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Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the Revenue. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-24, [in short ‘CIT(A)’] Mumbai and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the ‘Act’).
The sole ground raised
by the Revenue is that the Ld. CIT(A) erred (i) in allowing the plea of the assessee that disallowance made was excessive and assessee has not stopped its business, (ii) in not M/s Unimers India appreciating the fact that the assessee failed to revive the business in subsequent six years and the assessee has failed to file full details of expenses during the assessment proceedings
3. Briefly stated, the facts of the case are that the Assessing Officer (AO) made a disallowance of expenses of Rs.63,59,624/- and sales commission of Rs.66,31,301/-. In appeal the Ld. CIT(A) confirmed the disallowance of Rs.66,31,701/- made by the AO towards sales commission. However, he allowed the ground of appeal of the assessee against the disallowance of expenses of Rs.63,59,624/-. The Revenue is in appeal against the above order of the Ld. CIT(A) allowing expenses of Rs.63,59,624/-. The AO observed during the course of assessment proceedings that the assessee failed to file documentary evidence with regard to various expenses aggregating to Rs.1,27,19,248/- consisting of salary, wages, & bonus of Rs.41,69,127/-, property tax of Rs.20,22,444/-, security charges of Rs.12,20,000/-, legal & professional fees of Rs.16,21,664/- besides other minor expenses. The AO made a disallowance of Rs.63,59,624/- [50% of Rs.1,27,19,248/-]. In appeal, the Ld. CIT(A) held as under: “On totality of facts, I am of the considered opinion that the appellant company had not stopped its business and had to pay salary wages, security service charges, legal and professional fees to keep business apparatus in a running condition and the Ld. AO not having found any discrepancy in the vouchers or details, it could not be said that the expenses are not genuine or not for the purpose of business. Accordingly, I do not agree to the action of M/s Unimers India Ld. AO in disallowing 50% of the said expenditure. In any case, the appellant had itself added back Rs.20,22,444/- on account of property tax not paid u/s 43B and therefore, the grounds raised have to be allowed in favour of the appellant.”
4. Before us, the Ld. DR supports the order of the AO making a disallowance of expenses of Rs.63,59,624/-. None appeared on behalf of the assessee.
5. We have heard the Ld. DR and perused the relevant materials on record. We find that the Ld. CIT(A) has rightly arrived at a finding that the assessee itself has added back Rs.20,22,444/- on account of property tax not paid u/s 43B. Further, the Ld. CIT(A) has rightly observed that the AO has not found any discrepancy in the vouchers and other details. As the disallowance made by the AO is based on estimate, without any proper reasoning, we uphold the order of the Ld. CIT(A).