Expenses cannot be treated as bogus merely for accounting subsequent to date of search

Shri Mehul Prakash Mehta Vs DCIT (ITAT Mumbai)

ITAT Mumbai held that expenses booked upto the date of survey cannot be treated as bogus only for the reason that the expenses were accounted in the books of account subsequent to the date of search.

Facts- On perusal of cash book, AO noticed that the assessee had claimed Rs.19,35,558/- as expenses pertaining to the period upto the date of survey which were not recorded in the cash book found during the course of survey and the same have been booked and thereafter in the cash book produced during the assessment proceedings.

The assessee submitted that the cash book was not updated as on the date of survey though the assessee had incurred expenses from the first date of the financial year upto the date of survey and that post the survey, the assessee had updated the cash book. The assessee also submitted that these are genuine expenses incurred by the assessee during the course of business in relation to mainly transportation expenses, petrol charges and other office related expenses. The assessee also produced vouchers with regard to these expenses.

AO did not accept the submissions of the assessee and made an addition of Rs.19,35,558/- towards the expenses booked in the cash book upto the date of survey treating the expenses as not genuine and that the evidences produced in the form of vouchers could not be accepted.

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