORATE WARD 2(5), KOCHI, KOCHI

ITA 793/COCH/2022

AI Insights

The case involves Focused Solutions Inc, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which confirmed the disallowance of salary expenses amounting to Rs. 15,85,794 for 52 employees due to the non-availability of their current addresses and contact numbers during the assessment year 2014-15. The Income Tax Officer (ITO) had initially disallowed these expenses, stating they were not incurred for the purposes of business. The assessee argued that the employees were engaged for a short period and that there was a high labor turnover, making it difficult to provide current contact details. The Tribunal, considering the acceptance of similar salary expenses in other assessment years, partly allowed the appeal but confirmed a smaller ad-hoc disallowance to prevent potential revenue leakage.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23342 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-05-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 25-07-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GIRIY ALBERT; SNR
• Assessee Lawyers: P.M VEERAMANI; C.A
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH : BY VIRTUAL HEARING BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K, JUDICIAL MEMBER ITA No.793/Coch/2022 Assessment Years : 2014-15 Focused Solutions Inc, 40/7132A, Bharat Arcade, IIIrd Floor, M.G Road, Ernakulam – 682 035. PAN – AABFF 2082 L Vs. The Income Tax Officer, Non Corporate Ward-2(5), Kochi. APPELLANT RESPONDENT Assessee by : Shri P.M Veeramani, C.A Revenue by : Smt. GirIy Albert, Snr. DR Date of hearing : 10.09.2024 Date of Pronouncement : 15.10.2024 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order passed by the NFAC, Delhi dated 23/06/2022 in DIN No. ITBA/NFAC/S/250/ 2022-23/1043553104(1) for the assessment year 2014-15. 2. The only issue raised by the assessee is that the ld. CIT(A) erred in confirming the disallowance of the salary paid to 52 employees amounting to Rs. 15,85,794/- on account of non-availability of current address/contact numbers. ITA No.793/Coch/2022 Page 2 of 3 . 3. The AO during the assessment proceedings found that the assessee could not furnish the current address and contact Nos. of 52 employees out of 233 employees engaged by him. Thus, the AO disallowed the amount of salary attributable to such employees amounting to Rs. 15,85,794/- holding that such expenses were not incurred for the purposes of the business. The view taken by the AO was subsequently confirmed by the ld. CIT(A). 4. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 5. The ld. AR before us filed a paper book running from pages 1 to 42 and contended that the people were engaged in the assessment year 2014-15 for short period of time. Furthermore, there is high labour turnover in the business activity of the assessee, therefore, the assessee could not locate the current address and contact numbers of 52 employees. The ld. AR further submitted that similar amount of salary was accepted by the revenue in the earlier and later assessment years while framing the assessment u/s 143(3) of the Act. The ld. AR in support of his contention drew our attention at page 29 of the paper book. 6. On the other hand, the ld. DR vehemently supported the orders of the authorities below. 7. We have heard the rival contentions of both the parties and perused the materials available on record. Undeniably the onus lies upon the assessee to furnish supporting evidence with respect to the expenditure clamed in the profit and loss account. Indeed, in the present ITA No.793/Coch/2022 Page 3 of 3 . case, the assessee failed to discharge the onus cast upon it. However, since similar amount of salary was accepted by the revenue in the earlier and later years as evident from the details placed on page 29 of the paper book. Therefore, we are not inclined to uphold the disallowance made by the authorities below. Nevertheless, to curb any possible leakage of revenue and in the interest of justice to both the parties, we confirm the ad-hoc disallowance of Rs. 2 lakhs to the total income of the assessee. Hence, the ground of appeal of the assessee is hereby partly allowed. 8. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in court on 15th day of October, 2024 Sd/- Sd/- (SOUNDARARAJAN K) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 15th October, 2024 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore "