2020 (5) TMI 651 - AT - Income Tax

Disallowance of expenses on various heads viz., tours travels and repairs maintenance - assessee failed to produce direct evidence in respect of the expenses claimed - according to the AO, genuineness of the expenses could not be verified - HELD THAT - Assessee has brought to our notice that its director s parents expired during the year under consideration and, therefore, he was held up in hospital discharging his pious obligation by looking after them in the Hospital. Since the assessee could not produce the evidence, AO has disallowed the expenses. Since there is a reasonable cause for the assessee not to appear before the AO, in the interest of Justice and fairplay, set aside the impugned order of Ld. CIT(A) and remand the matter back to the file of AO for fresh adjudication. As relying on TIN BOX COMPANY VERSUS COMMISSIONER OF INCOME-TAX 2001 (2) TMI 13 - SUPREME COURT set aside the impugned order of the Ld. CIT(A) and remand the matter back to the file of AO for fresh adjudication. Order pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown ordered by GOI - HELD THAT - Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, rely upon the decision of the Co-ordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited 2020 (5) TMI 359 - ITAT MUMBAI .

Summary

Issues:
Appeal against order disallowing expenses claimed by the assessee for the assessment year 2016-17.

Analysis:
The appeal was made by the assessee against the order disallowing expenses claimed on tours & travels and repairs & maintenance. The AO disallowed the expenses due to the lack of direct evidence provided by the assessee, questioning the genuineness of the claims. The assessee's managing director faced personal difficulties during the assessment year, leading to the inability to oversee the income tax assessment. The accounts were audited, and the assessee asserted having supporting documents to prove the expenses' veracity. The AO's disallowance was solely based on the absence of direct evidence, without considering the genuine cause for the lack of documentation. The tribunal noted the reasonable cause for the assessee's inability to produce evidence and set aside the order for fresh adjudication by the AO, citing the decision of the Hon'ble Supreme Court in Tin Box Company Vs. CIT. The Supreme Court emphasized the importance of providing a reasonable opportunity for the assessee to present their case before making an assessment order.

The tribunal directed the AO to afford a reasonable opportunity for the assessee to be heard and participate diligently in the assessment proceedings to substantiate their plea. Due to the COVID-19 pandemic and lockdown, the order could not be pronounced immediately, instructing the assessee to approach the AO post-lockdown for further proceedings. The tribunal acknowledged the delay in pronouncing the order but excluded the lockdown period from the calculation, following a Co-ordinate Bench decision in a similar case. Consequently, the appeal of the assessee was allowed for statistical purposes, and the order was pronounced on 22nd May 2020.