KAMLA DEVI JAYDAYAL JAIN PRIVATE LIMITED,MUZAFFARPUR vs. ASSISTANT COMMISIONER OF INCOME TAX, MUZAFFARPUR
Facts
A search u/s 132(1) of the Income Tax Act was conducted on the premises of Dr. Ram Gopal Jain, whose company M/s. Kamla Devi Jaydayal Jain Hospital Pvt. Ltd. is the assessee. The Assessing Officer (AO) added 50% of the claimed expenses as inflated, amounting to ₹20,80,028/-, because the assessee admitted to inflated expenditure and failed to provide substantiating evidence. The Commissioner of Income Tax (Appeals) restricted this disallowance to 10% of the expenses.
Held
The Tribunal noted that for AY 2016-17, the assessment was made u/s 144 of the Act. While acknowledging that disallowances can be made if facts warrant, even in the absence of incriminating evidence for unabated years, the Tribunal found no justification to interfere with the CIT(A)'s finding. The CIT(A) had already restricted the disallowance to a reasonable extent of 10%, which the Tribunal confirmed.
Key Issues
Whether the disallowance of 10% of expenses, as confirmed by the CIT(A), is justified and whether the AO's addition was based on cogent grounds.
Sections Cited
132(1), 250, 143(3), 153A, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PATNA ‘SMC’ BENCH AT KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
IN THE INCOME TAX APPELLATE TRIBUNAL PATNA ‘SMC’ BENCH AT KOLKATA [Virtual Court] Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No(s).: 19/PAT/2025 Assessment Year(s): 2016-17 Kamla Devi Jaydayal Jain ACIT, Central Circle, Private Limited Vs. Muzaffarpur (Appellant) (Respondent) PAN: AAECK0593R Appearances: Assessee represented by : None. Department represented by : Ashwani Kr. Singal, JCIT. Date of concluding the hearing : 08-January-2026 Date of pronouncing the order : 24-February-2026 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the Assessee is against the order of the Commissioner of Income Tax (Appeals)- 3, Patna [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2016-17 dated 28.10.2024. 1.1 The Registry has informed that the appeal is barred by limitation by 15 days. The assessee has filed a petition for condonation of delay explaining the reasons that assessee is of old age and was not well during the relevant period and due to medical treatment and health issues, the appellate order and its consequences were inadvertently overlooked by the assessee. The assessee requested the Bench to condone the delay. After perusing the same, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from
EMPLOYEES BENEFIT EXPENSES 2013-14 6,714,042.00 3,166,970.00 Accepted u/s 153 A 2014-15 7,219,261.00 3,698,466.00 Accepted u/s 153A Estimated disallowance @50% by A.O. deleted by 2015-16 7,380,127.00 3,265,761.00 CIT (A) Estimated disallowance @50% by A.O. restricted 2016-17 72,44,610.00 32,88,000.00 by CIT(A)@10% OTHER EXPENSES 2013-14 6,714,042.00 1,137,721.50 Accepted u/s 153 A 2014-15 7,219,261.00 1,174,462.01 Accepted u/s 153A Estimated disallowance @50% by A.O. deleted by 2015-16 7,380,127.00 1,071,500.18 CIT(A) Estimated disallowance @50% by A.O. restricted . 2016-17 72,44,610.00 9,65,144.15 by CIT(A) @10%
….. 9. That it is not the case of the assessing officer that the aforesaid expenses have not been incurred. That the assessing officer is not alleging that the expenses are not incurred for business purposes. Keeping in view the nature of business of the appellant, these expenses are genuine business expenses incurred in regular course of business and cannot be doubted upon. The Assessing Officer and LD CIT (A) has failed to give cogent
