BEHARI ASSOCIATES,BAREILLY vs. INCOME TAX OFFICER, WARD- 1(1), BAREILLY

Vide grounds of appeal, the assessee has challenged the order of ld. CIT(A) by which he has confirmed the disallowances made by the Assessing Officer out of loading unloading freight shop expenses by disallowing 5% out of freight and 10% out of other expenses by holding that the assessee was not able to produce voucher for claim of such expenses. Such disallowances were made to cover possible leakages on account of excess claim of expenditure. The Assessing Officer further disallowed an amount of Rs.35,995/- being 25% of telephone expenses and depreciation of car by holding that the assessee must have used a part of these facilities for personal purposes. The ld. CIT(A) upheld the order of Assessing Officer and therefore, the assessee is before me. The ld. AR at the outset submitted that the books of account were not rejected and Assessing Officer has made the disallowances on adhoc basis without pointing out any discrepancy and without pointing out any possible over claim of expenses. As regards the personal use of facilities the ld. AR submitted that the assessee has been using these facilities only for business purposes and therefore, the disallowances confirmed by ld. CIT(A) are not justified and it was prayed that appropriate relief may be granted to the assessee.

The ld. DR, on the other hand, relied on the orders of the authorities below and submitted that the Assessing Officer had made the disallowances after consultation with the counsel of the assessee as the assessee was not able to produce complete vouchers. As regards the personal use of telephone and car the ld. DR submitted that it is not possible that assessee utilized these service only for business purposes, therefore, disallowances sustained by ld. CIT(A) are justified.

I have heard the rival parties and have perused the material available on record. I find that the Assessing Officer has disallowed an amount of 5% out of freight expenses and has disallowed 10% out of other expenses. The Assessing Officer has not pointed out any discrepancy in the vouchers and has made a general statement that assessee was not able to produce vouchers. At the same time, it is also correct that assessee did not file complete vouchers and neither these were filed before ld. CIT(A), therefore, I hold that disallowances equivalent to 5% of the freight expenses is justified whereas I restrict the disallowance out of 10% to 5%.

As regards the disallowances attributable to personal use of telephone and car, I find that authorities below has made a disallowance equivalent to 25% of such expenses which is quite on a higher side, therefore, I restrict the disallowance to the extent of 10%.

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