Tribunal allows appeal, directs AO to delete disallowed expenses.

The Tribunal allowed the appeal, directing the AO to delete the disallowance of miscellaneous expenses amounting to Rs. 2,77,418 due to practical difficulties faced by the appellant in maintaining vouchers for expenses in remote areas. Regarding the disallowance of puja expenses of Rs. 1,65,308, the Tribunal allowed 90% of the expenses, recognizing their importance to the business, but directed 10% to be disallowed for revenue loss prevention. The appeal was partly allowed, with the judgment pronounced on 30 June 2020 by Shri A. T. Varkey, JM.

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Issues:
1. Disallowance of miscellaneous expenses
2. Disallowance of puja expenses

Issue 1: Disallowance of Miscellaneous Expenses
The appellant appealed against the Ld. CIT(A)'s order confirming the disallowance of miscellaneous expenses amounting to Rs. 2,80,900. The AO disallowed the amount as the expenses were incurred in cash without documentary evidence. The Ld. CIT(A) partially allowed Rs. 3,482 and confirmed Rs. 2,77,418. The appellant contended that due to challenging conditions in North East States, drivers faced practical difficulties in keeping vouchers for expenses. The appellant argued that with a GP of 25.80% from a turnover of Rs. 10.63 cr, the disallowance would increase the gross profit. The Tribunal noted the practical difficulties faced by the appellant in maintaining vouchers for expenses incurred in remote areas of Assam, Meghalaya, and Mizoram. The Tribunal observed that the disallowance was unwarranted considering the reasonable expenses incurred and directed the AO to delete the disallowance of Rs. 2,77,418.

Issue 2: Disallowance of Puja Expenses
The AO disallowed puja expenses of Rs. 1,65,308 as the expenses were in cash without supporting documents. The Ld. CIT(A) confirmed the disallowance, stating uncertainty regarding the purpose of the expenses. The appellant argued that puja expenses were integral to the business, ensuring safe journeys for drivers and cleaners. Citing a Calcutta High Court case, the appellant sought deletion of the addition. The Tribunal noted that puja expenses were essential for the smooth running of the transport business, especially in remote areas. While acknowledging the absence of vouchers, the Tribunal allowed 90% of the expenses, directing 10% to be disallowed for revenue loss prevention. Consequently, the appeal was partly allowed.

The judgment was pronounced on 30 June 2020 by Shri A. T. Varkey, JM.

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