HMD Mobile India Pvt. Limited Vs ACIT (ITAT Delhi)
ITAT Delhi held that disallowance of expenditure on adhoc basis without contrary material and without rejection of books of accounts not justifiable. Accordingly, disallowance made in the impugned order deleted.
Facts- Vide the present appeal, the appellant has mainly pressed disallowance of Rs. 44,25,00,000/- @25% various expenses. Notably, AO proposed the disallowance of Rs.44,25,00,000/- in the body of the draft assessment order. However, inadvertently, he mentioned the disallowance of Rs.3,00,00,000/- in the computation of income.
Conclusion- Held that the AO has not pointed out that any part of the expenditure in question is either found to be bogus or fictitious nor is found to have not been incurred by the assessee wholly and exclusively for business. There is no mention of rationale in arriving at the percentile of disallowance in the instant case. Further, there is no clear findings as to the number of bills and vouchers requiring denial of allowances with the amount of expenditure and nature of defects therein or therewith. The AO has not given any reasoning for enhancing the disallowance to Rs.44,25,00,000/- in the final assessment order than the proposed disallowance of Rs.3,00,00,000/- in the draft assessment order. Moreover, the Revenue has not brought out any deprecative material on the record to substantiate its conclusion as logical particularly when the AO has not rejected the books of the assessee. Thus, the AO’s action ((25% disallowance out of certain expenses aggregating to Rs.177.00 Crores), in view of the details mentioned above and in para 5.2 of this order is held unjustified. Consequentially, the disallowance of Rs.44,25,00,000/- made in the impugned order is hereby deleted.
