TaxTMI 
TaxTMI 
2022 (4) TMI 288
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.... the Ld Assessing Officer [for short "Ld AO"] 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....
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....sition and the case laws relied upon by the appellant assessee as well the respondent revenue. 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 ....
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....mpugned addition, the assessee filed an appeal before the CIT(A), wherein the Ld CIT(A) categorically notified the disproportion increase in the turnover over 9 times (approx.) with that increase in freight expenses over 20 times and 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 accoun....
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....n in the present Income Tax Statute, nor it has been brought to our notice by either parties to dispute, which subscribes vis-à-vis authorises the tax authorities to arrive at this logic of subscribing ad-hoc disallowances. Evidently, there has 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....
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....s test, duly supported by genuine and satisfactory proof [for short "GSP"], accompanied by reasonable explanation. Consequently, during course of assessment or reassessment proceedings, the burden of proof of deductibility of expense in relation to queried 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 on....