2024 (11) TMI 317

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.... 2. Brief facts of the case are, assessee filed its return of income for Assessment Year 2018-19 declaring total income at Rs. Nil. The case was selected for complete scrutiny under e-assessment scheme 2019 to verify the issue of business loss and business expenses. Accordingly, notices u/s 143 (2) and 142(1) of the Income-tax Act, 1961 (for short 'the Act') were issued and served on the assessee. During assessment proceedings, the Assessing Officer observed from the profit & loss account of the assessee that assessee has claimed personal expenses of Rs. 2,72,21,201/- in connection with business. He observed that assessee had not produced any relevant details in support of the personal expenses incurred by it. In absence of the above deta....

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....dents, and deserves to be quashed and set aside. 2. That, the Ld. CIT(Appeals) miserably failed to consider the fact that the expenses claimed by the Appellant under of head of "personnel expenses" as mentioned in the audited financials of Appellant are directly related to the business and hence cannot be disallowed U/S 37 of the Act. 3. That, the CIT (Appeals) erred in law by confirming an ad-hoc disallowance of personnel expenditure at the rate of 10% as estimated by the Ld. AO u/s 37 of the Act which is illegal, arbitrary, and hence liable to be deleted. 4. That, the Ld. CIT (Appeals) erred in law and on facts by confirming the disallowance of personnel expenditure without a query being raised about the same by....

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....mently argued that Assessing Officer has wrongly considered the 'personnel expenditure' as 'personal expenditure' and he prayed that the addition may be deleted. 6. On the other hand, ld. DR for the Revenue relied on the orders of the lower authorities. 7. Considered the rival submissions and material placed on record. We observed that the Assessing Officer noticed from the Profit and Loss account statement that assessee has claimed expenditure of personnel expenditure, however he has mistook that assessee has claimed personal expenditure without providing any documentary evidences. Accordingly, he made ad hoc disallowance @ 10% of the personnel expenditure. After considering the facts on record, we observed that the addition made by ....