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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
This appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-1, Amritsar dated 24.01.2017 in respect of Assessment Year 2012-13.
The assessee has raised the following grounds of appeal:
“1. That the learned Commissioner of Income Tax (Appeal)-1, Amritsar has grossly erred in confirming the disallowance of Rs. 8,92,000/- made by the Assessing officer @20% of Salary and Wages claimed at Rs. 44,64,000/-.
2. That the learned Commissioner of Income Tax (Appeal)-l, Amritsar has grossly erred in confirming the disallowance of Rs. 3,54,815/- out of Rs. 7,09,630/- made by the Assessing officer under the head “Loading and Unloading”.
3. That the learned Commissioner of Income (Appeal)-1, Amritsar has grossly erred in confirming the disallowance of Rs. 3,35,654/- out of total disallowance of Rs. 5,35,654/- made by the Assessing officer under the head “Staff Welfare Expenses”.
That the learned Commissioner of Income Tax (Appeal)-l, Amritsar has grossly erred in confirming the disallowance of Rs. 1,35,040/- made by the Assessing officer @20% of Business Promotion expenses of Rs. 6,75,200/-.
5. That the learned Commissioner of Income Tax (Appeal)-l, Amritsar has grossly erred in confirming the disallowance of Rs. 1,23,504/- made by Assessing officer @20% of Car /Scooter/Depreciation Expenses on account of personal use of the assessee.
6. That the learned Commissioner of Income Tax (Appeal)-l, Amritsar has grossly erred in confirming the disallowance of Rs. 26,877/- made by Assessing officer @20% of Telephone Expenses on account of personal use of the assessee.
7. That the learned Commissioner of Income Tax (Appeal)-1, Amritsar has grossly erred in confirming the disallowance of Rs. 1,50,527/- made by Assessing officer @20% of Generator Expenses Claimed at Rs. 7,52,637/-.
That the learned Commissioner of Income Tax (Appeal)-l, Amritsar has dismissed the various grounds by passing an order without properly disposing off the arguments of the assessee.
Nitin Mahajan v. Asstt. CIT 9. That the disallowances confirmed by Worthy Commissioner of Income Tax (Appeal)-1, Amritsar are very high and excessive keeping in view, the legitimate needs of the business of the assessee, the past history and subsequent assessments u/s 143(3) of the assessee.”
Additional grounds of appeal:-
“1. That the ld. Assistant Commissioner of Income Tax, Circle 1, Amritsar has grossly erred in making Adhoc disallowance under various head of expenses without invoking the provisions of section 145(3) of the Income Tax Act and rejecting the Books of Accounts.”
4. At the out, the Ld. AR reiterated the submissions made before the ld. CIT(A) and contended that ad hoc disallowance is not justified when there is no defect pointed out in the books of accounts by the AO. He contended that the revenue authorities have grossly erred in making Adhoc disallowance under various head of expenses without invoking the provisions of section 145(3) of the Income Tax Act and rejecting the Books of Accounts. In support, he relies in the case of Ramjiwan Lal vs. CIT (All HC) 3 Taxmann0279.
Per contra, Ld. DR supported the order of authorities below.
Heard. We note that the AO has neither pointed out any specific discrepancies in respect of expenses charges claimed under various heads. The Ld. AR argued that the learned Commissioner of Income Tax
Nitin Mahajan v. Asstt. CIT (Appeal)-1, Amritsar has grossly erred in confirming the disallowance of Rs.
8,92,000/- made by the Assessing officer @20% of Salary and Wages claimed at Rs. 44,64,000/-; that he erred in confirming the disallowance of Rs. 3,54,815/- out of Rs. 7,09,630/- made by the Assessing officer under the head “Loading and Unloading”; that he further erred in confirming the disallowance of Rs. 3,35,654/- out of total disallowance of Rs. 5,35,654/- made by the Assessing officer under the head “Staff Welfare Expenses”; that the learned Commissioner of Income Tax (Appeal)-l, Amritsar has grossly erred in confirming the disallowance of Rs. 1,35,040/- made by the Assessing officer @20% of Business Promotion expenses of Rs. 6,75,200/; that the learned Commissioner of Income Tax (Appeal)-l, Amritsar has grossly erred in confirming the disallowance of Rs. 1,23,504/- made by Assessing officer @20% of Car /Scooter/Depreciation Expenses on account of personal use of the assesse; that the learned Commissioner of Income Tax (Appeal)-l, Amritsar has grossly erred in confirming the disallowance of Rs. 26,877/- made by Assessing officer @20% of Telephone Expenses on account of personal use of the assesse and that the learned Commissioner of Income Tax (Appeal)-1, Amritsar has grossly erred in confirming the disallowance of Rs. 1,50,527/- made by Assessing officer @20% of Generator Expenses Claimed at Rs. 7,52,637/-without
Nitin Mahajan v. Asstt. CIT pointing out specific defects in books and without rejecting books of account.
The ld. counsel has demonstrated the accounting of the said expenses before the authorities below and before us as well. Under the peculiar facts of the case, we find merit in the contention of the ld. AR on adhoc addition without invoking section 145(3) of the Act. Over and above, in the present case the AO has not pointed out any specific discrepancies in expenses claimed in the accounts of the assesse.
8. We find that Assessing Officer has made addition for the reason of self generated vouchers without specifying or indicating specific reason for the disallowances except that expenses are not completely verifiable as the assesse not produced material on the record, however, neither the AO nor CIT(A) did mention the faction of the material required to be produced by the assesse in respect of the disallowances made out of the expenses. As such, the observations made by the Assessing Officer are not sufficient to make adhoc addition to the income returned by the assessee. The Ld. CIT(A)’s observation are casual and perverse to the facts on record and contrary to hold that expenses are not verifiable. We are accordingly not inclined to agree with the finding of the Ld. CIT(A) on this issue of Nitin Mahajan v. Asstt. CIT disallowances of expenses in respect of adhoc additions under consideration. Hence, these grounds of the appeal are allowed.
In the above view, we hold that the finding of the ld. CIT(A), are perverse to the facts on record. Therefore, the adhoc disallowances of expenses in respect of expenses confirmed by the CIT(A) are deleted.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 20.12.2022