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Income Tax Appellate Tribunal, MUMBAI BENCHES “H” MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the assessee. The relevant assessment year is 2011-12. The appeal is directed against the order of the Commissioner (Appeals)-3, Mumbai and arises out of order u/s 143(3) of the Income Tax Act, 1961 (the ‘Act’).
The grounds of appeal filed by the assessee read as under:-
i. The learned CIT(A) erred in confirming ad-hoc disallowance to the extent of 10% of staff welfare expenses. He failed to appreciate that the Appellant is a company with accounts duly audited; and in such circumstances, it is well settled (including by jurisdictional High Court and ITAT Decisions) that no ad-hoc disallowance can be made. ii. The learned CIT(A) erred in recording findings patently contrary to the record. In particular he has recorded contrary and mutually inconsistent findings to the effect in para 3.2 that no submissions were filed, and in para 5 holding that mere making of submission is not enough. He failed to consider the case-laws specifically relied on in the Appellant’s written submissions, which were duly filed in advance of the hearing before the CIT(A). iii. Reasons assigned by learned CIT(A) are wrong, insufficient and contrary to law.
In a nutshell, the facts are that the assessee had debited Rs. 12,93,633/- towards refreshment expenses for customers and staffs. The Assessing Officer (AO) found that some of the expenses pertaining to Rs. 10,57,560/- were claimed on the basis of vouchers and were not supported by bills. Therefore, the AO disallowed 10% of such expenses which worked out to Rs. 1,05,776/-. The assessee preferred an appeal before the learned CIT(A) who concluded that mere making submission is not sufficient and as the assessee could not submit any evidence in support / justification of claim of expenses incurred towards staff welfare during the assessment proceedings nor during the appellate proceedings, he upheld the disallowance of 10% made by the A.O.
The learned counsel of the assessee relied on the decision of the ITAT ‘’I’’ Bench, Delhi in the case of Widex India (P) Ltd. vs. DCIT (2012) 66 DTR (Del)(Trib) 57.
The learned DR relied on the order of the learned CIT(A).
We have heard the rival submissions and perused the relevant material on record. We find that in the case of Widex India (P) Ltd. (supra), the Tribunal has observed that ‘’the AO has not doubted the claim, he has merely made general observations while making an adhoc disallowance holding that the extent of the claim is to be limited on an estimate basis without rejecting the accounts and without caring to point out deficiencies in the vouchers produced’’. The Tribunal allowed the claim of the assessee on the basis of peculiar facts and circumstances of the case. We find that in the instant case the assessee failed to submit any evidence in support / justification of claim of expenses incurred towards staff welfare during the course of assessment proceedings before the AO and also in the appellant proceedings before the learned CIT(A). In view of the above, the decision relied on by the learned counsel of the assessee is distinguishable from the instant case. As the learned counsel of the assessee failed to file any evidence in support / justification of claim of expenses as mentioned at para 5 by the learned CIT(A) in his order dated 18.12.2015, we uphold the disallowance of Rs. 1,05,776/- made by the A.O.
In the net result, the appeal is dismissed.
Order pronounced in the open court on 22/12/2016