VINAY ANILKUMAR CHOKSEY,MUMBAI vs. DCIT CIRCLE 19(3), MUMBAI

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ITA 649/MUM/2026Status: DisposedITAT Mumbai24 April 2026AY 2023-246 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the lower authorities did not consider the evidence submitted by the assessee to substantiate the expenses. Therefore, the issue was restored to the Assessing Officer for de novo adjudication.

What were the facts?

The assessee, engaged in theatrical exhibition, claimed business expenses of Rs. 4,92,24,323. The Assessing Officer disallowed 25% of these expenses due to a lack of detailed documentation, which the CIT(A) reduced to 12.5%.

What were the issues?

Whether the disallowance of business expenses was justified without considering the documentary evidence provided by the assessee.

Which sections of the Income-tax Act were involved?

Section 37

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “F” BENCH, MUMBAI

Before: SHRI SANDEEP SINGH KARHAILSHRI BIJAYANANDA PRUSETH

For Appellant: Ms. Simoni Shah a/w Mr. Priyank Ghia
For Respondent: Shri Ajay Modi, CIT-DR

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER

ITA No. 649/Mum./2026 (Assessment Year : 2023-24) Vinay Anilkumar Choksey, 101 Sankalp, 18, Walkeshwar Road, Mumbai - 400006 PAN : ADYPC0781D ……………. Appellant v/s

Deputy Commissioner of Income Tax, Circle – 19(3), Piramal Chambers, Lal Baug, ……………. Respondent Mumbai – 400012

Assessee by : Ms. Simoni Shah a/w Mr. Priyank Ghia Revenue by : Shri Ajay Modi, CIT-DR

Date of Hearing – 16/04/2026 Date of Order – 24/04/2026

O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned order dated 24.11.2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2023-24.

2.

In this appeal, the assessee has raised the following grounds: - “Disallowance u/s 37 of the Act amounting to Rs. 61,53,040/-

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i. On the facts and circumstances of the case, the Ld. CIT(A) has erred is restricting the disallowance to Rs. Rs. 61,53,040 being 12.5 percent of the expenses amounting to Rs. 4,92,24,323 without providing an opportunity for video conferencing OR any appropriate mode as requested by the appellant during the course of appellant proceedings. ii. The Ld. CIT(A) has erred in confirming the disallowance of business expenses to the extent of 12.5 percent of the total expenses amounting to Rs. 61,53,040, purely on an ad hoc and estimated basis. The disallowance so sustained is arbitrary, unwarranted, and liable to be deleted. iii. The Ld. CIT(A) has erred in disallowing the expenses merely on the basis of the nature of business. iv. The Ld. CIT(A) has failed to appreciate that the appellant had duly furnished the supporting evidences including the copies of agreements, sample invoices, ledger extracts, and relevant extract of bank statements highlighting sample payments. The same be considered and addition be deleted. v. The Ld. CIT(A) erred in sustaining the estimated disallowance without establishing any finding that such expenses were bogus, excessive, non- genuine OR not incurred wholly and exclusively for the purposes of business, as required under section 37(1) of the Act. The estimation adopted is thus arbitrary, excessive, and unreasonable.”

3.

The solitary grievance of the assessee is against the ad-hoc disallowance of expenditure claimed by the assessee.

4.

We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is an individual and is engaged in the business of theatrical exhibition. For the year under consideration, the assessee filed its return of income on 29.10.2023, declaring a loss of Rs. 2,83,06,093/-. During the assessment proceedings, it was observed that the assessee has shown income of Rs.41,67,651/- and declared expenditure to the tune of Rs.4,92,24,323/-. Accordingly, the assessee was asked to furnish a detailed break-up of the expenses incurred along with supporting documents to establish the genuineness of the expenses. The assessee was also directed to substantiate

3 ITA No. 649/Mum/2026 (A.Y. 2023-24)

how the said expenditure was incurred wholly and exclusively for the purpose of business and thus allowable under section 37 of the Act. On the basis that the assessee failed to furnish detailed break-up of the expenses incurred along with supporting documents to establish the genuineness of the expenses to the tune of Rs.4,92,24,323/-, the Assessing Officer (“AO”) vide order dated 31.03.2025 passed under section 143(3) read with section 144B of the Act made a disallowance to an extent of 25% of the total expenses claimed by the assessee on the basis that in the absence of any documentary evidence to prove the genuineness of the expenses there is no option but to estimate the disallowance. The learned CIT(A), vide impugned order, granted partial relief to the assessee and reduced the disallowance to 12.5%. The relevant findings of the learned CIT(A), vide impugned order, are reproduced as follows: - “In this ground appellant had challenged the addition of Rs. 1,23,06,080 made by Assessing Officer on account of disallowance of 25% of the expenses claimed by the appellant. During the assessment proceeding the appellant could not furnish detailed breakup of expenses and could not the same were incurred wholly and exclusively for the purpose of business and were allowed to u/s 37 of the Act. The appellant failed to furnish the required document such as copy of ledger account of expenses and vouchers etc. The appellant had submitted during the appellant proceedings that he is in business of theatrical exhibition where box office collection and other related receipts are initially collected by the appellant but the substantial portion of the revenue goes to distributers who own the copy right The appellant further submitted that during the assessment proceedings he filed following documents: - Copies of agreements executed with distributors; - Sample invoices; - Bank statement extracts evidencing payments made to distributors; - A detailed explanation on the nature of business. The appellant further, submitted that the AO did not find any expenses to be bogus inflated or non-business in nature and the disallowance was made on estimation only. It was also submitted that the books of account were audited.

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I find that the onus was on the appellant to prove the genuineness of all the expenses and to furnish the required bill Voucher and copy of ledgers etc. In absence of these there was no other option available with the AO than to estimate the disallowance. Merely, the books being audited is not sufficient to justify the expenses. However, looking to the nature of business and nature of expense etc. which mainly consist of payments to the distributors, I restrict the disallowance to 12.5% of the total expenses i.e. Rs.61,53,040/-. The ground of appeal is partly allowed.”

5.

During the hearing, the learned Authorized Representative (“learned AR”), by referring to the findings of the learned CIT(A) as noted in the foregoing paragraphs, the assessee submitted the copies of the agreement executed with the distributors, sample invoices, bank statement extracts evidencing payment made to distributors and a detail explanation on the nature of the business. The learned AR submitted that similar evidence was also furnished before the AO, and therefore, there is no basis for the lower authorities to make an ad hoc disallowance when no fault was found with the evidence submitted by the assessee.

6.

On the other hand, the learned Departmental Representative (“learned DR”) vehemently relied upon the orders passed by the lower authorities.

7.

Having considered the submissions of both sides and perused the material available on record, we find that, in the present case, the impugned addition was made by the AO by not being satisfied with the genuineness of the expenses claimed to have been incurred by the assessee. Accordingly, the AO disallowed 25% of the expenses, which the learned CIT(A) reduced to 12.5%. As per the assessee, before the AO as well as before the learned CIT(A), documentary evidence was furnished by the assessee to substantiate his claim of incurring expenditure for the purpose of business. In this regard,

5 ITA No. 649/Mum/2026 (A.Y. 2023-24)

during the hearing, our attention was drawn to various submissions, along with documentary evidence, filed by the assessee before the lower authorities, which form part of the paper book. As is evident from the perusal of the impugned order, despite noting the evidence filed by the assessee in support of its claim, the learned CIT(A) restricted the disallowance on the basis that no evidence had been filed by the assessee. Therefore, we are of the considered view that the findings of the learned CIT(A) are completely contrary to the evidence on record and its own recording of facts in page 15 of the impugned order. As is evident from the record, neither AO nor the learned CIT(A) considered any evidence filed by the assessee to prove the genuineness of the expenditure claimed during the year. Therefore, we restore this issue to the file of the Jurisdictional AO for de novo adjudication after taking into consideration the various evidence filed by the assessee. We further direct that if the AO is of the opinion that more evidence is required to verify the claim of the assessee, then a proper and reasonable opportunity be granted to the assessee to furnish the same. With the above direction, the impugned order is set aside, and the grounds raised by the assessee are allowed for statistical purposes.

8.

In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 24/04/2026

Sd/- Sd/- SANDEEP SINGH KARHAIL BIJAYANANDA PRUSETH JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24/04/2026 Prabhat

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Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order

Assistant Registrar ITAT, Mumbai

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