SHREE FISCAL SERVICES P.LTD,MUMBAI vs. ITO 2(3)(2), MUMBAI

This appeal filed by the assessee on 21.10.2016 is against the order of the CIT (A)-6, Mumbai dated 21.7.2016 for the assessment year 2010-2011.

In this appeal, assessee raised the six grounds in toto. The only issue raised in this appeal relates to the validity of the re-assessment / exparte order of the AO. Further, the assessee also questioned the ad-hoc addition ie 75% of the business development expenses and 50% of the travelling expenses account and denying of business loss by way of the legal expenses. Explaining the facts, Ld Counsel for the assessee submitted that the Assessing Officer issued notice u/s 148 read with section 142(1) of the Act and called for the return of income. Assessee is engaged in the business of share broking. Assessee filed the return of income eventually declaring the return loss of Rs. 3,98,070/- and determined the assessed income at Rs. 28,13,500/-. 3. Referring to the way the Assessing Officer resorted to adhocism, Ld AR submitted that the said expenses were essentially disallowed suspecting that the said expenses are required to be disallowed as they were spend towards travelling expenses. Further, regarding the judgment of the Hon’ble Gujarat High Court in the case of Sayaji Iron & Engg. Co. CIT [2002] 121 Taxman 43 (Gujarat), Ld Counsel for the assessee submitted that there can be any travel expenses in a case where the expenses are incurred by a company whose accounts are thoroughly audited and every expenditure is done with the help of resolutions of the Board of Directors. Further, Ld AR submitted that if they may disallow a nominal sum of Rs. 1 lakh for want of vouchers and other deficiency, if any.

On hearing both the parties, I find, this is a case of exparte assessment and there is no point in remanding the issues to the file of the AO considering the smallness of the issues in these days. As such, the way the disallowance made by the AO and confirmed by the CIT (A)are not sustainable as they are merely a case of adhoc additions. There is no evidence gathered by the officers for supporting the figure of 75% or 50% as the case may be or any material is gathered to support the said disallowance. Considering the same, I am of the opinion, this is a case where the assessee is a company and the said judgment of Gujarat High Court (supra) is relevant here. Therefore, I am of the view restricting the addition to the said amount of Rs. 1 lakh should meet the ends of justice. Accordingly, Grounds on merits raised by the assessee are allowed. As advocated, the grounds raised