Disallowance of Business Expenses Made Without Proper Justification: ITAT Restricts It to 10% of Expenses Claimed

The ITAT (Income Tax Appellate Tribunal) has restricted the disallowance of business expenses to 10% when made without proper justification. The tribunal observed that if the Assessing Officer (AO) arbitrarily disallows a higher percentage of expenses without providing cogent reasons or rejecting the books of accounts, a restricted disallowance of 10% is appropriate. This ruling acts as a check on arbitrary additions by tax authorities, implying that while some estimation might be permissible for unverified expenses, a blanket disallowance without proper basis is unsustainable and should be limited.