SRI TIRUMALA ESTATES,HYDERABAD vs. ITO., WARD-1(1), HYDERABAD

Facts

The assessee, a real estate firm, claimed commission and land development expenses. The Assessing Officer (AO) made ad hoc additions of 10% to both expenses for lack of sufficient supporting documents and disallowed certain expenses. The CIT(A) upheld these additions.

Held

The Tribunal held that the AO made ad hoc disallowances without rejecting the books of accounts and without pointing out specific discrepancies. The assessee had provided substantial evidence for commission payments through banking channels and for land development expenses paid to regulatory authorities.

Key Issues

Whether ad hoc disallowance of commission and land development expenses made by the AO without rejecting books of accounts and without specific evidence of incorrectness is sustainable.