DCIT, SONEPAT vs. M/S. TOYO SPRINGS LTD., SONEPAT

Briefly stated facts are that the assessee filed return of income for the AY 2010-11 on 26.09.2010 declaring a total income of Rs.3,69,42,490/-. During scrutiny proceedings, the AO found that the assessee claimed the expenses to the tune of Rs.2,04,66,574/- towards advert, publicity, sales promotion and miscellaneous expenses and found that the assessee did not furnish a complete vouchers in support of such expenditure. The AO disallowed 20% thereof which comes to Rs.40,93,314/-. In appeal, Ld.CIT(A) observing that it is not open for the AO to make any adhoc disallowance without pointing out

We have gone through the orders of the authorities below. The AO recorded a finding that the gross profit shown by the assessee for the AY 2010- 11 @ 11.55% is more than the same @ 9.78% for the immediately preceding year. Having recorded so, the AO disallowed 20% of the expenses on the grount of the assessee failing to discharge his onus by not furnishing complete vouchers. Admittedly books of accounts are audited and no discrepancy could be found out by the AO. As rightly pointed out by the Ld. CIT(A), having accepted the books of accounts as well as the G.P.rate, without pointing out in specific instance of expenses not being properly vouched, is not open for the AO to make disallowance. We, therefore, uphold the findings of the Ld. CIT(A) and find that the appeal is devoid on merits. We, therefore, proceed to dismiss the appeal.

In the result, the appeal filed by the Revenue is dismissed.