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TMI Blog2024 (8) TMI 1229X X X X Extracts X X X X X X X X Extracts X X X X ..... he payments have been made only and exclusively for the purposes of his business. HELD THAT:- 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. Even the CIT(A) has failed to appreciate that there are limits to the kind of evidences that any normal business entity woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 parties responded to notices u/s 133(6) of the Act and filed confirmations amounting to Rs. 24,73,206/-. He thereafter proceeded to make an addition of Rs. 2,59,97,824/- ostensibly on the ground that the payments to a substantial number of parties could not be verified. 1.1. Before the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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, revenue could not have been earned, besides disallowance on the grounds of confirmation from the respective parties is unwarranted. 2. During the course of hearing before us, a paper book containing 174 pages has been filed with the following index, indicating the extensive documentation presented before the authorities below to prove the genuineness of expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioning and for such commercial activities he relies on a series of the vendors and service providers to ensure that the projects are constructed and made functional. It has been averred all along that the income earned under the head business and profession could only be made possible by incurring the expenditure which was considered unjustified on the grounds that some of the vendors did not respond to, or could not be located, when notices were issued by the AO. It was averred that the assessee has meticulously maintained necessary documents in evidence of the expenditure and had even deducted tax at source on the same. It was asserted in the end that there was nothing further that the assessee could have done to prove the genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limits to the kind of evidences that any normal business entity would have with it to justify the expenditure incurred for earning business income. In this case it is felt that the assessee could not have done any better than what he has already done in terms of filing detailed documents to justify the expenditure incurred. We draw strength from two cases of the Hon'ble Calcutta High Court in this regard to show that the burden of proof on the assessee regarding proving expenditure u/s 37(1) of the Act has limits and cannot be mainly disallowed on the grounds adopted by the AO. The two cases are as follows: a) Ashok Surana vs. CIT reported in [2016] 384 ITR 267 (Calcutta) the head note of which is extracted as under: Section 37(1) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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