CRYSTAL INFRABUILD PRIVATE LIMITED ,MAHARASHTRA vs. "ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, UDAIPUR", UDAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE DR. MITHA LAL MEENA, HON’BLE ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, HON’BLE JUDICIAL MEMBER ITA Nos. 720 to 722/Jodh/2025 (Assessment Years – 2020-21, 2021-22 and 2023-24) KBK Mercantile LLP Assistant Commissioner of 2 ACME Plaza Sangam Bign Income Tax, Central Circle-1 Cinema Kurla Road, Udaipur-313004 Mumbai-400059 PAN No. AANFK 1535 B ITA Nos. 723 to 725/Jodh/2025 (Assessment Years – 2020-21, 2021-22 and 2023-24) MPK Equity Research LLP Assistant Commissioner of 401 D Wing, Oberoi Splendor Income Tax, Central Circle-1 J.V. Link Road, Udaipur-313004 Mumbai-400060 PAN No. AAWFM 7936 P

ITA Nos. 731, 732, 733 & 794/Jodh/2025 (Assessment Year – 2020-21, 2021-22, 2023-24 & 2022-23) Crystal Infrabuild Private Assistant Commissioner of Limited Income Tax, Central Circle – 1 30 2nd Floor, Amruteshwar Chsl Udaipur - 313004 Jss, Road JSS Road, Mumbai - 400002 PAN No. AAECC 2541 H

Assessee by Shri M.S. Jhanwar, CA (Physical) Shri Ajay Malik, CIT-DR (Virtual) Revenue by

Date of Hearing 07 / 05 / 2026. Date of Pronouncement 21 / 05 / 2026.

2 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 ORDER DR. MITHA LAL MEENA, A.M.: These appeals by assessees are filed against the order of Ld. Commissioner of Income Tax Appeal, Udaipur - 2 [hereinafter referred to CIT(A)] challenging therein disallowance of business expenditure u/s 37(1) of the Act.

ITA No. 720/Jodh/2025 (Assessment Year: 2020-21)

3 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 2.4 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in sustaining the disallowance of ₹7,350/- towards Conveyance charges. 2.5 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of ₹6,340/- relating to Telephone expenses. 2.6 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹3,620/- under the head "Office Expense". 3. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C, which is not chargeable on the facts of the case. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is deleted. (The appellant denies its liability to such interest.) 4. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal.

ITA No. 721/Jodh/2025 (Assessment Year: 2021-22)

4 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 2.4 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in sustaining the disallowance of ₹5,941/- towards Conveyance charges. 2.5 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of ₹6,192/- relating to Telephone expenses. 2.6 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹2,819/- under the head "Office Expense". 3. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C, which is not chargeable on the facts of the case. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is deleted. (The appellant denies its liability to such interest.) 4. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal.

ITA No. 722/Jodh/2025 (Assessment Year: 2023-24)

5 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 2.3 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in sustaining the disallowance of ₹5,235/- towards Conveyance charges. 2.4 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of ₹5,654/- relating to Telephone expenses. 2.5 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹2,641/- under the head "Misc. Expense". 3. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C, which is not chargeable on the facts of the case. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is deleted. (The appellant denies its liability to such interest.) 4. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal.

2.1 The appellant assesse MPK Equity Research LLP has raised following grounds of appeals:

ITA No. 723/Jodh/2025 (Assessment Year: 2020-21)

6 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 2.1 Under the facts and circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the disallowance of ₹30,000/- in respect of Salary expenses. 2.2 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in upholding the disallowance of ₹36,000/- being Office Rent. 2.3 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of ₹870 /- incurred on Travelling. 2.4 Under the facts and circumstances of the case and in law, the 1d. CIT(A) has erred in sustaining the disallowance of ₹1,145/- towards Conveyance charges. 2.5 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of ₹1,750/- relating to Telephone expenses. 2.6 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹5,585/- under the head "Office Expense". 2.7 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹2,860/- under the head "Misc. Expense". 3. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C, amounting to ₹0.00 u/s 234B (and applicable interest under Section 234C), which is not chargeable on the facts of the case. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is deleted. (The appellant denies its liability to such interest.) 4. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal.

ITA No. 724/Jodh/2025 (Assessment Year: 2021-22)

7 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 2. That the learned CIT(A) erred in upholding the disallowance of ₹77,397, being bona fide business expenditures (such as salaries, rent, and administrative expenses) incurred wholly and exclusively for the purposes of the business, which are fully allowable under Section 37(1) of the Income Tax Act, 1961. The disallowance is unjustified on facts and in law. 2.1 Under the facts and circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the disallowance of ₹30,000/- in respect of Salary expenses. 2.2 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹36,000/- being Office Rent. 2.3 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in confirming the disallowance of ₹1,086 /- incurred on Travelling. 2.4 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in sustaining the disallowance of ₹972/- towards Conveyance charges. 2.5 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of ₹1,285/- relating to Telephone expenses. 2.6 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹5,683/- under the head "Office Expense". 2.7 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹2,371/- under the head "Misc. Expense". 3. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C, amounting to ₹0.00 u/s 234B (and applicable interest under Section 234C), which is not chargeable on the facts of the case. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is deleted. (The appellant denies its liability to such interest.) 4. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal.

ITA No. 725/Jodh/2025 (Assessment Year: 2023-24)

8 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 order) have been passed without due consideration of relevant facts and applicable law, rendering the assessment improper. The disallowances/additions resultant are arbitrary, perverse and contrary to settled principles, and therefore the entire disallowance of ₹ 1,60,354/- deserves to be deleted and the impugned order quashed. 2. That the learned CIT(A) erred in upholding the disallowance of ₹1,60,354 being bona fide business expenditures (such as salaries, rent, and administrative expenses) incurred wholly and exclusively for the purposes of the business, which are fully allowable under Section 37(1) of the Income Tax Act, 1961. The disallowance is unjustified on facts and in law. 2.1 Under the facts and circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the disallowance of ₹1,19.564/- in respect of Salary expenses. 2.2 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹36,000/- being Office Rent. 2.3 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of ₹1,180 /- incurred on Travelling. 2.4 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in sustaining the disallowance of ₹1,035/- towards Conveyance charges. 2.5 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of ₹618/- relating to Telephone expenses. 2.6 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹447/- under the head "Office Expense". 2.7 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹1,510/- under the head "Misc. Expense". 3. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C, amounting to ₹0.00 u/s 234B (and applicable interest under Section 234C), which is not chargeable on the facts of the case. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is deleted. (The appellant denies its liability to such interest.) 4. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal.

9 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23

2.2 The appellant assesse Crystal Infrabuild Private Limited has raised following grounds of appeals:

ITA No. 731/Jodh/2025 (Assessment Year: 2020-21)

10 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 2.6 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹4,183/ under the head "Printing & Stationery". 2.7 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹1,800/- under the head "Filling Fee". 2.8 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in upholding the disallowance of ₹368/ under the head "Postage & Courier Charges". 3. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C, amounting to ₹71,421 u/s 234B (and applicable interest under Section 234C), which is not chargeable on the facts of the case. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is deleted. (The appellant denies its liability to such interest.) 4. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal.

ITA No. 732/Jodh/2025 (Assessment Year: 2021-22)

11 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 2.3 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in sustaining the disallowance of ₹5,390/- towards Conveyance charges. 2.4 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of ₹9,105/- relating to Telephone expenses. 2.5 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹13,681/ under the head "Office Expense". 2.6 Under the facts and circumstances, the Id. CIT(A) has erred in confirming the disallowance of a ₹463/- Postage and Courier expense. 2.7 Under the facts and circumstances, the Id. CIT(A) has erred in sustaining the disallowance of ₹2,244/- incurred on Printing and Stationery. 3. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C, amounting to ₹85,839 u/s 234B (and applicable interest under Section 234C), which is not chargeable on the facts of the case. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is deleted. (The appellant denies its liability to such interest.) 4. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal.

ITA No. 733/Jodh/2025 (Assessment Year: 2023-24)

12 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 2.1 Under the facts and circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the disallowance of ₹5,22,000/- in respect of Salary expenses. 2.2 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in upholding the disallowance of ₹53,100/- being Office Rent. 2.3 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of ₹35,465/- incurred on Travelling. 2.4 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in sustaining the disallowance of ₹12,460/- towards Conveyance charges. 2.5 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the disallowance of ₹3,938/- relating to Telephone expenses. 2.6 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹19,797/ under the head "Office Expense". 2.7 Under the facts and circumstances, the ld. CIT(A) has erred in confirming the disallowance of a ₹560/- Postage and Courier expense. 2.8 Under the facts and circumstances, the ld. CIT(A) has erred in sustaining the disallowance of ₹1,668/- incurred on Printing and Stationery. 3. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C, amounting to ₹37,149 u/s 234B (and applicable interest under Section 234C), which is not chargeable on the facts of the case. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is deleted. (The appellant denies its liability to such interest.) 4. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal.

ITA No. 794/Jodh/2025 (Assessment Year: 2022-23)

13 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 settled principles, and therefore the entire disallowance of ₹5,36,494/- deserves to be deleted and the impugned order quashed. 2. That the learned CIT(A) erred in upholding the disallowance of ₹85,437/-, being bona fide business expenditures (such as rent, and administrative expenses) incurred wholly and exclusively for the purposes of the business, which are fully allowable under Section 37(1) of the Income Tax Act, 1961. The disallowance is unjustified on facts and in law. 2.1 Under the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the disallowance of ₹47,200/- being Office Rent. 2.2 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in confirming the disallowance of ₹ 11,086/- incurred on Travelling. 2.3 Under the facts and circumstances of the case and in law. the Id. CIT(A) has erred in sustaining the disallowance of ₹ 6,725/- towards Conveyance charges. 2.4 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in confirming the disallowance of ₹4,106/- relating expenses. to Telephone 2.5 Under the facts and circumstances of the case and in law, the Id. CIT(A) has erred in upholding the disallowance of ₹16,320/- under the head "Office Expense". 3. Under the facts and circumstances of the case and in law, the learned CIT(A) grossly erred in disallowing Salary expenses of ₹4,49,127/- and Printing & Stationery of ₹1,930/-, even though the same had been duly examined and allowed by the Assessing Officer after verification. Disallowance of Salary and Printing & Stationery are unjustified, beyond the scope of appellate jurisdiction, and contrary to the settled principle that expenses incurred wholly and exclusively for business purposes which are fully allowable under Section 37(1) of the Income Tax Act, 1961. The disallowance is unjustified on facts and in law. The disallowance of Salary expenses is therefore bad in law and deserves to be deleted in full. 4. That the learned CIT(A) further erred in confirming the levy of interest under Sections 234B and 234C. The interest is purely consequential to the above disallowance and ought to be deleted if and to the extent the underlying addition is deleted. (The appellant denies its liability to such interest.) 5. The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal, either before or during the hearing of this appeal.

14 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23

15 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 21.03.2024 which was served upon the appellant assessee and subsequently, notice u/s 142(1) of the Income Tax Act, 1961 was issued by the AO on 30.10.2024. The AO has passed assessment order u/s 143(3) of the I.T. Act, 1961 and assessed total income at Rs. Nil on 13.01.2025 after making addition of Rs. 4,72,408/- on account of disallowance of indirect expenses.

“The appellant has also challenged the action of the AO for not providing cross- examination of the employees whose statements were recorded. However, neither in the assessment order nor in the documents submitted during appellate stage, any such request for cross-examination is found and hence the AO was well within his rights for not providing such opportunity without any request from the appellant. Even if it is accepted that the appellant has made such request, the cross- examination of its own employees who had filed retracted statements against their statement recorded during search proceedings, would be a futile exercise. The granting of cross-examination should be examined on the facts of each and every case and cannot be universal formula as decided by various High Courts. The cross- examination cannot be treated as right of the appellant in each and every case. The facts of the appellant's case under consideration do not support the request of the appellant. The appellant has also stated that the AO has ignored the rule of consistency, disregarding past assessment position without any new evidence. He has enclosed an order decided for A.Y. 2022-23 in his own case u/s 143(3) dated 16.03.2024, wherein the AO has accepted the genuineness of all the expenditure incurred by the assessee. This contention of the appellant is not accepted as each A.Y. in Income Tax proceedings is considered as different year and if deemed fit, the department has various methods of curing any mistake committed by the AO while finalizing the Assessment Order. However, there is a force in appellant's contention that the AO has accepted the nature of business conducted by the appellant i.e. investment. Although, by the above discussion, it is proved that the premise from which the LLP is being operated was a dummy address and the companies/LLP registered of this address were not conducting any actual business and were acting as a conduit for holding shares of

16 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 unlisted companies. The whole search action in the case of Miraj Group was based upon the conversion of unrecorded cash income and it's re-routing in the regular books of accounts. But the action of the AO lacks any reasoning when he rejected all the expenditure borne by the appellant which even includes ROC filing fees, auditor fees, bank charges, DP charges etc. which cannot be treated as bogus because the nature of the business of the appellant is investment as mentioned by AO in its order. The appellant has challenged that the AO has not verified bills/voucher of the expenses incurred and only on the basis of the statements recorded of the employees during the course of the search proceedings, which were even retracted, went ahead with this allowance of all expenditure whether statutory or for carrying out day to day business of the appellant LLP. The arguments along with documentary evidences and the case laws submitted by the appellant are considered and it is accepted that for running of any LLP/company/partnership firm, certain statutory expenditure needs to be incurred. However, there is a strength in the decision of the AO that various entities are being run from a dummy address and hence the expenditure linked to it which are non-statutory, needs to be disallowed. Hence, the bifurcation of the expenditure which are allowed and which are disallowed are as follows- Particulars AY 2020-21 Allowed/Disallowed Salary 4,24,100 Disallowed Secretarial Audit Fee 7,500 Allowed Professional Charges 20,000 Allowed Bank Charges 128 Allowed Conveyance 5,235 Disallowed Telephone Expense 5,654 Disallowed Travelling Expense 7,150 Disallowed Misc. Expenses 2,641 Disallowed Hence, the appellant is given partial relief on these grounds of appeal.” 7. The Ld. AR submitted that the AO and the Ld. CIT(A) has failed to consider and evaluate the books of account, bank statement, ledger of expenses produced before both the lower authorities and other evidences furnished during the course of assessment proceedings as discussed by the AO in the assessment order vide para 3 that assessee firm has submitted its reply along with supportive evidences on 03.10.2024. The Ld. AR further submitted

17 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 that AO did not point out any discrepancy or any of the expenses claimed but disallowed merely on allegation that the assessee firm is a shell company and no genuine business activities carried out at registered address by the assessee LLP. The Ld. AR argued that in fact assessee is an LLP as against company as inference drawn by the Ld. AO and the capital is introduced by the partner in the appellant LLP who are regularly filed its ITR. Therefore, question of dummy shareholders does not arise in the present case of the appellant LLP. There was a non-application of mind on the part of the AO who has brushed aside the detailed submission and voluminous documentary evidences furnished by the assessee during the course of assessment proceedings. The AR has further argued that the AO has made the disallowance of the business expenditure merely based on suspicion, conjecture or surmise which is not permitted under law. In support, the Ld. AR placed reliance on the judgment of Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. Vs. CIT (1954) 26 ITR 775 (SC) where it has been held that assessment cannot be based on suspicion, conjecture or surmise and that the ITO cannot make a pure guess without reference to any evidence or material. He has further referred to the judgement of Umacharan Shaw & Bros Vs. CIT (1959) 37 ITR 271 (SC) where it has been held that suspicion, however strong, cannot take a place of proof.

18 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 8. The Ld. AR further referred to the finding recorded by the Ld. CIT(A) in para 5.3.3 at Pgs. 11-14 of the impugned order where the Ld. CIT(A) has supported the case of the appellant by observing as under:

i. “The search and seizure action conducted by the department on the Miraj Group has led to discovery of web of companies/LLP which were utilized to channelize the unaccounted money into regular course of business. However, during the year under consideration, the AO has not made any addition or raised any allegation regarding any such activity by the LLP. ii. The AO has not brought anything on record while passing the assessment order like balance sheet, P & L account or even bank statement which could conclusively prove that the appellant LLP is a bogus entity for the relevant Assessment Year. iii. However, there is a force in appellant's contention that the AO has accepted the nature of business conducted by the appellant I.e. Investment. iv. But the action of the AO lacks any reasoning when he rejected all the expenditure borne by the appellant. v. The arguments along with documentary evidences and the case laws submitted by the appellant are considered and it is accepted that for running of any LLP/company/partnership firm, certain statutory expenditure needs to be incurred.” 9. The Ld. AR further submitted that despite the categorical finding given by the Ld. CIT(A), he has sustained the disallowance of routine business expenditure without pointing out any defect or inconsistency therein, and without disproving the genuineness of such expenses. The Ld. AR argued that such finding given by Ld. CIT(A) based on general assumptions rather than on an objective appreciation of evidence produced by the appellant without proper valuation of material facts. The Ld. AR further submitted that the

19 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 authorities below have accepted the appellant’s business as investment company and the Ld. CIT(A) has partial sustenance is internally contradictory in itself to his observations and amounts to what the Hon’ble Supreme Court held in R.N. Gosain Vs. Yashpal Dhir (1992) 4 SCC 683 described as approbating and reprobating – a course impermissible in law. Thus, the Ld. AR argued that Ld. CIT(A) cannot simultaneously hold that the AO failed to prove bogusness and yet sustain a disallowance premised entirely on that very finding of bogusness.

20 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 Group and the Ld. CIT(A) records that the Assessing Officer relied upon statements of a peon, security guard, the auditor, etc. However, none of these persons have any nexus with the appellant LLP, nor do their statements establish any adverse inference against the appellant. The Ld. AR submitted that there has been inconsistency in the assessment with the past assessment order where such disallowances has not been made in the preceding assessment years and in the succeeding assessment years where assessment orders have been passed u/s 143(3) of the Income Tax Act, 1961 and the department consistently accepted the appellant’s business activity and corresponding expenditure pattern. The CIT(A) acknowledges this fact but refuses to apply the principle of inconsistency by stating that each year is separate. The AR contended that reasoning given by Ld. CIT(A) is incorrect because the principle of consistency applies where the fact remained identical and no new evidence is found. The CIT(A) does not record discovery of any new material relating to the appellant in the present year. In absence of fresh facts, deviation from the Department’s own past stand is arbitrary. The AR pleaded that the business disallowances sustained by Ld. CIT(A) may be deleted.

21 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 13. We have heard both the sides, perused the material on record, impugned order, assessment order and written submissions filed before us. Admittedly, the assessment order passed by the AO is based on general observation rather than on any cogent material evidence. It is noted that disallowances has been made on the basis of third party statement without reference to any incriminating evidence and without rejection of books of account and that without affording any opportunity of cross examination of the third party. It is pertinent to mention here that Ld. CIT(A) has himself recorded in para 5.33 that the genuine factual matrix of the appellants case and the balance of convenience supports the contentions of the appellant assessee as under:

"... The AO has not brought anything on record while passing the assessment order like balance sheet, P & L account or even bank statement which could conclusively prove that the appellant LLP is a bogus entity for the relevant Assessment Year. However, there is a force in appellant's contention that the AO has accepted the nature of business conducted by the appellant i.e. investment...."

22 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 and sustained only part of the business expenses, restricting the disallowance to the extent of Rs. 4,44,780/- as against Rs. 4,72,408/- made by the AO.

23 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 Properties Ltd. (Cal HC) and Modi Industries Ltd. (Del HC) held that companies must incur operational and administrative expenditure even in years of limited business, and such expenditure must be allowed. Accordingly, the disallowance sustained by the CIT(A) lacks legal foundation, is inconsistent with the statutory scheme and judicial principles, and deserves to be deleted.

24 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 handling compliance, preparation of documents and coordination with auditors. Thus, the salary, travelling expenses, conveyance expenses, telephone expenses and miscellaneous expenses amount to Rs. 4,24,100/-, 7150/-, 5235/-, 5654/- and 2641/- respectively are directly linked to the business functioning actually performed and cannot be disallowed merely on the assumption of minimal business activity. Therefore, the Ld. CIT(A) decision is held to be arbitrary and deserves to be deleted. Our view gets support from the following judgments:

 The ITAT Mumbai in the case of DCIT (CC) Vs. Shapoorji Pallonji and Company Pvt. Ltd. ITA No. 2242/mum/2025 (19.09.2025) deleted a disallowance of Rs. 22.18 crore of manpower service payments, holding that payments made through banking channels establish genuineness and cannot be deemed unexplained merely on the basis on suspicion.  Similarly, the ITAT Kolkata in Bagla Agro Limited Vs. DCIT (04.03.2025) held that expenses accepted in previous assessments cannot be disputed without fresh grounds. 18. In the present case, the AO accepted similar expenses in assessment year 2022-23 without any objection. It is noted that neither the AO nor the Ld. CIT(A) has discussed any new material on record. In our view, the deviation

25 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 from the past history, in absence of new evidence, is arbitrary as being in violation of principles of rule of consistency.

i. CIT v. Walchand and Co. Pvt. Ltd. (1967) 65 ITR 381 (SC): In Walchand's case, the Supreme Court noted that the revenue authorities had questioned the necessity of certain business expenses, alleging that they were excessive and not needed for business. The assessee established that the expenditure was incurred out of commercial considerations and in the normal course of business. The Court held that the reasonableness of expenditure must be judged from the point of view of a businessman and not from the standpoint of the Assessing Officer. The Supreme Court emphasized that the tax department cannot dictate how much an assessee should spend to run its business. In the present case, the CIT Appeal disallowed salary, rent, travelling, conveyance, telephone and other administrative expenses solely because he believed the appellant's business activity was "minimal." This is identical to the error addressed by the Supreme Court. The appellant incurred expenditure for day- to-day administration, statutory compliance, banking work and accounting. These are matters of commercial expediency. The Assessing Officer cannot substitute his view for that of a prudent businessman. The disallowance therefore directly contradicts the principle laid down in Walchand and must be deleted.

26 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 ii. S. A. Builders Ltd. v. CIT (2007) 288 ITR 1 (SC): In S. A. Builders, the Assessing Officer disallowed certain advances made to a subsidiary on the reasoning that the expenditure did not serve business purpose. The Supreme Court held that so long as the expenditure is incurred on grounds of commercial expediency, the Assessing Officer cannot question the business wisdom of the assessee. The Court clarified that commercial expediency includes such expenditure as prudent businessman incurs with the objective of preserving and promoting business interests. In the appellant's case, the authorities below disallowed basic administrative expenditure by claiming that these were not necessary due to "non-statutory". The Supreme Court has categorically held that such subjective assessment is impermissible. If the appellant considers it necessary to maintain employees, office premises and administrative infrastructure to carry out statutory filing, document preparation, banking and audit coordination, commercial expediency is clearly present. The disallowance ignores the ratio of S. A. Builders and is unsustainable in law. iii. CIT v. Malayalam Plantations Ltd. (1964) 53 ITR 140 (SC): In Malayalam Plantations, the assessee claimed certain expenses relating to statutory liabilities and management obligations. The department contended that these were not strictly for the purpose of earning income. The Supreme Court held that expenditure incurred for the preservation of the business and performance of statutory duties is allowable under section 37. Expenditure incidental to carrying on business is regarded as for the purposes of business. The appellant LLP has incurred statutory compliance expenses office expenses, such as accounting, documentation, filing, banking and administrative coordination. Salary, rent, postage and travelling are integral to carrying out statutory obligations under the Companies Act, Income Tax Act and GST laws. The CIT Appeal accepted statutory expenses but illogically disallowed the operational expenses required to incur them. Under Malayalam Plantations, all such incidental and statutory- supporting expenditure is allowable. The disallowance is contrary to this binding precedent. iv. Dhakeshwari Cotton Mills Ltd. v. CIT (1954) 26 ITR 775 (SC): In this landmark judgment, the Supreme Court held that assessment cannot be based on suspicion, conjecture surmise. Additions must be grounded in tangible material or evidence. The Court rejected an assessment that was based solely on loose statements and assumptions without supporting documents. In the present case, the Assessing Officer and CIT Appeal relied entirely on uncorroborated search statements of third parties (a peon, an accountant and a group employee) none of whom were linked to the appellant's management. The CIT Appeal himself records that the Assessing Officer brought no seized profit and loss account, balance sheet, bank statement or other Incriminating material specific to the appellant. Disallowance based on assumption that the appellant was "at a

27 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 dummy address" without evidence violates the principle laid down in Dhakeshwari Cotton Mills. The disallowance has no evidentiary backing and must be deleted. v. Umacharan Shaw and Bros. v. CIT (1959) 37 ITR 271 (SC): In this case, the department made additions based on presumption without any direct evidence. The Supreme Court held that suspicion, however strong, cannot take the place of proof and additions must be supported by credible material. The disallowance in the appellant's case rests solely on suspicion derived from third- party statements and an alleged common address issue. No document, voucher or bank entry has been shown to be non-genuine. Salary vouchers, rent agreements, GST invoices, TDS records and office expenditure bills were all produced and accepted by the AO. The disallowance is purely suspicion-based and therefore contrary to this Supreme Court decision. vi. Mehta Parikh & Co. v. CIT (1956) 30 ITR 181 (SC): The assessee in this case produced affidavits and documentary evidence supporting its claims. The department rejected them without any cross-examination or contradiction. The Supreme Court held that when evidence remains uncontroverted, the revenue cannot disregard it without giving reasons. In the appellant's case, ledger statements, TDS return, bank statements and other documents were submitted. Nowhere in the assessment order did the AO dispute their genuineness. The rejection of expenditure despite unchallenged evidence violates the law laid down in Mehta Parikh. vii. Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC): The Supreme Court held that once a consistent view has been taken material has emerged, the in earlier years and department should maintain consistency and cannot arbitrarily deviate. no new In earlier scrutiny assessments of the appellant (AY 2015-16, AY 2017-18), identical expenditure patterns were accepted under section 143(3). No new incriminating material was found during search pertaining to the appellant. The sudden disallowance contradicts the principle of consistency. 21. From the record, it is evident that the Ld. CIT(A) did not appropriately consider the factual matrix of the case while accepting the statutory and compliance related expenses such as accounting charges, ROC filing fee and bank charges is genuine and sustain the disallowances of expenses related to administrative and other operational activities merely on the basis of presumption that such expenses are non-statutory in the nature and due to

28 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 perceived minimal business activity. This observation of the Ld. CIT(A) has been arrived without identifying any specific deficiency in the books of account and without demonstrating any personal or non-business element or without pointing out any lack of business evidence.

29 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 functioning and compliance requirements of the appellant LLP. The acceptance of statutory expenses, while simultaneously disallowing the genuine administrative and other expenses results in an internally inconsistent and legally unsustainable conclusion.

30 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 794/Jodh/2025 in the case of Crystal Infrabuild Private Limited in mutatis mutandis, ordered accordingly.

Order pronounced in the open court on 21/05/2026.

Sd/- Sd/- (SUDHIR PAREEK) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 21/05/2026. Nimisha Sr. PS True Copy

31 ITA Nos. 720 to 725/Jodh/2025 ITA Nos. 731, 732, 733 & 794/Jodh/2025 Asst. Years: 2020-21 to 2022-23 Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File BY ORDER,