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TMI Blog2022 (1) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... ponding expenditure claims as well. Faced with this situation and in larger interest of justice, we are of the opinion that the Assessing Officer's action disallowing 20% of cost of material, 10% of construction and other expenses involving disallowance of 28,19,8.54 and 6 (in crores) deserved to be partly upheld to the extent of 50% thereof on lumpsum basis with a rider that the same shall not be treated as a precedent. We make it clear that we have partly reversed the CIT(A)'s findings under challenge and restore the three impugned disallowances to the extent of 50% of the corresponding sums added in the assessment order. Necessary computation shall follow as per law. - ITA No. 227/Hyd/2019 - - - Dated:- 14-12-2021 - A.M. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer at ₹ 6,00,00,000/-, when the assessee has failed to discharge it's onus as per section 37 of the I.T. Act by substantiating the expenditure claimed with relevant documentary evidences. 4. Whether on the facts and in the circumstances of the case, and in law, ld. CIT(A) was correct in restricting the disallowances made in the assessment order to considerably lower amounts without any justification when the assessee has failed to produce proper supporting bills/vouchers/documents. 5. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary . 3. Both the learned representatives next invited our attention to the CIT(A)'s detailed discussion granting pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments were made through cheques. In the circumstances, there is no reason why 20% of the expenditure debited is to be disallowed. Besides, the appellant submits that the disallowance made by the AO is too high . 4.2 I have considered the assessment order and submissions of the appellant. The AD has not specified/quantified the expenses not properly vouched. Disallowance on estimation has to be on some basis. Disallowance of 20% of expenses is on higher side. Considering the turnover, nature of business and the fact that major expenses are paid through cheques, a disallowance of 2% would meet the ends of justice. It is directed accordingly. The ground raised is partly allowed. 5. Ground no. 3 is against disallowance towards constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed. 6. Ground no. 4 is against ad hoc disallowance of ₹ 6,00,00,000/- under the head of Other expenses . The issue is discussed by the AO as under: During the financial year relevant to the Assessment year 2014-15, it is seen that the assessee has debited an amount of ₹ 66,42,64,152/- towards other expenses. While arriving at profit from business, the assessee had voluntarily disallowed ₹ 36,86,87,743/- towards provision for bad and doubtful debts and ₹ 7,34,12,607/- towards provision for expenses, out of the expenditure claimed under the head Other expenses . The same is evident from the computation of income furnished by the assessee. When compared to the financials of the preceding year with the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in making any disallowance from the said amount. 6.2 I have considered the assessment order and submissions of the appellant. The AO has not specified/quantified the expenses not properly vouched. Disallowance on estimation has to be on some basis. Disallowance of ₹ 6,00,00,000/- is on higher side. Considering the turnover, nature of business disallowance of other expenses is restricted to 2% of ₹ 22,21,63,802/- to meet the ends of justice. It is directed accordingly. The ground raised is partly allowed . 4. Learned CIT (DR) vehemently contended during the course of hearing that the Assessing Officer had rightly disallowed the assessee's corresponding expenditure claim(s) on estimation basis only despite the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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