Tribunal Allows Appeal Despite Delay, Reduces Expense Disallowance to 5%

The appeal filed by the assessee was allowed by the Tribunal, despite a delay of 78 days in filing. The Tribunal condoned the delay and proceeded to hear the appeal. Regarding the disallowance of expenses incurred by the assessee, the Assessing Officer initially disallowed 10% of the expenses due to lack of proper documentation. The CIT(A) upheld the disallowance, but the Tribunal reduced it to 5% based on a previous decision. Consequently, the Tribunal directed the Assessing Officer to disallow only 5% of the total expenses, and the order was pronounced on 08/06/2021.

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Issues:
Delay in filing appeal, Disallowance of expenses incurred by the assessee

Delay in Filing Appeal:
The appeal was filed by the assessee with a delay of 78 days. The assessee admitted the delay and provided reasons for it. The Tribunal considered the submissions, condoned the delay, and proceeded to hear the appeal.

Disallowance of Expenses Incurred by the Assessee:
The Assessing Officer disallowed various expenses incurred by the assessee, citing that they were booked with self-made vouchers and some payments were made in cash without proper bills. The AO disallowed 10% of the total expenses. The assessee, in response, argued that the expenses were for business purposes, audited by the auditors without discrepancies, and produced bills for verification. However, the CIT(A) sustained the addition as the assessee failed to submit bills and vouchers for verification during the appellate proceedings. The Tribunal noted a previous decision where a similar issue was addressed, reducing the disallowance from 10% to 5%. Therefore, the Tribunal directed the Assessing Officer to disallow only 5% of the total expenses, following the previous decision.

In conclusion, the appeal filed by the assessee was allowed, and the Tribunal pronounced the order on 08/06/2021.

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