No Proof from Assessee, No Comparables from Income Tax Dept: ITAT cuts Ad Hoc Disallowance to 4%...

In a case where the assessee provided no proof for certain expenses and the Income Tax Department failed to provide comparables to justify its ad-hoc disallowance, the Income Tax Appellate Tribunal (ITAT) reduced the ad-hoc disallowance from 10% to 4%. Crucially, the ITAT explicitly stated that this decision should not be treated as a precedent. This ruling highlights the complexities in tax assessments where neither party fully substantiates their claims. While the assessee bears the primary burden of proof for expenses, the department also needs a basis for disallowance beyond mere suspicion. The ITAT's pragmatic approach aimed to arrive at a reasonable estimate given the lack of concrete evidence from both sides. However, by stating it's not a precedent, the Tribunal limits the general applicability of this specific percentage, emphasizing that future cases will be judged on their own facts and evidence.