What did the Tribunal hold?

The Tribunal found that a 5% disallowance on unsupported cash expenses was reasonable, considering the nature of the business and similar past decisions. The CIT(A)'s disallowance of 10% was therefore amended.

The assessee, a Clearing and Forwarding agent, claimed cash expenses of Rs. 61,65,245/-. The Assessing Officer (AO) disallowed 20% of these expenses due to lack of supporting evidence. The CIT(A) reduced the disallowance to 10%.

What were the issues?

The primary issue was the reasonableness of the disallowance made on account of unsupported cash expenses claimed by the assessee. The Tribunal had to determine the appropriate percentage of disallowance.

S.M. Enterprises vs ACIT | ITAT Mumbai 2016

Income Tax Appellate Tribunal, “I” BENCH, MUMBAI

Before: SHRI D. KARUNAKARA RAO & SHRI PAWAN SINGH

For Appellant: Shri Prakash Pandit

For Respondent: Shri T.A. Khan, CIT-DR

Hearing: 01.12.2016Pronounced: 16.12.2016

सुनवाई की तायीख / Date of Hearing : 01.12.2016 घोषणा की तायीख /Date of Pronouncement : 16.12.2016 आदेश / O R D E R PER D. KARUNAKARA RAO, AM:

This appeal filed by the assessee on 26.5.2015 is against the order of the CIT (A)-28, Mumbai dated 31.3.2015 for the assessment year 2010-2011. In this appeal, assessee raised the following grounds which read as under:- “1. In the facts and circumstances of the case and in law, the CIT (A) erred in confirming the disallowance of Rs. 6,16,525/- out of the total disallowance of Rs. 12,33,049/- made by the AO being 10% of the unsupported cash expenses of Rs. 61,66,052/-.

2. Reasons given by the Ld CIT (A) in confirming the disallowance of Rs. 6,16,525/- out of the total disallowance of Rs. 12,33,049/- made by the AO being the 10% of the unsupported cash expenses of Rs. 61,55,052/- are wrong insufficient and contrary to the facts and evidence on record.”

2. Briefly stated relevant facts of the case are that the assessee, who is a „Clearing and Forwarding‟ (C&F) agent, filed the return of income declaring the total income of Rs. 61,55,051/-. Assessment was completed u/s 143(3) of the Act and the assessed income was determined at Rs.73,88,100/- after making addition of Rs. 12,33,049/-. The background facts of this addition, which is the subject matter of the present appeal, include that the assessee debited certain expenses under four

S.M. ENTERPRISES,MUMBAI vs. ACIT 12(1) (OLD), MUMBAI

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