SUREEL ENTERPRISE PRIVATE LIMITED,CHHATRAL vs. ACIT, CIRCLE, GANDHINAGAR

Facts

The assessee claimed employee benefit expenses constituting 87.70% of its turnover. The Assessing Officer disallowed a portion of these expenses due to the assessee's failure to provide sufficient supporting documents, citing previous years' disallowances and invoking Section 145(3). The CIT(A) upheld the disallowance.

Held

The Tribunal held that since the Assessing Officer did not reject the books of accounts and made the disallowance on an ad hoc basis without specific findings, similar to previous years, the disallowance was not sustainable. The Tribunal followed its own previous decisions in similar cases.

Key Issues

Whether the disallowance of employee benefit expenses, made on an ad hoc basis without rejecting the books of accounts, is sustainable.