AYYOOR POKAR ABDUL KADAR, MUMBAI V. ASST CIT 20(1), MUMBAI

CO 59/MUM/2011

• Counselvise Citation: [2014] 123 COUNSELVISE.COM (IT) 0069 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 30-09-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2011
• Court: TRIBUNAL
• Department Lawyers: ASGHAR JAIN
• Assessee Lawyers: DHIRENDRA M SHAH
• Keywords: Depreciation; Business expenditure; Reasonable cause; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A. NO. 3933/M/2010 ( AY : 2006 - 2007) I.T.A. NO. 392 0/M/2010 ( AY : 2007 - 2008 ) ITO - 20(1)(1), ROOM NO.702, 7 TH FLOOR, PIRAMAL CHAMBER, PAREL, MUMBAI 400 012. VS. SHRI AYYOOR POKAR ABDUL KADER, 214, JANKI CENTRE, SHAH INDUSTRIAL ESTATE, OFF. VEERA DESAI ROAD, ANDHERI (W), MUMBAI 400 058. PAN:AABPP0236A (APPELLANT) (RESPONDENT) C.O. NO. 59/M/2011 (ARISING OUT OF I .T.A. NO. 3933 /M/2010 ) (AY : 2006 - 20 07) C.O. NO. 60/M/2011 (ARISING OUT OF I .T.A. NO. 3920 /M/2010 ) (AY : 2 007 - 20 08) SHRI AYYOOR POKAR ABDUL KADER, 214, JANKI CENTRE, SHAH INDUSTRIAL ESTATE, OFF. VEERA DESAI ROAD, ANDHERI (W), MUMBAI 400 058. PAN:AABPP0236A VS. ITO - 20(1)(1), ROOM NO.702, 7 TH FLOOR, PIRAMAL CHAMBER, PAREL, MUMBAI 400 012. (CROSS OBJECTOR ) (APPELLANT IN APPEAL ) ASSESSEE BY : SHRI DHIRENDRA M. SHAH REVENUE BY : SHRI ASGHAR JAIN, DR DATE OF HEARING: 30.9 .2014 DATE OF ORDER: 21 .10 .2014 O R D E R PER BENCH : THERE ARE FOUR APPEALS UNDER CONSIDERATION INVOLVING ASSESSMENT YEARS 2006 - 07 AND 2007 - 08. OUT OF THEM, REVENUE FILED TWO APPEALS (ITA NOS.3920 & 3933/M/2010) AND ASSESSEE FILED TWO CROSS OBJECTIONS (C.O.NOS.59 & 60/M/2011). ALL THESE APPEALS EMANATE FROM THE COMBINED ORDER OF THE CIT (A) - 31, MUMBAI, DATED 26.2.2010. SINCE, THE ISSUES RAISED IN ALL THESE APPEALS ARE CONNECTED, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. 2 I.T.A.NO. 3933/M/2010 ( AY: 2006 - 20 07) (REVENUES APPEAL) 3 . THIS APPEAL IS FILED BY THE REVENUE ON 1 4.5.2010 AGAINST THE ORDER OF THE CIT (A) - 31, MUMBAI DATED 26.2.2010 FOR THE ASSESSMENT YEAR 2006 - 2007 . IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: I THE L EARNED CIT(A) HAS E R RED ON FACTS AND I N LAW AND I N T HE C IRCUM S TANC E S OF THE C ASE I N RESTR I CTING T HE D I SA L LO W A N CE MADE ON A C CO UNT O F L A BOU R EXPENSES FRO M RS . 55,19,271/ - / - ( 2 0% O F T OTA L EXPENSES ) TO R S . 13,79,818 / - ( 5% OF T OTA L EXPENSES) . II . THE L EARNED CIT(A) HAS F AILED TO APPREC I ATE T HE F AC T TH AT TH E ASSES S E E H A S SHOWN LOSS I N THE TRAD I NG ACCOUNT I TSELF MAKES I T E VI DEN T T HA T I T I S I NFLATING TH E E X PENSES I N THE HEAD OF L ABOU R C H A R GES W H I CH ARE N O N V E RI F I A BLE A ND FOR WH I CH NO DETA I LS WERE KEPT BY THE ASSESSEE AND NO BOOKS O F ACC O UNT WERE PRODUCED , AND THE ASSESS I NG OFFICE R W AS RI GHT IN D I S ALL O WIN G 20% OF TOTAL LABOUR CHARGES . I II . THE L EARNED CI T(A) HAS ERRED ON FACTS A N D IN L A W A N D IN T HE CIRCUM S TANCES OF TH E C ASE IN DE L ET I NG T HE DI SA LL OWA NC E OF DEPREC IATION ON LUX U RY C A R AND ANOTHE R CAR , AS THERE WAS NO BUS I NESS IN THE ABO V E CONCER N. I V . THE L EA R NED CIT ( A ) F A IL ED TO APPREC I A T E TH E F AC T T H A T AO HA S ALL O WED THE E X PENSES C L A I M E D ON ACCOUNT OF DEPREC I AT I ON O F C A R A N D E X PE NS E S IN TOTO T REAT I NG I T AS FOR BUSINESS PURPOSE A N D NO DISA LL O W ANCE F OR P E R S ON A L USE WAS MADE ON TH I S ACCOUNT . 4. IN THIS APPEAL, TWO ISSUES WERE RAISED BY THE REVENUE I.E., (I) DISALLOWANCE OF LABOUR EXPENSES AND (II) DISALLOWANCE OF DEPRECIATION ON LUXURY CAR. BRIEF LY STATED RELEVANT FACTS RELATING TO THESE ISSUES ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF READYMADE GARMENTS. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS.18,21,105/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. IN THE ASSESSMENT , AO MADE VARIOUS ADDITIONS ON ACCOUNT OF LABOUR EXPENSES, COMMISSION EXPENSES, BUSINESS PROMOTION EXPENSES ETC AND DETERMINED THE ASSES SED INCOME AT RS. 93,31,640/ - . DURING THE ASSESSMENT PR OCEEDINGS, AO OBSERVED THAT THE ASSESSEE CLAIMED LABOUR EXPENSES AMOUNTING TO RS. 2.75 CRS FOR THE AY 2006 - 2007. THESE EXPENSES CLAIMED TO HAVE BEEN PAID TO THE SKILLED LABOURERS ENGAGED IN THE EMBROIDERY AND JARDOZI WORKS. THE PAYMENTS WERE MADE TO THEM IN CASH. AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF THE PAYMENT BUT THE ASSESSEE FAILED TO FURNISH THE SAME. AO 3 FURTHER OBSERVED THAT PROPER REGISTERS WERE ALSO NOT MAINTAINED BY THE ASSESSEE IN SUPPORT OF THE SAID PAYMENTS MADE TO THE LABOURERS . CONSIDERING THE FACT THAT THERE ARE NO SUPPORTING EVIDENCES AND NO PROPER DETAILS FOR JUSTIFYING THE HUGE CLAIM OF EXPENDITURE INCURRED ON ACCOUNT OF LABOUR CHARGES PAID IN CASH, ASSESSING OFFICER MADE DISALLOWANCE ON AD - HOC BASIS TO THE EXTENT OF 20% O F THE TOTAL EXPENDITURE AMOUNTING TO RS. 55,19,271/ - . AGGRIEVED WITH THE DECISION OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). 5. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE COULD NOT IMPROVE THE STATUS OF HIS CASE. HOWEVER, ASSESSEE FILED DETAILED WRITTEN SUBMISSIONS, WHICH ARE EXTRACTED IN PARA 4.2.2 OF THE IMPUGNED ORDER. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) CONCURRED WITH THE FINDINGS OF THE AO. VIDE PARA 4.3.1 OF HER ORDER, CIT (A) HELD T HAT THE DISALLOWANCE MADE BY THE AO APPLYING THE FLAT RATE OF 20% OF THE CLAIM OF EXPENSES IS ON HIGHER SIDE. EVENTUALLY, CIT (A) RESTRICTED THE DISALLOWANCE TO ONLY 5% OF THE TOTAL EXPENDITURE INCURRED ON ACCOUNT OF LABOUR CHARGES. RELEVANT PORTION FROM THE SAID PARA 4.3.1 OF THE CIT (A)S ORDER READS AS UNDER: 4.3.1..THEREFORE, TO THIS EXTENT I FIND THAT THE DETAILS PROVIDED BY THE APPELLANT IS NOT FULLY VERIFIABLE, SO AS TO ASCERTAIN THE GENUINENESS OF THE EXPENDITURE CLAIMED. SINCE, COMPLETE DETAIL S OF THE EXPENDITURE CLAIMED ARE NOT FURNISHED OR NOT AVAILABLE OR NOT MAINTAINED BY THE APPELLANT, I FIND IT WOULD MEET THE JUSTICE, IN CASE THE DEDUCTION CLAIMED IS RESTRICTED TO 5% OF THE TOTAL EXPENDITURE INCURRED ON THIS ACCOUNT. ACCORDINGLY, IN VIEW OF THE ABOVE, THE EXPENDITURE DISALLOWED AMOUNTING TO RS. 13,79,818/ - BEING 5% OF THE TOTAL LABOUR CHARGES DEBITED TO HIS P & L ACCOUNT FOR THE AY 2006 - 07. 6. AGGRIEVED WITH THE RELIEF GRANTED BY THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNA L VIDE GROUND NOS.1 AND 2 OF ITS APPEAL. FURTHER, AGGRIEVED WITH THE CIT (A)S DECISION OF CONFIRMING THE DISALLOWANCE TO THE TUNE OF 5% OF THE TOTAL LABOUR CHARGES, ASSESSEE IS I N APPEAL VIDE GROUND NO.1 OF HIS CROSS OBJECTION. 7. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDER OF THE AO AND MENTIONED THAT THE ASSESSEE FAILED TO FURNISH THE RELEVANT DETAILS AND EVIDENCES, THEREFORE, MAKING DISALLOWANCE TO THE EXTENT OF 20% OF THE ASSESSEES CLAIM IS FAIR AND REASONABLE. 4 8. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE EXPENSES CLAIMED BY THE ASSESSEE ARE GENUINE AND THEY ARE INCURRED FOR THE BUSINESS PURPOSES OF THE ASSESSEE. IN SUCH CIRCUMSTANCES, RESTRICTING THE DISALLOWANCE TO 5% BY THE ASSESSEE IS NOT PROPER AND THE ENTIRE CLAIM MADE BY THE ASSESSEE SHOULD BE ALLOWED IN TOTO. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT PAPERS FILED BEFORE US. THIS IS AN UNDISPUTED FACT THAT THE IMPUGN ED EXPENDITURE IS MADE IN CASH. THE SKILLED LABOURERS, WHO ARE SAID TO BE RECEIVED THE PAYMENTS, ARE NOT FULLY IDENTIFIABLE. IN SUCH CIRCUMSTANCES, AOS DECISION TO MAKE DISALLOWANCE OF A PORTION OF THE CLAIM IS NOT AN UNFAIR DECISION. HOWEVER, AOS DECISION IN MAKING DISALLOWANCE TO THE EXTENT OF 20% OF THE CLAIM IS WITHOUT ANY BASIS. ON CONSIDERING THE EXCESSIVENESS OF THE DISALLOWANCE MADE BY THE AO, CIT (A) RESTRICTED THE DISALLOWANCE TO ONLY 5%. IN OUR OPINION, THE SAID DECISION OF THE CIT (A), EXTRACTED ABOVE FROM 4.3.1 OF THE IMPUGNED ORDER, IS FAIR AND REASONABLE. THEREFORE, WE FIND NO INFIRMITY IN THE DECISION OF THE CIT (A). ACCORDINGLY, GROUND NOS.1 AND 2 RAISED BY THE REVENUE AS WELL AS THE GROUND NO.1 RAISED BY THE ASSESSEE IN HIS CROSS OBJECTION STAND DISMISSED. 10. GROUND NOS.3 AND 4 OF THE REVENUES APPEAL RELATE TO THE DISALLOWANCE OF DEPRECIATION ON LUXURY CAR. BRIEFLY STATED RELEVANT FACTS IN THIS REGARD ARE THAT THE ASSESSEE , BEING PROPRIETOR OF M/S. POMANA TRADING CORPORAT ION, CLAIMED LOSS OF RS.8,55,841/ - ON ACCOUNT OF VEHICLE EXPENSES AND DEPRECIATION ON VEHICLE FOR THE AY 2006 - 2007 . DURING THE ASSESSMENT PROCEEDINGS, AO DISALLOWED THE SAID AMOUNT BY HOLDING THAT THERE WAS NO BUSINESS BY THE SAID PROPRIETARY CONCERN AND THEREFORE, THE SAID LUXURY VEHICLES WERE NOT USED FOR THE BUSINESS PURPOSES OF THE ASSESSEE. ACCORDINGLY, THE CLAIM OF DEPRECIATION WAS DENIED. AGGRIEVED WITH THE DECISION OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). 11. DURING THE PROCEEDING S BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, CIT (A) DIRECTED THE AO TO ALLOW THE CLAIM OF THE ASSESSEE. HE DID NOT AGREE WITH THE FINDINGS OF THE AO THAT THE IMPUGNED CARS WERE NOT USED DURING THE YEAR. HE CONSIDERED THE FACT THAT THE ASSESSEE HAS NUMBER OF PROPRIETARY CONCERNS AND THE CARS WERE USED FOR THE BUSINESS PURPOSES OF 5 THE ASSESSEE AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), REVENUE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUND NOS. 3 AND 4. 12. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDER OF THE AO. 13. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE HEAVILY RELIED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. ON PERUSAL OF THE CIT (A)S ORDER, WE FIND, THE DECISION OF THE CIT (A) IS GIVEN VIDE PARA 7.3 OF HER ORDER AND THE SAME IS EXTRACTED WHICH READS AS UNDER: 7.3. I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. FROM THE SAME, I FIND THAT THE AO IS NOT JUSTIFIED IN DRAWING HIS CONCLUSION THAT THE VEHICLES OWNED BY THE APPELLANT IN HIS PROPRIETARY CONCERN M/S. POMANA TRADING CORPOR ATION, ARE NOT USED FOR HIS BUSINESS PURPOSE DURING THE RELEVANT ASSESSMENT YEAR. FROM THE BASIC FACTS AVAILABLE ON RECORD, THE APPELLANT IS RUNNING SEVERAL PROPRIETARY CONCERNS, THEREFORE, IT CANNOT BE HELD THAT THE VEHICLES MAINTAINED BY THE APPELLANT I N HIS PROPRIETARY CONCERN M/S. POMANA TRADING CORPORATION, ARE NOT USED FOR RUNNING HIS BUSINESS OF THE PROPRIETARY CONCERNS. SINCE, THE ENTIRE TAXABILITY OF THE APPELLANT IS IN HIS INDIVIDUAL CAPACITY, I FIND THAT THE AO IS NOT JUSTIFIED IN ARRIVING AT H IS CONCLUSION THAT THE VEHICLE SHOWN BY THE APPELLANT IN ONE PARTICULAR CONCERN IS ONLY REQUIRED TO BE UTILIZED IN THE SAID PROPRIETARY CONCERN. SINCE, THE APPELLANT IS AN INDIVIDUAL ASSESSEE, IT CANNOT BE SAID THAT THE VEHICLE MAINTAINED IN ONE CONCERN I S NOT UTILIZED FOR RUNNING HIS BUSINESS IN THE NAME AND STYLE OF ANOTHER CONCERN. THEREFORE, THESE FINDINGS OF THE AO REGARDING THE DISALLOWANCE OF EXPENSES CLAIMED UNDER THE HEAD VEHICLE MAINTENANCE AND DEPRECIATION ON VEHICLE, TO MY CONSIDERED OPINION I S UNWARRANTED. THE SAME IS THEREFORE DIRECTED TO BE ALLOWED. 15. F ROM THE ABOVE, WE FIND THAT THE DIRECTION OF THE CIT (A) TO ALLOW THE CLAIM OF THE ASSESSEE MADE UNDER THE HEAD VEHICLE MAINTENANCE AND DEPRECIATION ON V EHICLE IS FAIR AND REASONABLE. REVENUE HAS NOT DEMONSTRATED WITH ANY EVIDENCE THAT THE CARS IN QUESTION WERE NOT USED AT ALL BY THE ASSESSEE. THEREFORE, IN OUR OPINION, THERE IS NO INFIRMITY IN THE ORDER OF THE CIT (A) AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NOS. 3 & 4 RAISED BY THE REVENUE ARE DISMISSED. 16. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 6 C.O. NO. 59/M/2011 (ARISING OUT OF I.T.A. NO.3933 /M/2010 ) (AY: 2006 - 20 07) 17. T HIS CROSS OBJECTION IS FILED BY THE ASSESSEE ON 5.5.2011 AGAINST THE ORDER OF THE CIT (A) - 31, MUMBAI DATED 26.2.2010 FOR THE ASSESSMENT YEAR 2006 - 2007. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING CROSS OBJECTIONS WHICH READ AS UNDER: 1. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN ALL OWING FULL DEDUCTION OUT OF DISALLOWANCE MADE ON ACCOUNT OF LABLOUR CHARGES. (B) THE LD CIT (A) ERRED IN CONFIRMING THE ADDITION OF 5% OF LABOUR CHARGES WHICH DELETED THE WHOLE OF THE LABOUR EXPENSES BE ALLOWED IN FULL. (C) WITHOUT PREJUDICE THE ADDITION SUSTAINED BE REDUCED. 2. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 8,65,780/ - MADE ON ACCOUNT OF COMMISSION CHARGES WHICH BRING BUSINESS EXPENDITURE IT BE ALLOWED IN FULL. (B) WITHOUT PREJUDICE THE ADDITION MADE BE RE DUCED. 3. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 1,24,528/ - (SIC) MADE OUT OF BUSINESS PROMOTION EXPENSES WHICH BE ALLOWED IN FULL. (B) WITHOUT PREJUDICE THE ADDITION BE REDUCED. 18. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE AFFIDAVIT FILED BY THE ASSESSEE, DATED 5.5.2011, AND MENTIONED THAT THERE IS A DELAY OF 7 DAYS IN FILING THE CROSS OBJECTION BEFORE THE TRIBUNAL AND PRAYED FOR CONDONATION OF DELAY. IN THIS REGARD, LD COUNSEL READ OUT THE RELEVANT PORTIONS FROM THE SAID AFFIDAVIT WHICH READ AS UNDER: 1. 2 3. 4. THAT I HAD TO GO TO MY NATIVE PLACE FOR THE RELIGIOUS CEREMONY BEING HAKIKA (I.E., NAMING CEREMONY) OF MY NEPHEW (MY BROTHERS SON MR. NIZAR AYYOOR), BEING THE ELDEST IN THE FAMILY AND IMPORTANT CEREMONY I HAD TO GO TO OUR VILLAGE TO PERFORM THE CEREMONY AT VILLAGE UPPALA, DIST KSARGOD, KERALA STATE, I WENT ON 25 TH APRIL AND AFT ER FINISHING ALL CEREMONY, I CAME BACK TO MUMBAI ON OR ABOUT 3 RD MAY, 2011. 5. AS SOON AS I CAME TO MUMBAI, I RECEIVED THE FORM, FOR BOTH THE ASSESSMENT YEARS HAVING CROSS OBJECTION AGAINST APPEALS FILED BY THE IT DEPARTMENT IMMEDIATELY I SIGNED THE FORM AND FORWARDED THE SAME TO THE OFFICE OF MY CHARTERED ACCOUNTANT ON 4 TH MAY, 2011. 6. THAT MY CHARTERED ACCOUNT HAS IMMEDIATELY ON RECEIPT OF THE FORMS FOR BOTH THE YEARS FILED THE CROSS OBJECTION ON 5 TH MAY, 2011. 7. THAT THE CROSS OBJECTION COULD NOT BE FILED WITHIN 30 DAYS AND THERE IS DELAY OF ABOUT 7 (SEVEN) DAYS FOR THE REASON STATED HEREIN ABOVE. 8. I PRAY THAT THE DELAY BE CONDONED AND THAT THE CROSS OBJECTION BE HEARD TOGETHER WITH THE MAIN APPEAL FILED BY THE IT DEPT. 7 19. ON PERUSAL OF THE ABOVE MENTIONED AFFIDAVIT AS WELL AS THE REASONS GIVEN BY THE ASSESSEE, WE ARE OF THE OPINION THAT THERE IS A SUFFICIENT AND REASONABLE CAUSE FOR NOT FILING THE CROSS OBJECTION WITHIN THE STIPULATED TIME BEFORE THE TRIBUNAL. CONSIDERING THE SAID REASON GIVEN B Y THE ASSESSEE AND ALSO CONSIDERING THE SMALLNESS OF THE DELAY, WE CONDONE THE DELAY OF 7 DAYS AND PROCEED TO ADJUDICATE THE CROSS OBJECTION ON MERITS. 20. GROUND NO.1 RELATES TO THE DISALLOWANCE OF LABOUR CHARGES. WE HAVE ALREADY DEALT WITH THE ISSUE WHILE ADJUDICATING THE GROUND NOS.1 AND 2 OF THE REVENUES APPEAL ITA NO.3933/M/2010 IN THE ABOVE PRARAGRAPHS OF THIS ORDER , WHEREIN WE HAVE DISMISSED THE GROUNDS RAISED BY THE REVENUE AS WELL AS THE GROUND NO.1 OF THE CROSS OBJECTION RAISED BY THE ASSESSEE. THEREFORE, CONSIDERING THE SAME, GROUND NO.1 OF THE CROSS OBJECTION RAISED BY THE ASSESSEE IS DISMISSED. 21. GROUND NO.2 RELATES TO THE DISALLOWANCE ON ACCOUNT OF COMMISSION CHARGES. BRIEFLY STATED RELEVANT FACTS IN THIS REGARD ARE THAT DURIN G THE YEAR UNDER CONSIDERATION ASSESSEE PAID COMMISSION CHARGES AMOUNTING TO RS. 8,65,780/ - . DURING THE ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THE PAYMENT OF ENTIRE COMMISSION CHARGES WAS MADE IN CASH AND NO DEDUCTION OF TDS WAS MADE U/S 194H OF THE ACT . CONSIDERING THE FACT THAT THE ASSESSEE COULD NOT SUBSTANTIATE HIS CLAIM WITH THE REQUISITE DETAILS, AO DISALLOWED THE ENTIRE CLAIM OF THE ASSESSEE. AGGRIEVED WITH THE DECISION OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). 22. DURING THE PROCE EDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) DISM ISSED THE APPEAL VIDE THE CONTENTS OF PARA 5.3 OF HER ORDER. AGGRIEVED WITH THE DECISION OF THE CIT (A), ASSESSEE FILED THE PRESENT APPEAL BEFORE T HE TRIBUNAL BY RAISING THE GROUND NO.2 OF HIS CROSS OBJECTION. 23. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDERS OF THE AO AND THE CIT (A). 24. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER A UTHORITIES. 25. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND THE PAPERS FILED BEFORE US. ON PERUSAL OF THE CIT (A)S ORDER, WE 8 FIND, PARA 5.3 OF HER ORDER IS RELEVANT IN THIS REGARD. CONSIDERING ITS SIGNIFICANCE, T HE SAID PARA 5.3 IS EXTRACTED WHICH READS AS UNDER: 5.3. I HA V E CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS AND ARGUMENTS OF THE AR. FROM THE UNDISPUTED FACTS BROUGHT ON R ECO RD THE APPELLANT HAS CLAIMED DEDUCTION ON ACCOUNT OF PA Y MENT OF COMMI SS ION O F RS.8 , 65 , 780 / - FOR THE A Y 06 AND RS . L2,30 , 680/ - FOR THE A Y 2007 - 08 IN HIS RETURNS OF INCOME FILED FOR RELEVANT ASSESSMENT Y EARS UNDER APPEAL . HO W EVER , THE APPELLANT COULD NOT FURNISH AN Y PARTICULARS OR DETAILS OF THE PERSONS / PA R TIES TO W HOM THE ALLEG ED COMMISSION PAID , THE DETAILS OF SER V ICES RENDERED A GA IN S T W HICH THE ALLEGED COMMISSION IS P AID A S C LAIMED IN HIS P&L ACCOUNT . THESE FINDIN G S OF THE AO REMAIN UNCONTROVERTED B Y THE APPELLANT TO THE E X TENT THAT THE A R H AS FA IL E D TO FU RNISH AN Y SUCH DETAILS OR E V IDENCE S IN A PPEAL . THE CONTENTI O N OF TH E A R TH A T SUCH P A RTICULARS W ERE GIVEN BEFORE T HE AO DURING THE ASSESSMEN T P ROCEEDIN GS REM A INED UNSUBSTANTIATED SINCE, THE AR HAS F A ILED TO F URNISH THE RELE VA NT DET A I LS AND E V IDENCES BEFORE UNDERSIGNED IN APPEAL . THEREFORE , THE CONT E NTION O F THE A PPELLANT THAT THE DETA ILS WERE PROVIDED TO THE AO DURING THE COURSE OF A SSESSMENT PROCEEDINGS REGARDI NG THE PAYMENT OF COMMISSION, BASIS OF COMMISSION AND THE DETAILS OF THE PAY MENTS REMAINED COMPLETELY MISPLACED. THEREFORE , ON ACCOUNT OF THESE FACTS BROUGHT RECORD , I A M O F THE CONSIDERED OPINION THAT THE APPELLANT COULD NOT DISCHARGE ONUS CAST ON HIM TO PRO V E THAT TH E E XP ENDI T URE CLAIMED IS GENUINE BUSINESS EXPENDITURE INCURRED WHOLLY AND EX C LUSI V EL Y FOR HIS BUSINE SS PURPOSES. SECONDLY A L S O FI ND S UFFICIENT MERITS IN THE F IND I N GS OF THE AO THAT THE APPELLANT W A S REQUIRED TO DEDUC T TDS ON THE P AY MENT S M A D E, EVE N IF IT I S PRO V ED TH A T THE SAME IS IN THE NATURE OF COMM I SSION PAID ON A CCOUNT O F SE R V IC ES R E NDERED B Y THE ALLEGED AGENTS, AS PRO V IDED UNDER SECTION 194H OF THE ACT . SINCE , THE APPELLANT HAS FAILED TO DE DUCT TAX AT SOURCE WITHOUT ANY REASONABLE CAUSE , I F IND THAT THE AO IS FULLY JUSTIFIED IN I NVOKING THE ' P R O V ISIONS OF S E CTION 4 0 ( A) ( I A) OF THE A C T . THEREFORE, ON ACCOUNT THE ABOVE, T H E ENTIRE DISALLO WA N CE MA D E O N THI S A CCOUNT IS CONFIRMED. THIS GROUND OF APPEAL IS THEREFORE, DISMISSED. 26. FROM THE ABOVE, WE FIND THAT THE ASSESSEE COULD NOT SUBSTANTIATE THAT HIS CLAIM OF EXPENDITURE ON ACCOUNT OF COMMISSION CHARGES IS A GENUINE ONE AND THE SAME IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES OF THE ASSESSEE. CONSIDERING THE ASSESSEES FAILURE IN DISCHARGING HIS ONUS, CIT (A) RIGHTLY CONFIRMED THE DISALLO WANCE MADE BY THE AO. THEREFORE, IN OUR OPINION, THERE IS NO INFIRMITY IN THE ORDER OF THE CIT (A) AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.2 OF THE CROSS OBJECTION RAISED BY THE ASSESSEE IS DISMISSED. 27. GROUND NO.3 OF THE CROS S OBJECTION RELATES TO THE DISALLOWANCE OF BUSINESS PROMOTION EXPENSES. BRIEF FACTS ARE THAT THE ASSESSEE CLAIMED BUSINESS PROMOTION EXPENSES OF RS.1,24,528/ - IN HIS RETURN OF INCOME. IN THE ASSESSMENT, AO DISALLOWED 10% OF THE SAID EXPENSES CONSIDERING THE FACT THAT THE ENTIRE SAID EXPENDITURE WAS INCURRED IN CASH AND THE SAME IS COMPLETELY NOT VERIFIABLE. ON APPEAL, CIT (A) CONFIRMED THE DISALLOWANCE MADE BY THE AO. AGGRIEVED, ASSESSEE 9 FILED AN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUND NO.3 OF THE CROSS OBJECTION. 28. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDERS OF THE AO AND THE CIT (A). 29. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 30. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT PAPERS FILED BEFORE US. ON PERUSAL OF THE CIT (A)S ORDER, WE FIND, PARA 6.3 OF HER ORDER IS RELEVANT IN THIS REGARD AND CONSIDERING ITS IMPORTANCE, THE SAME IS EXTRACTED WHICH READ AS UNDER: 6.3. I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. FROM THE UNDISPUTED FACTS BROUGHT ON RECORD THE ENTIRE EXPENDITURE CLAIMED IS INCURRED IN CASH AND THE SAME IS NOT VERIFIABLE. THE EXPENDITURE INCURRED IS FOUND TO BE MOSTLY IN THE NATURE OF ENTERTAINMENT AS WELL AS PERSONAL EXPENSES BEING INCURRED ON ACCOUNT OF TEA, COFFEE, FOOD ETC. ALTHOUGH, THE EXPENDITURE IS STATED TO BE INCURRED FOR THE STAFF MEMBERS, NO SUCH PERQUISITES ARE SHOWN IN THEIR RESPECTIVE INDIVIDUAL ACCOUNTS. IN ANY CASE, IT IS AN UNDISPUTED FACT THAT THE EXPENDITURE INCURRED IS NOT VERIFIABLE SINCE, THE ENTIRE EXPENDITURE IS INCURRED IN CASH FOR WHICH NO PROPER DETAILS ARE MAINTAINED BY THE APPELLANT. THEREFORE, ON ACCOUNT OF THESE FACTUAL ASPECTS WHICH ARE NOT DISPUTED DENIED BY THE AR, THE DISALLOWANCE MADE BEING REASONABLE IS ACCORDINGLY, CONFIRMED. THIS GROUND OF APPEAL IS THEREFORE DISMISSED. 31. FROM THE ABOVE, WE FIND THAT THE ENTIRE EXPENDITURE CLAIMED BY THE ASSESS EE WAS INCURRED IN CASH AND THE SAME IS NOT VERIFIABLE . CONSIDERING THE FACT THAT THE SAID EXPENDITURE IS STATED TO BE INCURRED FOR THE WELFARE OF THE STAFF MEMBERS, IN OUR CONSIDERING OPINION, IF THE DISALLOWANCE IS RESTRICTED TO 5% OF THE TOTAL EXPENSES DEBITED ON THIS ACCOUNT IN THE P&L ACCOUN T , WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, GROUND NO.3 RAISED BY THE ASSESSEE IN HIS CROSS OBJECTION IS PARTLY ALLOWED. 32. IN THE RESULT, CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED . 10 I.T.A.NO. 3920 /M/2010 ( AY: 2007 - 2008) (REVENUES APPEAL) 33. THIS APPEAL IS FILED BY THE REVENUE ON 14.5.2010 AGAINST THE ORDER OF THE CIT (A) - 31, MUMBAI DATED 26.2.2010 FOR THE ASSESSMENT YEAR 2007 - 2008. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GRO UNDS WHICH READ AS UNDER: I THE L EARNED CIT(A) HAS E R RED ON FACTS AND I N LAW AND I N T HE C IRCUM S TANC E S OF THE C ASE I N RESTR I CTING T HE D I SA L LO W A N CE MADE ON A C CO UNT O F L A BOU R EXPENSES FRO M RS . 50 , 04 , 614/ - ( 2 0% O F T OTA L EXPENSES ) TO R S . 12 , 51 , 153/ - ( 5% OF T OTA L EXPENSES) . II . THE L EARNED CIT(A) HAS F AILED TO APPREC I ATE T HE F AC T TH AT TH E ASSES S E E H A S SHOWN LOSS I N THE TRAD I NG ACCOUNT I TSELF MAKES I T E VI DEN T T HA T I T I S I NFLATING TH E E X PENSES I N THE HEAD OF L ABOU R C H A R GES W H I CH ARE N O N V E RI F I A BLE A ND FOR WH I CH NO DETA I LS WERE KEPT BY THE ASSESSEE AND NO BOOKS O F ACC O UNT WERE PRODUCED , AND THE ASSESS I NG OFFICE R W AS RI GHT IN D I S ALL O WIN G 20% OF TOTAL LABOUR CHARGES . I II . THE L EARNED CI T(A) HAS ERRED ON FACTS A N D IN L A W A N D IN T HE CIRCUM S TANCES OF TH E C ASE IN DE L ET I NG T HE DI SA LL OWA NC E OF DEPREC IATION ON LUX U RY C A R AND ANOTHE R CAR , AS THERE WAS NO BUS I NESS IN THE ABO V E CONCER N. I V . THE L EA R NED CIT ( A ) F A IL ED TO APPREC I A T E TH E F AC T T H A T AO HA S ALL O WED THE E X PENSES C L A I M E D ON ACCOUNT OF DEPREC I AT I ON O F C A R A N D E X PE NS E S IN TOTO T REAT I NG I T AS FOR BUSINESS PURPOSE A N D NO DISA LL O W ANCE F OR P E R S ON A L USE WAS MADE ON TH I S ACCOUNT . 34. ALL THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL ARE IDENTICAL TO THAT OF THE GROUNDS RAISED FOR THE AY 2006 - 07 VIDE ITS APPEAL I.T.A.NO. 3933/M/2010 AND THE ONLY DIFFERENCE IS IN FIGURES. WHILE ADJUDICATING THE SAID APPEAL FOR THE AY 2006 - 2007, WE HAVE ALREADY DISCUSSED THE ISSUES INVOLVED IN THE GROUNDS I.E., (I) DISALLOWANCE OF LABOUR EXPENSES AND (II) DEPRECIATION ON CARS AND THE APPEAL OF TH E REVENUE IS DISMISSED VIDE PARA 16 OF THIS ORDER. CONSIDERING THE COMMONNESS OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT APPEAL WITH THAT OF THE REVENUES APPEA L FOR THE AY 2006 - 07, THE DECISION GIVEN BY US IN THE SAID APPEAL (I .T.A.NO. 3933/M/2010 ) EQUALLY APPLIES FOR THE AY 2007 - 2008 TOO. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE IN THE PRESENT APPEAL STAND DISMISSED. 35. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 11 C.O. NO. 60 /M/2011 (ARISING OUT OF I.T.A. NO.3920 /M/2010 ) (AY: 2007 - 20 08 ) 36. THIS CROSS OBJECTION IS FILED BY THE ASSESSEE ON 5.5.2011 AGAINST THE ORDER OF THE CIT (A) - 31, MUMBAI DATED 26.2.2 010 FOR THE ASSESSMENT YEAR 2007 - 2008 . IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING CROSS OBJECTIONS WHICH READ AS UNDER: 1. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN ALLOWING FULL DEDUCTION OUT OF DISALLOWANCE MADE ON ACCOUNT OF LABLOUR CHARGES. (B) THE L D CIT (A) ERRED IN CONFIRMING THE ADDITION OF 5% OF LABOUR CHARGES WHICH DELETED THE WHOLE OF THE LABOUR EXPENSES BE ALLOWED IN FULL. (C) WITHOUT PREJUDICE THE ADDITION SUSTAINED BE REDUCED. 2. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 12,30,680/ - MADE ON ACCOUNT OF COMMISSION CHARGES WHICH BRING BUSINESS EXPENDITURE IT BE ALLOWED IN FULL. (B) WITHOUT PREJUDICE THE ADDITION MA DE BE REDUCED. 3. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 2,80,987/ - MADE OUT OF BUSINESS PROMOTION EXPENSES WHICH BE ALLOWED IN FULL. (B) WITHOUT PREJUDICE THE ADDITION BE RED UCED. 4. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 26,266/ - OUT OF STAFF WELFARE AND CONVEYANCE EXPENSES WHICH BE ALLOWED IN FULL. (B) WITHOUT PREJUDICE THE ADDITION BE REDUCED. 37. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE AFFIDAVIT FILED BY THE ASSESSEE, DATED 5.5.2011, AND MENTIONED THAT THERE IS A DELAY OF 7 DAYS IN FILING THE CROSS OBJECTION BEFORE THE TRIBUNAL AND PRAYED FOR CONDONATION OF DELAY. IN THIS REGARD, LD COUNSEL READ OUT THE RELEVANT PORTIONS FROM THE SAID AFFIDAVIT WHICH READ AS UNDER: 1. 2 3. 4. THAT I HAD TO GO TO MY NATIVE PLACE FOR THE RELIGIOUS CEREMONY BEING HAKIKA (I.E., NAMING CEREMONY) OF MY NEPHEW (MY BROTHERS SON MR. NIZAR AYYOOR), BEING THE ELDEST IN THE FAMILY AND IMPORTANT CEREMONY I HAD TO GO TO OUR VILLAGE TO PERFORM THE CEREMONY AT VILLAGE UPPALA, DIST KSARGOD, KERALA STATE, I WENT ON 25 TH APRIL AND AFTER FINISHING ALL CEREMONY, I CAME BACK TO MUMBAI ON OR ABOUT 3 RD MAY, 2011. 5. AS SOON AS I CAME TO MUMBAI, I RECEIVED THE FORM, FOR BOTH THE ASSESSMENT YEARS HAVING CROSS OBJECTION AGAINST APPEALS FILED BY THE IT DEPARTMENT IMMEDIATE LY I SIGNED THE FORM AND FORWARDED THE SAME TO THE OFFICE OF MY CHARTERED ACCOUNTANT ON 4 TH MAY, 2011. 6. THAT MY CHARTERED ACCOUNT HAS IMMEDIATELY ON RECEIPT OF THE FORMS FOR BOTH THE YEARS FILED THE CROSS OBJECTION ON 5 TH MAY, 2011. 12 7. THAT THE CROSS OBJ ECTION COULD NOT BE FILED WITHIN 30 DAYS AND THERE IS DELAY OF ABOUT 7 (SEVEN) DAYS FOR THE REASON STATED HEREIN ABOVE. 8. I PRAY THAT THE DELAY BE CONDONED AND THAT THE CROSS OBJECTION BE HEARD TOGETHER WITH THE MAIN APPEAL FILED BY THE IT DEPT. 38. ON PERUSAL OF THE ABOVE MENTIONED AFFIDAVIT AS WELL AS THE REASONS GIVEN BY THE ASSESSEE, WE ARE OF THE OPINION THAT THERE IS A SUFFICIENT AND REASONABLE CAUSE FOR NOT FILING THE CROSS OBJECTION WITHIN THE STIPULATED TIME BEFORE THE TRIBUNAL. CONSIDERING THE SAID REASON GIVEN BY THE ASSESSEE AND ALSO CONSIDERING THE SMALLNESS OF THE DELAY, WE CONDONE THE DELAY OF 7 DAYS AND PROCEED TO ADJUDICATE THE CROSS OBJECTION ON MERITS. 39. GROUND NOS.1 TO 3 RAISED BY THE ASSESSEE IN THIS CROSS OBJECTION ARE IDENTICAL T O THAT OF THE GROUNDS RAISED FOR T HE AY 2006 - 07 VIDE ITS C.O.NO.59 /M/2011 AND THE ONLY DIFFERENCE IS IN FIGURES. WHILE ADJUDICATING THE SAID CROSS OBJECTION FOR THE AY 2006 - 2007, WE HAVE ALREADY DISCUSSED THE ISSUES INVOLVED IN THE SAID GROUNDS AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. CONSIDERING THE COMMONNESS OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT APPEAL WITH THAT OF THE CROSS OBJECTION FOR THE AY 2006 - 07, THE DECISION GIVEN BY US IN THE SAID APPEAL ( C.O.NO.59/M/201 1 ) EQUALLY A PPLIES FOR THE AY 2007 - 2008 TOO. ACCORDINGLY, GROUND NOS.1 AND 2 OF THE CROSS OBJECTION ARE DISMISSED AND GROUND NO.3 IS PARTLY ALLOWED. 40. GROUND NO.4 RELATES TO DISALLOWANCE OF STAFF WELFARE AND CONVEYANCE EXPENSES. BRIEFLY STATED RELEVANT FACTS IN TH IS REGARD ARE THAT THE ASSESSEE CLAIMED CONVEYANCE EXPENSES OF RS. 3,80,897/ - , STAFF WELFARE EXPENSES OF RS. 1,50,765/ - AND DIWALI EXPENSES OF RS. 60,860/ - TOTALING TO RS. 5,92,522/ - IN ITS P & L ACCOUNT. IN THE ASSESSMENT, CONSIDERING THE TURNOVER OF THE ASSESSEE, AO DISALLOWED 10% OF THE TOTAL EXPENDITURE AMOUNTING TO RS. 59,252/ - . AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). 41. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CI T (A) RESTRICTED THE DISALLOWANCE TO 5% AMOUNTING TO RS. 26,266/ - AND PARTLY ALLOWED THE APPEAL. AGGRIEVED WITH THE DECISION OF THE CIT (A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUND NO.4 OF THE CROSS OBJECTION. 13 42. D URING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 43. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 44. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. ON PERUSAL OF THE CIT (A)S ORDER IN GENERAL AND PARA 10.3 IN PARTICULAR, WE FIND THE SAME IS RELEVANT IN THIS REGARD WHICH READS AS UNDER: 10.3. I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. FR OM THE BASIC FACTS BROUGHT ON RECORD THE APPELLANT HAS INCURRED CONVEYANCE, STAFF WELFARE DIWALI EXPENSES AMOUNTING TO RS. 5,92,5 22/ - IN ITS PROFIT AND LOSS ACCOUNT WHICH ARE ENTIRELY INCURRED IN CASH. THEREFORE, ON ACCOUNT OF NON - VERIFIABILITY OF THE EXPENDITURE CLAIMED, THE AO HAS DISALLOWED 10% OF THE TOTAL EXPENDITURE CLAIMED AMOUNTING TO RS. 59,252/ - ON THIS ACCOUNT. HOWEVER , ACCORDING TO THE AR, THE ENTIRE EXPENDITURE INCURRED IS FOR THE BUSINESS PURPOSES OF THE APPELLANT, THEREFORE, THE HEAD OF DISALLOWANCE MADE BY THE AO IS UNWARRANTED AND ACCORDINGLY THE DISALLOWANCE MADE SHOULD BE DELETED. FROM THE NATURE OF EXPENDITURE PARTICULARLY ON ACCOUNT OF STAFF WELFARE AND DIWALI EXPENSES, WHICH ARE ENTIRELY FOUND TO BE INCURRED IN CASH AND ACCORDINGLY PROPER VERIFICATION THEREOF IS NOT FEASIBLE OR NOT POSSIBLE, THIS FACT IS NOT DISPUTED BY THE AR, I FIND THAT THE DISALLOWANCE MA DE IS IN CASH AND PROPER DETAILS THEREOF ARE NOT MAINTAINED, THE AO IS IN A DISADVANTAGES POSITION TO VERIFY THE CLAIM OF THE APPELLANT. FROM THE NATURE OF EXPENDITURE CLAIMED BY THE APPELLANT, AS I FIND EXCEPT IN THE CASE OF CONVEYANCE, THE APPELLANT COU LD HAVE MAINTAINED PROPER DETAILS AND EVEN PAID THE EXPENDITURE INCURRED THROUGH BANKING CHANNELS. HOWEVER, THE APPELLANT HAS NOT FURNISHED ANY PLAUSIBLE REASON OR EXPLANATION FOR INCURRING THE ENTIRE EXPENDITURE ON ACCOUNT OF STAFF WELFARE AND DIWALI EXP ENSES IN CASH ONLY. THEREFORE, TO THIS EXTENT, I FIND MYSELF COMPLETELY IN AGREEMENT WITH THE FINDINGS OF THE AO THAT THE EXPENDITURE INCURRED IS NOT FULLY VERIFIABLE. HOWEVER, CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, I FIND IT WOULD MEET THE JUSTICE, IF THE DISALLOWANCE MADE IS RESTRICTED TO 5% OF THE TOTAL EXPENSES DEBITED ON THIS ACCOUNT IN THE P&L ACCOUNT OF THE APPELLANT. ACCORDINGLY, AO IS DIRECTED TO DISALLOW 5% OF THE TOTAL EXPENSES DEBITED AMOUNTING TO RS. 26,266/ - ON THIS AC COUNT AND THE BALANCE DISALLOWANCE MADE IS DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS THEREFORE, PARTLY ALLOWED. 45. FROM THE ABOVE, WE FIND, THE CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE BY RESTRICTING THE DISALLOWANCE TO 5% ON ACCOUNT OF STAFF WE LFARE AND CONVEYANCE EXPENSES. CONSIDERING THE FACT THAT THERE ARE NO SUCH CLAIMS PRIOR TO THE ASSESSMENT YEAR 2007 - 2008, THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.4 OF THE C ROSS OBJECTION RAISED BY THE ASSESSEE IS DISMISSED. 46 . IN THE RESULT, CROSS OBJECTION FILED BY THE ASESSEE IS PARTLY ALLOWED. 47 . CONCLUSIVELY, TWO APPEALS FILED BY THE REVENUE ARE DISMISSED AND TWO CROSS OBJECTIONS FILED BY THE ASSESSEE ARE PARTLY ALLOWE D. 14 ORDER PRONOU NCED IN THE OPEN COURT ON 21 ST OCTOBER, 2014. SD/ - SD/ - (H. L. KARWA) (D. KARUNAKARA RAO) PRESIDENT ACCOUNTANT MEMBER DATE: 21.10 .2014. AT :MUMBAI OKK COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR A, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI