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

Facts

The assessee claimed employee benefit expenses constituting 87.70% of turnover. The Assessing Officer disallowed a portion of this claim due to the assessee's failure to provide sufficient supporting documents and the ad hoc nature of bonus provisions. Similar disallowances occurred in previous assessment years.

Held

The Tribunal, following its own precedents and the principle of consistency, found no justification for the disallowance, especially since the Assessing Officer did not reject the assessee's books of accounts. The disallowance was made on an ad hoc basis without establishing any inflation or unverifiable elements.

Key Issues

Whether the disallowance of employee benefit expenses is sustainable when the Assessing Officer did not reject the books of accounts and the disallowance was made on an ad hoc basis without sufficient justification, especially in light of previous favorable tribunal decisions for the assessee.