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TMI Blog2024 (1) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been booked under various heads are not supported with proper bills and vouchers and vouchers are not signed by receivers, bills are not in proper format, ad hoc disallowance was made. Tax Authorities were supposed to consider the nature of the business of the assessee being in distribution business of very competitive project like mobile phones through distributors in the States of Bihar, Jharkhand and Uttrakhand and on that account if certain expenditures, on day to day basis for running the distributorship and employees network were not in proper vouchers formats or signed, that alone cannot be a justification for disallowance on ad hoc basis to extent of 30%. The prayer of learned DR that issue should be restored to AO is also not considerable as it is not established that assessee is relying anything which was not otherwise before the learned tax authorities below. All that is established is that without pointing out anything specific defect on wholesome basis certain part of the expenses has been discarded on estimate basis. Same is not sustainable under the law. Assessee appeal allowed. - Shri Shamim Yahya, Accountant Member And Shri Anubhav Sharma, Judicial Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed in Profit Loss Account. On verification of ledgers with bills and vouchers related to the above claimed expenses, following things were observed: 1. There was a non-maintenance of proper bills vouchers, 2. Most of the vouchers are internally vouched. 3. Even, the produced vouchers were not fully supported with correct bills and hence some the claim didn't match with evidence. 4. It is settled law that assessee has to maintain proper bills and vouchers of the expenses in order to make it amenable to verification. 5. Further, it is found that assessee has made payment to meet the above expenses mostly in cash below the threshold limit of Rs. 20,000/- 6. So, genuineness of above expenses for business purpose remained unverified in absence of supporting evidences. In this situation, the inflation of expenses can't be ruled out. 7. Few expenses such as Guest House Expenses, Mobile and Internet Expenses claimed by the assessee, which is something personal in nature, 8. Mostly bills and vouchers were devoid of receiver signature, 9. Proper name and address of receivers were missing in most of the vouchers, 10. Few ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961 and is hereby added back to the total income of the assessee. 4. Learned CIT(A) sustained the addition with following relevant finding in para 7: 7. I have carefully examined the assessment order and the submissions of the appellant. The Assessing Officer in the assessment order has observed that the expenses claimed by the appellant under various heads are not adequately supported by bills and vouchers. The AO verified the ledgers, bills and vouchers submitted by the appellant during the assessment proceeding and remarked that the proper bills and vouchers are not maintained by the appellant. Most of the vouchers are internal vouchers and not supported by the proper bills. Payments are made in cash and expenses are also of personal in nature. The bills and vouchers do not bear the receipt or signature of the receiver of the appellant. Accordingly, the AO has held that 30% of the expenses under various heads as reproduced in the assessment order are not fully allowable and had accordingly disallowed 30% of the expenses on estimation basis. The appellant in his written submission has stated that the books of accounts are duly audited. The appellant had discharged it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure. The appellant has not been able to counter the findings of the AO that the expenses booked under various heads are not supported by proper bills and vouchers and that the vouchers are not signed by the receivers, bills are not in proper format etc. In these circumstances, 1 find that the appellant has not been able to justify that the expenses were booked correctly and were incurred wholly and exclusively for the purposes of business. 7.2 The AO disallowed expenses to the extent of 30% of the above referred heads after pointing out several anomalies in the submission/records of appellant such as 'personal in nature; not supported by bills', not incurred/expended and not expended for business etc. Several instances have been noted where the expenses were incurred in violation of provisions of Section 40A(3). Some of them have been mentioned supra. In these circumstances, I find that the disallowance made by AO @ 30% subsuming all such violations/anomalies is very fair and reasonable. Accordingly addition of Rs. 1,01,88,612/- made by AO is confirmed. 5. The assessee is in appeal, raising following grounds: 1. For that the Id CIT(A) is erred in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... houghtful consideration to the material on record and observe that the learned tax authorities without actually pointing out any deficiency in the books of account have inferred that the expenses are excessive and unreasonable so as to disallow to the extent of 30%. The order of learned tax authorities does not indicate if the financials of the assessee were otherwise questioned on any account. The assessee has shown revenue from operation as on 31.03.2017 at Rs. 576,98,65,384. The same has been accepted by the Revenue and even when the scrutiny was taken up, for analyzing low income in comparison to high loans etc. and high revenue from operations, but except for observing that there was non-maintenance of proper bills and vouchers to disallow expenses @ 30% on ad hoc basis, no other conclusion was drawn with regard to profit calculation reflected in the financials. 10. The orders of learned tax authorities make it apparent that on observing that the expenses have been booked under various heads are not supported with proper bills and vouchers and vouchers are not signed by receivers, bills are not in proper format, ad hoc disallowance was made. However, Ld. Tax Authorities wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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