INCOME TAX ACT, 1961

Section 69

Income from undisclosed sources - Addition under section 69 - Bogus expenditure towards employees benefit - CIT (A) restricted disallowance on account of bogus expenditure merely on the basis of whims and fancies and without perusing any record

AO made disallowance of 25% of expenses claimed by assessee under the head 'employees benefit' expenses and other expenses on the ground that the same were not supported by any voucher or other evidence. CIT(A) restricted such disallowance to 10% on the ground that the disallowance made by the AO was purely on ad hoc basis and without pointing out any defect or confronting the assessee on the issue. Aggrieved, Revenue was in appeal. Held: It was found that CIT(A) restricted disallowance on account of bogus expenditure to 10% merely on the basis of whims and fancies and without perusing any record. No doubt, the disallowance made by the AO was also purely on ad hoc basis but on failure of the assessee to support the claim with any voucher/evidence. In such circumstances, the CIT(A) was not expected to restrict the disallowance to 10% also on ad hoc basis. Therefore, the matter was remanded to the CIT(A) to decide the same afresh in accordance with law.

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 69

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