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TMI Blog2022 (4) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... ] u/s 143(3) of the Income-tax Act, 1961 [for short "the Act"] for assessment year [for short "AY"] 2012-2013. 2. The only dispute under this appeal is that, it challenges the legality of ad-hoc disallowance carried out in the assessment without specific findings vis-à-vis reasoning. 3. Effectively there is a solitary ground assailed in the present appeal, however before advancing the matter on facts for adjudication, we reproduce ground/s challenged by the appellant as under; "1. Because, the Ld. Commissioner of Income Tax (Appeals) erred in law as well as on facts while confirming the ad hoc addition of Rs. 1,70,000/- made by Ld. Assessing Officer" "2. Because, the Ld. CIT(Appeals) has erred in overlooking and summarily rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. On a careful contemplation of the assessment and first appellate records, it revealed that; 6.1. The assessee has newly commenced trading business of Ferro Alloys & Iron Steel in the name & style of Shree Sadguru Steel Agency and for the purpose of this business, following mercantile system of accounting has maintained such books of accounts as required by section 44AA of the Act, and such books were subjected to tax audit u/s 44AB of the Act for the year under consideration. The tabulated comparative profitability and turnover position of the aforesaid business since its commencement as placed before the Ld AO showcased as; Sr AY Turnover Gross Profit Net Profit Amt Period Amt Ratio % Amt Ratio % 1 2012-2013 9,60,49,45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd reproducing the AO's contention, confirmed the impugned disallowance in wholesome. 6.5. During the course of hearing, the learned counsel for the assessee [for short "AR"] adverting the disallowance argued that, ignoring the unequal period of operation, Ld AO had in a most arbitrary manner disallowed portion of inward freight charges / expense applying ad-hoc percentile and which has been sustained by the Ld CIT(A), despite of the fact that, all expense including freight debited to profit & loss account [for short "P&L"] and claimed in the return of income has all the valid characteristic laid in section 37(1) of the Act and hence disallowance were unwarranted. 6.6. It is further stated that, the solitary basis for making arbitrary a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been no clear findings as to number of vouchers requiring denial of allowances with the amount of expenditure and nature of defects therein or therewith, moreover department could not bring out any deprecative material on record to substantiate its conclusion as logical. We couldn't also see remotely there is any mention of rationale in arriving at and applying the percentile of disallowance in the present case, consequently we find substantial force in the claim of the assessee that devoid of any specific infirmity qua the assessee's claim for deduction of the aforementioned expenditure by the lower tax authorities, and for the reason, the ad-hoc disallowance carried out in a most arbitrary manner could by no means be held to be justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied transaction stands discharged upon the submission of GSP accompanied by relevant voucher and reasonable explanation when called for. 11. We can find the statutory force and support in aforestated view from the ration laid down by Hon'ble Apex Court in CIT Vs Indian Molasses reported at 78 ITR 474, CIT Vs Calcutta Agency reported at 19 ITR 191 (SC) and I. H. Sugar Factory & oil Mils Pvt Ltd Vs CIT reported at 125 ITR, 293 (SC), wherein the Hon'ble Lordship have held that, the primary onus of providing necessary facts and produce evidence in substantiating the claim in order to avail the deduction under Section 37(1) is on the assessee. 12. Once the assessee is absolved in aforesaid terms, the onus is then shifted on revenue to prove ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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