M/S. GIIRAJ SPINTEX PVT. LTD.,BHILWARA vs. ITO, WARD-1, BHILWARA

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ITA 211/JODH/2019Status: DisposedITAT Jodhpur20 September 2023AY 2015-164 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance made by the Assessing Officer was ad-hoc and without reasonable basis, as specific expenses were not identified. The CIT(A) also failed to provide reasons for sustaining a part of the disallowance.

What were the facts?

The assessee, engaged in manufacturing and sale of synthetic fabrics, had expenses disallowed by the Assessing Officer due to incomplete bills and vouchers. The CIT(A) restricted the disallowance to Rs. 50,000.

What were the issues?

Whether the disallowance of expenses made on an ad-hoc basis without identifying specific expenditures is sustainable. Whether the appellate authorities provided adequate reasoning for sustaining any part of the disallowance.

Which sections of the Income-tax Act were involved?

Section 37

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JODHPUR BENCH ‘SMC’, JODHPUR

Before: SHRI SAKTIJIT DEY, VICE- & SHRI GIRISH AGRAWAL

Hearing: 14.09.2023Pronounced: 20.09.2023

ORDER This is an appeal by the assessee against order dated 01.08.2018 of learned Commissioner of Income-tax (Appeals), Ajmer for the assessment year 2015-16.

2.

There is delay of 236 days in filing the present appeal. After considering the submissions of the parties and perusing materials on record, we are of the view that the delay in filing the appeal was due to reasonable cause. Accordingly we condone the delay and admit the appeal for adjudication on merits.

3.

When the appeal was called out, at the very outset, learned counsel appearing for the assessee, on instructions, submitted that ground No. 1 & 2 have been wrongly taken, as the assessee has already been granted the desired relief by the first appellate authority.

Thus, he did not press these two grounds. In view of the aforesaid submission of learned counsel for the assessee, ground Nos. 1 & 2 are dismissed as not pressed.

4.

Even, in so far as ground No. 3 is concerned, learned counsel submitted that the figure of disallowance mentioned at Rs.1,00,000/- is by mistake. Actual disallowance, which remains after first appellate order is Rs.50,000/-. Be that as it may, the only surviving ground is ground No. 3. Hence, we proceed to decide this ground.

5.

Briefly, the facts relating to the issue are, the assessee is a resident corporate entity stated to be engaged in the manufacturing and sale of synthetic fabrics. In the assessment year under dispute, the assessee had filed its return of income on 22.09.2015 declaring income of Rs.5,51,890/-. In course of assessment proceedings, the Assessing Officer called for various information and details. After examining them, he observed, in respect of expenses claimed the assessee was unable to furnish complete set of bills and vouchers.

Accordingly, on purely estimate basis he disallowed an amount of Rs.1,00,000/- out of expenses claimed. The assessee contested the aforesaid disallowance before learned first appellate authority. After considering the submissions of the assessee, learned first appellate authority restricted the disallowance to Rs.50,000/-.

6.

We have considered rival submissions and perused materials on record. A reading of the assessment order reveals that the Assessing Officer has not identified the specific expenses, in connection with which, the assessee could not furnish the required bills/vouchers. In fact, the assessment order on this aspect is cryptic and bereft of any discussion. The Assessing Officer has not specified what is the nature of expenditure he proposed to disallow. Thus, the disallowance is purely of adhoc nature without any reasonable basis.

Even, learned first appellate authority has reduced the disallowance to Rs.50,000/- without assigning any reason why the disallowance has to be made. Since the disallowance made and sustained by the departmental authorities is without proper reasoning, we are inclined to delete the disallowance of Rs.50,000/- sustained by learned first appellate authority. However, it is made clear, this decision of ours is purely based on the facts involved in the present appeal, hence, cannot be taken as a precedent.

7.

In the result, appeal is allowed as indicated above.

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