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

PDF · subscribers
ITA 3560/DEL/2014Status: DisposedITAT Delhi27 October 2017AY 2010-112 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 Tribunal upheld the CIT(A)'s decision to delete the addition. It was held that the AO cannot make an ad-hoc disallowance without pointing out specific instances of expenses not being properly vouched, especially when the books of accounts are accepted.

What were the facts?

The assessee claimed expenses for advert, publicity, sales promotion, and miscellaneous items. The AO disallowed 20% of these expenses for lack of complete vouchers, despite the books of accounts being audited and the GP rate being higher than the previous year.

What were the issues?

Whether the AO can make an ad-hoc disallowance of expenses without identifying specific instances of unvouched expenditure, when the books of accounts are otherwise accepted.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘D’ NEW DELHI

Before: SH.N.K.SAINI & SH.K.N.CHARY

Hearing: 28.09.2017Pronounced: 27.10.2017

Appellant by None Respondent by Sh. Sampurnanand, Sr.DR Date of Hearing 28.09.2017 Date of Pronouncement 27.10.2017 ORDER PER K.N.CHARY, JUDICIAL MEMBER Aggrieved by the order dated 18.03.2014 in Appeal No.94/2013-14 passing by the Commissioner of Income Tax (Appeal) [in short “CIT(A)”], Rohtak for 2010-11 Assessment Year, the Revenue filed this appeal.

2.

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

any specific instance of expenses not being properly vouched, deleted the addition. Hence, the Revenue filed this appeal.

3.

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.

4.

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

The order is pronounced in the open court on 27th October, 2017.

Recent GST High Court judgments

Search GST case law →