2016 (1) TMI 1256 - AT - Income Tax

Disallowance of various expenses on adhoc basis - Held that - Assessment order was framed u/s 144 as the assessee did not appear before the Assessing Officer in spite of service of various notices as the assessee did not turn up to file the details asked by the Assessing Officer, even on granting final opportunity for 26/11/2010, the assessee merely filed certain documents which were not sufficient. Ultimately, ex-parte assessment was framed by the Assessing Officer. The assessee did not furnish the details of receipt of commission/brokerage, claim of expenses in his profit and loss account, necessary details with respect to sundry creditors etc. Even before this Tribunal, the registered AD letter, sent by the Registry was return un-served. It is noted that in the absence of necessary details ad-hoc disallowance was made by the Assessing Officer to the tune of broadly 10% of the total expenses/claim. It is noted that wherever, relief could have been given, the ld. Commissioner of Income Tax (Appeals) has already granted relief such as difference in total receipt as per TDS certificate and profit & loss account. Under the facts, to cut short the matter and to avoid litigation, by keeping in view, the principle of justice, the adhoc disallowance is restricted to 8% against 10% made by the ld. Assessing Officer, thus, the appeal of the assessee is partly allowed.

Summary

Issues:
1. Delay in filing appeal and condonation of delay.
2. Disallowance of expenses on adhoc basis.

Delay in filing appeal and condonation of delay:
The appellant was aggrieved by the order of the Ld. First Appellate Authority regarding the disallowance of expenses amounting to Rs. 2,21,186 on an adhoc basis. The appeal was filed 637 days beyond the limitation period, and no application for condonation of delay was submitted initially. However, an affidavit was later filed citing the death of the appellant's mother due to breast cancer as the reason for the delay. The Tribunal emphasized the need for a liberal approach in condoning delays caused by bona fide reasons, as substantial justice should prevail over technical considerations. Citing previous judgments, the Tribunal highlighted that sufficient cause for delay should be construed liberally to advance substantial justice. Considering the circumstances, the Tribunal condoned the delay and proceeded to address the appeal on its merits.

Disallowance of expenses on adhoc basis:
The Tribunal noted that the assessment order was framed under section 144 of the Income Tax Act due to the appellant's non-appearance before the Assessing Officer and failure to provide necessary details despite multiple notices. The appellant did not furnish details regarding commission, brokerage, expenses in the profit and loss account, and sundry creditors. An ex-parte assessment was conducted, leading to an adhoc disallowance of 10% of total expenses. The Tribunal acknowledged relief granted by the Commissioner of Income Tax (Appeals) in certain aspects but decided to restrict the adhoc disallowance to 8% instead of 10% made by the Assessing Officer. The appeal was partly allowed to provide justice and avoid prolonged litigation.

In conclusion, the Tribunal addressed the delay in filing the appeal, emphasizing the need for a liberal approach in condoning delays caused by genuine reasons. The Tribunal also reviewed the disallowance of expenses on an adhoc basis, considering the appellant's non-compliance with providing necessary details. By granting partial relief and restricting the adhoc disallowance, the Tribunal aimed to promote justice and efficiency in resolving the appeal.