Self-made vouchers would not make expenses not genuine unless they do not carry necessary details-ITAT

Self-made vouchers would not make expenses not genuine unless they do not carry necessary details like address of the recipient or signature-ITAT deleted the adhoc disallowance.

ABCAUS Case Law Citation:
ABCAUS 2295 (2018) (04) ITAT

The appellant assessee had challeneged the order passed by the Commissioner of Income Tax (Appeals) in confirming the order of the Assessing Officer (AO) for 10 per cent disallowance of expenses claimed by it.

The assessee was trading in jewellery and had claimed expenditure under the head “making charges”. During the course of the assessment proceedings, the Assessing Officer (AO) noted that all these payments were made in cash and some of the vouchers produced by the assessee in this regard were self-made made. Hence, he made a disallowance of 10% of the making charges claimed by the assessee and added it back to the returned income of the assessee.

Before the Tribunal, the contention of the assessee was that he had filed copies of audited balance sheet, P & L a/c and Tax Audit report in Form No.3CB & 3CD along with said return. The Assessing Officer did not find any defect in the books of accounts or the statements filed by the assessee. However, the AO still made the disallowance only for a reason that some of the vouchers produced in support of such expenditure were self-made.

It was submitted that the said making charges were paid to small time Goldsmiths and hence, only vouchers could be produced for justifying the expenditure. Nevertheless, no defects were pointed out by the lower authorities in such vouchers. Hence, the adhoc disallowance was not justified.

The Tribunal observed that no defect whatsoever had been pointed out by the Assessing Officer in the books of accounts or audited financial accounts filed by the assessee along with its return.

The Tribunal opined that just because of making charges were supported by self-made vouchers would not mean that such claim was not genuine. Revenue could not point out, any self-made voucher, which did not carry necessary details like address of the recipient or signature of the Goldsmith.

The ITAT held that in given circumstances, the disallowance made on adhoc basis was not warranted. Accordingly it was deleted.