MR. NIKHIL VIJAY CHAUHAN,MUMBAI vs. ITO 21(2)(4), MUMBAI

This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals) [in short learned CIT(A)] dated 31.01.2019 pertaining to assessment year (A.Y.) 2012-13.

read as under :-

1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the adhoc disallowance of Rs. 4,04,798/- being 10% of the expenses of Rs. 40,47,980/- being Salary and incentives to Salesman, drivers, delivery boys and office staff in the course of business as distributor and selling agents of Hindustan Lever Limited - Rs. 1,25,082/-.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT[A] erred in confirming the adhoc disallowance of Rs. 79,864/- being 15% of general expenses of Rs. 5,32,425/- on account of conveyance, Travelling and telephone expenses – Rs. 24,678/-

3. In this case the assessee is a proprietor of M/s. Prasad Enterprises and is a distributor and selling agent of Hindustan Unilever Limited. In the assessment order the Assessing Officer noted that there was some reduction in gross profit rate. He obtained explanation from the assessee. He did not dispute the explanation. However, without giving any specific reason he made adhoc disallowance in salary and incentive to salesmen @ 10% and conveyance travelling and telephone charges @ 5%.

4. Upon assessee’s appeal learned CIT(A) confirmed the same. Against this order the assessee is in appeal before the ITAT.

5. I have heard learned Departmental Representative and perused the records. In my considered opinion adhoc disallowance without pointing out any defect in the vouchers whatsoever is not sustainable in law. That ‘personal element can be ruled out’ is not legally sustainable ground whatsoever. Hence, I set aside the orders of the authorities below and delete the disallowance.

Pronounced in the open court on 1.3.2021.