JAI GURDAVE SPINNING MILLS PRIVATE LIMITED,DELHI vs. INCOME TAX OFFICER, DELHI

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ITA 1044/DEL/2025Status: DisposedITAT Delhi14 May 2025AY 2016-17Bench: SHRI SATBEER SINGH GODARA (Judicial Member)3 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that disallowing the entire expenditure for a fabric trading business is not sustainable in law, especially when the revenue failed to provide cogent evidence. A lump sum disallowance of Rs. 1 lakh was deemed appropriate.

What were the facts?

The assessee is in the business of fabric trading and appealed against the disallowance of expenditure. The lower authorities disallowed an expenditure of Rs. 9,62,470, later upheld to Rs. 9,50,303 by the CIT(A)/NFAC, allowing only audit fees and a small sum of bank charges.

What were the issues?

Whether the disallowance of the entire expenditure claimed by the assessee, engaged in fabric trading, is legally sustainable without cogent evidence from the revenue.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI

Before: SHRI SATBEER SINGH GODARA

Hearing: 14.05.2025Pronounced: 14.05.2025

Date of hearing 14.05.2025 Date of pronouncement 14.05.2025 ORDER This assessee’s appeal for assessment year 2016-17, arises against the Commissioner of Income Tax (Appeals)/Addl./JCIT(A)- 10, Mumbai’s DIN and order no. ITBA/APL/S/250/2024- 25/1071613247(1), dated 27.12.2024, involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

2.

Heard both the parties. Case files perused.

3.

It emerges during the course of hearing that both the learned lower authorities have disallowed the assessee’s entire expenditure claim of Rs.9,62,470/-, in the assessment framed on 24.12.2018 which stands upheld to the extent of Rs.9,50,303/- in the lower appellate proceedings. It is made clear that what all the learned CIT(A)/NFAC has done is to allow the assessee’s audit fee expenditure claimed of Rs.11,500/- with a very small sum of bank charges and upheld all other items.

4.

That being the case, the Revenue could hardly dispute that once the assessee is engaged in the business of fabric trading etc., disallowance of its entire impugned expenditure would be hardly be sustainable in law, even if it has failed to plead and prove the same by way of filing cogent/supporting evidence. It thus deemed appropriate in these peculiar facts that a lump sum disallowance of Rs. 1 lakh only would be just and proper with a rider that the same shall not be treated as a precedent. The assessee gets the relief of Rs.8,50,303/- in other words. Necessary computation shall follow as per law.

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