INERNATIONAL BOOK HOUSE. P.LTD,MUMBAI vs. ITO WD 2(2)1, MUMBAI

O R D E R

PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A)- Mumbai, for the assessment year 2011-2012, in the matter of order passed under Section 143(3) of the I.T. Act. 2. In this appeal, assessee is aggrieved for an adhoc disallowance of expenses @5% incurred on car expenses, office expenses and travelling and conveyance. The AO observed that assessee did not produce all the bills / vouchers for supporting the claim of expenses and as some of the expenses were made in cash 5% of the same were worked out to be Rs. 5,48,189/-, accordingly the same was disallowed and added to the total income. 3. By the impugned order CIT(A) confirmed the action of the AO against which assessee in further appealed before us. 4. It was argued by the learned AR that no such adhoc allowance was made either in the earlier or subsequent years even while passing scrutiny assessment order under Order 143 (3) and further contended that there was no justification for making any adhoc disallowance. 5. On the other hand, learned DR relied on the order of the lower authorities. 6. We have considered rival contentions and carefully gone through the orders of the authorities below. From the record we found that the AO has made a disallowance on adhoc basis without pointing out as to which expenses were not verifiable or which was the expenses paid in cash over the prescribed limit. Keeping in view the totality and facts and circumstances of the case, vis-à-vis nature of assessee’s business and nature of expenses, we direct the AO to restrict the disallowance to the extent of 1%. We direct accordingly. 9. In the result, appeal of the assessee is allowed in part. Order pronounced in the open court on this 28/09/2016. (PAWAN SINGH) (R.C. SHARMA) न्यानयक सदस्य / JUDICIAL MEMBER