Delhi Gujarat Fleet Carriers Private Limited Vs DCIT (ITAT Delhi)
Ad-hoc Disallowance Restricted to 8% – Estimation Without Rejecting Books Curtailed Substantially
The Delhi ITAT partly allowed the assessee’s appeal and substantially reduced the ad-hoc disallowance made in respect of various business expenses for AY 2021-22. The Tribunal noted that the Assessing Officer had disallowed 100% of four categories of expenses—miscellaneous/general expenses, business promotion, repair & maintenance, and vehicle running expenses—aggregating to ₹1.62 crore, merely on the ground of alleged deficiencies in supporting details, without rejecting the books of account.
The CIT(A) had accepted the assessee’s contention in principle and reduced the disallowance to 25%, but the Tribunal held that even this estimation was excessive and without proper basis. Taking note of the assessee’s transport business, past assessment history where similar expenses were largely allowed, and the fact that the books were never rejected, the Tribunal ruled that only a reasonable estimation could be made.
Accordingly, the Tribunal restricted the disallowance to 8% of the disputed expenses instead of 25%, directing the AO to recompute the income on that basis. The appeal was thus partly allowed with substantial relief to the assessee.
FULL TEXT OF THE ORDER OF ITAT DELHI
