2024 (5) TMI 1583

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....e only issue raised by the assessee is that the ld. CIT (A) erred in confirming the disallowance of Rs. 16,12,265.00 being 20% of Rs. 80,61,363.00 on an ad-hoc basis and in an arbitrary manner. 3. Briefly stated facts are that the assessee in the present case is an individual and filed his return of income declaring income of Rs. 1,49,51,120/- under the head 'house property', 'business income' and 'other sources.' The assessee in the year under consideration has claimed certain expenses as details below: * Freight: Rs. 15,18,973 * Custom Duty: Rs. 13,94,681 * Interest: Rs. 17,85,660 * Wages: Rs. 33,62,049 4. The AO required the assessee to produce the documentary e....

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....fore, in absence of any proof for payment of freight, interest and wages the AO had rightly disallowed 20% of the amount of freight, interest and wages and the order of the AO requires no interference." 6. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 7. The ld. AR before us filed a paper book running from 1 to 45 pages and a comparative chart of the impugned expenses claimed by the assessee in the earlier years. The ld. AR before us fairly agreed that the assessee failed to furnish the supporting evidence for the expenses disallowed by the AO on an ad-hoc basis. But as per the ld. AR, disallowance has been made by the AO in arbitrary manner and nonscientific basis. According to the ld. AR, the g....

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....h the necessary details yet any disallowance if warranted, it has to be based on a scientific and rational basis. It is also not out of the place to mention that while making the disallowance in the absence of documentary evidence, some guess work is involved, but the same should be made after considering the financial data of the assessee of the earlier and later years. In the present case, the Revenue had financial data of the assessee of the earlier years, which in our considered view, should have been taken into consideration, while making the disallowance on ad-hoc basis but the revenue failed to do so. As such, we do not find any basis in adopting the disallowance at the rate of 20% of the expenses as stated above. 11. Coming to th....