Mere Entries in the Books of Accounts does not establish Genuineness of Expenditure: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Chennai bench has held that mere entries in the books of accounts do not establish the genuineness of the expenditure.

The appellant is an individual engaged in the business of executing civil and structural steel contracts. During the course of assessment proceedings, the Assessing Officer observed that the assessee had sold a property for a consideration of Rs. 4,42,47,900/- against which he claimed E77,58,200/- as discount, E85,00,000/- as development cost and Rs. 5,00,000/- as commission expenditure. Out of these, the Assessing Officer disallowed discount claim of Rs. 77,58,200/- for want of details, disallowed commission payment of Rs. 5,00,000/- for non-deduction of TDS and in respect of development charges at Rs. 85,00,000/-, a sum of Rs. 19,72,951/- was found to be non-verifiable, accordingly, brought to tax.

On the first appeal, the Commissioner of Income Tax (Appeals) upheld the said order.

On the second appeal, the assessee contended before the Tribunal that the profit cannot be brought to tax since the property was sold in the capacity of holding power of attorney. In respect of the claim for deduction of discount, development expenditure and commission paid, copies of ledger abstract were filed.

Upholding the orders of the lower authorities, the Tribunal held that “We heard the rival submissions and perused the material on record. The contention that profit arising on account of sale of the property cannot be brought to tax as the land was sold in the capacity of holding power of attorney cannot be accepted since the profits were assessed under the head ‘’profit and gain of business’’. As regards to the allowances of discount, commission and development expenditure, no evidence was filed before us establishing the genuineness of the expenditure. Mere entries in the books of accounts do not establish the genuineness of the expenditure. Hence, we do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals). The grounds of appeal are dismissed against the appellant.”

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