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2020 (12) TMI 115 - ITAT DELHIRevised return - Net income determination - disallowance of expenses in the revised return filed by the assessee - since tax liability was not paid to the date of filing of the income tax return therefore applying the provisions of Section 43B the above disallowance was made - HELD THAT:- In most of the cases the assessee has been assessed u/s 143 (3) of the income tax act and no such disallowances as has been made in the current year are made in those years. It is also the fact that the learned assessing officer has not disallowed any of the expenditure on the basis of the individual instances of such expenditure and holding that those are not incurred for the purposes of the business and therefore same are not allowable to the assessee u/s 37 (1) of the income tax act as they are not fully and exclusively incurred for the purposes of the business. In most of the disallowances AO has made ad hoc disallowance is out of those expenditure. Therefore, in the interest of justice it would be proper and just if the net profit ratio of the assessee is assessed at certain percentage which will also take care of the lower net profit shown by the assessee. It is also required to be appreciated that for the impugned assessment year the assessee’s turnover has clocked at more than ₹ 15 crores, which is the highest among all those years stipulated above. AO was not shown all the bills and vouchers of expenses incurred by the assessee. Therefore it is not the case of the assessee that all those expenditure incurred by the assessee are wholly and exclusively incurred by the assessee, as without production of them it would not be possible for the learned assessing officer test this expenditure on those criteria - it is also not the case of AO that assessee has not produced details before him. AO has completely verified the books of accounts, sales bills, purchase bills, bank statements et cetera during the course of the assessment proceedings and did not find any defect in them AO has made certain disallowance holding them to be excessive and unreasonable by applying the provisions of Section 40 A (2) of the act without finding that to what extent they are unreasonable or excessive having regard to the market price of such services. In any case, if the learned assessing officer would have rejected the books of accounts then naturally he would have as the assessee at the net profit rate We direct the AO to restrict the net income of the assessee at 1.90 percentage of the total turnover of 15.63 crores which would be ₹ 2,970,532 compared to the net profit shown by the assessee of ₹ 23,55,800/– - AO is directed to assess the total income of the assessee at ₹ 2,970,532 plus a sum of ₹ 3,091,133/–[ 43B disallowance ] - Appeal of the assessee is partly allowed.
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