SHRI.B.L.THIMMEGOWDA,BANGALORE vs. INCOME TAX OFFICER, BANGALORE

The assessee has raised the following grounds :

3. The only issue arises in this appeal of the assessee is regarding disallowance made by the Assessing Officer and confirmed by the CIT (Appeals) on account of expenditure incurred in respect of the brokerage and commission business. The assessee is an individual and doing business of brokerage and commission. The assessee declared gross revenue from such activity of Rs.13,15,000 and also claimed an expenditure of Rs.10,61,750. The Assessing Officer while framing the assessment ex-parte disallowed the claim of the assessee under Section 57 of the Income Tax Act, 1961 (in short 'the Act'). On appeal, the assessee claimed that the assessee is in the business of brokerage and commission

Before the Tribunal, the learned Authorised Representative of the assessee has submitted that the CIT (Appeals) has estimated the expenditure without giving any basis and therefore made an adhoc disallowance of Rs.9,41,750. He has further contended that once the CIT (Appeals) has accepted that the expenditure is regarding business activity then the claim of expenditure in question cannot be disallowed as the assessee has offered the income at 21% of the gross receipts. Thus the learned Authorised Representative has submitted that the neither the Assessing Officer nor the CIT (Appeals) has given opportunity to the assessee to furnish the evidence and substantiate the claim of the assessee. He has pleaded that the assessee may be given one more opportunity for filing the relevant evidence in support of the claim of expenses and therefore the matter may be remitted to the record of the Assessing Officer.

On the other hand, the learned Departmental Representative has forcefully contended that the assessee did not file any evidence in support of the claim of expenditure before the Assessing Officer. Further though the assessee challenged the action of the Assessing Officer before the CIT (Appeals) but again has not furnished any evidence to substantiate the expenses incurred by the assessee in connection with the business activity. Thus despite sufficient opportunity given by the Assessing Officer as well as by the CIT (Appeals), the assessee has failed to produce any evidence in support of the claim.

Having considered the rival submissions as well as the relevant material on record, it is noted that the assessee has not filed any evidence to substantiate the claim of expenditure of Rs.10,61,750 in respect of the brokerage and commission receipts of Rs.13,50,000. The CIT (Appeals) observed that the claim of the assessee is highly excessive and estimated the expenditure of assessee at Rs.10,000 per month however, the CIT (Appeals) has not discussed the basis of estimation of expenses and has made an adhoc disallowance as well as allowance of the claim of the expenditure. Since the assessee has now pleaded for one more opportunity to file the relevant evidence in support of the claim

In the result, the appeal of the assessee is allowed for statistical purpose.