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TMI Blog2024 (10) TMI 1562X X X X Extracts X X X X X X X X Extracts X X X X ..... contingency expenditure recorded in the CTC report. As mentioned above, the contingency expenditure is mentioned 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. 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. The impounded material shows the expenditure on mercantile basis and no cash expenditure, therefore, the presumption of the AO that the assessee has generated cash out of bogus expenditure, is without any basis. Thus, the presumption is only in search cases where it is presumed that the contents of such books of account and other documents are true whereas, the appeals under consideration are cases of survey operations where there is no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at length. Case records carefully perused and the relevant documentary evidence brought to our notice duly considered in light of Rule 18(6) of the ITAT Rules, 1963. 5. Briefly stated the facts of the case are that the assessee is an AOP (Association of Persons) being a joint venture between ITD Cementation India Ltd., and Indian company and Italian Thai Development Public Company Limited, a foreign enterprise, and is engaged in the business of infrastructure development to undertake projects of construction of roads, bridges, metro railway contracts, water supply project on contract basis from Government/non-government entities. The joint venture has entered into contracts of water supply projects for Kolkata Municipal Corporation and earned contract revenue from these projects. 6. A survey action u/s 133A of the Act was carried out in ITD Cem group and related entities on 26/10/2021. During the course of survey operation it is found that the assessee is following a unique method of accounting and the same is followed by the assessee group entities to record unaccounted cash expenses which is deployed to secure work contracts from the contractee organizations. It was noticed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee failed to submit any documentary evidence to support the claim of assessee that SOP has been diverted in issuing PO/WO for the above referred expenses due to exigencies like nature of exigencies, prior or 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 organization, which was not followed before issuing WO/PO in some of the cases. Also, the assessee has failed to submit vendorwise list of contingency expenses, books of account where contingency expenses were maintained and breakup of contingency expenses and liaising expenses. As the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. The same is restricted to Rs. 2,95,000/-. The appellant gets a relief of Rs. 1,15,05,000/-. The disallowance is made u/s 37(1) of the Act. 9. We have given a thoughtful consideration to the order of the authorities below. Let us first understand the basis of CTC. As mentioned elsewhere, the assessee is into infrastructure development extensively engaged in construction work across the country with ongoing projects across the country. As it happens in this line of business, the business-man makes a budgeted figure of project cost and after few months of execution of the work, the budgeted figures are revised. As it always happens, the actual expenditure is always higher than the budgeted figure and the actual expenditure is recorded in the books of accounts. There is no dispute that the total expenditure recorded in the CTC is reported as accounted expenditure. 10. The entire addition revolves around the contingency expenditure recorded in the CTC report. As mentioned above, the contingency expenditure is mentioned 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 assessee. 15. Though the ld. First Appellate Authority has admitted that the entire expenses cannot be disallowed yet, he himself went on to estimate the disallowance which is again not a proper procedure. Once the expenses have been found to be fully recorded in the books of accounts, the same cannot be disallowed only on the whims and surmises of the revenue authorities. 16. Considering in totality the facts of the case in hand in light of the documentary evidence referred during the course of proceedings, we do not find any merit in the impugned additions. We direct the AO to delete the additions from the captioned appeals. 17. Other issues in the captioned appeals have not been pressed, therefore, the same are dismissed as not pressed. 18. In the result, the captioned appeals by the assessee are partly allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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