Date of Order: July 29, 2022
Judges: Shri B.R.R. Kumar, Accountant Member and Shri Anubhav Sharma, Judicial Member
Background: Quickmed Healthcare Pvt Ltd filed appeals against the assessment order passed by the ACIT Central Circle-16, New Delhi, following a search and seizure operation. The tribunal reviewed the case involving disallowances based on expenses claimed during the financial year relevant to AY 2018-19.
The Income Tax Appellate Tribunal dealt with appeals concerning assessment years from 2016 to 2019. For AY 2018-19, specific disallowances were contested that were based on a statement made under section 132(4) of the Income Tax Act, which the appellant argued was improperly applied to their situation.
During the proceedings, it was argued that the disallowances totaling Rs. 532,110 for AY 2018-19, which were calculated at 3% of the total expenses reported, were unjustified. The appellant contested that these expenses were inflated and did not pertain directly to the appellant, citing the lack of direct reference to Quickmed Healthcare in the said statement of Shri Rakesh Jain.
The tribunal concluded that the disallowances were made on an ad-hoc basis without proper justification and were not supported by any incriminating material apart from a general statement. It was emphasized that such statements alone do not constitute sufficient evidence for making disallowances. The appeals for AY 2018-19 were allowed, and the tribunal directed the deletion of the impugned disallowances.
The order was praised for its thorough consideration of the facts and adherence to principles of natural justice, ensuring that expenses are only disallowed based on clear, corroborative evidence linking them to undisclosed income.
This judgment underscores the importance of precise documentation and justification for disallowances by tax authorities, particularly in cases following search and seizure operations. It highlights the necessity for the tax authorities to rely on concrete evidence rather than general assumptions or unrelated statements.
The case serves as a significant precedent for similar disputes, ensuring that assessments are conducted fairly and based on substantiated claims.
Order Pronounced in the Open Court on July 29, 2022.
ITA 1699/DEL/2020: Quickmed Healthcare Pvt Ltd vs ACIT Central Circle-16, New Delhi for AY 2018-19
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