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2021 (1) TMI 603 - AT - Income TaxAd hoc disallowances @20% of expenses for want of proper bills and vouchers as well as the telephone and vehicle expenses on the ground of personal use - assessee has submitted that the AO has made ad hoc disallowances in respect of certain expenses without pointing out any specific defect or the profit declared by the assessee is less than the past history - HELD THAT:- So far as the expenditure in respect of advertisement, miscellaneous expenses, repair and maintenance of shop expenses special discount, the same are disallowed by the AO for want of bills and vouchers. The expenditure on account of telephone and vehicle running are also disallowed to the extent of 20% for personal purpose. The assessee has not disputed the fact that the proper bills and vouchers were not produced by the assessee for verification therefore to that extent the assessee has failed to prove that all the expenses were incurred wholly and excessively for business purpose. The onus to prove the claim of expenditure incurred wholly and excessively for business purpose lies on the assessee. Accordingly, there is a default on the part of the assessee to substantiate the claim of the expenditure. However, the disallowance of 20% made by the AO is arbitrary and excessive. As relying on M/S. RIMJHIM ISPAT LIMITED [2016 (1) TMI 374 - ALLAHABAD HIGH COURT] ad hoc disallowance made by the AO @ 20% is restricted to 5%. The AO is directed to re-compute the disallowance by applying 5%. The appeal is partly allowed.
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