Shashi Kant Loyalka Vs ACIT (ITAT Delhi)
ITAT Delhi held that disallowance on ad-hoc basis without any specific allegation merely on the basis of general remarks and observations is unsustainable as assessee has successfully demonstrated that the expense has been incurred wholly and exclusively for the purpose of business.
Facts- The assessee alleges that CIT(A) has erred in law in making adhoc disallowances under salary, conveyance and car running expenses, general expenses and staff welfare and that too without appreciating/ considering the submission of the assessee and in violation of the principles of natural justice.
Conclusion- In the present case the assessee has successfully demonstrated that his turnover during relevant financial period was Rs. 111,31,85,086/- and the quantum of disallowance is very small in comparison to the turnover. Therefore, when the assessee has successfully demonstrated that the expense has been incurred wholly and exclusively for the purpose of business of assessee and the Assessing Officer has not point out any specific defect or deficiency therein then the disallowance cannot be made on ad-hoc basis without any specific allegation merely on the basis of general remarks and observations. Therefore, respectfully following the order of coordinate Bench of Raipur in the case of Shri Kailas Chand Agarwal the grounds of assessee are allowed and AO is directed to delete the entire disallowances.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the assessee is directed against the order dated 24.06.2019 of the Ld. CIT(A)-12, New Delhi relating to Assessment Year 2016-17.
2. The grounds of appeal raised by the assessee read as under:
1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making adhoc disallowances under the following heads and that too without appreciating/considering the submissions of the assessee and in violation of principles of natural justice.
