Maiden Marketing India Pvt. Ltd. Vs ITO (ITAT Mumbai)
ITAT Deletes Expense Disallowance Due to Absence of Defects in Supporting Evidence; ITAT Deletes ₹25.48 Lakh Additions Made on Ad Hoc Estimation of Business Expenses; Post-COVID Increase in Business Expenses Accepted by ITAT After Assessee Furnished Evidence; ITAT Rules Ad Hoc Expense Additions Unsustainable Without Finding Expenses Non-Genuine.
The appeal before the ITAT Mumbai arose from an order passed by the National Faceless Appeal Centre confirming disallowances made under Section 143(3) read with Section 144B of the Income Tax Act for Assessment Year 2023-24. The assessee, engaged in advertising agency services, had filed a return declaring a loss of ₹1.30 crore.
During scrutiny assessment, the Assessing Officer observed that although the assessee’s turnover had declined by 23.93%, several expenses had increased disproportionately. A show cause notice was issued seeking explanation for the increase in expenditure. The assessee submitted detailed explanations and supporting documents regarding staff welfare expenses, salaries and wages, legal and professional fees, and travelling expenses. It explained that increased costs were attributable to post-COVID business recovery, resumption of office operations, additional hiring, appointment of senior leadership personnel, increased audit and compliance requirements, participation in industry events, and expansion into a new business segment.
