SARVODAYA MINING SERVICES,NIMBAHERA vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, UDAIPUR, UDAIPUR
Facts
The assessee's appeal was filed against the order of the CIT(A) for AY 2017-18. The AO had disallowed 1% of total expenses amounting to Rs. 51,40,431. The CIT(A) partly allowed the appeal, reducing the disallowance to Rs. 8,13,552 by disallowing 20% of certain administrative and other expenses.
Held
The Tribunal held that the AO disallowed expenses without rejecting the books of account. The CIT(A) also did not point out specific lacunae in the expenses. The assessee had undergone tax audit and maintained books of account as per Section 44AB. No contradiction was established between audited books and lower authorities' findings.
Key Issues
Whether the disallowance of expenses made by the AO and partly sustained by the CIT(A) is justified without rejecting the books of account and without pointing out specific defects.
Sections Cited
250 of the Income-tax Act, 1961, 143(3) of the Act, 145 of the Act, 139 of the Act, 44AB of the Act
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: DR. MITHA LAL MEENA & SHRI ANIKESH BANERJEE
Per Anikesh Banerjee (JM):
The instant appeal of the assessee was filed against the order of Learned Commissioner of Income-tax (Appeal), Udaipur-2 [for brevity, ‘Ld. CIT(A)’] order passed under section 250 of the Income-tax Act, 1961 (in shot, ‘the Act) for the Assessment Year 2017-18, date of order 09/03/2024. The impugned order emanated from the order of the Learned Assistant Commissioner of Income-tax,
2 ITA No.438 /Jodh /2024 Sarvodaya Mining Servicews Central Circle-1, Udaipur (in short, ‘Ld.AO’) passed under section 143(3) of the Act, date of order 17/12/2018. 2. The appeal was filed with delay for 15 days. The petition for condonation of delay was filed. The ordinate delay for 15days is condoned. 3. We heard the rival submissions and considered the documents available on the record. The Ld.AR argued and submitted a paper book containing pages 1 to 55, which is kept on record. The Ld.AR submitted that the Ld.AO disallowed 1% of total expenses amount of Rs.51,40,43,061/-, which comes to Rs.51,40,431/- due to huge claim of expenses, which include expenses under the head “other expenses” amount to Rs.11,85,76,456/-. The aggrieved assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) only considered the administrative expenses and disallowed 20% of telephone expenses ; motor expenses; travelling expenses, staff welfare expenses and mess expenses totaling Rs.40,67,763.71, which came to Rs.8,13,552/-. In nutshell, out of disallowance of Rs.51,40,431/-, the Ld.CIT(A) sustained Rs.8,13,552/-. The aggrieved assesse filed an appeal before us. 4. Related to these disallowances, the Ld. DR argued and fully relied on the order of the Ld.AO. But the Ld.DR has also confirmed that the department has not filed any cross appeal against the impugned appellate order. 5. In our considered view, we find that the Ld.AO has rejected primarily 1% of the entire expenses without rejecting the books of account maintained by the assessee, u/s 145 of the Act. The assesse filed the return of income u/s 139 of the Act along with audit report dated 26/10/2017. But without rejecting the same, the entire addition was made. On perusal of the appellate order, we also find that there is no specific lacuna found by the Ld.CIT(A) and a separate observation was made related to 20% of addition of expenses of Rs.40,67,763/- which comes to
3 ITA No.438 /Jodh /2024 Sarvodaya Mining Servicews Rs.8,13,552/-. Respectfully relied on the order of the Hon’ble Rajasthan High Court in the case of Kashiram Radhekrishan v. CIT [1985] 155 ITR 609/ [1986] 27 Taxman 397 (Raj.). The specific lacuna was not pointed out by both the revenue authorities related disallowance of expenses. The assessee had undergone tax audit and maintaining the books of account u/s 44AB of the Act. The contradiction with audited books of account and the findings of the lower authorities is not established during the assessment proceeding. The ld. Sr. DR did not able to find out any contrary view against the submission of the ld. Counsel of the assessee. Accordingly, the addition of amount of Rs.8,13,552/- is liable to be quashed. 6. In the result, the appeal of the assessee bearing ITA No.438/Jodh/2024 is allowed. Order pronounced on 29th day of September 2025 in accordance with Rule 34(4) of the Income tax (Appellate Tribunal) Rules, 1963. Sd/- sd/- (DR. MITHA LAL MEENA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Jodhpur, Dt: 29th September, 2025 Pavanan Copy of the Order forwarded to: अपीलाथ�/The Appellant , 1. �ितवादी/ The Respondent. 2. आयकर आयु� CIT 3. िवभागीय �ितिनिध, आय.अपी.अिध., जोधपुर /DR, ITAT, 4. JODHPUR गाड� फाइल/Guard file. 5.
BY ORDER, //True Copy// (Asstt. Registrar), ITAT, JODHPUR
