https://www.taxtmi.com/caselaws?id=462817 The ITAT Delhi allowed the assessee's appeal and deleted the disallowance of freight expenses. The tax authorities had disallowed freight and cartage expenditure, alleging it was inflated to artificially increase expenses without actual business purpose, primarily because the assessee belonged to the SRS Group under investigation. The ITAT held that mere suspicion cannot substitute proof, and the authorities failed to examine the assessee's financials or audited accounts. The tribunal found that freight expenses, being related to building construction material supply business, cannot be doubted without proving the underlying revenue itself is bogus. The authorities' adverse inference based solely on group association during search proceedings was insufficient for disallowance. The ITAT emphasized that in quasi-judicial proceedings, tax authorities must bridge the gap between "may be true" and "must be true" through proper inquiry before discrediting expenditure. en-us Fri, 21 Feb 2025 00:00:00 +0530 Thu, 17 Jul 2025 18:58:41 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=462817 The ITAT Delhi allowed the assessee's appeal and deleted the disallowance of freight expenses. The tax authorities had disallowed freight and cartage expenditure, alleging it was inflated to artificially increase expenses without actual business purpose, primarily because the assessee belonged to the SRS Group under investigation. The ITAT held that mere suspicion cannot substitute proof, and the authorities failed to examine the assessee's financials or audited accounts. The tribunal found that freight expenses, being related to building construction material supply business, cannot be doubted without proving the underlying revenue itself is bogus. The authorities' adverse inference based solely on group association during search proceedings was insufficient for disallowance. The ITAT emphasized that in quasi-judicial proceedings, tax authorities must bridge the gap between "may be true" and "must be true" through proper inquiry before discrediting expenditure. Case-Laws Income Tax Fri, 21 Feb 2025 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=462817