Bushra Saif Shaikh Vs DCIT (ITAT Ahmedabad)
The Ahmedabad ITAT allowed the assessee’s appeal for statistical purposes by setting aside the impugned order and restoring the matter to the Assessing Officer for fresh examination. The assessee, engaged in branding, marketing and advertising, had claimed business promotion expenses of ₹7,32,37,692. During scrutiny, the Assessing Officer rejected the books of account under Section 145(3), estimated profit by applying an 8% net profit rate, and noted that TDS evidence under Section 194C was furnished only for part of the expenditure, though no separate disallowance under Section 40(a)(ia) was made since the income had been estimated. The Tribunal observed that the Assessing Officer had examined only the business promotion expenses and had not identified any defect in the disclosed sales or purchases or any other discrepancy in the books. It held that inability to substantiate one expenditure claim did not justify rejection of the entire books of account and estimation of profit. As complete supporting evidence for the business promotion expenses had not been produced, the Tribunal restored the issue to the Assessing Officer to verify the books, vouchers, bills, agreements, confirmations and other relevant evidence, conduct necessary enquiries, and decide the matter afresh after providing adequate opportunity of hearing.
The Ahmedabad ITAT set aside the rejection of books of account and the estimation of income at 8% of turnover, holding that the Assessing Officer had erred in rejecting the entire books merely because the assessee could not fully substantiate business promotion expenses of ₹7.32 crore. The assessee, engaged in the business of branding, marketing and advertising, had challenged the rejection of books, estimation of profits, and adverse findings relating to business promotion and event expenses.
The Tribunal observed that the scrutiny was primarily focused on the claim of business promotion expenses. While the AO expressed doubts regarding supporting documents, confirmations and TDS compliance relating to those expenses, no defects whatsoever were pointed out in the sales of ₹33.60 crore, purchases of ₹25.30 crore or any other part of the books of account. It held that if the assessee failed to substantiate a particular expenditure, the AO ought to have confined the disallowance to that claim instead of rejecting the entire books and estimating profits.
At the same time, the Tribunal noted that the assessee had admittedly failed to furnish complete supporting evidence before the AO but submitted that the necessary bills, vouchers, confirmations and TDS records could now be produced. In the interest of justice, it restored the matter to the AO for fresh examination with a direction to afford one more opportunity to the assessee to produce all relevant books of account, vouchers, bills, agreements, confirmations and other supporting evidence relating to the business promotion expenses. The AO was directed to verify the material, conduct necessary enquiries and decide the issue afresh by passing a reasoned order after granting adequate opportunity of hearing. The appeal was accordingly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 12.02.2026 for the Assessment Year (A.Y.) 2023-24 in the proceeding u/s 143(3) r.w.s. 144B of the Income Tax Act [hereinafter referred as “the Act”].
