2024 (10) TMI 1562

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.....T.A. No. 4558/Mum/2024 are four separate appeals by the assessee preferred against four separate orders of the ld. Commissioner of Income Tax (Appeals) - 53, Mumbai, dated 26/07/2024, pertaining to AYs 2016-17, 2017-18, 2018-19 & 2022-23. 2. Since common issues are involved in the captioned appeals, they were heard together and are disposed off by this common order for the sake of convenience and brevity. 3. Since the underlying facts in the impugned issues are identical, at the concession of rival representatives, we have considered the facts for AY 2016-17 in ITA No. 4556/Mum/2024. 4. Representatives of both the sides were heard at length. Case records carefully perused and the relevant documentary evidence brought to our notice....

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....or non-business purposes. On this presumption, the AO alleged that the assessee has incurred certain unaccounted expense in cash that is bogus expenditure and such cash have been generated by debiting fictitious expenditure in the ledger account/books of accounts. The AO further presumed that the contingency expenses shown in the CTC reports are adjusted in various costing heads of the books of accounts by passing "adjustment entries" which are 1) booking of artificial expenditure from shell entities and 2) booking of over-invoiced expenditure from regular vendors. The AO further alleged that the assessee has booked various bogus expenses in order to generate cash for meeting 'contingency' expenses. 6.1. The AO rubbished the contention o....

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.... post approval for such exigencies, any standard practice followed for expenses due to exigencies. ii. The assessee shown its inability to produce vendor wise list for contingency expenses. iii. The assessee shown its inability to provide books of account wherein contingency expenses has been maintained. iv. The assessee shown its inability to provide break up of liaisoning expenses. and contingency expenses. v. The assessee has failed to submit the delivery challan/stock register/e-way bill/labour register of parties to whom notices u/s 133(6) were issued. 11. In view of the above, it is found that the assessee has followed SOP for issuing WO/PO and the same is considered as sacred for the organ....

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....n'ble AP HC held that "The rate of estimation of profit is always discretionary. On consideration of the fact, sometimes the profit is estimated at 5% and sometimes it is estimated at 3%. It depends upon the appreciation of each and every fact of every individual case." It was further held that Court should not interfere with such discretion, unless the exercise of discretion was absolutely arbitrary. Thus, the estimation of profits or disallowance depends on facts and circumstances of each of the case. 14.23. In view of the above discussion, I am unable to agree with the stand of the AO that the entire expenses are to be disallowed. At the same time, there is no merit in the claim of the appellant that all the expenses are gen....

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.... at the time of preparation of the budget but when the actual figures are known, the same are recorded in the books of accounts. Therefore, it cannot be said that that the contingency figure are not recorded in the books of accounts. In fact, the AO himself admitted this fact at para 4 of his order where he has categorically accepted that the total cost figure in the CTC report matches the total cost figure of the books of accounts. 11. Since the figure of contingency has been recorded against the figure of total expenditure incurred, it is illogical to assume that the assessee has booked bogus expenditure and generated cash outflow from it. Moreover, the impounded material shows the expenditure on mercantile basis and no cash expenditur....

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....n. This means that in the cases of survey operations, the onus is on the revenue to bring the cogent material evidence on record to show that the assessee has incurred expenditure which are not recorded in the books of accounts. As mentioned elsewhere, in the appeals under consideration, all the expenditure has been found to be recorded in the books of accounts and no error or infirmity has been pointed out by the AO nor by the ld. CIT(A). Even the books of accounts have been accepted and no defect has been pointed out. 14. The allegation that the assessee has not followed the Standard Operating Procedure (SOP) is not relevant as long as the impugned expenditure are found recorded in the regular books of account maintained by the assesse....