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| The Tax Publishers2020 TaxPub(DT) 0359 (Del-Trib) INCOME TAX ACT, 1961
section 145(3)
Mere submission that expenditure had been incurred could not lead to allowance of expenditure. Assessee had to prove with cogent material that expenditure had been incurred to earn income. In these circumstances matter was remitted back to AO to examine the aspect of allowance of expenditure on the basis of cogent material to be submitted by assessee.
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Accounting method - Rejection - Estimation of profit - Assessee seeking allowance of expenditure against estimated income
Assessee was found to be engaged in providing bogus accommodation entries. Accordingly, AO rejected assessee's books and estimated income @ 2% on sale turnover and investment turnover in view of assessee's statement coupled with prevalent market condition for such entries. Assessee submitted that it had to incur expenditure on account of salary, rent, bank charges, conveyers, telephone water and electricity and same had to be allowed against estimated income.Held: Mere submission that expenditure had been incurred could not lead to allowance of expenditure. Assessee had to prove with cogent material that expenditure had been incurred to earn income. In these circumstances matter was remitted back to AO to examine the aspect of allowance of expenditure on the basis of cogent materials to be submitted by assessee.
REFERRED :
FAVOUR : Matter remanded.
A.Y. : 2006-07 & 2007-08
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