ITO, NEW DELHI vs. M/S. SPEEDNET CABLES (P) LTD., NEW DELHI

The only issue raised in this appeal is against the allowing of deduction of expenses amounting to Rs.33,84,154/- incurred by the assessee.

Briefly stated, the facts of the case are that the assessee, inter alia, showed sale of Rs.8,23,590/-, against which the expenses amounting to Rs.33,84,154/- were claimed as deduction. On being called upon to furnish the evidence of purchase and sale, the assessee submitted detail of purchases, which has been set out in the assessment order. As the sales were made in cash, the assessee submitted that no record was maintained of the names of sellers. Since the assessee did not furnish such details, the AO held that huge expenses of Rs.33,84,154/- claimed in the Profit & Loss Account could not be allowed as deduction. The ld. CIT(A) overturned the assessment order on this point and allowed the deduction.

I have heard the rival submissions and perusing the relevant material available on record. It is observed that the assessee made sales to the tune of Rs.8,23,590/- and gave details of purchases as has been recorded on page 2 of the assessment order. The genuineness of the purchases has not been challenged by the AO. The mere fact that the assessee made sales in cash, cannot be a reason to doubt the genuineness of the business transactions. This proves the carrying on of business.

In the result, the appeal is dismissed.