Blanket adhoc disallowance requires transaction wise or head wise adverse findings; absent specificity, percentage cuts were deleted.

Adhoc percentage disallowances of brokerage and administrative expenses were set aside where the assessing authority failed to identify specific, material defects in books or particular transactions; the taxpayer produced audited accounts, sub-broker ledgers, agreements, TDS records, bank evidence and vouchers. The legal principle applied requires transaction wise or head wise adverse findings before imposing blanket disallowances; absent such specificity and given extensive corroborative documentation, the adhoc 10% deductions were deleted and the additions removed in favour of the assessee.

---

---

Issues: (i) Whether the adhoc disallowance of 10% of sub-brokerage expenses made by the Assessing Officer and confirmed by the Commissioner (Appeals) is sustainable. (ii) Whether the adhoc disallowance of 10% of total administrative expenses made by the Assessing Officer and confirmed by the Commissioner (Appeals) is sustainable.

Issue (i): Whether adhoc disallowance of 10% of sub-brokerage expenses is justified.

Analysis: The assessee furnished audited books, ledger details of sub-brokers with names, PANs and addresses, agreements with two sub-brokers, TDS evidence including Form 16A and form 26AS entries, bank statements and ledger copies showing payments. The Assessing Officer made general observations of exaggeration and noted absence of certain documentary proofs regarding coordination or intimations but failed to point to specific defects in the furnished documents or identify particular transactions as non-genuine. The Tribunal examined whether isolated minor discrepancies in some documents, in context of large-scale dealings with thousands of sellers and extensive supporting material, justified a blanket 10% adhoc disallowance without head-wise or transaction-specific findings.

Conclusion: The adhoc disallowance of 10% of sub-brokerage expenses is deleted and the issue is decided in favour of Assessee.

Issue (ii): Whether adhoc disallowance of 10% of total administrative expenses is justified.

Analysis: The assessee produced bills and vouchers for various heads of administrative expenses. The Assessing Officer noted some bills lacking GST numbers, one instance of duplicate bill numbering, and non-production of certain conveyance supporting documents, but did not point to material or pervasive defects in the overall documentary record or disaggregate findings head-wise. Given the scale of operations and the materials produced, the Tribunal assessed if such limited discrepancies warranted a uniform 10% deduction across all administrative expense heads without specific adverse findings.

Conclusion: The adhoc disallowance of 10% of administrative expenses is deleted and the issue is decided in favour of Assessee.

Final Conclusion: The impugned additions and adhoc disallowances made by the lower authorities are not sustainable for lack of specific, transaction-wise or head-wise findings and are therefore deleted; the appeal is allowed in favour of the assessee.

Ratio Decidendi: Blanket adhoc disallowances require specific, material and transaction- or head-wise infirmities to be identified by the assessing authority; absent such specific findings, extensive audited accounts and corroborative documentary evidence preclude general percentage-based disallowances.

---