Arvind Kumar Vs PCIT (ITAT Delhi)
ITAT Delhi held that since nature of expense i.e. purchase and source of expense not doubted and only genuineness of expense is doubted, the disallowance has to be made under section 37 of the Income Tax Act and not under section 69C. Accordingly, order of PCIT set aside.
Facts- The case of the assessee was reopened u/s 148 of the Act on the basis of the allegation that the assessee had claimed purchases from Kanheya Exports which was not a genuine entity. AO conducted physical verification from supplier and collected statement from the controller of the entity. Finally, AO held the expenses of Rs. 2,14,810/- claimed by the assessee to be not genuine and disallowed the same u/s 37 of the Act.
Assuming jurisdiction conferred upon by provisions of section 263 of the Act, the PCIT issued a show cause notice to the assessee stating that the disallowance was to be made u/s 69C and not section 37 and higher rate of 60% as per section 115BBE of the Act was applicable instead of normal rates and thus the assessment order was prejudicial to the interest of the Revenue.
This appeal by the assessee is preferred against the order of the Pr. CIT dated 21.03.2025 framed u/s 263 of the Income-tax Act, 1961.
