TaxTMI 
TaxTMI 
2026 (5) TMI 1826
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....ideration of relevant facts and applicable law, rendering the assessment improper. The disallowances/additions resultant are arbitrary, perverse and contrary to settled principles, and therefore the entire disallowance of Rs. 1,81,980/- deserves to be deleted and the impugned order quashed. 2. That the learned CIT(A) erred in upholding the disallowance of Rs.1,81,980, being bona fide business expenditures (such as salaries, rent, and administrative expenses) incurred wholly and exclusively for the purposes of the business, which are fully allowable under Section 37(1) of the Income Tax Act, 1961. The disallowance is unjustified on facts and in law. 2.1 Under the facts and circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the disallowance of Rs.96,000/- in respect of Salary expenses. 2.2 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in upholding the disallowance of Rs.60,000/- being Office Rent. 2.3 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in confirming the disallowance of Rs.8,670 / - incurred on Travelling. 2.4 Under the fac....
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.... 17,749 / - incurred on Travelling. 2.4 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in sustaining the disallowance of 05,941/- towards Conveyance charges. 2.5 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of 16,192/- relating to Telephone expenses. 2.6 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of [2,819/- under the head "Office Expense". 3. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C, which is not chargeable on the facts of the case. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is deleted. (The appellant denies its liability to such interest.) 4. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal. ITA No. 722/Jodh/2025 (Assessment Year: 2023-24) 1. Under the facts and circumstances of the case and in law, the....
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....orders of the authorities below (the assessment order as upheld in the impugned CIT(A) order) have been passed without due consideration of relevant facts and applicable law, rendering the assessment improper. The resultant are arbitrary, disallowances/additions perverse and contrary to settled principles, and therefore the entire disallowance of 78,211/- deserves to be deleted and the impugned order quashed. 2. That the learned CIT(A) erred in upholding the disallowance of 178,211, being bona fide business expenditures (such as salaries, rent, and administrative expenses) incurred wholly and exclusively for the purposes of the business, which are fully allowable under Section 37(1) of the Income Tax Act, 1961. The disallowance is unjustified on facts and in law. 2.1 Under the facts and circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the disallowance of [30,000/- in respect of Salary expenses. 2.2 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in upholding the disallowance of [36,000/- being Office Rent. 2.3 Under the facts and circumstances of the case and in law, the ld. C....
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....llowance of [30,000/- in respect of Salary expenses. 2.2 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of [36,000/- being Office Rent. 2.3 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in confirming the disallowance of [1,086 / - incurred on Travelling. 2.4 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in sustaining the disallowance of 1972/- towards Conveyance charges. 2.5 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of [1,285/- relating to Telephone expenses. 2.6 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of [5,683/- under the head "Office Expense". 2.7 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of [2,371/- under the head "Misc. Expense". 3. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C, amounting to 00.00 u/s 234B (and....
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....facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of 01,510/- under the head "Misc. Expense". 3. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C, amounting to 00.00 u/s 234B (and applicable interest under Section 234C), which is not chargeable on the facts of the case. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is deleted. (The appellant denies its liability to such interest.) 4. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal. 2.2 The appellant assessee Crystal Infrabuild Private Limited has raised following grounds of appeals: ITA No. 731/Jodh/2025 (Assessment Year: 2020-21) 1. Under the facts and circumstances of the case and in law, the orders of the authorities below (the assessment order as upheld in the impugned CIT(A) order) have been passed without due consideration of relevant facts and applicable law, rendering the assessment improper. The res....
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.... 4. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal. ITA No. 732/Jodh/2025 (Assessment Year: 2021-22) 1. Under the facts and circumstances of the case and in law, the orders of the authorities below (the assessment order as upheld in the impugned CIT(A) order) have been passed without due consideration of relevant facts and applicable law, rendering the assessment improper. The resultant disallowances/additions are arbitrary, perverse and contrary to settled principles, and therefore the entire disallowance of 14.75 Lakh deserves to be deleted and the impugned order quashed. 2. That the learned CIT(A) erred in upholding the disallowance of 04.75Lakh, being bona fide business expenditures (such as salaries, and administrative expenses) incurred wholly and exclusively for the purposes of the business, which are fully allowable under Section 37(1) of the Income Tax Act, 1961. The disallowance is unjustified on facts and in law. 2.1 Under the facts and circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the disall....
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....f the business, which are fully allowable under Section 37(1) of the Income Tax Act, 1961. The disallowance is unjustified on facts and in law. 2.1 Under the facts and circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the disallowance of 15,22,000/- in respect of Salary expenses. 2.2 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in upholding the disallowance of 153,100/- being Office Rent. 2.3 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of [35,465/- incurred on Travelling. 2.4 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in sustaining the disallowance of [12,460/- towards Conveyance charges. 2.5 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of 13,938/- relating to Telephone expenses. 2.6 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of [19,797/ under the head "Office Expense". 2.7 Under the facts and circumstan....
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....ce of 14,106/- relating expenses. to Telephone 2.5 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in upholding the disallowance of [16,320/- under the head "Office Expense". 3. Under the facts and circumstances of the case and in law, the learned CIT(A) grossly erred in disallowing Salary expenses of 04,49,127/- and Printing & Stationery of [1,930/-, even though the same had been duly examined and allowed by the Assessing Officer after verification. Disallowance of Salary and Printing & Stationery are unjustified, beyond the scope of appellate jurisdiction, and contrary to the settled principle that expenses incurred wholly and exclusively for business purposes which are fully allowable under Section 37(1) of the Income Tax Act, 1961. The disallowance is unjustified on facts and in law. The disallowance of Salary expenses is therefore bad in law and deserves to be deleted in full. 4. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is de....
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....s rights for not providing such opportunity without any request from the appellant. Even if it is accepted that the appellant has made such request, the cross- examination of its own employees who had filed retracted statements against their statement recorded during search proceedings, would be a futile exercise. The granting of cross-examination should be examined on the facts of each and every case and cannot be universal formula as decided by various High Courts. The cross- examination cannot be treated as right of the appellant in each and every case. The facts of the appellant's case under consideration do not support the request of the appellant. The appellant has also stated that the AO has ignored the rule of consistency, disregarding past assessment position without any new evidence. He has enclosed an order decided for A.Y. 2022-23 in his own case u/s 143(3) dated 16.03.2024, wherein the AO has accepted the genuineness of all the expenditure incurred by the assessee. This contention of the appellant is not accepted as each A.Y. in Income Tax proceedings is considered as different year and if deemed fit, the department has various methods of curing any mistak....
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..... CIT(A) has failed to consider and evaluate the books of account, bank statement, ledger of expenses produced before both the lower authorities and other evidences furnished during the course of assessment proceedings as discussed by the AO in the assessment order vide para 3 that assessee firm has submitted its reply along with supportive evidences on 03.10.2024. The Ld. AR further submitted that AO did not point out any discrepancy or any of the expenses claimed but disallowed merely on allegation that the assessee firm is a shell company and no genuine business activities carried out at registered address by the assessee LLP. The Ld. AR argued that in fact assessee is an LLP as against company as inference drawn by the Ld. AO and the capital is introduced by the partner in the appellant LLP who are regularly filed its ITR. Therefore, question of dummy shareholders does not arise in the present case of the appellant LLP. There was a non-application of mind on the part of the AO who has brushed aside the detailed submission and voluminous documentary evidences furnished by the assessee during the course of assessment proceedings. The AR has further argued that the AO has made the....
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....ciation of evidence produced by the appellant without proper valuation of material facts. The Ld. AR further submitted that the authorities below have accepted the appellant's business as investment company and the Ld. CIT(A) has partial sustenance is internally contradictory in itself to his observations and amounts to what the Hon'ble Supreme Court held in R.N. Gosain Vs. Yashpal Dhir (1992) 4 SCC 683 described as approbating and reprobating - a course impermissible in law. Thus, the Ld. AR argued that Ld. CIT(A) cannot simultaneously hold that the AO failed to prove bogusness and yet sustain a disallowance premised entirely on that very finding of bogusness. 10. The AR also submitted that AO did not invoke Section 145(3) of the Act and thus, he has accepted the books of account of the assessee as the AO did not point out any defect, inconsistency or irregularity in the books of account/record. Yet, the AO treated 100% of the expenses as non-genuine without any basis. In this regard, the AR placed reliance on the judgment of Hon'ble Delhi High Court in the case of PCIT Vs. Forum Sales (P.) Ltd. [2024] 298 taxman 533/468 ITR 392 where it has been held income cannot ....
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....ile passing the assessment order like balance sheet, P & L account or even bank statement which could conclusively prove that the appellant LLP is a bogus entity for the relevant Assessment Year. However, there is a force in appellant's contention that the AO has accepted the nature of business conducted by the appellant i.e. investment .... " 14. It is noted that the AO has disallowed entire expenditure of Rs. 44,72,408/- treating the appellant as non-genuine entity solely based on generalised search statements. However, the Ld. CIT(A) after considering the record, accepted the statutory and compliance related expenses as genuine and sustained only part of the business expenses, restricting the disallowance to the extent of Rs. 4,44,780/- as against Rs. 4,72,408/- made by the AO. 15. In the present case, the Ld. CIT(A) has disregarded the well settled principle of consistency by merely observing that each assessment year is separate, without demonstrating any change in facts or bringing on record any fresh incriminating material for the year under consideration. We find that it is undisputed fact on record that in the assessment year 2022-23, the assessment was ....
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....coordination with auditors. Thus, the salary, travelling expenses, conveyance expenses, telephone expenses and miscellaneous expenses amount to Rs. 4,24,100/-, 7150/-, 5235/-, 5654/- and 2641/- respectively are directly linked to the business functioning actually performed and cannot be disallowed merely on the assumption of minimal business activity. Therefore, the Ld. CIT(A) decision is held to be arbitrary and deserves to be deleted. Our view gets support from the following judgments: ● The ITAT Mumbai in the case of DCIT (CC) Vs. Shapoorji Pallonji and Company Pvt. Ltd. ITA No. 2242/mum/2025 (19.09.2025) deleted a disallowance of Rs. 22.18 crore of manpower service payments, holding that payments made through banking channels establish genuineness and cannot be deemed unexplained merely on the basis on suspicion. ● Similarly, the ITAT Kolkata in Bagla Agro Limited Vs. DCIT (04.03.2025) held that expenses accepted in previous assessments cannot be disputed without fresh grounds. 18. In the present case, the AO accepted similar expenses in assessment year 2022-23 without any objection. It is noted that neither the AO nor the Ld. CIT(A) has discuss....
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....n grounds of commercial expediency, the Assessing Officer cannot question the business wisdom of the assessee. The Court clarified that commercial expediency includes such expenditure as prudent businessman incurs with the objective of preserving and promoting business interests. In the appellant's case, the authorities below disallowed basic administrative expenditure by claiming that these were not necessary due to "non-statutory". The Supreme Court has categorically held that such subjective assessment is impermissible. If the appellant considers it necessary to maintain employees, office premises and administrative infrastructure to carry out statutory filing, document preparation, banking and audit coordination, commercial expediency is clearly present. The disallowance ignores the ratio of S. A. Builders and is unsustainable in law. iii. CIT v. Malayalam Plantations Ltd. (1964) 53 ITR 140 (SC): In Malayalam Plantations, the assessee claimed certain expenses relating to statutory liabilities and management obligations. The department contended that these were not strictly for the purpose of earning income. The Supreme Court held that expenditure incurred ....
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....fice expenditure bills were all produced and accepted by the AO. The disallowance is purely suspicion-based and therefore contrary to this Supreme Court decision. vi. Mehta Parikh & Co. v. CIT (1956) 30 ITR 181 (SC): The assessee in this case produced affidavits and documentary evidence supporting its claims. The department rejected them without any cross-examination or contradiction. The Supreme Court held that when evidence remains uncontroverted, the revenue cannot disregard it without giving reasons. In the appellant's case, ledger statements, TDS return, bank statements and other documents were submitted. Nowhere in the assessment order did the AO dispute their genuineness. The rejection of expenditure despite unchallenged evidence violates the law laid down in Mehta Parikh. vii. Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC): The Supreme Court held that once a consistent view has been taken material has emerged, the in earlier years and department should maintain consistency and cannot arbitrarily deviate. no new In earlier scrutiny assessments of the appellant (AY 2015-16, AY 2017-18), identical expenditure patterns were accepted un....