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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-11, Chennai, dated 22.05.2017 and pertains to assessment year 2012-13.
Smt. Ruby George, the Ld. Departmental Representative, submitted that the Assessing Officer disallowed the overhead expenses claimed by the assessee to the extent of ₹3,53,66,369/-.
According to the Ld. D.R., on verification, the Assessing Officer found that the details of ledger, vouchers and invoices were not filed by the assessee for claiming the expenditure. Therefore, according to the Ld. D.R., in the absence of any vouchers and ledger, the Assessing Officer disallowed 10% of the total claim made by the assessee. On appeal by the assessee, the CIT(Appeals) called for remand report. On the basis of the remand report, according to the Ld. D.R., the CIT(Appeals) found that the assessee was not able to produce vouchers to the extent of ₹24.50 lakhs. In respect of other things, the assessee has filed vouchers. The CIT(Appeals) restricted the disallowance to ₹24.50 lakhs. According to the Ld. D.R., since the assessee could not file any details, the CIT(Appeals) is not justified in restricting the disallowance to ₹24.50 lakhs.
On the contrary, Shri P. Rajasekharan, the Ld. representative for the assessee, submitted that no doubt, the Assessing Officer disallowed the claim of the assessee to the extent of ₹3,53,66,369/- on the ground that the assessee could not produce any documentary evidence to support the claim of expenditure. The disallowance was made on ad hoc basis at the rate of 10%. The assessee explained the real situation that there was flood in Chennai, therefore, some of the materials were destroyed, hence, it could not be filed before the Assessing Officer. Therefore, according to the Ld. representative, the Assessing Officer is not justified in making disallowance on ad hoc basis.
We have considered the rival submissions on either side and perused the relevant material available on record. On the basis of the submission made by the assessee and the documentary evidence filed, a remand report was called for by the CIT(Appeals). In fact, the CIT(Appeals) has reproduced the entire remand report in the impugned order. From the remand report, it appears that the assessee has produced copies of wage bills, challans, audited financials, etc. for verification. After verifying the details produced by the assessee, the Assessing Officer filed remand report before the CIT(Appeals).
In the remand report, the Assessing Officer found that there was justification in the claim made by the assessee. The Assessing Officer also found that the addition in the original assessment order was made on ad hoc basis, therefore, the assessee is entitled for relief. On the basis of the above remand report, the CIT(Appeals) examined the matter afresh in the light of the material available on record and found that the assessee could not produce material in respect of the expenditure to the extent of ₹24.50 lakhs. The CIT(Appeals) has also found that since the assessee could not produce the corresponding vouchers and to avoid protracted litigation, the assessee agreed for disallowance to the extent of ₹24.50 lakhs. The fact remains that there was flood in Chennai. Inspite of that, the assessee produced the materials before the Assessing Officer. The CIT(Appeals) after verifying the material filed by the assessee, has found that there was no justification for disallowance made on ad hoc basis in the original assessment order. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly allowed the claim of the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
In the result, the appeal filed by the Revenue stands dismissed.