SHRI LALCHAND POPATLAL SHAH,AHMEDABAD vs. THE ITO, WARD-5(2)(5), AHMEDABAD

The above appeal filed by the assessee arises from order of the Commissioner of Income Tax (Appeals)-5, Ahmedabad dated 26.03.2019 for assessment year 2013-14.

Solitary grievance of the assessee is that the ld.CIT(A) has erred in confirming addition of Rs.3,61,074/-.

With the assistance of the ld.representatives, we have gone through the record carefully. It emerges out that the assessee at the relevant time was engaged in trading of MS angles, channels etc. He has filed his return of income electronically declaring total income at Rs.12,00,240/-. The ld.AO has considered the following expenses:

According to the AO, the assessee failed to give plausible explanation of this expenditure, and he disallowed 20%. On appeal, the ld.CIT(A) has confirmed disallowance. We find that the AO did not devote much energy about discussing the nature of expenditure, and details submitted by the assessee. His whole discussion runs in ten lines on page no.3 & 4, and thereafter he simply made disallowance at 20%. The assessee was unable to submit complete details even before the CIT(A). When we confronted this aspect to the ld.counsel for the assessee, then his stand was that disallowance at 20% is too high considering nature and magnitude of business of the assessee. After due consideration of all the relevant factors, particularly, the nature of the business of the assessee, we direct the AO to restrict disallowance to 10%. In other words, 50% of the addition confirmed by the ld.CIT(A) at Rs.3,61,074/- would be deleted. Assessee thus gets part relief. This ground is accordingly disposed.

In the result, the appeal of the assessee is partly allowed.