9911796707
TMI Blog2021 (8) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... see, the AO could not have estimated the income by ad hoc disallowance as done in this case. CIT(A) as well as the AO has said there was certain deficiency in verifying the expenses for non-production of supporting vouchers etc. According to us, if there is deficiency in the vouchers or the bills supporting the incurrence of an expenditure, at the most, the expenses to the extent which are not supported by the vouchers could be regarded to be non-genuine and can be disallowed by the AO. Since the AO or the Ld. CIT(A) has not rejected the books of account of the assessee they could not have estimated (ad hoc disallowance of 10%) the expenses claimed to have been incurred by the assessee. Moreover, the AO has made the ad hoc disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , selling and administrative expenses on ad hoc basis. 4. The brief facts as noted by the AO is that pursuant to the revisional order of the Ld. CIT u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as the Act ) interdicting the original assessment order passed u/s. 143(3) of the Act on 27.03.2014, the AO in the second round of assessment noted that the assessee company had sales turnover of ₹ 71,79,26,0982/- and other income of ₹ 3,51,54,228/- in this assessment year 2011-12, whereas sales turnover and other income in the preceding assessment year 2010-11 was only to the tune of ₹ 51,76,81,388/- and other income was only ₹ 1,62,88,291/-. Therefore, according to the AO, there was 37% growth in sales t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought out as under: Particulars FY 2010-11 FY 2009-10 Increase in % Commission 2203534 479851 360% Delivery charges 22435777 7015761 220% Miscellaneous expenses 6865135 2854817 140% Total 31504446 10350429 204% Drawing attention to this chart, the AO observed that assessee could not explain the reason for sharp increase in the expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preceding assessment year 2010-11 there was substantial growth in sales turnover and income from other sources. However, according to the AO, the assessee has suffered losses which he asked the assessee to explain. Pursuant to the same, the assessee brought to the notice of the AO that the assessee had three units of which two are functioning from West Bengal and one from Raipur, Chhattisgarh. According to the assessee in the preceding AY 2010-11 the sales of its products took place in nearby areas of its units and, therefore, the transportation/delivery expenses incurred was less. However, in this relevant assessment year the assessee received sale orders from different parts of the country and, therefore, the goods had to be delivered at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. So, according to the Ld. AR since in this case, the AO has not rejected the books of the assessee, he could not have estimated the disallowance. Per contra, the Ld. DR supported the action of the Ld. CIT(A) and contended that assessee could not furnish evidence in support of the higher expenses claimed to have been incurred though there was substantial increase in the manufacture and sales turnover. Therefore, the AO rightly disallowed 10% of expenses since assessee might have incurred personal expenses and therefore, Ld. CIT(A) has confirmed the same after finding that assessee failed to produce evidence for incurring of expenses. So, she does not want us to interfere in the order of the Ld. CIT(A). In his rejoinder, the Ld. AR submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance as done in this case. The Ld. CIT(A) as well as the AO has said there was certain deficiency in verifying the expenses for non-production of supporting vouchers etc. According to us, if there is deficiency in the vouchers or the bills supporting the incurrence of an expenditure, at the most, the expenses to the extent which are not supported by the vouchers could be regarded to be non-genuine and can be disallowed by the AO. Therefore, in the facts and circumstances of this case since the AO or the Ld. CIT(A) has not rejected the books of account of the assessee they could not have estimated (ad hoc disallowance of 10%) the expenses claimed to have been incurred by the assessee. Moreover, the AO has made the ad hoc disallowance on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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