2019 (6) TMI 611 - HC - Income Tax

Allowability of expenditure - HELD THAT - It appears that this sum of ₹ 55,27,558/- was paid by the assessee from its account. But for whatever reasons, they had produced only the ledger before the tribunal in proof of such payment, which was not accepted by it. We give a chance to the appellant to prove its case. But we make it clear that they have to establish this case before the tribunal in a summary manner from the disclosed documents. There is no scope of any long drawn procedure of producing further documents adducing oral and documentary documents etc. If on the basis of the available evidence, the tribunal is able to convince itself that the above expense was actually incurred by the assessee and allowable, it will pass an appropriate order.

Summary

Issues:
Allowability of claimed expenses based on ledger recording without supporting documents.

Analysis:
The High Court of Calcutta addressed the issue of the allowability of expenses claimed by the assessee based solely on ledger recording without supporting documents. The Commissioner (Appeals) had initially allowed the expenses, but the tribunal overturned this decision, emphasizing the necessity of supporting documents for such claims. The appellant argued that the expenses were legitimate, supported by audited accounts, cheque payments, and ledger entries. However, the tribunal found the lack of additional evidence problematic, leading to the dismissal of the claim.

The Court, showing leniency towards the assessee, granted an opportunity to prove the legitimacy of the claimed expenses. The appellant was instructed to present conclusive evidence before the tribunal in a concise manner, utilizing existing documents without resorting to lengthy procedures or additional submissions. The tribunal was tasked with re-evaluating the issue within six months, based on the evidence provided by the appellant. The High Court set aside the tribunal's previous order solely on this issue, allowing for a fresh determination.

In conclusion, the High Court's judgment emphasized the importance of substantiating expense claims with proper documentation. While granting the appellant a chance to validate the claimed expenses, the Court outlined strict guidelines for the presentation of evidence to ensure a prompt resolution of the matter. The decision highlighted the significance of adhering to procedural requirements and providing sufficient proof to support financial claims in legal proceedings.