TMI Blog2022 (4) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... testify the twofold establishment of aforesaid provision of law, therefore the appellant disentitled himself from immunity of being held as the assessee-in-default within the meaning of Section 201(1) of the Act and resultantly, un-distanced from application of provisions of section 40(a)(ia) of the Act. Thus, in the light of aforesaid observations, the ground number 1 is dismissed. Ad-hoc disallowance of business expenses - As per assessee AO had in a most arbitrary manner disallowed portion of expense applying ad-hoc percentile and which has been sustained by the Ld CIT(A), despite of the fact that, all these business expenditure debited to profit loss account and claimed in the return of income has all the valid characteristic laid in section 37(1) - HELD THAT:- We neither could come across any provision in the present Income Tax Statute nor it has been brought to our notice by either parties to dispute, which subscribes vis- -vis authorises the tax authorities to arrive at this logic of subscribing ad-hoc disallowances. Evidently, there has been no clear findings as to number of vouchers requiring denial of allowances with the amount of expenditure and nature of defect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 8,30,975/- 2.That under facts and the laws, the learned CIT(Appeals) further erred in maintaining the adhoc disallowance of ₹ 2,00,000/- on lumpsum basis made by the learned Assessing Officer, out of various expenses claimed by the assessee Prayed to delete the disallowance of ₹ 2,00,000/- (Emphasis supplied) 4. Pithily the facts of the case are; 4.1 The appellant assessee is an individual and proprietor two concerns in the name style viz; Shri Balaji Road Carrier, engaged in transport logistic business and Shri Balaji Petroleum, engaged in trading of petroleum products. For AY 2010-2011, a return of income was e-filed on 25/09/2010 declaring total income of ₹17,20,230/-, which was summarily processed u/s 143(1) of the Act and subsequently selected for scrutiny through CASS. 4.2 The assessment u/s 143(3) of the Act was framed assessing the total income at ₹27,54,450/- on account of following three disallowance; a. Part of total expenses for sum of ₹2,00,000/- on ad-hoc basis reciting the reasoning of self-made cash vouchers and the presence of element of otherwise business usages etc. b. Interest on delayed pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ma Leasing Finance Ltd 3,46,000 No Certificate Placed On Record 2 SREI Infrastructure Finance Ltd 4,84,975 No Certificate Placed On Record 6.3. As regards to allowability of interest/finance charges, it is imperative to make note of insertion of first proviso to Section 201 (1) by the Finance Act 2012, operative with effect from 1st July 2012 which reads as under: Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income; And the person furnishes a certificate to this effect from an accountant in such form as may be prescribed. (Emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndmark Township reported at 377 ITR 635 and Hon ble Apex Court in judgment in M/s Hindustan Coca Cola Beverages Pvt Ltd Vs CIT reported at 293 ITR 22 and in the context of circular number e Circular No. 275/201/95-IT(B) dt 29/1/1997 issued by the Central Board of Direct Taxes [for shot CBDT ], the Hon ble Lordships have observed that, once it is proved on record that, the payee has accounted the amount in question as income and discharged the due taxes thereon then, no recovery of tax demand be enforced against the assessee. 6.7. In the case at hand, firstly, so far as payment of interest / finance charges to M/s Magma Leasing Finance Ltd is concern, a copy of ITR filed for AY 2010-2011 along-with a letter of confirmation of receipt is placed to substantiate the compliance of aforesaid provision, however in the absence of certificate from an accountant proving the twofold facts, as to whether the amount of interest in question is accounted as income and taxes due thereon has been paid to the credit of Government Treasury remained unestablished. Secondly so far as SREI Infrastructure Finance Ltd is concern, in support of assessee s claim, the reliance was placed on copy of PAN a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the expenditure therein claimed to have been incurred by the assessee wholly and exclusively for the purpose of its business did not inspire any confidence, nor it was the case of the revenue that any part of the expenditure in question was either found to be bogus or fictitious, nor was found to have not been incurred by the assessee wholly and exclusively for the purpose of his business. Indeed, it showcased an exercise of running around the circle by both the lower tax authorities while dealing with the present case. 7.4. We neither could come across any provision in the present Income Tax Statute nor it has been brought to our notice by either parties to dispute, which subscribes vis- -vis authorises the tax authorities to arrive at this logic of subscribing ad-hoc disallowances. Evidently, there has been no clear findings as to number of vouchers requiring denial of allowances with the amount of expenditure and nature of defects therein or therewith, moreover department could not bring out any deprecative material on record to substantiate its conclusion as logical. We couldn t also see remotely there is any mention of rationale in arriving at the percentile of disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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