Expenses Recorded in Cash Book Subsequent to Survey not Bogus: ITAT [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the expenses recorded in cash books subsequent to survey operations were not bogus.

The assessee Mehul Prakash Mehta was an individual, filed the return declaring income. The assessee was proprietor of Tirupati Enterprises and Trade In Logistics. During the course of survey proceedings, on examination of cash books maintained by the assessee, discrepancies were noticed in the cash in hand as per books and the physical cash available with the assessee.

On perusal of cash book, the Assessing Officer noticed that the assessee had claimed expenses pertaining to the period up to the date of survey which were not recorded in the cash book found during the course of survey and the same had been booked and thereafter in the cash book produced during the assessment proceedings.

The Assessing Officer made addition towards the expenses booked in the cash book upto the date of survey treating the expenses as not genuine and that the evidence produced in the form of vouchers could not be accepted.

Vallabhdas Parmar on behalf of the assessee submitted that the survey happened in the middle of the financial year and the books were not updated though the assessee had been incurring expenses towards normal course of business.

He also submitted that by considering the nature of business of the assessee, the expenses incurred were towards loading and unloading charges, petrol, etc. towards which the assessee could not produce proper invoices but had submitted vouchers before the Assessing Officer.

Mahita Nair, on behalf of the revenue submitted that vouchers could not be treated as proper evidence without bills and that the assessee could not substantiate the claim of expenses properly and, therefore, the lower authorities had rightly treated the expenses as bogus.

The two-member Bench of Amit Shukla (Judicial Member) and Padmavathy S. (Accountant Member) noted that the assessee was doing regular business throughout the year and there could not be a situation where no expenses were incurred from the first of the financial year till the date of search.

The Bench allowed appeal holding that the expenses booked by the assessee upto the date of survey could not be treated as bogus only for the reason that the same were accounted in the books of account subsequent to the date of search.

To Read the full text of the Order CLICK HERE

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