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Facts
The assessee, engaged in the business of cement and building materials, filed a return of income for AY 2017-18. The AO completed the assessment at a higher income, making an adhoc disallowance of expenditure. The CIT(A) confirmed this disallowance.
Held
The Tribunal held that the CIT(A)'s order was cryptic, arbitrary, and against natural justice as it confirmed the AO's action without addressing the assessee's contentions. Therefore, the matter was remanded back to the CIT(A).
Key Issues
Whether the CIT(A) was justified in confirming the adhoc disallowance made by the AO without properly adjudicating the assessee's grounds of appeal.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
Assessment Year: 2017-18 Pulikkottil Jacob Tojy .......... Appellant Pulikottil Building Materiala Athani P.O., Thrissur 680771 [PAN: ABHPT9585F] vs. The Income Tax Officer, Ward-2(5), Thrissur ......... Respondent Assessee by: Smt. Mini Candran, CA Revenue by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 28.10.2025 Date of Pronouncement: 29.10.2025 O R D E R This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-2, Mumbai [CIT(A)] dated 02.07.2025 for Assessment Year (AY) 2017-18.
Brief facts of the case are that the appellant is an individual dealing in the business of cement and building materials. The return of income for AY 2017-18 was filed on 08.02.2018 declaring income of Rs. 16,68,360/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward 2(5), Thrissur (hereinafter called "the AO") vide order dated 30.12.2019 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total Pulikkottil Jacob Tojy income of Rs. 45,09,899/-. While doing so, the AO made adhoc disallowance of expenditure claimed on account of delivery expenses, salary, discount and Coolie expenditure aggregating to Rs. 28,41,539/-.
Being aggrieved, an appeal was filed before the CIT(A) contending that no adhoc disallowance can be made without rejecting the books of account and merely on the ground that the expenditure is unreasonable. However, the CIT(A) confirmed the action of the AO vide the impugned order.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
The learned counsel for the assessee contended that no expenditure can be disallowed merely on the ground that the expenditure is unreasonable and excessive placing reliance on certain judicial precedents. All the expenditures are supported by vouchers.
On the other hand, the learned Sr. DR opposed the above submissions of the appellant.
I heard the rival contentions and perused the material available on record. The only issue that arises for my consideration is whether the CIT(A) was justified in confirming the adhoc disallowance made by the AO. On a mere perusal of the order passed by the CIT(A) it Pulikkottil Jacob Tojy would be evident that the first appellate authority merely confirmed the action of the AO by passing a cryptic order without meeting the contentions of the appellant. The approach adopted by the CIT(A) is arbitrary, unreasonable and against the principles of natural justice. Therefore, I remand the matter back to the file of the CIT(A) for fresh disposal of the appeal on merits after affording reasonable opportunity of hearing to the appellant.
In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.
Order pronounced in the open court on 29th October, 2025.