The Lucknow Bench of Income Tax Appellate Tribunal (ITAT) has reduced the disallowance as the quantum of disallowance made by the Assessing Officer (AO) was excessive and unreasonably high.
In this case the assessment order dated 10/12/2018 was passed under Section 143(3) of the Income Tax Act, 1961 whereby the assessee’s, Metal Cans and Closures Pvt Ltd total income was assessed at Rs.6,28,91,316/- as against returned income of Rs.6,25,16,280/-.
In the aforesaid assessment order, an addition of Rs.3,75,036/- was made on account of disallowance out of expenses under the head’s conveyance, loading & unloading expenses, misc. expenses, repair & maintenance, telephone expenses, travelling expenses and vehicle running & maintenance expenses.
Rakesh Garg, on behalf of the assessee contended that the addition had been made on ad hoc basis without pointing out any specific item of disallowance or discrepancy, that no defect or discrepancy had been pointed out by the Assessing Officer, that the accounts had been tax audited, that the payments were vouched, and that the aforesaid addition on account of disallowance out of various expenses were made on ad hoc basis should be deleted.
He further submitted that it was well settled that the assessee was required to adduce necessary evidence not only to the effect that the expenses claimed were business expenses, but also that the expenses were indeed incurred in the first place.
Sanjeev Krishna Sharma, on behalf of the revenue, relied on the orders of the Assessing Officer and the Commissioner of Income Tax Appeals (CIT(A)) and supported the same.
The two-member Bench of Sudhanshu Srivastava, (Judicial Member) and Anadee Nath Misshra, (Accountant Member) partly allowed the appeal filed by the assessee holding that some disallowance out of assessee’s claim of expenses was justified. What remained to be seen was whether the quantum of disallowance made by the Assessing Officer was excessive or unreasonably high having regard to facts and circumstances of the present case it was noted that the Assessing Officer and CIT(A) had not pointed out any specific item of expenditure which were to be disallowed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
