2024 (8) TMI 1229

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....ance of Rs. 2,59,97,824/- was made u/s 37(1) of the Income Tax Act, 1961 (in short the 'Act') on the finding that the assessee had failed to submit documentary evidences to confirm the genuineness of expenditure booked. It is recorded by the Assessing Officer (hereinafter referred to as ld. 'AO') that this case was selected for scrutiny and one of the reasons for the said selection were large payments made u/s 194(C) of the Act to persons who have not filed return of income. It is seen that the Income Tax Department was in possession of information that even though tax had been deducted u/s 194(C) of the Act to certain vendors but some recipients have not filed their returns of income. The AO found that only some of the part....

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.... relief of an amount of Rs. 38,03,998/- pertaining to five more parties. However, he proceeded to confirm the remaining addition which was an amount of Rs. 1,80,01,565/- (impugned amount). 1.3. Aggrieved this action, he has approached the ITAT through the following grounds of appeal: "1. For that the Ld. CIT(A), NFAC erred in confirming the addition to the extent of Rs. 1,80,01,565/- incurred towards business expediency on account of expenditure incurred towards various heads; testing & commissioning, security services, repairing, loading & unloading, labour charges, installation charges, freight expenses, etc. when the Income earned from corresponding activities remain undisputed. 2. For that without incurring such expenditure, reven....

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....th sample Form 16A 138-152 Y Y   13 Summary list wrt. Installation charges, Labour charges, Loading & Unloading charges, Repairs & maintenance charges, Security charges & Freight charges 153-161 Y Y   14 Security charges sample Invoices 162-163 Y Y   15. Summary of transaction carried since FY 2014-15 164 Y Y   16 Asst, order u/s. 143(3) for the AY 2015-16 165-172 Y Y   17 Common parties involved for the AY 2015-16 173-174 Y Y   2.1. The ld. A/R has averred that the assessee undertakes projects on a turnkey basis from concept to commissioning and for such commercial activities he relies on a series of the vendors and service providers to ensure that the projects are constructe....

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.... income under the head 'business and profession' would be earned by making certain relevant expenditure. While demonstrably unjustified expenditure could be disallowed, but it is also clear that there are limits to the kind of documentation and evidences that a normal business would be expected to maintain. In this case, the assessee has adequately demonstrated that he has meticulously maintained documents and even deducted tax at source on the payments made to vendors who were associating with him in executing turnkey projects. It is felt that even the ld. CIT(A) has failed to appreciate that there are limits to the kind of evidences that any normal business entity would have with it to justify the expenditure incurred for earning business....