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Shri Shivender Singh Versus The Assistant Commissioner of Income Tax, Range 11 (1) , Mumbai

2016 (7) TMI 264 - ITAT MUMBAI

Disallowance of expenditure u/s 37 - AO can disallow only unsubstantiated expenses instead of ad-hoc disallowance - Assessee was unable to submit complete details of the expenses including invoices - AO made ad-hoc disallowances - Held that:- AO should identify and disallow the specific expenses which are not proved and substantiated by the assessee to have been incurred wholly and exclusively for the purposes of business, instead of resorting to ad-hoc disallowances. Matter set aside and re .....

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A) ), for the assessment year 2007-08, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 18-11-2009 passed by the learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income Tax Act,1961 (Hereinafter called the Act ). 2. The ground of appeal raised by the assessee in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai (hereinafter called the Tribunal ) reads as under:- 1. Disallowance of Expenses of ₹ 7,83,34 .....

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business and during the course of business and therefore the same are allowable under law. 1.2 In any event disallowance of ₹ 7,83,340/- made by the AO being 50% of cash expenses made by the AO and confirmed by the CIT(A) is ad-hoc , arbitrary and without any basis. 2. Disallowance of ₹ 7,62,786/- out of Foreign Shooting Expenses 2.1 The CIT(A) erred in restricting the disallowance of foreign shooting expenses to ₹ 7,62,786/- being 50% of claim of expenses. The appellant submi .....

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when the appeal was called for hearing. We are proceeding to decide the appeal after hearing the arguments of learned DR and after persuing the material on record, including the paper book filed by the assessee. 4. The brief facts of the case are that the assessee is proprietor of M/s Dungarpur films and engaged in business of production of advertisement films. 5. During the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act, the assessee was asked to submit the deta .....

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assed by the AO u/s 143(3) of the Act. Similarly, the AO asked the assessee to submit the complete head wise details of expenses and place where the members stayed with respect to foreign shooting expenses of ₹ 50,85,241/-. The assessee submitted the bills covering partial details . As per the AO, verifiability of these expenses having been incurred wholly and exclusively for the business purposes remains questionable. The AO disallowed 25% of the expenses , vide assessment orders dated 18 .....

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o the tune of ₹ 2,60,162/- only out of the cash expenditure considered by the AO. It was submitted that books of accounts are audited and expenses are fully vouched and incurred for the purposes of business and hence fully allowable as per law and disallowance made is arbitrary without any basis. The learned CIT(A) observed that the expenses were incurred in cash and the invoices with respect to vouchers substantiating the expenditure were not produced before the AO. It was also observed b .....

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the learned CIT(A) worked out cash expenses of ₹ 15,74,680/- after excluding ₹ 7,03,115/- from ₹ 22,77,795/- cash expenses considered by the AO and restricted disallowance to 50% of ₹ 15,74,680/- i.e. to ₹ 7,83,340/- vide appellate orders of the learned CIT(A) dated 22-11-2011. Similarly , for the second addition with respect to disallowance of 25% of shooting expenses of ₹ 50,85,241/- by the AO where the assessee submitted partial bills covering partial deta .....

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nd other expenses incurred for conveyance, telephone and food expenses in foreign country. It was claimed before the learned CIT(A) that full details were submitted before the AO during course of assessment proceedings and these expenses were incurred for business purposes and allowable as per law.Thus , the assessee prayed before the learned CIT(A) that the adhoc addition is arbitrary and need to be deleted as without any basis. The learned CIT(A) held that the details of expenses had been furn .....

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the claim vide appellate orders dated 22/11/2011 passed by learned CIT(A). 8. Aggrieved by the appellate orders dated 22/11/2011 passed by the learned CIT(A) , the assessee filed second appeal before the Tribunal. 9. None appeared before the Tribunal on behalf of the assessee when the appeal was called for hearing. On the other hand , the learned DR submitted that disallowances have been made of the expenses claimed by the assessee as the assessee has not furnished complete details and invoices .....

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oducing advertisement films . The assessee accounts are audited as per the requirements of provisions of Section 44AB of the Act and the auditors have not pointed out any defect in their audit report. The assessee has claimed expenses as deduction from income in his return of income filed with the Revenue with respect to both the issues arising out of this appeal. The primary onus is on the assessee to have come forward and substantiate before the Revenue that the expenses which are so claimed a .....

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he issues arising out of this appeal and hence the authorities below made ad-hoc disallowances. It was incumbent on the assessee to have furnished the complete details of the expenses before the authorities below and to prove his claim by substantiating that the mandate of provisions of Section 37(1) of the Act are fully complied with as the primary onus is on the assessee to prove and substantiate his claim of deduction of expenses from the income before the authorities below as these expenses .....

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