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TMI Blog2025 (1) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... be disallowed as it could not be established in the absence of the vouchers that the expenditure was incurred for business purposes. It has been held in the case of P.K. Palanisamy Vs. N Arumugham and another [ 2009 (7) TMI 1311 - SUPREME COURT ] that it is a well settled principle of law that mentioning of wrong provision or non-mentioning of provision does not invalidate an order if the court and/or statutory authority had the requisite jurisdiction therefore. Even though the provisions of section 69C of the Act were not applicable, however since the primary evidence for the expenditure claimed was not produced before the Ld. AO, nor the same could be produced before the Bench, therefore, some disallowance was called for on account of expenditure not being supported by vouchers. Hence, it is considered appropriate to sustain the addition to the extent of 10% of the expenses disallowed by the Ld. AO for non-maintenance of the vouchers which was conveyed to the Ld. AR. Thus, addition being 10% of the disallowed amount is hereby sustained and the rest of the addition is directed to be deleted. Hence, Ground Nos. 1 and 2 of the appeal are partly allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case. Being aggrieved with the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A) who allowed the relief claimed. The relevant extract from the order of the Ld. CIT(A) is as under: 4. Appellate Findings: 4.1 Appeal Notices were issued to the assessee on 28.07.2022, 15.12.2023 fixing the case for 12.08.2022, 29.12.2023. The assessee has filed written submission on 03.08.2022 and 02.01.2024. 4.2 The main issue in all the grounds taken by the assessee is that the Learned Income Tax Officer has erred on the law as well as on the fact of the case in disallowing expenditures of Rs. 2,97,16,776 considering the same as bogus expenditure. 4.3 I have gone through the assessment order and record available. The scrutiny assessment under the E-assessment Scheme, 2019 for the assessment year 2018- 19 for M/s. Dhar Construction Company under the Computer-Assisted Scrutiny Selection (CASS) for the assessment year 2018-19 was completed with addition u/s 69C. The identified issues for scrutiny included the verification of the genuineness of expenses, refund claims, contract receipts or fees, and share capital/other capital. The case was selected due to larg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturns lies with individual taxpayers, and the failure to comply with this obligation does not automatically cast doubt on the legitimacy of the business transactions or the TDS deductions made by the appellant. The appellant's case rests on the assertion that any discrepancy arising from the non-filing of tax returns by the payee is beyond the appellant's control. The absence of a tax return from the payee should not be misconstrued as an indicator of the appellant's non- compliance or the lack of genuineness in their business operations. As a result, the absence of the payee's tax return filing, while a noteworthy concern, should not be used to impugn the genuineness of the appellant's business. On holistic evaluation of the appellant's submissions of case laws and facts of the case, the ground relating to Disallowance of expenses u/s 69C of Rs. 2,97,16,776 is allowed. 5. As a result, the appeal of the assessee is allowed. 4. Aggrieved with the order of the Ld. CIT(A), the revenue has filed the appeal before the Tribunal. 5. Rival contentions were heard and the record and the submissions made have been examined. The Ld. AR stated before the Bench that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served:- "As the expenditure was accounted in the regular books, the source is obviously explained. The provisions of Section 69C are not applicable as there was no unaccounted expenditure." 6. What the Assessing officer attempted to do was to go into the authenticity of the expenditure and he returned a finding that the expenditure was not authenticated by vouchers and consequently, he added the said expenditure as unexplained expenditure under Section 69C. We are in agreement with the observations and findings of the Commissioner of Income-tax (Appeals) as well as that of the Income-tax Appellate Tribunal that this is not a case which falls under Section 69C. Clearly, Section 69Crefers to the 'source of the expenditure' and not to the expenditure itself. Consequently, the Assessing Officer was clearly wrong in treating the said expenditure as unexplained expenditure under Section 69C of the said Act and the lower appellate authorities were right in their conclusions in deleting the said addition." 5.2. It was further submitted that following the decision of the Hon'ble Delhi High Court in the case of CIT vs. Radhika Creation (supra), the ITAT, De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for every detail. Further, a perusal of the assessment order shows that the reasons for selection was large payment made to individuals who had not filed the returns of income for which the assessee was asked to file their ledger details, ITR copies and other details and comparison with the last years. The assessee did not file any reply in the initial reply filed so a notice under section 142(1) of the Act was again issued by the Ld. AO on 26.02.2021, and a reminder was also sent. In response to which the assessee submitted a list with PANs, name and TDS deductions made but no confirmation, ledger copy, bank statement and copy of ITRs of the individuals was given, even though the assessee had assured to give the confirmations and the details within 5 days. Subsequently, notices under section 133(6) of the Act were issued on sample basis to some individuals/company to check the genuineness of expenses and they were asked to file the copy of their income tax returns, bank statement highlighting the transactions with the assessee and the purpose of the transaction along with the ledger copy. Response was received from 10 parties. Further, on the basis of data available on the Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y does not take away the jurisdiction of the authority under Section 22 of the Army Act. Therefore, the order of discharge of the appellant from the army service cannot be vitiated on this sole ground as contended by the Learned Counsel for the appellant." In N. Mani v. Sangeetha Theatres & Ors. [(2004) 12 SCC 278], it is stated: "9. It is well settled that if an authority has a power under the law merely because while exercising that power the source of power is not specifically referred to or a reference is made to a wrong provision of law, that by itself does not vitiate the exercise of power so long as the power does exist and can be traced to a source available in law." 6.1 Even though the provisions of section 69C of the Act were not applicable, however since the primary evidence for the expenditure claimed was not produced before the Ld. AO, nor the same could be produced before the Bench, therefore, some disallowance was called for on account of expenditure not being supported by vouchers. Hence, it is considered appropriate to sustain the addition to the extent of 10% of the expenses disallowed by the Ld. AO for non-maintenance of the vouchers which was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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