Notings In Seized Excel Sheet Alone Cannot Justify "Bogus" Expenditure Addition: ITAT Ahmedabad

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that transactions already recorded in regular books of account cannot be treated as “bogus” expenditure solely based on entries in a seized Excel sheet.

A Bench comprising Vice President Dr. B.R.R. Kumar and Judicial Member Suchitra R. Kamble, on 18 March, upheld the deletion of additions made by the Assessing Officer, holding:

“There is no reason for us to believe that a notation in a planning sheet represents a 'bogus' expense when the corresponding amount is clearly reflected in the audited books of account and the bank-verified trail.”

The case arose from a search conducted in the Kothi Group, during which an Excel file containing cheque and cash entries was seized. Based on this, the Assessing Officer had added Rs. 5 lakh, treating certain entries as unexplained expenditure under the Income Tax Act.

The Tribunal noted that the taxpayer had already recorded the cheque transactions in its regular books, and no independent evidence was produced to show that such entries represented unaccounted or bogus expenditure.

It held that where cheque transactions reflected in the Excel sheet were duly recorded in the books, the Revenue could not selectively treat them as unexplained without corroborative evidence

Accordingly, the Tribunal upheld the order deleting the addition.