Case Law Details
Grand Mumtaz Resorts Vs ITO (ITAT Amritsar)
Introduction: The recent case of Grand Mumtaz Resorts vs. ITO, decided by ITAT Amritsar, revolves around the ad-hoc disallowance of expenses worth Rs.1,02,350. The dispute arose due to the Assessing Officer’s sweeping statement on insufficiently vouched expenses. The assessee contended that the lack of specificity in pointing out particular vouchers rendered the disallowance unjustifiable.
Detailed Analysis: During the assessment proceedings, the assessee was asked to produce vouchers to substantiate various expenses, including miscellaneous, petrol, staff welfare, etc. The Assessing Officer (AO) made a 5% ad-hoc disallowance, claiming incomplete voucher verification. The crucial point raised by the assessee was that the AO failed to specify the missing vouchers, leading to a sweeping disallowance.
The appellant argued that petty vouchers, like taxi receipts, miscellaneous expenses, and uniform cleaning, are usually unavailable in informal sectors but are legitimate business expenditures. Citing precedent cases such as Pearl Farben Chem (ITA No.1122/Mum/2010) and DCIT v. M/s EPCOT Securities (P) Ltd. (ITA No. 395/Mum/2009), the assessee challenged the ad-hoc disallowance.
The ITAT, acknowledging the absence of specific findings on missing vouchers, directed the Assessing Officer to delete the ad-hoc disallowance of Rs.1,02,350.
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