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Tribunal allows appeal on expense disallowance, stresses evidence importance. The tribunal allowed the assessee's appeal against the disallowance of expenses for the assessment year 2016-17. The AO had rejected the expenses due to ...
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Tribunal allows appeal on expense disallowance, stresses evidence importance.
The tribunal allowed the assessee's appeal against the disallowance of expenses for the assessment year 2016-17. The AO had rejected the expenses due to lack of direct evidence, despite the genuine difficulties faced by the assessee's managing director during the assessment year. The tribunal emphasized the importance of providing a reasonable opportunity for the assessee to present evidence and directed a fresh adjudication by the AO. The delay caused by the COVID-19 lockdown was excluded from the calculation, and the appeal was allowed for statistical purposes.
Issues: Appeal against order disallowing expenses claimed by the assessee for the assessment year 2016-17.
Analysis: The appeal was made by the assessee against the order disallowing expenses claimed on tours & travels and repairs & maintenance. The AO disallowed the expenses due to the lack of direct evidence provided by the assessee, questioning the genuineness of the claims. The assessee's managing director faced personal difficulties during the assessment year, leading to the inability to oversee the income tax assessment. The accounts were audited, and the assessee asserted having supporting documents to prove the expenses' veracity. The AO's disallowance was solely based on the absence of direct evidence, without considering the genuine cause for the lack of documentation. The tribunal noted the reasonable cause for the assessee's inability to produce evidence and set aside the order for fresh adjudication by the AO, citing the decision of the Hon'ble Supreme Court in Tin Box Company Vs. CIT. The Supreme Court emphasized the importance of providing a reasonable opportunity for the assessee to present their case before making an assessment order.
The tribunal directed the AO to afford a reasonable opportunity for the assessee to be heard and participate diligently in the assessment proceedings to substantiate their plea. Due to the COVID-19 pandemic and lockdown, the order could not be pronounced immediately, instructing the assessee to approach the AO post-lockdown for further proceedings. The tribunal acknowledged the delay in pronouncing the order but excluded the lockdown period from the calculation, following a Co-ordinate Bench decision in a similar case. Consequently, the appeal of the assessee was allowed for statistical purposes, and the order was pronounced on 22nd May 2020.
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