Interesting Judgement : if a taxpayer incurs expenditure in cash due to business expediency and is not accused of suppressing its income, then no addition can be done due for the lack of vouchers

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Interesting Judgement : if a taxpayer incurs expenditure in cash due to business expediency and is not accused of suppressing its income, then no addition can be done due for the lack of vouchers

A M Manickam Vs ACIT
ITA Nos.192 & 193/Chny/2019
Whether if a taxpayer incurs expenditure in cash in regard to business expediency and is not accused of suppressing its income, then no addition is called for for the lack of vouchers – YES: ITAT
– Assessee’s appeals allowed : CHENNAI ITAT
Whether if a taxpayer incures expenditure in cash in regard to business expediency and is not accused of suppressing its income, then no addition is called for for the lack of vounchers – YES: ITAT
++ the additions on account of certain vouchers were not available to substantiate the expenditure and the expenditure is incurred in cash exceeding Rs.20,000/-.
The proviso to section 40A(3) comes to the rescue of the assessee when the assessee incurs expenditure by way of cash due to business expediency and other relevant factors.
Considering the fact that the assessee is a petty civil contractor procuring materials from unregulated market in a petty manner and since there is no finding by the Revenue that the assessee has suppressed his income or indulged in any transaction generating unaccounted money.
Thus, this Tribunal is of the view the addition made in the hands of the assessee for Rs 7.76 lacs towards non-availability of vouchers, Rs.23.27 lacs for the AY 2012-13 and Rs.1.25 cr for the AY 2013-14 is not warranted.
Therefore, this Tribunal direct the AO to delete the additions for both the AYs.

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