Case Law Details
DCIT Vs M/s Lexicon Auto Ltd. (ITAT KOLKATA)
AO cannot make disallowance on ad hoc basis without pointing out any defect / error in submission of assessee
It is settled law that the disallowance on account of ad hoc basis is not permissible under the provision of the Act. If the AO is not satisfied with the submission of assessee then he has to make the disallowance after making specific reference to such documents / vouchers. AO cannot just make the disallowance on ad hoc basis without pointing out any defect / error in the submission of assessee. In this connection, we also rely in the order of Co-ordinate Bench of ITAT Kolkata in the case of Animesh Sadhu Vs. ACIT in ITA 11 /Kol/20 13 Dated 12.11.2014. The relevant extract is reproduced below.:-
“8. We have considered the rival submissions. A perusal of the assessment order shows that the Assessing Officer has disallowed 20% of the expenses on estimate basis on the ground that no independent verification to be made to find out the authenticity of the expenses. Ld. CIT(Appeals) has reduced the same on the same ground. However, we are of the view that no estimated disallowance scan be made for inability to make independent verification. If any specific expenditure is unverifiable or is un-vouched, then such specific expenditure is disallowable. Her no such specific identification has been done. In these circumstances, we are of the view that the estimated disallowance as confirmed by the ld. CIT(Appeals) is unsustainable. Consequently the same stands deleted. In the result, Grounds No. 2 & 3 of the assessee’s appeal stand allowed.”
It was also observed that the entire amount of repairing charges was deducted by TML and the complete addresses of TML was in the possession of AO during the assessment proceedings, in fact, AO was not satisfied with the submission then he should have been sought clarification from TML by issuing notice u/s 133(6) of the Act but we note that AO failed to do so. Therefore we find no reason to interfere with the finding arrived by the Ld. CIT(A). Under the circumstances, this ground of Revenue’s appeal is dismissed.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
