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Judgment
ORDER
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal is filed by the Department against the order of Learned Commissioner of Income Tax (Appeals)-NFAC, Delhi dated 22.10.2025 under section 250 of the Act (hereinafter referred as ‘the Act’) arising from the assessment order dated 26.09.2022 by the Assessment Unit, Income Tax Department under section 143(3) r.w.s. 144B of the Act for the Assessment Year 2020-21.
The Revenue has raised the following grounds of appeal:
1)The Ld. CIT(A) erred in deleting the addition of Rs.4,47,29,880/-made by the Assessing Officer on account of excess claim of wages payable, without appreciating that the assessee failed to furnish any cogent evidence correlating the alleged year-end wages payable with the subsequent payments OR with the parties to whom such wages were claimed to be outstanding.
2)The Ld. CIT(A) erred in deleting the addition of Rs.79,06,275/- made u/s 68, ignoring the fact that the assessee failed to satisfactorily explain the nature and source of capital introduced during the year as mandated under section 68.
The brief facts of the case are that the assessee is a Manpower Supplier to different companies/firms and is mainly based in Gurgaon. The assessee filed its return of income for A.Y. 2020-21 u/s 139(1) on 08.01.2021 declaring an income of Rs.1,51,17,330/- and claimed a refund of Rs. 1,69,59,240/-. The case was selected for scrutiny and assessment was made with the following additions :
| Particulars | Amount |
| Excess wages payable | 4,47,29,880 |
| Increase in capital | 79,06,275 |
| Interest on Refund | 3,65,195 |
| Total | 5,30,01,350 |
Aggrieved by the order of AO, the assessee went in appeal before the learned CIT(A) and learned CIT(A) given partial relief to the assessee. Now, Aggrieved Revenue before us.
The issue in brief is addition made by the Assessing Officer of Rs.4,47,29,880/- on account of excess claim of wages payable and addition of Rs.79,06,275/- made u/s 68 of the Act.
Per contra, learned Representative of the department relied on the order of the AO whereas the counsel of the assessee relied upon the order of the CIT(A).
We have heard the rival submissions and perused the material available on record. We find that the CIT(A) on appreciation of facts deleted the said addition as under :
6.The AO noted that the total of salary/wages to employees debited in the profit and loss account was Rs. 191,67,63,694. The AO worked out the average monthly payment of salary at Rs. 15,97,30,307. The AO further noted that the appellant had shown wages payable in the balance sheet at Rs. 20,44,60,188, which was excessive by Rs.4,47,29,880 of the monthly average of Rs. 15,97,30,307. This excess amount was therefore disallowed.
6.1The appellant has maintained books and the books are audited. The AO has not pointed out any mistake in the books of the appellant. In a large organisation such as the appellant’s, there could be month to month variation in the salary bill. The details of variation are recorded in the books. The AO has not identified any specific mistake in the way salary expenses are claimed. The addition made is solely based on a presumption and is therefore not sustainable. This addition is therefore deleted.
6.2In the previous year, there is an introduction of Rs. 82,71,470 in the appellant’s capital account. The AO treated this as unexplained credit. The appellant explained the sources as under: 75,00,000 Transferred form Vijaya Bank SB account 18.11.2019 Own personal bank account, where the credits are on account of shop rent ( 40,500 per month) already offered for tax. 1,51,470 Transferred form HDFC bank on 20.03.2020 Bank account relates to Unique enterprises, own proprietary concern which became defunct in FY 2018- 19 6,20,000. This amount was paid by the assessee for purchase of a shop at Bhiwandi in FY 2019-20, was paid on 16.03.2019 and debited to advance for shop, now credited to the account of the appellant. 82,71,470 All amounts from appellant’s own account.
6.3The appellant filed the statement of Vijaya Bank account, wherefrom Rs. 75,00,000 is transferred to “Om enterprises” on 18.11.2019. In this bank account there is an opening credit balance of Rs. 28.03 lakhs. Recurring credits in this account appear to be from rent. The appellant has offered rental income of Rs. 5,46,000 for tax under the head, house property. Another significant credit in this account, prior to the transfer is Rs. 48.70 lakhs on 29.07.2019. This is attributed to IT refund. The explanation of the appellant appears to be satisfactory regarding Rs. 75 lakhs.
6.4Regarding Rs. 1,51,470, the appellant has furnished the statement of the bank account. The balance in the HDFC bank account of the concern, Unique Services (another proprietary concern) was transferred to the capital account of Unique Enterprises. This explanation is acceptable.
On perusal of the facts and circumstances of the instant case, we find that the AO has not disputed the genuineness of the payment made as salary. That being so, we are of the view that assessee’s explanation that there could be monthly variation in salary bill is acceptable. With respect to the credit entries, the assessee explanation that the same is from assessee’s own fund from different bank account and from account of proprietor concern, has not been controverted by the AO. We therefore are of the considered view that there is no interference called for in the order of CIT(A). The grounds appeal is dismissed.
In the result, appeal of the Revenue in ITA No. 255/DEL/2026 is dismissed.