ITAT Mumbai: Ad-hoc Disallowance U/s 37(1) Unsustainable Without Specific Defects – Revenue Appeal Dismissed

DCIT Vs NDX P2P Pvt. Ltd. (ITAT Mumbai) In the ITAT Mumbai dismissed the Revenue’s appeal and upheld deletion of an ad-hoc disallowance made by the AO on “other expenses”, holding that estimated disallowance cannot be sustained where books are audited and no specific defects are identified. The assessee, operating a P2P lending platform (“Liquiloans”), claimed other expenses of ₹44.14 crore. The AO disallowed 20% (₹8.82 crore) u/s 37(1) alleging lack of proper substantiation. Before CIT(A), the assessee furnished detailed ledger accounts, party-wise break-ups, invoices, and TDS d...