Tribunal Overturns AO's Ad-Hoc Disallowance of Expenses, Citing Lack of Jurisdiction and Fault in Documentation Review.

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....In the present case, the Assessing Officer (AO) disallowed the expenditure claimed u/s 57(iii) of the Income Tax Act on an ad-hoc basis. The AO did not challenge the genuineness of the expenditure and acknowledged the submission of bills and vouchers. Section 57(iii) allows deduction of any expenditure incurred wholly and exclusively for earning income, provided it is not a capital expenditure. The AO did not contend that the expenditure was capital in nature. The assessee earned income from dispensing medicines, and the expenditure was incurred in relation to this income-earning activity. The AO did not doubt that the expenditure was not incurred for earning income. Relying on the Petroleum Sports Promotion Board case, the Appellate Tribun.........