MAMTA PANDEY,DELHI vs. ITO WARD 43(3), DELHI

PER MADHUMITA ROY, JM:

The instant appeal filed by the assessee is directed against the

order dated 08.10.2025 passed by the Commissioner of Income Tax

(Appeals)/National Faceless Appeal Centre- Delhi arising out of the

assessment order dated 30.12.2017under Section 143(3) of the Income

Tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year

2015-16.

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income of Rs. 9,62,980/-. The case was selected for scrutiny assessment

under CASS for limited reasons (i) contract receipts/business mismatch;

(ii) other expenses claimed in the P&L A/c & (iii) tax credit mismatch.

Statutory notices issued under Section143(2)/142(1) were responded by

the assessee. During assessment proceedings the Assessing Officer

noticed that during the assessment year under consideration the

assessee had claimed other expenses amounting to Rs. 5,11,76,465/-

out of which Rs. 4,96,90,247/- was car rent paid by the assessee. The

Assessing Officer required the assessee to give list of top ten persons to

whom car rent had been paid for verification under Section 133(6) of the

Act. The Assessing Officer held that verification could not be done for

want of correct list provided by the assessee and that the assessee had

deliberately provided wrong details so that proper inquiry may not be

done. The AO held that some of the payments of car rent were not

genuine. Notices under Section 133(6) issued at the addresses furnished

by the assessee were not responded which clearly showed that some of

the amounts on car rent were not genuine. The learned AO on estimate

basis disallowed 20% of the expenses claimed by the assessee at Rs.

99,38,049/- and added the same to the income of the assessee.

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First Appellate Authority. The stand of the assessee before the NFAC was

that no addition was ever made on this count in the assessee’s case in

earlier years though the expenses were more than the current year.

Earlier years assessments were completed under Section143(3) of the

Act. The Ld. CIT(A) took note of the fact that in the three lists provided by

the assessee of the persons to whom rent was paid varied considerably

and the top recipients did not appear in one of the list and all addresses

were not made available and the rest did not reply. According to the

assessee all these persons had later on confirmed the details with their

PAN details. However, the assessee failed to submit any evidence in

respect of such claims during the appellate proceedings. He affirmed the

action of the learned AO. The NFAC also rejected the assessee’s stand

that time allowed was not adequate and the assessee was not given any

show cause notice for non-compliance by the persons to whom notices

under Section133(6) were sent.

audited by the CA are verified and reliable. Books of account have not

been rejected by the revenue authorities. Without rejecting the books of

account or without pointing out any defect, the Learned AO made

arbitrary and estimated disallowance with no justification. Earlier years

assessments have been completed under Section143(3) and no such

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addition was ever made by the Learned AO though high percentage of car

rent was claimed. The assessee had fully cooperated with the department

and replied/complied all the statutory notices issued by the Learned

Assessing Officer. On different dates the Assessing Officer asked for

different details and accordingly the details were submitted and no

adverse material was gathered by the Learned AO. Notices were sent to

the outsiders and not to the assessee. The Learned CIT(A) never verified

from the Assessing Officer about late response from all or some of them.

All payments were after TDS and by cheques verifiable and genuine. It is

further submitted that the confusion was created by the AO himself as

he earlier sought the detail as per quantity TDS return and then himself

tried to link this quarterwise TDS detail with the total sum paid in full

year detail to each cab owner and found that yearly figures did not match

with quarterly figures. What was needed that he should have added

figures from each quarter relating to certain persons and the figures will

match in every case. This required picking up of figures of an individual

from each quarter, then added up and compare them with yearly figures.

The AO failed to this simple exercise. The accounts are audited one and

tax audit report is on AO’s file. The assessee has also filed quarterly TDS

list for the period 1.04.2014 to 31.03.2015 in support of his contention

available at page 13 of the compilation filed by her.

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further submitted that the relevant documents never placed before the

Ld. CIT(A) as reflecting from the order impugned.

and having regard to the material available on record we find that the

assessee had responded to the notices issued by the department.

Undisputedly the accounts are duly audited, report whereof was on the

AO’s record. No discrepancy has been pointed out therein. TDS has been

duly deducted and the quarterly TDS statement was also filed for

verification.

Assessee that disallowance of expenses on ad-hoc basis that is not

tenable is found to be acceptable. Thus, we have observed the Assessee

has given all details before the authorities below. It is also observed that

the Assessee has duly deducted tax at source while making payments for

the car rent. We have also observed that the Ld. A.O. has issued notice

under Section 133(6) to the suppliers at the fag end when assessment

was getting time barred and it is the claim of the Assessee that the

persons to whom notices under Section 133(6) were issued have duly

replied but such assessment get time barred and notices under Section

133(6) were issued at the fag end of the limitation period, the A.O. has

not taken cognizance of the same. We have observed that the Ld. CIT(A)

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has not called for the assessment record and has not verified the

contentions of the assessee, no independent enquiry has been made by

the Ld. CIT(A) also and all the contentions of the assessee were rejected.

We have also observed that the assessee has claimed that all payments

for cab rentals were made by banking channels and details were placed

before the authorities below. We also observed that scrutiny

assessments have been conducted by revenue for the earlier Assessment

Years 2014-15 and no addition has been made by the Ld. A.O; the

assessment order dated 07.12.2016 passed by the Ld. A.O. under

Section 143(3) of the Act for A.Y 2014-15 is placed at Paper Book Page

No. 11.

all the facts, details and evidence before the Ld. A.O. as well as the Ld.

CIT(A), it is not justifiable to make ad-hoc disallowances; the authorities

below ought to have considered while making disallowances of the

aforesaid expenses by pointing out specific deficiencies and defects in the

replies submitted by the Assessee. Thus, under these facts and

circumstances we do not hold any merit in the orders passed by the

authorities below whereof the addition was made in the hands of the

assessee which was later confirmed by the Ld. CIT(A). In the facts and

circumstances of the present case, addition made in the hands of the

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Assessee on estimate basis is found to be not sustainable and therefore,

deleted.

Order pronounced in the open court on 11 .08.2026

Sd/- Sd/-

(RAMIT KOCHAR) (MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 11.08.2026 Sr. PS: Pooja Mittal/R.N