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2023 (9) TMI 847 - BOMBAY HIGH COURT
Disallowance of 10% of expenses claimed under facility management - ITAT held in favour of the assessee by observing that in the case of companies which are having large volume of transactions, it would be practically difficult to bring all evidences to substantiate the expenses in one go and the ledger account that was furnished was sufficient and verifying the ledger account on test check basis was enough - HELD THAT:- The party-wise details provided by assessee amounted to approximately Rs. 55 Crores against the total expenditure of Rs. 62,84,30,804/- claimed, i.e., 89% of the total expenditure. The assessee also submitted the ledger accounts and even copies of sample invoices during the course of DRP proceedings.
ITAT took a considered view that when assessee has, in compliance with the directions of the AO, placed on record substantial material that is complete party-wise details of purchases and labour expenses exceeding Rs. 10 Lakhs amounting to a total of Rs. 55 Crores approximately, which worked out to about 89% of the total expenses and also furnished copies of invoices of Rs. 82,22,049/- for verification on sample basis, the AO was not correct in disallowing an ad hoc 10% of the expenses.ITAT held that the assessee having substantiated almost 89% of the expenses claimed, in view of the large transactions involved, the AO was not justified in making a disallowance.
There is also nothing to indicate in the assessment order that the AO also made any efforts to investigate the matter further if he had certain doubts or reservations as regard genuineness of the expenditure. The least the AO should have done is to verify those expenses on his own after clearly recording his reasons for so doing. No infirmities in the order passed by the ITAT