West Coast Fine Foods (India) Pvt Ltd Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that disallowance of expenses purely on adhoc basis without rejection of books of accounts or without pointing out any specific deficiencies is not justifiable and liable to be set aside. Accordingly, appeal of assessee allowed.
Facts- The assessee is engaged in the business of trading aquatic animal feed and related products, trading of farm raised shrimps which is purchased from various shrimp farmers and sold to processing house that freeze and export the shrimps. AO completed assessment u/s. 143(3) by making adhoc disallowances of Rs. 9,23,78,676/- at the rate of 5% of the total purchases of Rs.184,75,73,529/- and adhoc disallowances of Rs. 28,07,723/- that is 5% of business promotion expenses, cold storage expenses, office expenses, repairs and maintenance expenses and transportation expenses which totals up to Rs.5,61,54,456/-.
CIT(A) in the first appeal has reduced this ad hoc percentage of 5% to 2% and gave partial relief to the assessee. Being aggrieved, both revenue and assessee has preferred the present appeal.
Conclusion- In the present case, there is neither rejection of books of accounts maintained by the assessee, nor it is a case where any defect or specific deficiencies are pointed out by the authorities below in respect of the disallowances made. Submissions made by the assessee in the course of assessment proceedings are uncontroverted.
