THE DCIT CIRCLE 5(1), BHOPAL vs. M/S L N MALVIYA INFRA PROJECTS P LTD, BHOPAL

Per Vijay Pal Rao, JM:

This appeal by the Revenue is directed against the order dated 22.03.2023 of Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NFAC) for A.Y.2011-12. The Revenue has raised following grounds of appeal:

“1. On the facts & in the circumstances of the case, the CIT(A) has erred in deleting the disallowance of Rs. 1,44,54,016/- made by the AC. on account of interest on GST/Service Tax, and has failed to

ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. examine any penalty components in the delayed interest on GST paid by the assessee. 2. On facts & in the circumstances of the case, the IT(A) has erred in deleting the disallowance of Rs.8 ,15,1 77/- made by the A.O. on account .of Interest on TDS, as the same is not allowable expenses. 3. On facts & in the circumstances of the case, the CIT(A) has erred in deleting the disallowance of Rs.12;69,0751- made by the A.O on account of travelling expenses.". 2. Ground no.1 is regarding the addition made by the AO on account of interest on GST/service tax by invoking explanation to section 37(1) of the Act which was deleted by the CIT(A). Ld. DR has submitted that the interest was levied due to default on the part of the assessee in payment of the taxes under GST Act and Rules and therefore, in view of the explanation-1 to section 37(1) of the Act the deduction of such levy is not allowable. Thus, ld. DR has relied upon the order of the AO.

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ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. then also relied upon the judgment in case of Lachmandas Mathuradas v. Commissioner of Income Tax 122 taxman 828 and submitted that the interest on arrears of sales tax was compensatory in nature and not penal.

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ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. case there is a default or delay in deposit of TDS the assessee would be liable to pay the tax being assessee in default. Therefore, the payment of interest on delayed deposit of TDS would become part and parcel of tax liability of the assessee similar to the interest u/s 234A,234B, 234C, 234D. Accordingly interest on belated deposit of TDS or non-deposit of TDS by the assessee would not be an allowable claim of expenditure. Though the same may not fall in the ambit of explanation-1 to section 37(1) of the Act but the said expenditure cannot be regarded as expenditure incurred wholly and exclusively for the purpose of business of the assesse. The income tax liability as well as interest as income tax liability cannot be allowed as expenditure incurred for the business of the assesse.

“14. Now we take up the last Ground No. 4. The issue involved in this ground is the disallowance of interest expenditure on late payment of TDS amounting to Rs. 2,13,093/-. 15. During assessment proceeding, the Ld. AO observed that the assessee has made delay in payment of TDS and therefore paid interest of Rs. 2,13,093/- u/s 201(1A) of the Act to the Income-tax Department. The assessee has debited this interest expenditure to P&L A/c and claimed as business-deduction u/s 37(1) of the Act. The Ld. AO, however, observed that the interest has been paid on account of delay in payment of TDS deducted and therefore it is in the nature of fine and therefore not allowable as deduction. On this basis, the Ld. AO disallowed the deduction of Rs. 2,13,093/-.

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ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. 16. The Ld. CIT(A) agreed with the Ld. AO and confirmed the disallowance. 17. Before us, the Ld. AR placed reliance upon the decision of ITAT, Kolkata in DCIT Vs. M/s. Rungta Mines Ltd. ITA No.1531/Kol/2017 order dated 05.10.2018 for assessment-year 2014-15, which is again based on ITA No. 1887/Kol/2016 for assessment-year 2011- 12 in the case of very same assessee. The relevant paras relied upon by the Ld. AR are reproduced below: “The issue of delay in the payment of service tax is directly covered by the judgment of Hon'ble Apex Court in the case of Lachmandas Mathura Vs. CIT reported in 254 ITR 799 in favour of assessee. The relevant extract of the judgment is reproduced below: "The High Court has proceeded on the basis that the interest on arrears of sales tax is penal in nature and has rejected the contention of the assessee that it is compensatory in nature. In taking the said view the High Court has placed reliance on its Full Bench's decision in Saraya Sugar Mills (P.) Ltd. v. CIT [1979] 116 ITR 387 (All.) The learned counsel appearing for the appellant- assessee states that the said judgment of the Full Bench has been reversed by the larger Bench of the High Court in Triveni Engg. Works Ltd. v. CIT [1983] 144 ITR 732 (All.) (FB), wherein it has been held that interest on arrears of tax is compensatory in nature and not penal. This question has also been considered by this Court in Civil Appeal No. 830 of 1979 titled Saraya Sugar Mills (P.) Ltd. v. CIT decided on 29-2-1996. In that view of the matter, the appeal is allowed and question Nos. 1 and 2 are answered in favour of the assessee and against the revenue. In view of the above judgment, there remains no doubt that the interest expense on the delayed payment of service tax is allowable deduction. The above principles can be applied to the interest expenses levied on account of delayed payment of TDS as it relates to the expenses claimed by the assessee which are subject to the TDS provisions. The assessee claims the specified expenses of certain amount in its profit & loss account and thereafter the assessee from the payment to the party deducts certain percentage as specified under the Act as TDS and pays to the Government Exchequer. The amount of TDS represents the amount of income tax of the party on whose behalf the

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ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. payment was deducted & paid to the Government Exchequer. Thus the TDS amount does not represent the tax of the assessee but it is the tax of the party which has been paid by the assessee. Thus any delay in the payment of TDS by the assessee cannot be linked to the income tax of the assessee and consequently the principles laid down by the Hon'ble Apex Court in the case of Bharat Commerce Industries Ltd. Vs. CIT (1998) reported in 230 ITR 733 cannot be applied to the case on hand. Thus, in our considered view, the principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. (supra) is not applicable in the instant facts of the case. Thus, we hold that the Assessing Officer in the instant case has wrongly applied the principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd.(supra). We also find that the Hon'ble Supreme Court in the case of Lachmandas Mathura (Supra) has allowed the deduction on account of interest on late deposit of sales tax u/s 37(1) of the Act. In view of the above, we conclude that the interest expenses claimed by the assessee on account of delayed deposit of service tax as well as TDS liability are allowable expenses u/s 37(1) of the Act. In this view of the matter, we find no reason to interfere in the order of Ld. CIT(A) and we uphold the same. Hence, this ground of Revenue is dismissed.” Relying upon this decision, the Ld. AR argued that the interest on late payment of TDS is allowable as business-deduction as held by Hon’ble ITAT, Kolkata and therefore the lower authorities have wrongly disallowed the deduction claimed by the assessee. 18. The Ld. DR supported the orders of lower authorities and argued that the TDS once deducted, becomes money of the exchequer and by delayed payment of the same, the exchequer is deprived of getting its money in time. Hence the interest levied u/s 201(1A) is certainly in the nature of fine or penalty and not deductible in computing taxable income. Therefore, the Ld. AO has rightly disallowed the deduction. 19. We have considered the rival submission of both sides. We observe that in M/s. Rungta Mines Ltd. (supra) cited by Ld. AR, the Hon’ble ITAT Kolkata has given preference to the decision of Hon’ble Apex Court in Lachmandas Mathura Vs. CIT 254 ITR 799 wherein the deduction of interest on late payment of sales-tax was allowed as business deduction, as compared to the decision of Hon’ble Apex Page 6 of 17

ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. Court in Bharat Commerce Industries Ltd. Vs. CIT (1998) 230 ITR 733 wherein the deduction of interest on late payment of income-tax was disallowed. The Hon’ble ITAT observed that the principle laid down in Lachmandas Mathura Vs. CIT reported in 254 ITR 799 can be applied to the interest expenses levied on account of delayed payment of TDS as the assessee deducts TDS out of the specified expenses and the TDS so deducted represents the amount of income- tax of the parties on whose behalf it is deducted. Hence the TDS does not represent the income-tax of the assessee but it is the tax of the other parties. Therefore any delay in the payment of TDS by the assessee cannot be linked to the income tax of the assessee and consequently the principles laid down by the Hon'ble Apex Court in the case of Bharat Commerce Industries Ltd. Vs. CIT (1998) reported in 230 ITR 733 cannot be applied. At this stage, we take note of the following decisions which hold a totally opposite view: (i) CIT Vs. Chennai Properties and Investment Ltd. (1999) 239 ITR 435 (Madras High Court): The Hon’ble High Court held thus: “8. The liability for deduction of tax arises by reason of the provisions of the Act. Under Section 201, the consequence of failure to comply with the same renders that person liable to be deemed as an assessee in default with all the consequences attached thereto. The liability to pay interest on the amount not deducted or deducted but not paid is directly related to the failure to deduct or remit the amount. The amount required to be deducted is the amount payable as income-tax. The interest paid for the period of delay takes colour from the nature of the principal amount required to be paid, but not paid within time. The principal amount here would be the income-tax and the interest payable for delayed payment is the consequence of failure to pay the tax and in the circumstances, in the nature of a penalty though not described as such in Sub-section (1A) of Section 201 of the Act. The fact that the income-tax required to be remitted was not income-tax payable by the assessee, but is ultimately for the benefit of and to the credit of the recipient of the income on whose behalf that tax is payable does not in any manner alter the character of the payment, namely, its character as income tax.

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ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. 9. Learned counsel for the Revenue submitted placing strong reliance on the recent decision of the Supreme Court in the case of Bharat Commerce and Industries Ltd. v. CIT[1998] 230 ITR 733, that payments required to be made by way of income-tax'under the Income-tax Act are not deductible as expenditure and the further amounts which a person may be required to pay by a reason of failure to comply with the provisions requiring the payments of the tax are also amounts which cannot be regarded as deductible expenditure under Section 37 of the Act. 10. In that case the question considered was as to whether interest paid on delayed payment of income-tax and surtax by way of instalments, on income voluntarily disclosed under the Voluntary Disclosure of Income and Wealth Act, 1976, is not in any way an expense incurred wholly or exclusively for the purpose of the assessee's business. The court held that (headnote) : "When interest is paid for committing a default in respect of the statutory liability to pay advance tax, the amount paid and the expenditure incurred in that connection is not in any way connected with preserving or promoting the business of the assessee. . . The liability in the case of payment of income-tax and interest for delayed payment of income- tax or advance tax arises on the computation of the profits and gains of business". The court further held that (headnote): "Under the Income-tax Act, the payment of such interest is inextricably connected with the assessee's tax liability. If income-tax itself is not a permissible deduction under Section 37, any interest payable for default committed by the assessee in discharging his statutory obligation under the Income-tax Act, which is calculated with reference to the tax on income, cannot be allowed as deduction". 11. Before holding so, the court considered the decision of the apex court in the case of Mahalakshmi Sugar Mills Co. v. CIT [1980] 123 ITR 429, a decision rendered by three learned judges of the apex court and held that the ratio of that judgment had no application to the case before it in the case of Bharat Commerce and Industries Ltd. v. CIT [1998] 230 ITR 733. The assessee in the case of Mahalakskmi Sugar Mills Co. had claimed deduction of interest paid on arrears of sugarcane cess. The payment of sugarcane cess, as it was observed by the court in the case of Bharat Commerce and Industries, is very much a part of the assessee's business expense and any interest on arrears of cess would, therefore, take colour from

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ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. the cess which is payable, that it was an indirect tax which had to be paid in the course of carrying on business. 14. As already noticed the payment of interest takes colour from the nature of the levy with reference to which such interest is paid and the tax required to be but not paid in time, which rendered the assessee liable for payment of interest was in the nature of a direct tax and similar to the income-tax payable under the Income-tax Act. The interest paid under Section 201(1A) of the Act, therefore, would not assume the character of business expenditure and cannot be regarded as a compensatory payment as contended by learned counsel for the assessee.” (ii) Ferro Alloys Corporation Ltd. Vs. CIT(1992) 196 ITR 406 (Bombay High Court): The Hon’ble Court held thus: “3. The point stands concluded against the assessee by the consistent view of this court right from Aruna Mills Ltd. [1957] 31 ITR 153 to CIT v. Ghatkopar Estate and Finance Corporation (P) Ltd. [1989] 177 ITR 222 (Bom). The Delhi High Court in the case of Bharat Commerce Industries Ltd. v. CIT [1989] 180 ITR 37, have also taken the same view. Very fairly, Shri Bhide, learned counsel for the assessee, informs us that there is no decision which has taken a contrary view.” 20. Thus we observe that the decision in M/s Rungta Mines Ltd. (Supra) relied upon by Ld. AR does not find support from the decisions of Hon’ble Madras High Court and Bombay High Court. We are consciously aware that the decisions of Hon'ble High Courts would prevail over the decision of Hon'ble ITAT, Kolkata. Therefore, respectfully following the decisions of Hon'ble High Courts, we are inclined to hold that the interest on late payment of TDS is not allowable as business deduction and the lower authorities have rightly disallowed the same. Therefore the Ground No. 4 is hereby dismissed”. 9. Hence, the impugned order of the CIT(A) qua this issue is set aside and the order of the AO is restored.

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ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. 10. Ground no.3 is regarding adhoc disallowance of traveling expenses which was deleted by the CIT(A). Ld. DR has submitted that the assessee has claimed traveling expenses of Rs.2,53,81,491/-. The AO on examination of the ledger account and invoice furnished by the assessee found that the assessee failed to substantiate the fact that expenditure under the head of traveling expenses are wholly and exclusively incurred for the purpose of the business. Thus, the AO has made disallowance of 5% of the traveling expenses on the ground of personal in nature. He has relied upon the order of the AO.

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ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. 12. We have considered rival submissions as well as relevant material on record. At the outset, we note that the AO has made an adhoc disallowance of 5% of the traveling expenses in para 3.4.4 as under:

“3.4.4 In connection with the Travelling expenses of Rs. 2,53,81,491/-, the assessee furnished the copy of ledger account, copy of invoices of these expenses. Further, on complete analysis of ledger account and invoices furnished by the assessee, it is seen that the assessee failed to substantiate the fact that the expenditure incurred by the assessee under the headTravelling expense is wholly and exclusively incurred for the purpose of business. The element of personal nature in these expenses cannot be ruled out in the absence of complete documentary evidences which can prove that the above expenses were incurred wholly and exclusively for the purpose of business. In view of the above facts, the 5% of the said travelling expenses amounting to Rs. 12,69,075/- [ 0.05 deg * 2, 53, 81, 4911 are disallowed being personal in nature and added back to the total income of the assessee. The penalty proceeding u/s 270A of the Act is also initiated for the under-reporting of income.”

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ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. business trip does not arise. In absence of any such defect or incident brought on record by the AO an adhoc disallowance is not permissible. The CIT(A) has considered this issue in para 7.7 to 7.9 as under:

“7.7. Finding on GOA No. 5 a) The undersigned has gone through the assessment order and written submission filed by Appellant. This Ground of Appeal is discussed and decided in subsequent paras of this order. b) AO noted that the Appellant has debited the following expenses to P&L account.

1 Traveling Expenses Rs.22,53,81,491/-

AO noted that element of personal use cannot be ruled out. AO made adhoc disallowance @5% of these expenses to the tune of Rs.12,69,075/-(5% of Rs.2,53,81,491/-) due to following reasons: • Personal element of expenses cannot be ruled out. • These expenses are not wholly and exclusively for the purpose of business. Thus, an addition of Rs.12,69,075/- was made to Total Income of Appellant. c) The above facts show that AO has made the adhoc disallowance out of expenses based on general observation without pointing out even a single defect in the bills/vouchers or the books of accounts produced before the AO. The books of accounts of Appellant are Audited and Tax Audit Report was prepared and produced before the AO. Auditor has not even given a single adverse remark/comment on the books of accounts maintained or the bills /

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ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. vouchers maintained in support of Travelling expenses debited in P&L a/c. No reason has been given by the AO for estimating the adhoc disallowance @ 5% of expenses. No evidences has been brought out in support of disallowance of expenses made by the AO. NO rationale has been given by the AO for making adhoc disallowance @ 5% nor has the AO given a specific finding that expenses debited are not genuine. AO has no power to estimate the reasonableness of expenses debited and he cannot Sit on the armchair of businessman to decide the reasonableness of expenditure debited. It has been held in a number of judgments that AO cannot force a businessman to maximize his profits. Expenditure debited has to be decided from the view point of a prudent businessman and not from the view point of Revenue/AO. The AO cannot merely act on the basis of presumption, guesswork or surmise to make adhoc disallowance of expenses. Adhoc disallowance of expenses can be made by the AO based on specific enquiry and providing evidence as to how these expenses are not wholly and exclusively for the purpose of Appellants business. Adhoc disallowance of expenses cannot be made by the AO based on guesswork. Such an addition based on pure guess work is not sustainable in the eyes of law. Another point to be noted is that similar expenses were debited consistently by the Appellant in earlier AY's and subsequent AY's. The AO cannot make adhoc disallowance of expenses based on presumption or based on outlandish consideration of plugging possible leakage of Revenue. The books of accounts and bills/ vouchers were produced before the AO along with ledger of expenses. The AO cannot make adhoc disallowance merely on basis of conjecture and without any tangible reasons. 7.8 The below mentioned judicial pronouncements support the contention of appellant that adhoc disallowance @ 5% out of Travelling expenses made by the AO is not sustainable in the eyes of law. a) The Hon'ble ITAT, Lucknow Bench in the case of M/s Vijay Infrastructure Ltd. Vs. ACIT held that on the basis of general observations without pointing out even a single specific defect in the vouchers or books of accounts, the ad-hoc disallowances made by the AO is not justifiable. This decision is squarely applicable to the Page 13 of 17

ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. present case as the AO has made disallowance based on general observation without pointing out even a single specific defect in the vouchers/bills/books of accounts. b) Recently, the Hon'ble High Court in case of PCIT-2, Lucknow vs. Metal Seam Company (P) Ltd. vide order dated 05.09.2017 deleted the ad-hoc disallowances made as a result of general observation. The Hon'ble ITAT, Lucknow in DCIT vs. U.P. Drug and Pharmaceuticals vide order dated 25.04.2013 and Super Tannery Ltd. vs. ACIT vide order dated 16.04.2015 deleted the ad-hoc disallowances made by the AO without specifying defects in bills/vouchers. c) Reliance is placed on judgments of Hon'ble ITAT, Lucknow Bench in Kanha Vanaspati vs. JCIT, Lucknow and UP Corporation Federation vs. Department of Income Tax in ITA No. 33/LKW/2011 dated 22.03.2011. It was held that ad-hoc disallowances without specifying defects in bills/vouchers cannot be upheld. d) The Hon'ble ITAT, Lko in Rakesh Kr. Agarwal vs. ACIT Kanpur in ITA No. 41/LKW/2017 for AY 2012-13 vide order dated 19.02.2018 it was held that AO has made ad-hoc disallowance without pointing any specific defect in vouchers or without specifying instance. It was held that AO merely acted on presumption and ad-hoc disallowance was deleted. e) The Hon'ble ITAT, Lucknow in Mukesh Kumar Mahawar vs. ITO Sultanpur in ITA No. 615/LKW/2014 for AY 2009-10 vide order dated 02.09.2015 held that AO cannot make ad-hoc disallowance based on general observation. f) The Hon'ble ITAT, Lucknow in Premier Car Sales US ACIT in ITA No. 449 and 450/LKW/2018 for AY 2012-13 and AY 2013-14 vide order dated 22.04.2019 held that ad-hoc disallowance without pin pointing any error in books of accounts is not justified as the AO has not pointed any vouchers or expenditure on which he had any doubt. g) The Hon'ble ITAT Lucknow in M/s Bajaj Auto Centre vs. ITO in ITA No. 722/LKW/2017 for AY 2014-15 vide order dated 19.09.2018 held that ad-hoc disallowance of expenses cannot be made without any specific enquiry by the AO or without providing any evidence as to how these expenses are for personal use. The AO cannot make ad-hoc disallowance of guess work. Reliance was placed on decision Page 14 of 17

ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. of Hon'ble Apex Court in JJ Enterprises vs. CIT 254 ITR 216 (SC) where it was held that addition made on basis of pure guess work is not sustainable. Reliance was also placed on decisions of Hon'ble ITAT, Lucknow Bench in cases of Kuldeep S Sethi vs. ITO in ITA No. 1446/Alld/1997 and Mukesh Kumar Mahawar vs. ITO Sitapur in ITA No. 615/LKW/2014. h) The Hon'ble Supreme Court in the case of Pr. CIT vs. R. G. Buildwell Engineers Ltd. [2018] 99 taxmann.com 284 (SC) held that " Section 37(1) of the IT Act, 1961 Business expenditure allowability of [onus to prove]. In course of assessment, assessee claimed deduction of expenses towards bricks, machinery repair, cartage, labour expenses etc. Assessing Officer disallowed 10 percent of said expenses on ground that insufficient evidence was adduced. Tribunal set- aside said ad-hoc disallowance on two grounds, firstly assessee's books of account have not rejected and secondly, such expenses were allowed consistently in past in scrutiny assessment. High Court upheld order passed by Tribunal- Whether SLP filed against view taken by High Court to be dismissed. Held, yeas [para 2] in favour of assessee". i) Hon'ble ITAT Delhi in DCIT vs Vasudeva Jewellers in ITA No 4246- 4248/Dec/2014 dated 15.03.2019. It was held that AO has made addition merely on basis of a doubt. Further, in absence of rejection of books of accounts, the ad-hoc addition to GP rate cannot be sustained. j) Hon'ble ITAT Admedabad Bench in Hakim Chand D & sons vs ACIT in ITA No. 3081/Ahd/2014 dated 29.07.2016. It was held that any disallowance should be specific and properly quantified. We are unable to sustain this presumptive and ad-hoc addition based on outlandish consideration of plugging possible leakage on revenue, consequently same is deleted. k) Hon'ble ITAT Delhi in Prayag Polytech (P) Ltd Vs Additional CIT in ITA No. 6625/Dec/2019 dated 07.11.2019. It was held that addition is based on assumption that decrease in sales amount to decrease in expenses. The ledger account were produced before the AO. Merely on basis of conjecture the ad-hoc addition cannot be made without any tangible reason to do so. 1) Hon'ble Punjab and Haryana High Court in CIT vs SSP(P) Ltd (2011) 202 Taxmann 0386. It was held that Audited books with Page 15 of 17

ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. vouchers were produced by assessee and AO failed to show that expenses are not for business purposes. Adhoc disallowance of expenses was made without any basis, without any material which would justify the amount being spent on personal use by Directors. and same is dismissed COME TAX There is is no merit in appeal DEPARTME m) Hon'ble ITAT Delhi in Devika Bhapat vs DCIT in ITA No.3384/Del/2014 dated 03.01.2018. We hold that estimated addition made without any basis cannot be sustained. Moreover, disallowance is not justified merely on ground that similar disallowance was made in previous year. We hold that addition is liable to be deleted. n) Reliance is also placed on following judgments wherein it was held that adhoc additions are not permissible. a. JJ Entreprises vs CIT(2002) 254 ITR 216 (SC) b. LalchandBhapatAmbica Ram vs CIT (1959) 37 ITR 288(SC) c. CIT vs Shehnaz Hussain (2004) 267 ITR 572 (Del) d. Vichitra Constructions (P) Ltd Vs ACIT in ITA N_{0} 5047/Del/2015, dated 27.05.2019 (Hon'ble Delhi ITAT) 7.9 In view of the above facts and discussion and respectfully following the judgments outlined above the ad-hoc disallowance made by the AO out of Travelling expenses is held to be made on presumption only. The AO has made this disallowance based on general observation without pointing out any specific evidences/submissions produced before him. The AO has made ad- hoc disallowance of Rs. 12,69,075/- for the reason that Personal element of expenses cannot be ruled out. There is no specific defect pointed out by the AO in the vouchers/bills produced or evidences produced. There is no finding of the AO that these expenses are not genuine. He has made the disallowance based on general observation which is not sustainable. In view of the above facts and respectfully following the judgements outlined above the adhoc disallowance of expenses made by the AO of Rs. 12,69,075/- is not sustainable in the eyes of law and same is hereby deleted. In view of the above discussions, the allowed.”

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ITANo.189/Ind/2023 L.N. Malviya Infra Projects P. Ltd. 14. Thus, it is clear that the CIT(A) has deleted the disallowance made by the AO by considering the various binding legal precedence on this point. Accordingly in the facts and circumstances as discussed above we do not find any error or illegality in the impugned order of the CIT(A) qua this issue the same is upheld.

Order pronounced in the open court on 09 .01.2024.

Sd/- sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member

Indore,_ 09.01.2024 Patel/Sr. PS

Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

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