ISHVATHAM,KOLKATA vs. I.T.O., WARD - 28(1),, KOLKATA.
Before: SHRI RAJESH KUMARAssessment Year : 2013-14
This is an appeal filed by the assessee against the order of ld.
Commissioner of Income Tax (Appeals), National Faceless Appeal Centre
(NAFC),
New
Delhi
NFAC),
Delhi dated
24.3.2025
in Appeal
No.CIT(A),Kolkata-8/10264/2015-16 passed for Assessment Year 2013-14. 2. In Ground Nos.1 to 5 of appeal, the assessee has challenged the order of the ld CIT(A) in confirming the disallowance of entire expenses made under various heads made by the Assessing officer.
Assessment Year : 2013-14
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Briefly stated the facts are that the assessee firm is engaged in the business of purchase and sale of painting and is carrying on the business from the earlier years. During the year under consideration, the assessee has not effected any sale, however, expenses were incurred under various heads namely, business expenses of Rs.2,60,003/-, foreign travel expenses of Rs.7,79,968/-, club facility and subscription charges of Rs.72,864/-, travel expenses of Rs.1,63,594/- and motor car expenses of Rs.14,88,543/-. The assessee has during the year earned commission on sale of painting amounting to Rs.1,23,125/-. 4. In the appellate proceedings, ld CIT(A) confirmed the order of the Assessing officer. 5. After considering the rival submissions and perusing the materials available on record, I find that the assessee is engaged in the business of painting and during the year, the assessee has received commission of Rs.1,23,125/-. The assesse has also incurred various expenses under various heads and, accordingly, claimed the same in the profit and loss account, which were disallowed in entirety by the Assessing officer on the ground that the assessee has not furnished any bills and vouchers in support of the claim that the expenses incurred for the purpose of business of the assessee. However, on the contrary, from the assessment order for the assessment year 2012-13 placed before me, I note that the assessee had purchased six paintings amounting to Rs.21,85,000/- from six individuals and also sold the Assessment Year : 2013-14
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paintings to seven individuals/entities. Therefore, the claim of the Assessing officer that the assessee is not carrying on any business is wrong. In my opinion, the expenses cannot be disallowed in entirety on the ground that during the assessee has not made any sale of paintings because the assessee has establishment to do all these activities, nevertheless, during the year, no sale/purchase of paintings were recorded. I have also examined the nature of these expenses and found that these types of expenses are required to be incurred in any kind of business. Besides, in income tax law, the tax authority can disallow expenses claimed by a business entity, if they are considered excessive or unreasonable. This is particularly relevant for expenses paid to related parties or for which proper documentation is lacking. The onus is on the taxpayer to prove that the expenses were incurred wholly and exclusively for business purposes. In the assessment order, the Assessing Officer is of the view that the assessee has failed to produce any evidential documents.
In these circumstances, I am of the view that a reasonable disallowance could be made. Accordingly, I set aside the order of the ld CIT(A) and direct the AO to disallow the expenses under various heads to the tune of 20% of the total expenses. Ground Nos.1 to 5 of appeal stand partly allowed.
6. Ground Nos. 6 to 18 are not pressed; therefore, they are not being adjudicated upon.
Assessment Year : 2013-14
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In the result, appeal of the assessee is partly allowed. Order dictated and pronounced in the open court on 12/9/2025. (RAJESH KUMAR)
Accountant Member
Kolkata: Dated 12 /09/2025
B.K.Parida, Sr. PS (OS)
Copy of the Order forwarded to :
By order
Asst.