2018 (3) TMI 1898 - AT - Income Tax

Disallowance of expenses - assessee had claimed various expenses towards which he could not produce vouchers or furnish details - AO disallowed 20% of business promotion expenses, 15% of car maintenance expenses, 20% on weighing and unloading charges and 10% on transport charges - CIT(A) granted partial relief to the assessee based on estimate basis - HELD THAT - The entire addition made by the Ld.AO and the amount sustained by the Ld.CIT(A) is only on estimate basis. However considering the prayer of the Ld.AR that the assessee had genuinely incurred the expenditure claimed by him, we further grant relief of ₹ 6,79,060/- to the assessee and thereby we sustain the addition of ₹ 25,00,000/- - Appeal of the assessee is partly allowed

Summary

Issues: Partial disallowance of expenses by Ld.CIT(A) in assessment year 2014-15.

Analysis:
1. Nature of Disallowances: The assessee's appeal was against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2014-15. The primary contention was that the Ld.CIT(A) erred in partially disallowing various expenses claimed by the assessee. The disallowed amounts for different expense categories were specified, such as business promotion, telephone, traveling, car petrol charges, petrol expenses, vehicle maintenance, weighing & unloading charges, and transport charges.

2. Assessment Process: The assessee, an individual and proprietor of a trading business, filed the income tax return electronically for the said assessment year. After scrutiny under CASS, the Assessing Officer (AO) disallowed certain expenses due to lack of vouchers and details provided by the assessee. Notably, the AO disallowed a percentage of expenses like business promotion, car maintenance, weighing & unloading charges, and transport charges based on estimations, considering personal use of car petrol expenses.

3. Ld.CIT(A) Decision: The Ld.CIT(A) granted partial relief to the assessee on an estimate basis, reducing the total disallowed amount from &8377; 32,23,474/- to &8377; 31,79,016/-. However, acknowledging the genuine incurring of expenses by the assessee, the Ld.CIT(A) further allowed relief of &8377; 6,79,060/-. Consequently, the final disallowed amount was set at &8377; 25,00,000/-. The Ld.CIT(A) emphasized that the disallowances were made on an estimate basis, considering the plea of the assessee regarding the genuineness of the claimed expenditures.

4. Outcome: The Appellate Tribunal partially allowed the assessee's appeal, taking into account the adjustments made by the Ld.CIT(A) and further relief granted. The final decision was pronounced on 22nd March 2018 in Chennai, upholding the disallowed amount at &8377; 25,00,000/-. The Tribunal's decision highlighted the assessment of expenses and the considerations for partial relief granted to the assessee based on the genuine incurring of expenses.