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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
Per Dr. M. L. Meena, AM:
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:
2 ITA No.148/Asr/2017 Nitin Mahajan v. Asstt. CIT
“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/-.
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”.
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/-.
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.
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.
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.
3 ITA No.148/Asr/2017 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.”
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
4 ITA No.148/Asr/2017 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
5 ITA No.148/Asr/2017 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.
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
6 ITA No.148/Asr/2017 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
Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member
*GP/Sr./P.S.* Copy of the order forwarded to:
(1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.