Stitchmatic Shoecrafts Pvt. Ltd. vs Commissioner of Income Tax (Appeal)-Income Tax Department

This assessee’s appeal for assessment year 2022-23, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2025-26/1087133812(1), dated 10.03.2026 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

Heard both the parties. Case file perused.

Delay of 11 days in filing of the assessee’s/Revenue’s instant appeal is condoned in larger interest of justice and in light of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC).

It emerges during the course of hearing that the assessee/appellant is aggrieved against both the learned lower authorities’ respective assessments and lower appellate findings disallowing 20% of its aggregate expenses amounting to Rs.36.40 lakhs on ad-hoc basis which forms the sole subject matter of tribunal’s apt adjudication herein.

That being the case, it is noticed that the impugned expenses are in the nature of employees’ benefits, financial head and other miscellaneous outgo etc. incurred on day-to-day business activity which already stands accepted to the extent of 80% in principle. There is further no categorical finding in both the learned lower authorities’ respective orders as to how such an exorbitant disallowance @ 20% thereof could be made. The fact also remains that the assessee has failed to plead and prove the impugned three heads of expenses both during assessment as well as in the lower appellate proceedings.

Be that as it may, it is deemed appropriate in this peculiar factual backdrop that a lumpsum disallowance @ 5% of the assessee’s three foregoing heads of expenses would be just and proper with a rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law.

This assessee’s appeal is allowed.