Tribunal allows assessee's appeal, deletes Rs. 9,54,286 disallowance under Income Tax Act

The Tribunal ruled in favor of the assessee, deleting the disallowance of Rs. 9,54,286 under section 37(1) of the Income Tax Act, 1961 for the assessment year 2012-13. The Tribunal found the assessing officer's additional disallowance unjustified due to lack of reasoning, leading to the allowance of the assessee's appeal and removal of the disputed amount.

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Issues: Disallowance of expenses under section 37(1) of the Income Tax Act, 1961 for assessment year 2012-13.

Analysis:
1. The dispute revolves around the disallowance of Rs. 9,54,286 under section 37(1) of the Income Tax Act, 1961, concerning expenses incurred on a motor car, depreciation on a motor car, and business promotion.

2. The assessing officer observed a 10% disallowance by the assessee on these expenses due to a personal element involved. However, without providing any specific reasons, the officer further disallowed another 10% on the grounds that the initial disallowance was on the lower side.

3. The Tribunal noted that the assessing officer failed to justify why the initial 10% disallowance by the assessee was considered inadequate. Consequently, the Tribunal held the additional disallowance made by the assessing officer as unsustainable and deleted the disallowance of Rs. 9,54,286.

4. The Tribunal's decision was based on the lack of reasoning provided by the assessing officer for the additional disallowance, ultimately leading to the allowance of the assessee's appeal and the deletion of the disputed disallowance amount.

5. Therefore, the Tribunal allowed the assessee's appeal, ruling in favor of the assessee and deleting the disallowance of Rs. 9,54,286. The order was pronounced in open court on 26.12.2018.

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