Wizcraft Entertainment Agency Private Limited Vs ITO (ITAT Mumbai)
The appeal by the Department and the cross-objection by the assessee were decided by the Income Tax Appellate Tribunal, Mumbai against an order dated 30.06.2025 passed by the National Faceless Appeal Centre for Assessment Year 2022-23.
In the Department’s appeal, the first issue concerned deletion of an addition of ₹15,77,52,570 arising from an ad hoc disallowance of expenses. The assessee, a resident corporate entity engaged in organizing entertainment events, concerts, and theatrical productions, had filed its return declaring income of ₹23,04,51,260. During scrutiny, the Assessing Officer compared expenses claimed in the relevant year with those of the subsequent year and observed that certain heads—advertisement, professional fees, media purchase, leave travel allowance, and bonus—were higher in the impugned year. Although the assessee furnished explanations, the Assessing Officer disallowed 10% of these expenses on an ad hoc basis, resulting in the impugned addition.
The first appellate authority deleted the disallowance, holding that the ad hoc approach lacked basis. Before the Tribunal, the Department argued that the assessee failed to justify higher expenses and that deletion relied on additional evidence in violation of Rule 46A. The assessee contended that supporting evidence had been furnished and that the disallowance was selective and without identifying deficiencies.
