RAJ KUMARI,BHARATPUR vs. INCOME TAX OFFICER WARD-3, BHARATPUR

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ITA 914/JPR/2025Status: DisposedITAT Jaipur02 November 2026AY 2017-186 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the delay of 105 days in filing the appeal was condoned. The Tribunal found 'sufficient cause' for the delay, considering that the assessee was a household lady, lacked technical knowledge, and her tax affairs were managed by her deceased father-in-law. The appeal was heard on merits. On the substantive issue, the Tribunal held that the ad-hoc disallowance of breakage expenses claimed by the assessee was not sustainable. The assessee was running a wine shop and had declared a turnover of Rs. 4,03,28,175/- with a net profit of 0.96%. It was noted that the assessee's books of accounts were audited under Section 44AB and accepted by the AO. The Tribunal reasoned that a mere difference in net profit compared to other businessmen in the same line of business does not justify an ad-hoc disallowance, especially when the books of accounts are duly audited and accepted. Factors such as individual expertise, trained staff, and marketing strategies can lead to variations in profit. Therefore, breakage expenses, which were duly detailed in the audited financials, could not be disallowed on an ad-hoc basis. The disallowance was ordered to be deleted. The appeal filed by the assessee was allowed.

What were the facts?

The assessee, Raj Kumari, filed an appeal against the order of the CIT(A) for Assessment Year 2017-18. The assessee's return of income was selected for scrutiny. Notices under sections 143(2) and 142(1) were issued. The assessee provided details including month-wise salary, purchases, and capital accounts. The Assessing Officer (AO) disallowed 20% of the breakage expenses claimed by the assessee, amounting to Rs. 14,52,382/-, and made an addition of Rs. 1,43,410/-. The AO framed the assessment under section 143(3) at a total income of Rs. 27,03,020/-. The CIT(A) partly allowed the assessee's appeal. The assessee's appeal before the ITAT was filed with a delay of 105 days, which was condoned due to the death of the assessee's father-in-law who managed her tax affairs.

What were the issues?

1. Whether the Tribunal has the power to condone the delay of 105 days in filing the appeal, considering the reasons provided by the assessee? Assessee's Contention: The assessee, a household lady, lacked knowledge of computer and internet and relied on her deceased father-in-law for tax matters. His death on 15.04.2024 caused the delay. Upon receiving notice of penalty proceedings on 30.05.2025, she promptly filed the appeal. This constitutes 'sufficient cause' for condonation. 2. Whether the ad-hoc disallowance of breakage expenses amounting to Rs. 14,52,382/- made by the AO and sustained by the CIT(A) is sustainable, when the assessee's books of accounts were audited and accepted? Assessee's Contention: The assessee, running a wine shop, claimed a turnover of Rs. 4,03,28,175/- with a net profit of 0.96%. The books of accounts were audited under Section 44AB, and the audit report (Forms 3CB and 3CD) was accepted by the AO. The ad-hoc disallowance of breakage expenses, which were duly detailed in the audited financials, is not sustainable. The AO's comparison with other businessmen showing higher net profit is irrelevant due to individual expertise, staff, and marketing strategies.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 143(2),Section 142(1),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR “SMC” BENCH, JAIPUR

Before: SHRI KULDIP SINGH & SHRI PRAKASH, ACCOUNTANCT MEMBER

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR “SMC” BENCH, JAIPUR (PHYSICAL HEARING) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER & SHRI PRAKASH, ACCOUNTANCT MEMBER ITA No: 914/JPR/2025 Assessment Year: 2017-18

Raj Kumari The ITO, W/o Shri Manoj Kumar, Ward-3, Vs Gandhi Nagar, Sevar Raod, Bharatpur . (Respondent) Bharatpur. PAN: EHYPK1921B (Appellant)

Assessee Represented: Sh. Rajendra Agarwal, C.A. (thr. V.C.). Revenue Represented: Sh. Ghanshyam Meena, JCIT Date of hearing : 16-09-2026 Date of pronouncement : 02-11-2026 ORDER PER : KULDIP SINGH, JUDICIAL MEMBER:-

The Appellant, Raj Kumari (hereinafter referred to as the ‘assessee’) by filing the present appeal, sought to set aside the impugned order dated 30.12.2024 passed by the Commissioner of Income Tax (Appeals)-6, Chennai [hereinafter referred to as the ‘CIT(A)’] qua assessment year 2017-18 on the ground that:- “1. The Ld. Appellate authority erred in sustaining the disallowance of breakage of Rs. 14,52,382/-“

I.T.A No. 914/JPR/2025 Page No 2 Raj Kumari

2.

Briefly stated, facts necessary for consideration and adjudication of the issues at hand are: Assessee’s return of income for A.Y. 2017-18 declaring total income at Rs. 3,87,230/- was subjected to scrutiny. Necessary notices u/s 143(2) and u/s 142(1) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), were issued, but no reply has been filed. However on 15.12.2019 the assessee furnished certain details viz month wise` salary, monthwise purchase and capital accounts details etc. Declining the contention raised by the assessee, the AO proceeded to make disallowance/addition of Rs. 14,52,382/- by allowing 20% breakage expenses claimed by the assessee, made disallowance/addition of Rs. 1,43,410/-. The AO accordingly, proceeded to frame the assessment u/s 143(3) of the Act at the total income of Rs. 27,03,020/-. 3. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal, who has partly allowed the appeal. Being aggrieved with the impugned order passed by the Ld. CIT(A), assessee has come up before the Tribunal by way of filing the present appeal. 4. At the very outset, it is brought to the notice of the Bench that the present appeal is time barred with a delay of 105 days. The

I.T.A No. 914/JPR/2025 Page No 3 Raj Kumari

assessee by moving an affidavit sought to condone the delay of 105 days on the grounds inter-alia that the assessee being a household lady was not having her own mobile number and email ID, nor is having any knowledge of computer and internet; that all the income tax cases of the assessee are being looked after by her father-in-law Shri Brijendra Singh, who had expired on 15.04.2024 (his death certificate on record); that due to death of her father-in-law, she had no knowledge to file the appeal; that when the assessee has got notice regarding penalty proceedings dated 30.05.2025, she immediately filed the present appeal on 13.06.2025. 5. Keeping in view the facts that the entire income tax proceedings of the assessee were being looked after by her father-in- law, who has unfortunately expired on 15.04.2024, thus the appeal could not be filed and when the assessee has got the notice of the impugned order passed by the Ld. CIT(A) on 30.05.2025 from the AO initiating penalty proceedings, she filed the present appeal, we find it a “sufficient cause” to condone the delay, hence the delay of 105 days in filing the appeal is hereby condoned and the appeal is being heard on merits.

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6.

We have heard Ld. ARs for the assessee and Ld. DR for the Revenue and perused the record available on file. 7. Undisputedly, the assessee being a licensee running a wine shop and has claimed her turnover of Rs. 4,03,28,175/- during the year under consideration and shown net profit @ 0.96%. It is also not in dispute that the books of accounts maintained by the assessee were audited and accepted by the AO while making assessment. It is also not in dispute that the Assessing Officer has made adhoc disallowance @ 20% of the breakage expenses claimed by the assessee. 8. Ld. AR for the assessee challenging the impugned disallowance made by the AO and confirmed by the Ld. CIT(A) contended that when the entire details furnished by the assessee including breakage expenses have been examined by the AO and complete the books of accounts dully audited by Auditor u/s 44AB of the Act as per audited report Form 3CB and Form 3CD were accepted adhoc disallowance made by the AO and sustained by the Ld. CIT(A) is not sustainable. 9. No doubt the AO compared the assessee’s case with other businessman, in the same line, who has shown more net profit than

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assessee. But we are of the considered view that even in the same business one cannot get the same profit because it depends on many factors viz individual expertise of the businessman, trained staff and better marketing strategies. So merely on the basis of difference in the net profit adhoc disallowance cannot be made, particularly when duly audited of books of accounts have been accepted. 10. In view of the matter, we are of the considered view that breakage expenses claimed by the assessee, which are duly detailed in the audited financials cannot be disallowed on adhoc basis, hence ordered to be deleted. 11. Resultantly, the appeal filed by the assessee is allowed. Order pronounced in the open court on 02-11-2026 . Sd/- Sd/- (PRAKASH) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Jaipur Dated:- 02/11/2026. *Santosh. Copy of the order forwarded to: 1. The Appellant- 2. The Respondent- 3. CIT 4. CIT(A) 5. DR, ITAT, Jaipur.

I.T.A No. 914/JPR/2025 Page No 6 Raj Kumari 6. Guard File By order, SANTOSH Digitally signed by Asst. Registrar/Sr. P.S. SANTOSH KUMAR KUMAR MAURYA Date: 2026.11.02 MAURYA 14:08:20 +05'30'

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