RAJAN PRASAD,ANGUL vs. INCOME TAX OFFICER, ANGUL, ANGUL
Facts
The assessee filed an appeal against the order of the CIT(A) for AY 2022-2023. The Assessing Officer (AO) disallowed 50% of the total expenditure of Rs. 3,58,22,629/- without specifying which expenses were disallowed. The assessee contended that such ad hoc disallowances are not permissible under the Income Tax Act.
Held
The Tribunal noted that the disallowance was an ad hoc disallowance without pointing out specific faults in claimed expenses. The Tribunal held that ad hoc disallowances are not permissible and, in the absence of specific disallowance, the ad hoc disallowance of 50% of expenses is liable to be deleted.
Key Issues
Whether an ad hoc disallowance of expenditure made by the AO without specifying the nature of expenses is permissible under the Income Tax Act.
Sections Cited
Income Tax Act
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
Per Bench : This is an appeal filed by the assessee against the Ld.CIT(A), National Faceless Appeal Centre(NFAC), Delhi order dated 01/01/2025 passed in Appeal No. NFAC/2021-222/10327663 for the assessment year 2022-2023. 2. It was submitted by the learned AR that the AO in the course of assessment has disallowed 50 percentage of the total expenditure of Rs.3,58,,22,629/-. It was the submission that the AO has not even specified which are the expenses which is being disallowed. It was the submission that ad hoc disallowances is not permissible under the Income Tax Act. It was a prayer that the disallowance may be deleted.
2
In reply the learned Sr. DR submitted that the order of the learned CIT(A) is an exparte order. It was the submission that even the learned CIT(A) would have deleted the addition had the assessee appeared before the learned CIT(A). It was the submission that the he vehemently supported the order of the AO and CIT(A).
We have considered the rival submissions. A perusal of the assessment order, more specifically at page 7 Para 6(iv) shows that the AO has made a disallowance of 50 percentage of a total expenditure of Rs.3,58,22,629/-. The disallowance is an ad hoc disallowance and no specific fault has been pointed out in respect of any specific expenses which have been claimed. Ad hoc disallowances are not permissible. As there is no specific disallowance made, we are of the view that the ad hoc disallowance made at 50 percentage of the expenses is liable to be deleted and we do so.
In the result appeal of the assessee is allowed. Order dictated and pronounced in the open court on 26/09/2025. (राजेश कुमार) (जाजज माथन) (RAJESH KUMAR) (GEORGE MATHAN) लेखा सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य / JUDICIAL MEMBER ददनाांक Dated 26/09/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant- Rajan Prasad Hulursingh,Angul, 759122 2. प्रत्यर्थी / The Respondent- ITO, Angul 3. आयकर आयुक्त(अपील) / The CIT(A), आदेशधिुसधर/ BY ORDER, 4. आयकर आयुक्त / CIT विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कटक / DR, ITAT,
(
