No Disallowance if AO fails to point out which Voucher is Incomplete or Missing: ITAT

The assessee is a partnership firm and filed its return of income declaring income at Nil. The case was selected for scrutiny assessment u/s 143(3) of the Income Tax Act, 1961. The Assessing Officer while framing the assessment made ad hoc disallowance of Rs. 3,00,000 out of salary & wages expenses; Rs. 1,00,000 out of other expenses; and Rs. 1,00,000 out of job work.

Appeal before CIT(A): Aggrieved against this, the assessee preferred appeal before the learned CIT(Appeals), who sustained the addition.

Appeal before ITAT: Now the assessee is in appeal before this Tribunal. It was observed that three items of the expenses have been disallowed on an estimate basis. The basis of such disallowances is said to be the incompleteness of the bills and vouchers. However, the AO did not point out which bills and vouchers were found to be wanting.

Ld. counsel for the assessee has relied upon the decision of the Tribunal rendered in the case of Tripat Kaur Vs. ACIT in ITA no. 3244/Del/2012, it was held that, “the travelling expenses and salary expenses, addition made on estimate basis cannot be justified. Moreover, disallowance is also not justified merely on the ground that similar disallowance was made in the previous year. Accordingly, in the background of the aforesaid discussions and precedent, we hold that the addition on account of travelling expenses is liable to be deleted and hence, we set aside orders of the authorities below and decided the issue in favour of the assessee.”

The facts of the present case are similar. In the present case also the assessing authority has disallowed the expenses purely on the basis of estimation without specifying the instances where the vouchers were found to be incomplete or missing. Therefore, respectfully following the binding precedence, the tribunal directed the Assessing Officer to delete the addition.

Therefore, the appeal of the assessee was allowed.