This article explores the decision of the Income Tax Appellate Tribunal in the case of ASAS Global Services Pvt. Ltd. against the DCIT, Circle 3(2), New Delhi for the assessment year 2013-14. The appeal concerns an ad hoc disallowance made by the assessing officer and upheld by the CIT(A).
ASAS Global Services Pvt. Ltd., a company based in New Delhi, faced an ad hoc disallowance of Rs. 15,06,553 during the scrutiny of its returns for the fiscal year 2013-14. The disallowance was made on the basis that certain expenses were unsupported by adequate documentation, particularly small cash transactions.
The company appealed the disallowance, which was initially confirmed by the CIT(A). The matter escalated to the ITAT, where the company argued against the ad hoc nature of the disallowance, citing similar precedents where such disallowances had been overturned, including a decision from their own previous year’s case.
The ITAT, led by Shri Kul Bharat, examined the merits of the ad hoc disallowance. The tribunal noted that while some cash expenses were indeed incurred, the bulk of the disallowance lacked a firm basis in the absence of specific errors in the company’s documented expenses. Consequently, the tribunal adjusted the disallowance to reflect only the unvouchered cash expenses, significantly reducing the total disallowed amount.
This case highlights the tribunal’s stance on ad hoc disallowances and emphasizes the importance of documentation in substantiating business expenses. It also reflects on the judiciary’s role in ensuring that tax assessments are fair and based on clear evidential standards.
The decision to partly allow ASAS Global Services Pvt. Ltd.’s appeal underscores the necessity for assessing officers to adhere strictly to legal standards, providing a precedent for similar cases and reinforcing the principle of fairness in tax assessments.
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform