DCIT Vs Polycab India Limited (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, decided a batch of Revenue appeals and corresponding cross objections filed by the assessee arising from a consolidated order of the Commissioner of Income Tax (Appeals) for Assessment Years 2015-16 to 2023-24. Since all years arose from a common search conducted on 23.12.2023 and involved substantially similar facts and issues, the Tribunal heard them together and treated Assessment Year 2016-17 as the lead year.
The search resulted in multiple additions by the Assessing Officer (AO), principally relating to:
- Disallowance of consultancy expenditure under Section 37(1).
- Profit alleged to be embedded in unaccounted cash sales.
- Unexplained expenditure under Section 69C towards alleged cash salary payments.
- Unexplained expenditure relating to land transactions.
- Alleged liaisoning expenditure.
- Unexplained money under Section 69A.
The CIT(A) granted substantial relief after examining the search material, statements, digital evidence, books of account and other records. The Revenue challenged those findings before the Tribunal.
Consultancy expenditure under Section 37(1)
The AO alleged that consultancy expenditure claimed by the assessee actually represented liaisoning expenditure incurred for Government and public sector contracts. According to the AO, consultancy payments were routed through consultants who allegedly withdrew cash for liaisoning purposes.
