DEPUTY COMMISSIONER OF INCOME TAX,NON CORPORATE CIRCLE-1,MADURAI, MADURAI vs. THE MADURAI DISTRICT COOPERATIVE MILK PRODUCER UNION LIMITED, MADURAI

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ITA 3244/CHNY/2025Status: DisposedITAT Chennai05 March 2026Bench: SHRI ABY T. VARKEY (Judicial Member), SHRI INTURI RAMA RAO (Accountant Member)1 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The CIT(A) deleted the ad-hoc disallowance, holding that such disallowance cannot be made without identifying specific defects in the books of accounts. The Tribunal, perusing the material, agreed with the CIT(A)'s finding that no ad-hoc disallowance can be made without specific defects, and that the assessee had discharged its onus.

What were the facts?

The assessee, a Co-operative society engaged in milk procurement and processing, filed its return for AY 2020-21 declaring an income. The Assessing Officer made ad-hoc disallowances of 15% on certain expenditures due to the assessee's inability to produce evidence of genuineness.

What were the issues?

Whether ad-hoc disallowance of expenditure can be made by the Assessing Officer without identifying specific defects in the assessee's books of accounts.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI INTURI RAMA RAO

Hearing: 05.03.2026

PER INTURI RAMA RAO, ACCOUNTANT MEMBER:

1.

This is an appeal filed by the revenue directed against the Order of the National Faceless Appeal Centre, Delhi (hereinafter called as ‘NFAC’) dated 09.09.2025 for the assessment year 2020-21.

2.

The revenue raised the following grounds of appeal: “(1) The order of the Ld. CIT(A) is opposed to law on the facts and in the circumstances of the case.

:- 2 -: (2) The Ld. CIT(A) erred by not appreciating the fact that the assessee failed to provide supporting documents and evidences, TDS deducted thereof with regard to Admin overhead expenses of Rs.34,01,37,941/- which was rightly disallowed by the Assessing Officer. (3) The Ld. CIT(A) erred by not appreciating the fact that the assessee failed to submit complete bills/vouchers in support of purchase of resale items (P&1) Rs.24,02,10,076/-and purchase of resale items (marketing) Rs.11,39,270/- which was rightly disallowed by the Assessing Officer. (4) The Ld CIT(A) failed to notice that the Assessing Officer has specified the defect such as failure to provide supporting documents and evidences, TDS deducted thereof, failure to submit complete bills/vouchers, while disallowing the expenses in the assessment order. (5) For these and such other grounds that may be adduced at the time of hearing and it is prayed that the order of the Ld. CIT(A) may be reversed and that of the Assessing Officer be restored.

3.

The brief facts of the case are as under:

The appellant is a Co-operative society engaged in the business to procurement of the milk and processing of milk the return of income for Assessment Year 2020-21 was filed on 29th January, 2021 declared income of Rs. 17,39,91,090/-. Against the said return of income, the assessment was complete by Assessment Unit, Income Tax Department vide order dated 17/09/2022 passed u/s 143(3) r.w.s 144B of the Income Tax Act at a total income of Rs. 26, 12, 14,183/- while doing so the Assessing Officer made disallowance of 15% of the expenditure of Rs.

34,01,37,941/- and also disallowance 15% of other expenditure of Rs. :- 3 -: 24,13,49,346/- for inability of the appellant to produce the evidence to substantiate the genuineness of expenditure.

4.

Being aggrieved by the above assessment order and, an appeal was preferred before ld. CIT(A) who vide impugned order deleted the addition ad-hoc disallowance of expenditure of Rs. 8,72,23,093/- by holding that no ad-hoc disallowance can be made without specific defects in the books of accounts filed by the appellant.

5.

Being aggrieved by the above appeal, the appellant is in appeal before us in the present appeal, the ld. AR submitted that the ld. CIT(A) ought not to have deleted the addition without appreciating the fact that the appellant had failed to discharge once of proof the genuineness of expenses incurred. It is further pointed out that the Assessing Officer had recorded specific finding that the appellant society had failed to submit bills and vouchers despite granting several law opportunities. Thus it prayed that the order of ld. CIT(A). We reverse.

6.

On the other hand, ld. Departmental representative submitted that the Assessing Officer had not pointed out specific defects in the books of accounts maintained by the appellant income ad-hoc disallowance can be made. Therefore, the order of ld. CIT(A) is reasoned and speaking order and requested no interference.

:- 4 -: 7. We heard the rival submissions and perused the material on record. The Assessing Officer made an ad-hoc disallowance for failure of the respondent society to discharge the onus of substantiating the expenditure. On appeal before ld. CIT(A), the ld. CIT(A) held that no order disallowance can be made without finding of specific defects in the books of accounts and accordingly, we direct the Assessing Officer to delete the addition made. The revenue challenges the correctness of this finding of ld. CIT(A) the material available on record indicates. The appellant is a Government Co-operative Society the books of accounts were duly audited u/s 44AD of the Act as well as cooperate to department the position of law, the submission of respondent, the appellant society that it could not upload the information as called for by Assessment Unit, Income Tax Department voluminous of the prefers reminds uncontroverted. Therefore, the appellant cannot be held that the appellant had to discharge of substantiating the evidence. It is position of law that without finding of specific defects of books of accounts maintained by Assessing Officer. The order passed by ld. CIT(A) is inconsonance. It is well settled position of law and therefore, we do not find any illegality in the perversity in the finding of ld. CIT(A) and therefore, we do not find any merit in the appeal filed by the revenue is stands dismissed.

:- 5 -: Order pronounced on the 5th day of March, 2026 in Chennai.

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