Adhoc disallowance of estimated expenses was justified in the absence of substantiation of expenses by assessee
ABCAUS Case Law Citation:
ABCAUS 3670 (2023) (02) ITAT
Important Case Laws relied upon by parties:
Deputy Commissioner of Income Tax vs. M/s Bhawani Portfolio Pvt. Ltd.
In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming adhoc disallowance at the rate of 25 per cent of miscellaneous expenses.
During the course of the assessment proceedings, the Assessing Officer (AO) observed that the assessee failed to give break-up of the miscellaneous expenses and also failed to substantiate these expenses.
As a result, the AO resorted to estimation and disallowed 25% of miscellaneous expenses.
The Tribunal opined that the AO was justified in making the adhoc disallowance of estimated expenses as held by the Hon’ble High Court.
However, the Tribunal observed that the disallowance made in the immediately preceding assessment year was about 4 % of the total miscellaneous expenses.
The Tribunal opined that for the year in question, the estimation made towards disallowance at the rate of 25% was highly excessive.
Accordingly, the Tribunal modified the estimation at 5% of the expenses incurred instead of 25%.
As a result the ground of appeal was allowed.
Download Full Judgment Click Here >>
In absence of mala fide intention bank should not be treated as assessee in default for late deduction and deposit…
Whether bank account was fraudulently open in the name of assessee is question of fact. High Court declined to entertain…
SBI Concurrent Auditor Empanelment of Chartered Accountant Firms for FY 2024-25 SBI Concurrent Auditor Empanelment of CA Firms for FY…
Change in the constitution of Appellate Authority for CAs CSs and Cost Accountants In 2015, the Ministry of Corporate Affairs…
Trade Tax Department was unjustified in retaining refund beyond stipulated period and adjusting it against default notices issued subsequently. In…
Notice issued u/s 143(2) prior to filing of return of income by the assessee was invalid. Before filing ITR provisions…