ITAT: Re-adjudication to AO for Disallowance Made Basis of Absence of Business Vouchers

The Income Tax Appellate Tribunal (ITAT), the Pune Bench ordered the Assessing Officer to re-adjudicate against the disallowance made for the reason of the non-submission of business vouchers.

The appellant, Garve Motors Private Limited is an authorised dealer of Hyundai Cars and is a private limited company. The Assessing Officer reproduced the specifics of the expenses that the Assessee claimed to have paid for under the head of “Other Expenses.” For the explanation, the assessee presented the required documents. It was found after the verification that some of the vouchers are not backed by the evidence and are made intentionally. Therefore, the deduction of expenses to 10% was rejected by the Assessing Officer.

Consequently, the assessee appealed opposing the directive given by the Commissioner of Income Tax (Appeals) for accepting the disallowance made by the Assessing Officer.

The counsel for the assessee, Deepa Khare, argued that the assessing officer only cast doubt on some of the vouchers by physically handling them and considering the vouchers handmade and made no judgments about the validity of the expenditures.

Additionally, it was claimed that the assessee was unable to present the supporting documentation for all of the business expenses for which it had independently created vouchers because of the sheer volume of vouchers that needed to be produced. There was therefore no choice but to comply with the authorities’ conclusions in the absence of such examination vouchers.

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The counsel for the revenue, Ramnath P. Murkunde argued that the assessee couldn’t gather enough evidence to support the expenditure incurred and held up the decisions made by the lower authorities.

The bench observed that the assessing officer’s sole contention was the absence of evidence for questionable handmade vouchers, leading to their ad-hoc disallowance. The attorney representing the assessee explained the inability to produce all of the vouchers.

In a decision driven by justice, the two-member bench comprising S.S. Viswanethra Ravi (Judicial Member) and G.D. Padmahshali (Accountant) directed the Assessing Officer(AO) to re-adjudicate the case. In the interest of injustice, they restricted the disallowance to 5%. In the end, the appeal filed by the assessee was granted.