2010 (6) TMI 799 - AT - Income Tax

Tribunal overturns disallowance of expenses, citing detailed breakdown and supporting documentation.

The Tribunal allowed the appeal, overturning the disallowance of expenses made by the AO and upheld by the CIT(A). The Tribunal found the ad hoc ... - Issues involved: Appeal against CIT(A)'s order disallowing expenses u/s 143(3) for Asstt. Year 2005-06.Details of the Judgment:Issue 1: Disallowance of expensesThe AO disallowed 1/3rd of total expenses of &8377; 12,96,230 incurred by the assessee due to lack of supporting vouchers. The assessee explained that the vouchers were missing. The CIT(A) upheld the AO's decision. The assessee, a partnership firm in management consultancy, provided detailed expenses breakdown including establishment, repairs, staff welfare, telephone, tours, and vehicle running. Payments were made by cheques and cash, with names of recipients provided. The AO did not verify the expenses' genuineness despite details being furnished. The Tribunal found the ad hoc disallowance unjustified and deleted it, allowing the appeal.Conclusion:The Tribunal allowed the appeal, overturning the disallowance of expenses made by the AO and upheld by the CIT(A).