M/S C.K. CONSTRUCTION,RANCHI vs. DCIT, RANCHI

It transpires at the outset that the assessee’s identical first substantive grievance canvassed in the instant appeals challenges correctness of contract expenses disallowance on estimation basis @10% made by the Assessing Officer and restricted to 2% in lower appellate proceedings. Suffice to say, both the learned lower authorities have proceeded to disallow the impugned sum on estimation basis keeping in mind the fact that the same could not be satisfactorily proved by the assessee. Learned counsel has made vehement attempts in submitting various comparative charts in preceding and succeeding assessment years qua the impugned item(s) of expenditure. In our opinion, mere submission of a comparative chart is not a ground to delete the impugned estimated disallowance. The fact also remains &93/Ran/2016 M/s C. K. Construction that the assessee appears to have duly maintained books of accounts and profit ratio vis-a- vis the expenditure; prima facie, also does not show any abnormal trend. We therefore deem it appropriate that a lumpsum estimated disallowance of 1% only regarding contract expenses would be just and proper. We order accordingly. Necessary computation including that of interest to follow as per law.

Same reasoning to follow in assessee’s second identical substantive grievance in both these appeals challenging correctness of salary payment disallowance followed by second and fourth substantive grievance in latter assessment year regarding miscellaneous, travelling and convenience expenses @5%. We make it clear that we have upheld both the learned lower authorities’ action to the extent of 50% of all the disallowance heads in all these four issues. Necessary computation including that of interest shall follow as per law. It is further clarified that our instant estimation would not be treated as precedent in any other case.

These two assessee’s appeals are partly allowed in above terms.