M/s. V.R. Industries Pvt. Ltd, New Delhi V. DCIT, New Delhi

CO 387/DEL/2009

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4908 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 20-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 04-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BL GUPTA
• Assessee Lawyers: ANUSHA KHURANA
• Keywords: Business expenditure; Opportunity of being heard

Judgement Text

I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 1/20 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH I BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER ITA NO. 3277/DEL/2009 (ASSESSMENT YEAR 2006-07 DCIT, CIRCLE 17(1), VS. M/S. V R INDUSTRIES PVT. L TD., NEW DELHI. B-92, C-125, LOWER GROUND, SARVODAY ENCLAVE, NEW DELHI-110 070 C.O. NO.387/DEL./2009 (ASSESSMENT YEAR 2006-07) M/S. V R INDUSTRIES PVT. LTD. VS. DCIT, CIRCLE 1 7(1), B-92, C-125, LOWER GROUND, NEW DELHI SARVODAY ENCLAVE, NEW DELHI-110 070 (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAACV4695F APPELLANT BY: MS. ANUSHA KHURANA, DR RESPONDENT BY: SHRI B L GUPTA, ORDER PER A. K. GARODIA, AM: 1. THESE ARE THE APPEAL BY THE REVENUE AND CROSS OBJEC TION BY THE ASSESSEE, WHICH ARE DIRECTED AGAINST THE ORDER OF L D. CIT(A) XIX, NEW DELHI DATED 11.05.2009 FOR THE ASSESSMENT YEAR 2006-07. SINCE THE ISSUES ARE INTERCONNECTED, BOTH THESE APPEALS ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE. I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 2/20 2.1 GROUND NO.1 O THE APPEAL READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED IN DELEING THE DISALLOWANCE OF RS. 20,72,211/- ON ACCOUNT OF COMMISSION PAID IGNORING THE FACT THAT T HE ASSESSEE DID NOT DISCHARGE ITS ONUS TO JUSTIFY THE EXPENSES CLAI MED. 2.1.1 THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. ON PAGE 1 & 2 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS D EBITED AN AMOUNT OF RS.20,72,212/- IN P & L ACCOUNT ON ACCOUN T OF COMMISSION PAID UNDER THE HEAD SELLING EXPENSES. IT IS FURTHER NOTED BY THE A.O. THAT NO SUCH EXPENSES ARE CLAIMED IN THE IMMEDIATELY PRECEDING YEAR. THE A.O. ASKED THE ASS ESSEE TO FURNISH THE COMPLETE DETAILS IN THIS REGARD SUCH AS NAMES OF THE PARTIES, SERVICES RENDERED BY THEM AND ALSO TO PROV E THE GENUINENESS OF THESE EXPENSES. IT IS NOTED BY THE A.O. THAT IN RESPONSE, A COPY OF LEDGER WAS FURNISHED WITH THE R EPLY FILED ON 10.12.2008 WHEREIN NAMES OF CERTAIN PERSONS AND AMO UNTS WERE MENTIONED. IT IS FURTHER NOTED BY THE A.O. THAT NO FURTHER DETAILS SUCH AS COMPLETE ADDRESSES OF THE PERSONS, RATE OF COMMISSION, CORRESPONDING SERVICES RENDERED AND SALES ACHIEVED, MODE OF PAYMENT MADE, CONFIRMATION OF ALLEGED COMMISSION RE CEIVED ETC., WERE FILED TO PROVE GENUINENESS OF THESE EXPENSES. IT IS ALSO NOTED BY THE A.O. THAT THE ASSESSEE WAS AGAIN SPECIFICALL Y CONFRONTED VIDE ORDER SHEET ENTRY DATED 10.12.2008 THAT THE COMMISS ION EXPENDITURE IS NOT CONSIDERED GENUINE SINCE PROPER DETAILS AS REQUIRED, HAVE NOT BEEN PROVIDED. IT IS NOTED BY T HE A.O. THAT IN RESPONSE, REPLY WAS FILED ON 16.12.2008 BUT AGAIN, THE SPECIFIC DETAILS AS CALLED FOR, WERE NOT FILED. THEREAFTER, IT IS NOTED BY THE A.O. THAT IT IS APPARENT THAT THE ASSESSEE HAS NOT COME CLEAN HANDS TO PROVE THAT THE EXPENSES ARE GENUINE. IT IS NOTE D BY THE A.O. THAT I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 3/20 IT IS NOT ASCERTAINABLE FORM THE DETAILS FILED BY T HE ASSESSEE AS TO WHAT IS THE AMOUNT OF COMMISSION PAID TO INDIVIDUAL PARTY, WHAT ARE THE CORRESPONDING SALES EFFECTED AND WHETHER TH E TDS MADE OR NOT ETC. THE A.O. HAS COME TO THE CONCLUSION THAT THE TOTAL AMOUNT OF RS.20.72 LACS DEBITED UNDER THE HEAD COMMISSION PAID IS BOGUS. HE DISALLOWED THE ENTIRE CLAIM OF THE ASSES SEE. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE LD. CIT(A) WHO HAS DELETED THE DISALLOWANCE IN FULL AND NOW, THE REVENUE IS IN APPEAL BEFORE US. 2.1.2 IT IS SUBMITTED BY THE LD. D.R. FOR THE REVENUE THA T A SPECIFIC FINDING IS GIVEN BY THE A.O. IN THE ASSESSMENT ORDE R THAT DETAILS CALLED FOR BY THE A.O. WERE NOT FURNISHED BEFORE HI M AND THERE IS NO FINDING BY THE LD. CIT(A) THAT THIS FINDING OF T HE A.O. IS NOT CORRECT. IT IS POINTED OUT THAT THE FINDING OF LD. CIT(A) IS IN PARA 4.11 OF HIS ORDER. IT IS SUBMITTED THAT THERE IS N O CLEAR FINDING OF LD. CIT(A) AND HENCE, HIS ORDER SHOULD BE REVERSED AND THAT OF THE A.O. SHOULD BE RESTORED. 2.1.3 AS AGAINST THIS, THE LD. A.R. FOR THE ASSESSEE SUPP ORTED THE ORDER OF THE LD. CIT(A). IT IS ALSO SUBMITTED THAT COMMISSI ON WAS PAID TO VARIOUS PERSONS AS PER COMPLETE DETAILS GIVEN ON PA GES 1-22 OF THE PAPER BOOK-1. IT IS ALSO SUBMITTED THAT THE PERSON S WHO WERE RECEIVING HIGHER AMOUNT OF COMMISSION WERE ASSESSED TO TAX ALSO. IT IS ALSO SUBMITTED THAT THE ASSESSEE HAS ENTERED INTO AGREEMENT WITH ADIDAS, HONDA & BIKANER FOR SELLING AND MARKET ING THEIR PRODUCTS AND THE AGREEMENT WITH THESE PARTIES ARE A VAILABLE ON PAGES 17-21 OF THE PAPER BOOK. IT WAS ALSO SUBMITT ED THAT ALL PAYMENTS WERE MADE THROUGH A/C PAYEE CHEQUES AND CO PIES OF THE ACCOUNTS OF THE SERVICE AGENTS ARE AVAILABLE ON PAG ES 121-778 OF THE PAPER BOOK-I. REGARDING THE SERVICES RENDERED, IT WAS I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 4/20 SUBMITTED THAT THE DUTY OF THE AGENT WAS TO PROCURE THE ORDER FORM VARIOUS CANTEENS/STORES DEPARTMENT OF THE MILITARY AND ALSO RESPONSIBLE FOR COLLECTING THE PAYMENTS. RELIANCE WAS PLACED ON THE FOLLOWING JUDGEMENTS: A) ITO VS. SHRI SHYAM SUNDER JAJADIA I.T.A. NO. 4549/DEL/2004 DATED 19.09.2008, B) CIT VS PRINTERS HOUSE PVT. LTD. 188 TAXMAN 70 (DEL.) C) CIT VS BHARAT MEDICAL STORES 185 TAXMAN 54 (P& H). 2.1.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL ON RECORD AND HAVE GONE THOROUGH THE ORDERS OF AUTHORI TIES BELOW AND THE JUDGEMENTS CITED BY THE LD. A.R. FOR THE ASSESS EE. FROM THE SAME, WE FIND THAT A SPECIFIC FINDING IS GIVEN BY T HE A.O. IN THE ASSESSMENT ORDER THAT SOME SPECIFIC DETAILS WERE CA LLED FOR FROM THE ASSESSEE AND THESE WERE NOT SUBMITTED BY THE ASSESS EE BEFORE HIM. SUCH DETAILS ARE ADDRESSES OF THE PARTIES TO WHOM C OMMISSION WAS PAID, RATE OF COMMISSION AND CORRESPONDING SERVICES RENDERED SUCH AS SALES ACHIEVED ALONG WITH CONFIRMATION FROM THE RESPECTIVE PARTIES. THESE DETAILS ARE VERY MUCH RELEVANT IN O RDER TO EXAMINE THE GENUINENESS OF THE COMMISSION PAYMENT. IN THE PAPER BOOK FURNISHED BEFORE US ALSO, WE FIND THAT ON PAGES 1-1 2 OF THE PAPER BOOK-I IS PARTY WISE DETAILS OF COMMISSION PAID BUT THERE IS NO ADDRESS OF THE PARTIES ON THESE PAGES. THERE IS NO MENTION REGARDING THE RATE OF COMMISSION AND THE QUANTUM OF SALES ACHIEVED BY THE AGENTS AND THE NATURE OF SERVICES R ENDERED BY THEM. ON PAGES 13-14, ADDRESSES AND PAN OF SOME OF THE PA RTIES ARE AVAILABLE BUT IN VIEW OF THIS FINDING OF THE A.O. I N THE ASSESSMENT ORDER THAT ADDRESSES WERE NOT FURNISHED TO HIM, IT IS NOT CLEAR AS TO I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 5/20 WHETHER THE SAME WERE AVAILABLE WITH THE A.O. OR NO T AND THERE IS NO FINDING OF LD. CIT(A) IN THIS REGARD IN HIS ORDE R. REGARDING THIS SUBMISSION THAT THE PAYMENTS WERE MADE BY CHEQUE AN D SOME OF THE PARTIES ARE ASSESSED TO INCOME TAX, WE FEEL THA T THESE FACTS ARE NOT RELEVANT FOR THE PURPOSE OF DECIDING THE GENUIN ENESS OF THE COMMISSION PAYMENT BECAUSE GENUINENESS OF COMMISSIO N PAYMENT IS DEPENDENT ON THE NATURE OF SERVICES RENDERED BY THE PARTIES ALONG WITH RATE OF COMMISSION AND AMOUNT OF SALES ACHIEVE D BY THE COMMISSION AGENTS AND THESE FACTS ARE NOT AVAILABLE ON THESE PAGES OF THE PAPER BOOK. ON PAGE 121-778 OF THE PAPER BO OK-I, SOME DETAILS ARE AVAILABLE BUT THESE ARE NOT COMPLETE DE TAILS. ON PAGE 121 OF THE PAPER BOOK, THE FIRST NAME IS OF SHRI MA NOJ SHAH TO WHOM TOTAL COMMISSION PAID IS OF RS.34,775/- AND TH E FIRST PAYMENT ON 21.10.2005 IS OF RS.2855/-. BUT ON PAGE 122 OF THE PAPER BOOK, THE COPY OF DD SHOWS RS.2,500/- WHICH I S DATED 21.04.2006 I.E. AFTER THE END OF THE CURRENT YEAR A ND THAT TOO OF A ROUND SUM OF RS.2,500/- AND NOT THE EXACT AMOUNT OF RS.2855/- WHEREAS ON PAGE 121 OF THE PAPER BOOK, IT IS MENTIO NED THAT PAYMENT WAS MADE BY CHEQUE NO.288267 FOR MAKING DD FROM SYNDICATE BANK SOD ACCOUNT NO.226 ON 21.10.2005. O N PAGE 123 OF THE PAPER BOOK IS SOME HAND WRITTEN UNSIGNED PAPERS REGARDING SOME SALES OF VARIOUS ITEMS. ON PAGE 124 OF THE PAPER BOOK IS A SUMMARY OF RS.2786/- WHICH HAS BEEN REDUC ED TO AN AMOUNT OF RS.2588/- MENTIONED BELOW THAT AND BELOW THAT, ANOTHER AMOUNT OF RS.2,500/- IS MENTIONED AND IN THE LEDGER ACCOUNT OF SHRI MANOJ SHAH AVAILABLE ON PAGE 121 O THE PAPER B OOK, THE ENTRY APPEARING IN THE MONTH OF MARCH 2006 IS OF RS.6,500 /- AND RS.3,800/- AND THERE IS NO ENTRY OF EITHER RS.2786/ - OR RS.2588/- OR RS.2,500/-. WE DO NOT UNDERSTAND WHAT TYPE OF DETA IL IS FURNISHED I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 6/20 BY THE ASSESSEE IN THE PAPER BOOK. ON PAGE 127 OF THE PAPER BOOK IS ANOTHER SUMMARY OF EXPENSES OF SHRI MANOJ SHAH, WHICH INCLUDES SALES COMMISSION OF RS.2390/- FOR THE MONT H OF FEB 2006. ADDED TO THIS AMOUNT IS AN AMOUNT OF RS.600/- ON AC COUNT OF M/S. ADIDAS C FORM, ANOTHER AMOUNT OF RS.600/- ON ACCOUN T OF ROAD PERMIT, 6 NOS., XEROX RS.50/- AND FAX CHARGES RS.10 /, BROKERAGE BILL OF RS.166/- AND COURIER RS.100/- TOTAL OF WHIC H HAS BEEN MADE AT RS.3881/- ROUNDED OF TO RS.3,800/- BUT IN THE LE DGER ACCOUNT OF SHRI MANOJ SHAH AVAILABLE ON PAGE 121 OF THE PAPER BOOK, THE ENTRY AVAILABLE IN THE MONTH OF FEB 2006 IS OF CASH PAYMENT OF RS.1,000/- AND CHEQUE PAYMENT OF RS.6,000/- AND RS. 5,800/- AND THERE IS NO ENTRY OF RS.3,800/-. WHEN THE SALE COM MISSION FOR THE MONTH OF FEB. 2006 IS OF RS.2390/- THEN WHAT ARE TH ESE OTHER CHARGES FOR C FORM, ROAD PERMIT, XEROX, FAX AND COU RIER ETC. WHETHER THESE ARE ALSO TO BE PAID BY THE ASSESSEE, WHETHER THESE ARE ALSO INCLUDED AND DEBITED TO COMMISSION PAYMENT OR ARE ACCOUNTED FOR IN THE RESPECTIVE HEAD OF ACCOUNT. NOTHING IS CLEAR FROM THESE PAGES OF THE PAPER BOOK. SIMILAR IS THE CASE WHEN WE EXAMINE THE PAPERS REGARDING OTHER PARTIES. THERE IS NO CONFIR MATION FROM ANY OF THE PARTIES TO WHOM THE COMMISSION PAYMENT WAS M ADE. REGARDING THE FINDING OF LD. CIT(A), WE FIND THAT I T IS NOTED BY HIM IN PARA 4.11 OF HIS ORDER THAT THE ASSESSEE HAS MAINTAINED THE ACCOUNT IN RESPECT OF THE COMMISSION PAID TO VARIOU S PARTIES AND ASSESSEE HAS ALSO MADE DEDUCTION OF TDS. HE FURTHE R SAYS THAT HE HAD GONE THROUGH THE DETAILS LIKE ORDERS PROCURED B Y THE PERSONNEL DEPLOYED AT CSD BUT THERE IS NO FINDING GIVEN BY HI M AS TO WHETHER THESE DETAILS WERE IN ORDER OR NOT. HE FURTHER SAY S THAT THE A.O. WAS MISGUIDED BY THE FACT THAT THERE WAS NO COMMISS ION EXPENDITURE IN THE EARLIER YEAR IGNORING THE COMMIS SION PAID AND I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 7/20 RECEIVED IN THE SUBSEQUENT YEAR. THERE IS NO AGREE MENT AVAILABLE IN THE PAPER BOOK WITH ANY OF THE COMMISSION AGENT. I T WAS SUBMITTED BY THE LD. A.R. BEFORE US THAT THERE IS N O AGREEMENT OF THE ASSESSEE COMPANY WITH THE COMMISSION AGENT IN W RITING BUT ON PAGE 13 OF THE PAPER BOOK-I IN SUMMARY OF COMMISSIO N PAID DURING THIS YEAR, THE ASSESSEE HAS MENTIOEND THE DA TE OF APPOINTMENT OF VARIOUS COMMISSION AGENTS. IT IS NO TED THAT AS PER PAGE 13 OF THE PAPER BOOK, SHRI MANOJ SHAH WAS APPO INTED ON 21.10.2005 BUT AS PER THE DETAILS AVAILABLE AT PAGE 2 OF THE PAPER BOOK, COMMISSION OF RS.2855/- WAS PAID TO SHRI MANO J SHAH ON 21.10.2005 ITSELF AND THIS COMMISSION IS FOR THE MO NTH OF JULY, AUG AND SEP 2005, AS NOTED ON PAGE 2 OF THE PAPER BOOK. SIMILARLY, FOR RAJESH KUMAR, IT HAS BEEN STATED ON PAGE 13 OF THE PAPER BOOK THAT HE WAS APPOINTED ON 27.10.2005 AND AS PER THE DETAI LS AVAILABLE ON PAGE 2 OF THE PAPER BOOK, ON THIS VERY DATE I.E. 27 .10.2005, AN AMOUNT OF RS.7,400/- WAS PAID TO HIM ON ACCOUNT OF COMMISSION STATED TO BE OF THE MONTH OF AUG, SEP 2005. REGARD ING MR. SANJEEV KR. GUPTA TO WHOM TOTAL AMOUNT OF RS.24887/ - WAS PAID, IT HAS BEEN STATED ON PAGE 13 OF THE PAPER BOOK THAT H E WAS APPOINTED ON 21.10.2005 BUT AS PER THE DETAILS AVAI LABLE ON PAGE 5 OF THE PAPER BOOK-I, PAYMENT WAS MADE TO HIM ON THI S DATE I.E. ON 21.10.2005 FOR AN AMOUNT OF RS.9,500/- AND THE SAME IS FOR THE MONTH OF SEP 2005. THIS ANALYSIS SHOWS THAT THERE AS SO MANY INCONSISTENCY AND GAPS IN THE DETAILS AVAILABLE BEF ORE US AND HENCE, WE ARE NOT INCLINED TO SUSTAIN THE ORDER OF LD. CIT (A) BECAUSE NO CLEAR FINDING IS GIVEN BY HIM ON MANY ASPECTS. BUT AT THE SAME TIME, WE ARE NOT INCLINED TO SUSTAIN THE ASSESSMENT ORDER ALSO AS PER WHICH, THE A.O. HAS DISALLOWED THE ENTIRE CLAIM OF THE ASSESSEE REGARDING COMMISSION PAYMENT PARTICULARLY WHEN THE ASSESSEE HAS I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 8/20 SHOWN COMMISSION RECEIPT OF RS.101.06 LACS IN THE P RESENT YEAR AS AGAINST COMMISSION RECEIPT OF ONLY RS.31.56 LACS IN THE PRECEDING YEAR AND HENCE THIS IS NOT ACCEPTABLE THAT NO EXPEN SES WERE INCURRED BY THE ASSESSEE ON ACCOUNT OF COMMISSION P AYMENT PARTICULARLY WHEN SO MANY DOCUMENTS IN THIS REGARD ARE AVAILABLE IN THE PAPER BOOK AND AS PER THE CERTIFICATE OF THE AS SESSEE IN THE PAPER BOOK, THESE DOCUMENTS WERE SUBMITTED BY THE A SSESSEE BEFORE THE A.O. ALSO. UNDER THESE FACTS, WE FEEL T HAT THIS MATTER SHOULD GO BACK TO THE FILE OF THE A.O. FOR FRESH DE CISION AND HENCE, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DEC ISION. THE ASSESSEE HAS TO FURNISH ALL THE DETAILS WHICH ARE R EQUIRED BY THE A.O. ALONG WITH CONFIRMATION AND COMPLETE ADDRESSES OF THE PARTIES ALONG WITH DETAILS OF SERVICES RENDERED BY THEM, AG REEMENT WITH THEM, IF ANY, OR THE EVIDENCE OF THEIR APPOINTMENT ON DATES OF APPOINTMENT MENTIONED ON PAGE 13 OF THE PAPER BOOK. THEREAFTER, THE A.O. SHOULD PASS NECESSARY ORDER AS PER LAW AFT ER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THIS GROUND OF REVENUES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. 2.2 GROUND NO.2 OF THE APPEAL READS AS UNDER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.5,23,082/- OUT OF TOTAL DISALLOWANCE OF RS.5,23, 082/- ON ACCOUNT OF BUSINESS AND SALES PROMOTION EXPENSES IG NORING THE FACTS THAT MOST OF THESE EXPENSES WERE PERSONAL IN NATURE AND NO EVIDENCE WAS FILED IN SUPPORT OF THESE EXPEN SE. 2.2.1 THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. ON PAGE 3-4 OF THE ASSESSMENT ORDER THAT AN AMOUNT OF RS.11 ,46,163/- WAS DEBITED BY THE ASSESSEE TO THE P & L ACCOUNT UNDER THE HEAD I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 9/20 BUSINESS AND SALE PROMOTION. IT IS NOTED BY THE A.O. THAT OUT OF THESE EXPENSES, AN AMOUNT OF RS.3,19,543/- HAS BEEN DEBITED ON ACCOUNT OF SALES PROMOTION EXPENSES AND THE BALANCE AMOUNT OF RS.8,26,619/- HAS BEEN DEBITED ON ACCOUNT OF BUSINE SS PROMOTION EXPENSES. THE A.O. ASKED THE ASSESSEE TO FILE DOCU MENTARY EVIDENCE TO PROVE THE GENUINENESS OF THE EXPENSES. IT IS NOTED BY THE A.O. THAT THE ASSESSEE HAS FAILED TO DO SO. IT IS ALSO NOTED BY HIM THAT NO VOUCHER OR BILL IN SUPPORT OF THESE EXP ENSE WERE PRODUCED. WHEN THE ASSESSEE WAS SPECIFICALLY CONFR ONTED ON THIS ACCOUNT BY THE A.O. VIDE ORDER SHEET ENTRY DATED 10 .12.2008, THE ASSESSEE SIMPLY FILED COPY OF ACCOUNTS AND STATED N OTHING TO PROVE THE GENUINENESS OF THE EXPENSES AND NO VOUCHER OR B ILL WAS PRODUCED IN SUPPORT OF THESE EXPENSES. IT IS OBSER VED BY THE A.O. THAT AFTER PERUSAL OF THE COPY OF ACCOUNTS FURNISHE D BY THE ASSESSEE, IT WAS SEEN THAT MOST OF THE EXPENSE HAVE BEEN SHOW N INCURRED IN CASH WITHOUT ANY FURTHER NARRATION OR DETAIL. THE A.O. DISALLOWED HALF THE AMOUNT OF SALE PROMOTION EXPENSES DEBITED BY THE ASSESSEE AT RS.3,19,543/-. 2.2.2 REGARDING BUSINESS PROMOTION EXPENSES OF RS.8,26,61 9/-, IT WAS NOTED BY THE A.O. THAT MOST OF THESE EXPENSE WERE D EBITED IN CASH WITHOUT ANY SPECIFIC NARRATION OR DETAILS AND MOST OF THE EXPENSES APPEAR TO BE PERSONAL IN NATURE. IT IS NOTED BY HI M THAT AN AMOUNT OF RS.2 LACS IS DEBITED REGARDING PAYMENT TO HYATT REGENCY. THE A.O. WAS OF THE VIEW THAT THE SAME IS OF PERSONAL N ATURE. THE A.O. CONFRONTED THE ASSESSEE REGARDING THIS VIDE ORDER S HEET ENTRY DATED 4.12.2008 AND ASKED THE ASSESSEE TO SHOW CAUSE AS T O WHY THIS EXPENDITURE SHOULD NOT BE DISALLOWED AND IN RESPONS E, IT WAS SIMPLY STATED THAT THESE EXPENSE ARE IN THE NATURE OF BUSINESS PROMOTION EXPENSES OF THE COMPANY BUT THE ASSESSEE FAILED TO I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 10/20 SUBSTANTIATE ITS CLAIM BY ADDUCING ANY DOCUMENTARY EVIDENCE IN THIS REGARD. THE A.O. DISALLOWED HALF OF THE EXPEN SES DEBITED AT RS.8,26,619/-. BEING AGGRIEVED, THE ASSESSEE CARRI ED THE MATER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE DI SALLOWANCE IN FULL EXCEPT RS.50,000/- AND NOW, THE REVENUE IS IN APPEAL BEFORE US. 2.2.3 IT IS SUBMITTED BY THE LD. D.R. FOR THE REVENUE THA T ON ACCOUNT OF THIS EXPENDITURE ALSO, THE ASSESSEE HAS NOT FURNISH ED THE REQUISITE DETAILS BEFORE THE A.O. AS HAS BEEN NOTED BY THE A. O. IN THE ASSESSMENT ORDER. REGARDING THE ORDER OF LD. CIT(A ), IT WAS SUBMITTED THAT IN PARA 13.2 OF HIS ORDER, IT HAS BE EN STATED BY THE LD. CIT(A) THAT THE LD. A.R. COULD NOT COUNTER THE FINDINGS OF THE A.O. IN RESPECT OF THE AMOUNT OF RS.2 LACS PAID TO HYATT REGENCY. IT IS ALSO STATED BY HIM THAT PARTICULAR NATURE OF THIS EXPENDITURE IS NOT NARRATED BY THE ASSESSEE AND IN SPITE OF THIS F INDING OF LD. CIT(A), HE HAS CONFIRMED THE DISALLOWANCE OF AN AMO UNT OF RS.50,000/- AND THERE IS NO FINDING REGARDING OTHER EXPENSES CLAIMED BY THE ASSESSEE AND HENCE THE ORDER OF CIT( A) ON THIS ASPECT ALSO SHOULD BE REVERSED AND THAT OF THE A.O. SHOULD BE RESTORED. 2.2.4 AS AGAINST THIS, THE LD. A.R. FOR THE ASSESSEE SUPP ORTED THE ORDER OF LD. CIT(A). IT IS ALSO SUBMITTED THAT THE A.O. HAS AGREED THAT THE EXPENSES ARE REALLY INCURRED BECAUSE HE HAS ALSO AL LOWED THE EXPENSES TO THE EXTENT OF 50% AND HENCE THE AD-HOC DISALLOWANCE BY HIM TO THE EXTENT OF 50% IS NOT JUSTIFIED. IT I S ALSO SUBMITTED BY HIM THAT IN THE CASE OF A COMPANY, THERE IS NO QUES TION OF ANY PERSONAL EXPENDITURE OR PERSONAL USE AND IN THIS RE GARD, RELIANCE WAS PLACED BY HIM ON THE JUDGEMENT OF HON'BLE GUJAR AT HIGH COURT RENDERED IN THE CASE OF SANJAY IRON & ENGINEE RING COMPANY AS REPORTED IN 121 TAXMAN 43 (GUJ.). RELIANCE WAS ALSO PLACED ON I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 11/20 THE DECISION OF JODHPUR BENCH OF THE TRIBUNAL RENDE RED IN THE CASE OF OM PRAKASH JOSHI AS REPORTED IN 34 SOT 33. RELI ANCE WAS ALSO PLACED ON THE DECISION OF DELHI BENCH OF THE TRIBUN AL RENDERED IN THE CASE OF MIDLAND INTERNATIONAL LTD. AS REPORTED IN 109 ITD 199 (DEL.). 2.2.5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY THE LD. A.R. FOR THE ASSESS EE. WE FIND THAT THE DISALLOWANCE WAS MADE BY THE A.O. FOR THE REASO N THAT PROPER DETAILS AND EVIDENCES WERE NOT FURNISHED BY THE ASS ESSEE BEFORE HIM. THERE IS NO FINDING OF LD. CIT(A) IN HIS ORD ER THAT PROPER DETAILS WERE FURNISHED BY THE ASSESSEE BEFORE THE A .O. LD. CIT(A) SAYS THAT HE HAD GONE THROUGH THE ACCOUNT AND VOUCH ERS PRODUCED FOR VERIFICATION BUT HE HAS NOT OBTAINED ANY REMAND REPORT AND THERE IS NO FINDING THAT THESE VOUCHERS AND DETAILS WERE PRODUCED BY THE ASSESSEE BEFORE THE A.O. REGARDING PAYMENT OF RS.2 LACS TO HYATT REGENCY LD. CIT(A) ALSO SAYS THAT EXACT NATURE OF T HIS EXPENDITURE IS NOT PROVIDED BY THE ASSESSEE. IF THIS BE SO, TH EN ON WHAT BASIS, HE HAS RESTRICTED THE DISALLOWANCE TO RS.50,000/- O NLY, IS NOT CLEAR TO US. IN THE PAPER BOOK FILED BEFORE US, ON PAGES 299-315 OF THE PAPER BOOK-II, THE ASSESSEE HAS SUBMITTED COPY OF T HE LEDGER ACCOUNT OF SALE PROMOTION EXPENSES AND BUSINESS PRO MOTION EXPENSES. IN THE LEDGER ACCOUNT, PROPER NARRATION IS NOT AVAILABLE WHICH CAN SUGGEST AS TO WHETHER THE SAME IS RELATED TO THE BUSINESS OR NOT. ON PAGES 316-905 OF THE PAPER BOOK, THE AS SESSEE HAS FURNISHED COPIES OF VOUCHERS AND BILLS BUT UNLESS T HESE VOUCHERS AND BILLS ARE PROPERLY TABULATED IN THE FORM OF A M EANINGFUL DETAIL, IT CANNOT BE FOUND AS TO WHETHER THE SAME ARE FOR B USINESS PURPOSE OR NOT E.G. ON PAGE 377 OF THE PAPER BOOK IS A VOUC HER OF I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 12/20 RS.15,850/- ON ACCOUNT OF CASH PAID AS PER CASH MEM O. THE COPY OF CASH MEMO IS AVAILABLE ON PAGE 378 OF THE PAPER BOOK ISSUED BY SAHIL EMPORIUM, SOUTH EXTENSION AND IN THE CASH MEM O ONLY 5 AMOUNTS ARE TOTALED TO RS.20,630/- AND THEREAFTER A N AMOUNT OF RS.4,780/- HAS BEEN DEDUCTED AND THE BALANCE WAS SH OWN RS.15,850/-. THERE IS NO MENTION REGARDING THE ITE MS FOR WHICH THIS PAYMENT WAS MADE. THIS PARTY IS SPECIALIZED I N LADIES WEAR AS PER THE PRINTING ON THE CASH MEMO AVAILABLE BEFORE US. IF LADIES WEAR WERE PURCHASED THEN IT HAD TO BE EXPLAINED FOR WHOM AND WHAT WAS THE BUSINESS PURPOSE. ON PAGE 637 OF THE PAPER BOOK IS A CASH MEMO OF ROYAL CHINA OF RS.4130/- ON ACCOUNT OF FOOD AND BEVERAGES & LIQUOR. IT HAS ALSO TO BE EXPLAINED TH AT WHO HAS SPENT THIS AMOUNT FOR WHOM AND WHAT WAS THE BUSINESS PURP OSE FOR THIS EXPENDITURE. REGARDING PAYMENT OF RS.2 LACS TO HYA TT REGENCY, WE DO NOT KNOW AS TO WHETHER THE EVIDENCE FOR THIS PAYMENT IS AVAILABLE IN THE PAPER BOOK OR NOT BECAUSE NO SPECI FIC PAGE NUMBER OF THE PAPER BOOK WAS POINTED OUT BY THE LD. A.R. AND HENCE WE ARE NOT IN A POSITION TO COMMENT ABOUT THE ALLOWABILITY OF THIS PAYMENT OF RS.2 LACS TO HYATT REGENCY. UNDER THIS FACTUAL POSITION, WE FEEL THAT THIS MATTER SHOULD ALSO GO B ACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AND ASSESSEE HAS TO F URNISH ALL NECESSARY DETAILS AND EVIDENCES BEFORE THE A.O. AND THEREAFTER, THE A.O. SHOULD PASS NECESSARY ORDER AS PER LAW AFTER P ROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THIS GROUND OF THE REVENUE IS ALSO ALLOWED FOR STATISTICAL PURP OSES. 2.2.6 REGARDING VARIOUS JUDGEMENTS CITED BY THE LD. A.R. FOR THE ASSESSEE, WE WOULD LIKE TO POINT OUT THAT THE SAME SHOULD BE KEPT IN MIND BY THE A.O. WHILE DECIDING THE ISSUE AFRESH BE CAUSE THE JUDGEMENT WILL COME LATER AND FIRST, ON FACTS, THE ASSESSEE HAS TO I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 13/20 ESTABLISH THAT THE EXPENDITURE WAS INCURRED FOR THE BUSINESS PURPOSE. 2.3 GROUND NO.3 OF THE APPEAL READS AS UNDER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS .55,100/- OUT OF THE TOTAL DISALLOWANCE OF RS.1,10,200/- DISALLOWED BY THE A.O. ON ACCOUNT OF MEMBERSHIP AND SUBSCRIPTION PAID TO A GO LD CLUB IGNORING THE FACT THAT THE EXPENSES INCURRED WERE P ERSONAL IN NATURE AND NO NEXUS WITH THE BUSINESS OF THE ASSESSEE COMP ANY WAS ESTABLISHED. 2.3.1 THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. ON PAGE 4 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS DEBIT ED AN AMOUNT OF RS.1,10,200/- IN P & L ACCOUNT UNDER THE HEAD MEMBE RSHIP OF CLUB. IT IS NOTED BY THE A.O. THAT FROM THE DETAIL S, IT IS REVEALED THAT THIS INCLUDED PAYMENT OF RS.55,100/- EACH TO UPPAL OCHIDS CLUB AND DLF GOLF CLUB RESPECTIVELY. THE A.O. CONFRONT ED THE ASSESSEE AND ASKED THE ASSESSEE TO SHOW CAUSE VIDE ORDER SHEET ENTRY DATED 4.12.2008 AS TO WHY THIS EXPENDITURE SH OULD NOT BE DISALLOWED. IN REPLY, IT WAS SUBMITTED BY THE ASSE SSEE BEFORE THE A.O. THAT THIS EXPENSES IS IN THE NATURE OF BUSINES S PROMOTION EXPENSE OF THE ASSESSEE COMPANY. THE A.O. HAS OBSER VED THAT HE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CLAIM BY AD DUCING ANY DOCUMENTARY EVIDENCE IN THIS REGARD. HE DISALLOWED THE ENTIRE AMOUNT OF RS.1,10,200/- CLAIMED BY THE ASSESSEE ON THE BASIS THAT THIS EXPENDITURE IS OF PERSONAL NATURE. BEING AGGR IEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) WHO HAS DELETED 50% OF THE DISALLOWANCE I.E. REGARDING PAYM ENT TO DLF GOLF CLUB AND NOW THE REVENUE IS IN APPEAL BEFORE U S FOR THE AMOUNT DELETED BY LD. CIT(A). I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 14/20 2.3.2 THE LD. D.R. FOR THE REVENUE SUPPORTED THE ASSESSME NT ORDER, WHEREAS LD. A.R. FOR THE ASSESSEE SUPPORTED THE ORD ER OF LD. CIT(A). IT WAS SUBMITTED THAT WITH A VIEW TO PROMOT E SALE AND PROCURE MAXIMUM ORDER, THE MEMBERSHIP WAS TAKEN OF UPPAL ORCHID CLUB AND IT IS ALSO SUBMITTED THAT THE DIREC TORS WERE ENGAGED IN LOT OF TRAVELLING AND ON ACCOUNT OF THEI R MEMBERSHIP, THEY WERE GETTING CONCESSION FROM THE CLUB AT VARIO US STATIONS WHEREVER THE DIRECTORS WERE VISITING AND HENCE THIS IS A BUSINESS EXPENDITURE AND SHOULD BE ALLOWED IN FULL. IT IS A LSO SUBMITTED THAT IT IS A CASE OF A COMPANY AND HENCE THERE CANNOT BE ANY PERSONAL EXPENDITURE. RELIANCE WAS PLACED ON THE TRIBUNAL DE CISION RENDERED IN THE CASE OF STERLIGHT INDUSTRIES LTD. AS REPORTE D IN 6 SOT 497 (MUM.) AND ALSO ON THE JUDGEMENT OF HON'BLE APEX CO URT RENDERED IN THE CASE OF S A BUILDERS VS CIT AS REPORTED IN 2 88 ITR 01 (S.C.). 2.3.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSED TH E MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY THE LD. A.R. FOR THE ASSESS EE. WE FIND THAT THE DISALLOWANCE WAS MADE BY THE A.O. ON THE BASIS THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE IN SUPPORT OF BOTH THE PAYMENTS TO UPPAL ORCHID CLUB AND DLF GOLF CLUB RES PECTIVELY. IT IS NOTED BY THE LD. CIT(A) IN PARA 16 OF HIS ORD ER THAT THE ASSESSEE IS IN THE BUSINESS OF MARKETING AND PROMOT ING GOODS OF ADIDAS FROM WHOM BUSINESS WAS RECEIVED AND TO PROMO TE GOLF RELATED EQUIPMENTS, THE ASSESSEE TOOK THE MEMBERSHI P OF DLF GOLF CLUB FOR ORGANIZING EVENTS/TRAINING. THIS IS A GEN ERAL STATEMENT AND THERE IS NO FINDING OF LD. CIT(A) AS TO WHETHER THE ASSESSEE HAS IN FACT ORGANIZED ANY EVENT OR TRAINING IN DLF GOLF CLUB DURING THIS YEAR OR IN ANY SUBSEQUENT YEAR. MOREOV ER, THERE WAS NO I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 15/20 SUCH ARGUMENT MADE BY THE ASSESSEE BEFORE THE A.O. AND NOTHING WAS PRODUCED BEFORE THE A.O. HENCE, WE FEEL THAT T HIS MATTER SHOULD ALSO GO BACK TO THE FILE OF THE A.O. FOR A F RESH DECISION. WE, THEREFORE, SET ASIDE THE ORDER OF LD. CIT(A) ON THI S ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR FRESH DECISION. THE ASSESSEE SHOULD FURNISH NECESSARY DETAILS AND E VIDENCE BEFORE THE A.O. AND THEREAFTER THE A.O. SHOULD PASS NECESS ARY ORDER AS PER LAW. REGARDING VARIOUS JUDGEMENTS CITED BY THE LD. A.R., WE WOULD LIKE TO OBSERVE THAT THE JUDGEMENTS WILL COME LATER AND FIRST, THE ASSESSEE HAS TO BRING THE FACTS ON RECORD ALONG WITH EVIDENCE. WE DIRECT THE A.O. THAT WHILE DECIDING THIS ISSUE, HE SHOULD KEEP IN MIND THESE JUDGMENTS ALSO. THIS GROUND OF REVENUE S APPEAL IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 2.4 GROUND NO.4 OF THE APPEAL READS AS UNDER: 4, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.7,31,919/- OUT OF THE TOTAL DISALLOWANCE OF RS.7 ,81,919/- ON ACCOUNT OF TRAVELLING, BOARDING AND LODGING EXPE NSE IGNORING THE FACT THAT NO EVIDENCE WAS PRODUCED/FIL ED TO PROVE GENUINENESS OF THESE EXPENSES AND TO ESTABLIS H THAT THESE EXPENSES WERE INCURRED EXCLUSIVELY FOR BUSINE SS PURPOSES. 2.4.1 THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. ON PAGES 4-5 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS D EBITED AN AMOUNT OF RS.15,63,838/- UNDER THE HEAD TRAVELLING, BOARD ING AND LODGING. IT IS NOTED BY THE A.O. THAT WHEN ASKED FROM THE AS SESSEE, DOCUMENTARY EVIDENCE WERE NOT PRODUCED TO PROVE THE GENUINENESS OF THESE EXPENSES. THE A.O. ASKED THE ASSESSEE TO SHOW CAUSE AS PER ORDER SHEET ENTRY DATED 10.12.2008. IT IS NOTE D BY THE A.O. THAT I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 16/20 IN RESPONSE, THE ASSESSEE SIMPLY FILED COPY OF ACCO UNTS AND STATED NOTHING TO PROVE THE GENUINENESS OF THESE EXPENSES. IT IS ALSO OBSERVED BY HIM THAT EVEN NO VOUCHER OR BILLS WERE PRODUCED IN SUPPORT OF THESE EXPENSES. THE A.O. MADE DISALLOWA NCE TO THE EXTENT OF 50% OF THESE EXPENSES AND IN THIS MANNER, HE MADE DISALLOWANCE OF RS.7,81,919/- ON THIS BASIS THAT TH E ASSESSEE HAS FAILED TO ESTABLISH THAT THESE EXPENSES WERE INCURR ED EXCLUSIVELY FOR BUSINESS PURPOSE. BEING AGGRIEVED, THE ASSESSEE CA RRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED T HE DISALLOWANCE OF ONLY RS.50,000/- AND DELETED THE DI SALLOWANCE OF RS.7,31,919/-. AGAINST THIS DELETION OF DISALLOWAN CE, THE REVENUE IS IN APPEAL BEFORE US. 2.4.2 IT IS SUBMITTED BY THE LD. D.R. THAT THE ORDER OF L D. CIT(A) IS VERY GENERAL AND HE SAYS THAT THE FINDING OF THE A.O. WA S NOT SUCCESSFULLY CONTESTED. IT IS ALSO STATED BY HIM T HAT THE ASSESSEE HAS NOT PROVED BY FURNISHING EVIDENCE OF THE EXACT NATU RE OF THE EXPENSES AND THEREFORE HE HAS CONFIRMED THE DISALLO WANCE OF RS.50,000/- ONLY AND THAT HIS ORDER OF LD. CIT(A) S HOULD BE REVERSED AND THAT OF THE A.O. SHOULD BE RESTORED. AS AGAINST THIS, THE LD. A.R. FOR THE ASSESSEE SUPPORTED THE ORDER O F THE LD. CIT(A). IT IS ALSO SUBMITTED BY HIM THAT THE A.O. HIMSELF AGREED THAT THE EXPENSES ARE INCURRED UNDER THIS HEAD AND HE HAS ALSO ALLOWED 50% OF THE EXPENSES AND DISALLOWANCE HAS BE EN MADE ON AD-HOC BASIS WITHOUT ANY BASIS AND HENCE, THE ENTIR E DISALLOWANCE SHOULD HAVE BEEN DELETED. RELIANCE HAS BEEN PLACED ON THE JUDGEMENT OF HONBLE CALCUTTA HIGH COURT RENDERED I N THE CASE OF CIT VS UNITED COLLIERY LTD. AS REPORTED IN 49 TAXMA N 227 CAL. 2.4.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 17/20 THE JUDGEMENTS CITED BY THE LD. A.R. WE FIND THAT IT IS A SPECIFIC FINDING OF THE A.O. THAT NECESSARY DETAILS AND EVID ENCES WERE NOT FURNISHED BY THE ASSESSEE BEFORE THE A.O. THE LD. CIT(A) HAS ALSO GIVEN A FINDING THAT THE FINDING OF THE A.O. WERE N OT SUCCESSFULLY CONTESTED. THIS FINDING IS ALSO GIVEN BY LD. CIT(A ) THAT THE ASSESSEE HAS NOT PROVED BY FURNISHING EVIDENCE OF T HE EXACT NATURE OF EXPENDITURE. UNDER THESE FACTS, WE FEEL THAT IT CANNOT BE ACCEPTED THAT THE ENTIRE EXPENDITURE WAS INCURRED F OR THE BUSINESS PURPOSE. REGARDING THIS ASPECT THAT ONLY AD-HOC DI SALLOWANCE WAS MADE WITHOUT ANY SPECIFIC DEFECT, WE WOULD LIKE TO OBSERVE THAT IN THE ABSENCE OF PROPER DETAILS AND EVIDENCE BEING FU RNISHED BY THE ASSESSEE BEFORE THE A.O., THE A.O. WAS LEFT WITH NO OPTION BUT TO MAKE ESTIMATED DISALLOWANCE BECAUSE SPECIFIC DEFECT CAN BE POINTED OUT ONLY WHEN PROPER DETAILS AND EVIDENCES ARE FURNISHED BEFORE THE A.O. THE PRIMARY BURDEN IS ON THE ASSESS EE TO PROVE THE ALLOWABILITY OF EXPENSES CLAIMED BY THE ASSESSEE BY FURNISHING PROPER DETAILS AND EVIDENCES AND THE BURDEN WILL SH IFT ON REVENUE ONLY AFTER THAT. IN THE PRESENT CASE, PROPER DETAI LS AND EVIDENCES WERE NOT FURNISHED BY THE ASSESSEE BEFORE THE A.O. AND HENCE THE ASSESSEE HAS FAILED TO FULFILL ITS ONUS AND HENCE T HE A.O. WAS LEFT WITH NO OPTION BUT TO MAKE ESTIMATED DISALLOWANCE. THERE IS NO BASIS GIVEN BY THE LD. CIT(A) AS TO HOW HE HAS ESTI MATED THAT THE DISALLOWANCE AT RS.50,000/- ONLY IS REASONABLE AS A GAINST THE ESTIMATION OF THE A.O. @ 50% OF THE TOTAL EXPENSES. UNDER THESE FACTS, WE FEEL THAT IN THE INTEREST OF JUSTICE, THE ASSESSEE CAN BE PROVIDED ONE MORE OPPORTUNITY TO PRESENT ITS CASE P ROPERLY BEFORE THE A.O. AND HENCE WE SET ASIDE THE ORDER OF LD. CI T(A) ON THIS ISSUE ALSO AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR FRESH DECISION. WE WOULD LIKE TO CLARIFY THAT THE BURDEN IS ON THE I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 18/20 ASSESSEE TO FURNISH PROPER DETAILS AND EVIDENCES BE FORE THE A.O. AND THEREAFTER, THE A.O. SHALL PASS NECESSARY ORDER AS PER LAW. REGARDING THE JUDGMENT OF HON'BLE HIGH COURT OF CAL CUTTA RELIED UPON BY THE LD. A.R. FOR THE ASSESSEE, WE FIND THAT HIS JUDGEMENT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACT S ARE DIFFERENT. IN THAT CASE CERTAIN AMOUNT REPRESENTING TRAVELLING EX PENSE, EXPENDITURE ON LAW COST AND STAMPS WERE INCURRED IN RESPECT OF DEFUNCT BUSINESS OF THE ASSESSEE. THE SAME WAS DEL ETED BY THE LD. CIT(A) ON THE BASIS THAT THESE EXPENSE WERE INCURRE D FOR PROTECTING THE COMPANYS ASSETS AND THE TRIBUNAL IN THAT CASE CONFIRMED THE FINDINGS OF THE LD. CIT(A) AND IT WAS HELD THAT THE AMOUNT IN QUESTION WERE SPENT IN THE BUSINESS INTEREST OF THE ASSESSEE AND, THEREFORE, ALLOWABLE AS DEDUCTION. THIS TRIBUNAL O RDER WAS UPHELD BY THE HON'BLE HIGH COURT OF CALCUTTA. IN THAT CAS E, THE ASSESSEE HAS SUCCESSFULLY ESTABLISHED BEFORE THE LD. CIT(A) AND BEFORE THE TRIBUNAL THAT THE EXPENSES IN QUESTION WERE INCURRE D FOR THE BUSINESS PURPOSE, WHEREAS IN THE PRESENT CASE, THE ASSESSEE HAS FAILED TO FURNISH PROPER DETAILS AND EVIDENCES BEFO RE THE AUTHORITIES BELOW AND EVEN BEFORE US AND HENCE THIS JUDGEMENT O F HON'BLE HIGH COURT OF CALCUTTA IS OF NO HELP TO THE ASSESSE E. THE MATTER IS RESTORED BECK TO THE FILE OF THE A.O. FOR FRESH DEC ISION AND THE ASSESSEE HAS TO BRING EVIDENCES ON RECORD TO ESTABL ISH THAT THE EXPENSES WERE INCURRED EXCLUSIVELY FOR THE BUSINESS PURPOSES. THEREAFTER, THE A.O. SHALL PASS NECESSARY ORDER AS PER LAW. THIS GROUND OF THE REVENUE IS ALSO ALLOWED FOR STATISTIC AL PURPOSES. 2.5 IN THE RESULT THE APPEAL OF THE REVENUE STANDS ALLO WED FOR STATISTICAL PURPOSES. 3. NOW, WE TAKE UP THE CROSS OBJECTIONS FILED BY THE A SSESSEE. I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 19/20 3.1 GROUNDS NOS. 1, 2 & 6 WERE NOT PRESSED BY THE LD. A .R. FOR THE ASSESSEE AND HENCE THE SAME ARE DISMISSED AS NOT PR ESSED. 3.2 THE GROUNDS NOS. 3,4, & 5 OF THE C.O. READ AS UNDER : 3) ON THE FACT AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE CIT(A) WAS INCORRECT AND UNJUSTIFIED IN CONFIRM ING THE ADDITION OF RS.50,000/- OUT OF TOTAL ADDITION OF RS.5,73,082 /- INCORRECTLY AND UNJUSTIFIABLY MADE BY THE A.O. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A) WAS INCORRECT AND UNJUSTIFIED IN CONFIRM ING THE ADDITION OF RS.55,100/- OUT OF TOTAL ADDITION OF RS.1,10,200 /- INCORRECTLY AND UNJUSTIFIABLY MADE BY THE A.O. 5) ON THE FACTS NEW DELHI IN THE CIRCUMSTANCES O THE C ASE AND IN LAW THE CIT(A) WAS INCORRECT AND UNJUSTIFIED IN CONFIRMING THE ADDITION OF RS.50,000/- OUT OF TOTAL ADDITION OF RS .7,81,919/- INCORRECTLY AND UNJUSTIFIABLY MADE BY THE A.O. 3.3 IT WAS AGREED BY BOTH THE SIDES THAT THESE 3 GROUND S OF THE ASSESSEE IN THE CROSS OBJECTIONS ARE INTERCONNECTED WITH THE GROUNDS NOS. 2, 3 & 4 OF THE REVENUES APPEAL. SINCE WHILE DECIDIN G THE APPEAL OF THE REVENUE, ALL THESE THREE ISSUES HAVE BEEN RESTO RED BACK TO THE FILE OF THE A.O. REGARDING THE PART AMOUNT DELETED BY THE CIT(A), FOR THE BALANCE AMOUNT OF ADDITION CONFIRMED BY THE CIT(A) ALSO, THE MATTER HAS TO GO BACK TO THE FILE OF THE A.O. F OR FRESH DECISION AND ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT( A) ON THESE 3 ISSUES ALSO. REGARDING CONFIRMATION OF PART ADDITI ON ON THESE ISSUES ALSO WE RESTORE BACK THE MATTER TO THE FILE OF THE A.O. FOR FRESH DECISION. THE A.O. SHOULD DECIDE ALL THESE 3 ISSUES AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ALL THESE THREE GROUNDS OF THE ASSESSEE STANDS ALLO WED FOR STATISTICAL PURPOSES. I.T.A. NO.3277 /DEL/09 C.O.NO.387/DEL/09 20/20 4. IN THE COMBINED RESULT, THE APPEAL OF THE REVENUE S TANDS ALLOWED FOR STATISTICAL PURPOSES WHEREAS THE CROSS OBJECTIO N OF THE ASSESSEE STAND PARTLY ALLOWED FOR STATISTICAL PURPO SES. 5. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 3 0 TH JULY 2010. SD./- SD./- (RAJPAL YADAV) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH JULY, 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI