SHREE JAINA RICE AND ESTATES PRIVATE LIMITED,DELHI vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 22(2), DELHI, DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘E’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No.7807/Del/2025 Assessment Year: 2017-18 Shree Jaina Rice Estates Vs. DCIT, Pvt. Ltd., Circle-22(2), 525, Lahori Gate, Naya Delhi Bazar, Delhi PAN: AAQCS9960E (Appellant) (Respondent) Assessee by Sh. Suresh Kumar Gupta, CA Department by Ms. Ankush Kalra, Sr. DR

Date of hearing 30.04.2026 Date of pronouncement 30.04.2026 ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/Addl./JCIT(A), Panaji’s order dated 11.09.2025 having DIN and order no. ITBA/APL/S/250/2025-26/1080609570(1), involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

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Heard both the parties. Case file perused. 2. Coming to the assessee’s sole substantive ground raises herein, we note that it is aggrieved against the learned CIT(A)’s detailed discussion upholding the Assessing Officer’s assessment findings disallowing 10% of its various expenditure claim amounting to Rs.35,62,025/-; coming to Rs.3,56,203/- in assessment order dated 25.12.2019, reading as under: “7.2 Ground no.02 related is related with the issue of disallowance of 3,56,203/-out of various expenses aggregating to Rs.35,62,025/- clained in the P & L account @ 10% of such expense on account of personal use of asset and facilities to prevent the revenue leakage ignoring the fact that such disallowance are based on conjectures and surmise which is adjudicated as assessment order and written submission filed by the appellant. The appellant has submitted that: • All expenses were incurred wholly and exclusively for business purposes; • Books of accounts are duly audited; • Disallowance of such a high proportion of the expenses is arbitrary and excessive; • Merely because certain vouchers are self-made cannot be a ground to reject the claim when business exigency demands petty cash spending. Assessment Order Findings The AO noted that: • Majority of the vouchers produced were self-made and not backed by third-party bills; • In certain cases, the vouchers did not contain details of payees or supporting receipts; • No confirmations from recipients were filed; • Hence, genuineness and verifiability of such expenses could not be established. 2 | P a g e

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Discussion & Analysis I have carefully considered the rival contentions. It is a settled principle under section 37(1) of the Act that the onus lies upon the assessee to prove that an expenditure has been laid out "wholly and exclusively" for the purpose of business. This principle has been reiterated in CIT v. Calcutta Agency Ltd. (19 ITR 191, SC), where the Hon'ble Court held that mere entries in books are not sufficient burden of proof is on the assessee. the Further, the Hon'ble Madras High Court in CIT v. Coimbatore Salem Transport (216 ITR 418) observed that where expenditure is not supported by proper vouchers, disallowance is justified. Likewise, in CIT v. McMillan & Co. (33 ITR 182, SC), it was held that the AO is entitled to scrutinize and reject claims not substantiated by proper evidence. In the present case, although the appellant has filed books and produced certain vouchers, the AO has pointed out serious deficiencies. Self-made vouchers without supporting evidence cannot by themselves establish business expenditure. The Hon'ble Supreme Court in Sumati Dayal v. CIT (214 ITR 801) emphasized that the test of human probabilities and surrounding circumstances should be applied which in this case do not support the appellant's claim. The disallowance made by the AO is thus supported by law. Though the appellant has argued that the disallowance is excessive, it is noted that the AO has examined the details and disallowed only those items where evidence was insufficient. There is no indication of any ad hoc or estimated disallowance. In view of the above discussion and applying the ratio of the judicial precedents, I hold that the appellant has failed to discharge its onus of proving the genuineness and business purpose of the impugned expenditure. The disallowance of 30,56,203/- is therefore confirmed.. Accordingly, ground no.02 being devoid of merit is dismissed herewith. 7.3 As the appellant did raised any ground of appeal of and not deleted/modified/amended any ground of appeal during the course of appellate proceeding, therefore ground no.03 did not require the separate adjudication.”

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