Agarwal Print Media Vs ITO (ITAT Delhi)
There is no dispute with regard to the fact that the three items of the expenses have been disallowed on estimate basis. The basis of such disallowances is said to be incompleteness of the bills and vouchers. However, the Assessing Officer has not pointed out as to which bills and vouchers were found to be wanting.
Learned counsel for the assessee has relied upon the decision of the Tribunal rendered in the case of Tripat Kaur Vs. ACIT in ITA no. 3244/Del/2012 dated 07.09.2012, wherein the Tribunal has held as under:
“6. We have heard the rival contentions in light of the material produced. We find that the addition on account of travelling expenses was totally based on surmises and conjectures. Assessing Officer has not brought on record any cogent basis as to why this expenditure was to be disallowed. It is not the case that expenditure was considered to be bogus or any shortcoming in the vouchers in this regard was observed by the Revenue. Under the circumstances, we hold that estimated addition without any basis cannot be sustained. In this regard, the case law relied upon by the Ld. Counsel of the assessee in the case of the ITO vs. Lake Palace Hotels and Motels (P) Ltd. 13 TTJ (JP) 216 is germane. In this case, it was held that the travelling expenses and salary expenses, addition made on estimate basis cannot be justified. Moreover, disallowance is also not justified merely on the ground that similar disallowance was made in the previous year. Accordingly, in the background of the aforesaid discussions and precedent, we hold that the addition on account of travelling expenses is liable to be deleted and hence, we set aside the ITA NO. 3244/Del/20i2 orders of the authorities below and decided the issue in favour of the assessee.”
The facts in the present case are similar. In the present case also the assessing authority has disallowed the expenses purely on the basis of estimation without specifying the instances where the vouchers were found to be incomplete or missing. Therefore, respectfully following the binding precedence, I direct the Assessing Officer to delete the addition.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 15.09.2021, pertaining to the assessment year 2017-18. The assessee has raised following grounds of appeal:
“1. That the Ld. CIT(A) has committed manifest error of law, facts and evidences by ignoring and not passing the speaking and reasoned order on the ground raised by appellant that impugned assessment order dated 23/12/2019 passed by the Learned Assessing Officer u/s 143(3) of the I.T. Act, 1961 is against the fact and law of the case, wholly illegal and without jurisdiction liable to be quashed in toto.
2. That the Ld. CIT(A) has committed manifest error of law, facts and evidences by ignoring and not passing the speaking and reasoned order on the ground raised by appellant that on the facts and circumstances of the case the impugned order dated 23/12/2019 has been passed by the Learned Assessing Officer in a very hurried manner without affording any reasonable opportunity to appellant and thereby principles of natural justice have thus been grossly violated in the present case.
3. That the Ld. CIT(A) has committed manifest error of law, facts and evidences by ignoring and not passing the speaking and reasoned order on the ground raised by appellant that on the facts and circumstances of the case the impugned assessment order passed by the Learned Assessing Officer dated 23/12/2019 by making addition of Rs. 3,00,000.00 under the head Salaries and Wages, Addition of Rs. 1,00,000.00 under the head Other Expenses and Addition of Rs. 1,00,000.00 under the head Job Work, thereby Total addition made of Rs. 5,00,000.00 in different heads, are based on conjecture, surmise and presumptions and not hard rock of facts and liable to be annulled in toto.
4. That the Ld. CIT(A) has committed manifest error of law, facts and evidences by ignoring and not passing the speaking and reasoned order on the ground raised by appellant that on the facts and circumstances of the case the impugned assessment order passed of Learned Assessing Officer is not in conformity with the spirit of law and the judgment of various Courts.
5. That the Ld. CIT(A) has committed manifest error of law in disposing the appeal in a very casual and summary manner without affording any opportunity of hearing to appellant before disposal of the appeal.
6. That the appellant craves leave for reserving the right to alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”
2. The only effective ground in this appeal is against sustaining the addition of Rs. 5 lakh made on account of ad hoc disallowance of expenditure pertaining to salary & wages; job work and other expenses.
3. The facts giving rise to the present appeal are that in this case assessee is a partnership firm and filed its return of income declaring income at Nil. The case was selected for scrutiny assessment and the assessment U/s 143(3) of the Income Tax Act, 1961, hereinafter referred to as the “Act” was framed vide order dted 23.12.2019. The Assessing Officer while framing the assessment made ad hoc disallowance of Rs. 3,00,000/- out of salary & wages expenses; Rs. 1,00,000/- out of other expenses; and Rs. 1,00,000/- out of job work. Hence, the Assessing Officer computed income in paras 7 & 8 of the assessment as under:
7. In view of above, the income of the assessee is thus computed as under:
