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The Tax Publishers2021 TaxPub(DT) 0482 (All-Trib) INCOME TAX ACT, 1961
Section 37(1)
Where in respect of advertisement, miscellaneous expenses, repairs and maintenance of shop expenses special discount, the same were disallowed by AO for want of bills and vouchers and expenditure on account of telephone and vehicle running were also disallowed to the extent of 20% for personal purpose and proper bills and vouchers were not produced by assessee for verification, accordingly, there was a default on the part of assessee to substantiate the claim of expenditure, however, AO was directed to re-compute disallowance by applying 5%.
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Business expenditure - Ad hoc disallowances @20% of expenses for want of proper bills and vouchers as well as telephone and vehicle expenses on the ground of personal use - Allowability -
The only issue arose in appeal of assessee was regarding ad hoc disallowances @20% made by AO in respect of some expenses for want of proper bills and vouchers as well as telephone and vehicle expenses on the ground of personal use. Assessee submitted that AO had made ad hoc disallowances in respect of certain expenses without pointing out any specific defect or the profit declared by assessee was less than past history. He had further submitted that AO disallowed 20% of various expenses which were excessive and arbitrary. Held: In respect of advertisement, miscellaneous expenses, repairs and maintenance of shop expenses special discount, the same were disallowed by AO for want of bills and vouchers. Expenditure on account of telephone and vehicle running were also disallowed to the extent of 20% for personal purpose. Assessee had not disputed the fact that proper bills and vouchers were not produced by assessee for verification, therefore, to that extent the assessee has failed to prove that all expenses were incurred wholly and excessively for business purpose. Accordingly, there was a default on the part of assessee to substantiate the claim of expenditure. However, AO was directed to re-compute the disallowance by applying 5%.
Relied:J.J. Enterprises v. CIT (2002) 254 ITR 216 (SC) : 2002 TaxPub(DT) 676 (SC)<./i> and Pr. CIT v. Rimjhim Ispat Ltd. (2016) 382 ITR 152 (All) : 2016 TaxPub(DT) 1636 (All-HC).
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. : 2012-13
IN THE ITAT, ALLAHABAD BENCH
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