M/s. Gokul Chand Keshri Chand, JAIPUR V. ITO, SURATGARH

ITA 105/JODH/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4801 (ITAT-JODHPUR)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-12-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 09-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K DAS
• Keywords: Business income
• Section: 37(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, JODHPUR BEFORE SHRI B.P JAIN ACCOUNTANT MEMBER AND SHRI PARTHA SAR A THI CHAUDHURY JUDICIAL MEMBER ITA NO. 105 /JODH/2016 ASSESSMENT YEAR:20 12 - 13 M/S GOKUL CHAND KESHRI CHAND VS. THE ITO C/O. M/S. MGB & CO. SURATGARH FIRST FLOOR, 144A, MANGAL MARG, BAPU NAGAR JAIPUR PAN NO. AADFG2248M (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SANDEEP JHANWAR RESPONDENT BY : SH. A.K. DAS DATE OF HEARING : 08/12/2016 DATE OF PRONOUNCEMENT : 14/12/20 16 ORDER PER PARTHA SAR A THI CHAUDHURY , JM THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), BIKANER DT. 08/01/2016 ON THE FOLLOWING GROUNDS OF APPEAL: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE LD. COMMISSIONER OF IN COME TAX (APPEALS), BIKANER HAS ERRED IN CONFIRMING THE ADDITION OF RS. 77,38,705/ - MADE BY THE LD. A.O. BY VALUING CLOSING OF GUAR GUM @ RS. 25,000/ - PER QTL. AS AGAINST ASSESSEES VALUATION OF THE SAME @4839/ - PER QTL. 2. UNDER THE FACTS AND CIRCUMSTANC ES OF THE CASE LD. COMMISSIONER OF INCOME TAX (APPEALS), BIKANER HAS ERRED IN UPHOLDING THE LUMP SUM DISALLOWANCE OF INTEREST TO THE EXTENT OF RS. 50,000/ - MADE BY THE ASSESSING OFFICER BY APPLYING THE PROVISIONS OF SECTION 40A(2)(B). 2 3. UNDER THE FACTS A ND CIRCUMSTANCES OF THE CASE LD. COMMISSIONER OF INCOME TAX (APPEALS), BIKANER HAS ERRED IN UPHOLDING THE LUMP SUM DISALLOWANCE OF RS. 20,000/ - OUT OF TELEPHONE EXPENSES (RS. 22,678/ - ), SHOP EXPENSES (RS. 24,659/ - ) AND LABOUR AND WAGES EXPENSES (RS. 1,40,9 50/ - ) ON ARBITRARY SURMISE AND SUSPICION IN VIEW OF NON - BUSINESS AND PERSONAL USE. 2. THE BRIEF FACTS APPEARING IN THIS CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM CONSISTING OF SIX PARTNERS HAVING EQUAL RATIO AND DERIVING INCOME FROM THE BUSINESS O F ADHAT. BESIDES IT IS ALSO ENGAGED IN SALE AND PURCHASE OF AGRICULTURAL PRODUCE. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE SHOWN TOTAL RECEIPTS OF RS. 5,19,711/ - FROM ADHAT BUSINESS. APART FROM THIS, IT HAD ALSO SHOWN TOTAL SALES OF RS. 91,66,160/ - ON WHICH TOTAL PROFIT OF RS. 8,00,344/ - WAS DECLARED AT THE GP RATE OF 8.73%. T HE ASSESSEE HAD FILED ITS RETURN ON 29/09/2012 DECLARING TOTAL INCOME AT RS. 95,340/ - . THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(2) OF THE ACT WITH TOTAL ASSESSED INCOME AT RS. 79,04,050/ - . 3. WITH REGARD TO THE FIRST GROUND OF APPEAL IT IS REGARDING THE ADDITION OF RS. 77,38,705/ - MADE BY THE AO BY VALUING CLOSING OF GUAR GUM @ RS. 25,000/ - PER QTL AS AGAINST ASSESSEES VALUATION OF THE SAME @ RS. 4839/ - PER QTL AND THE S AME BEING CONFIRMED BY THE LD. CIT(A). 4 . THAT , DURING THE ASSESSMENT PROCEEDING VARIOUS DOCUMENT WERE CALLED FOR FROM THE ASSESSEE AND IT WAS TEST CHECKED BY THE AO. THE ASSESSEE HAS PROVIDED WRITTEN SUBMISSION AND VARIOUS BILLS AND VOUCHERS AS AND WHE N CALLED FOR BY THE AO. THAT HOWEVER FOR THE REASON SPECIFIED IN THE ASSESSMENT ORDER ITSELF WHICH IS ON RECORD THE AO ADOPTED MARKET RATE OF RS. 25,000/ - INSTEAD OF RS. 4839/ - DECLARED BY THE ASSESSEE FOR VALUING THE TOTAL CLOSING STOCK AT RS. 3 95,96,000 / - [ 383.84 X 25000/ - PER QTL] INSTEAD OF RS. 18,57,295/ - SHOWN BY THE ASSESSEE AND THE ADDITION OF RS. 77,38,705/ - WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. 5 . THAT , BEING AGGRIEVED , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND DURING THE COURSE OF APPELLATE PROCEEDING WRITTEN SUBMISSION WAS PLACED ON RECORD. THAT THEREIN THE ASSESSEE RELIED UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF V.K.J. BUILDERS AND CONTRACTORS P.LTD. VS. CIT 318 ITR 204 (SC) AND STATED THAT THE CLOSING STOCK OF EARLIER YEAR HAS TO FORM OPENING STOCK OF NEXT YEAR. IT WAS CONTENDED THAT CHOICE OF VALUATION OF STOCK DEPENDS UPON THE ASSESSEE HIMSELF AND THEREFORE, ADDITION MADE BY THE ASSESSING OFFICER REJECTING THE ASSESSEES CLAIM OF CHANGE OF METHOD OF VALUATION, DESERVES TO BE DELETED. THE ASSESSEE FURTHER TOUCHED UPON THE DIMENSION OF NOTIONAL INCOME AND SUBMITTED THAT THE VALUATION OF CLOSING STOCK WAS CARRIED OUT AS PER THE METHOD ADOPTED BY THE ASSESSEE BUT WHILE VALUING THE STOCK THERE S HOULD NOT BE ANY RESULTANT ELEMENT OF NOTIONAL INCOME. THE NOTIONAL INCOME CANNOT BE TAXED AT ALL. FURTHER IF THE ASSESSEE VALUED THE CLOSING STOCK AT MARKET RATE IT IS LIKELY TO RESULT IN NOTIONAL INCOME AND IF THIS INCOME IS SUBJECTED TO TAX, IT WILL BE AGAINST THE ACCOUNTING AND TAXATION PRINCIPLES BECAUSE IT IS NEITHER ACCRUED NOR EARNED. IN THIS REGARD THE ASSESSEE PLACED RELIANCE UPON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: I. DECISION OF HONBLE JURISDICTIONAL ITAT IN THE CASE OF ANIL TANTIA II. SANJE EV WOOLLEN MILLS VS. CIT (279 ITR 434) 4 III. HISARIA BROTHERS VS. ACIT 22 TAX WORLD 684 T HE ASSESSEE FURTHER SUBMITTED THAT THE CLOSING STOCK CANNOT BE DISTURBED WHEN THE OPENING STOCK, PURCHASES, GROSS PROFIT AND SALES HAVE BEEN ACCEPTED. THEREFORE, THE CL OSING STOCK REJECTED BY THE AO IS NOT IN ACCORDANCE WITH THE LAW. IN SUPPORT OF THIS CONTENTION THE ASSESSEE FURTHER PLACED RELIANCE ON THE DECISION OF SPECIAL BENCH OF JAIPUR ITAT IN CASE OF M/S COSMO POLITIAN TRADING CORPORATION (14 ITD 327 JP) AND DECIS ION OF HONBLE ITAT IN CASE OF JAIN GOTA STORE VS. ITO 386/JU/2012 , T HAT FURTHER PLACING RELIANCE ON M/S JAIN GOTA STORE IN ITA NO. 386/JU/2012. THE ASSESSEE CONTENDED THAT THE AO CANNOT MAKE ANY ADDITION SIMPLY ON THE BASIS OF AUDIT REPORT PREPARED BY THE CHARTERED ACCOUNTANT. THAT IT WAS ARGUED BY THE ASSESSEE THAT THE AO TOOK A N ERRONEOUS VIEW BY VALUING THE CLOSING STOCK OF GUAR AT MARKET PRICE . T HAT AS PER THE INSTITUTE OF CHARTERED ACCOUNTANTS (ICAI) REGARDING THE VALUATION OF THE CLOSING STOCK AS FO RMULATED THE ACCOUNTING STATNDARD - 2(AS - 2) ACCORDING TO WHICH THE ACCOUNTING PRACTICE RECOGNIZED THE METHOD OF COST OR MARKET PRICE (NET REALIZABLE VALUE) WHICHEVER IS LOWER FOR VALUING THE STOCK IN TRADE, THE ASSESSEE IS AT LIBERTY TO FOLLOW. IT IS AN ESTA BLISHED RULE OF COMMERCIAL PRACTICE AND ACCOUNTANCY THAT CLOSING STOCK CAN BE VALUED AT COST OR MARKET PRICE, WHICHEVER IS LOWER. THE ASSESSEE PLACED RELIANCE UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CHAINRUP SAMPATRAM VS. CIT(1953) 24 IT R 481 . T HAT IN VIEW OF THESE SUBMISSIONS THE ASSESSEE PLEADED BEFORE THE LD. CIT(A) FOR DELETION OF ADDITION OF RS. 77,3 8 , 7 05/ - MADE BY THE AO. 5 6 . THAT , THE LD. CIT(A) ON PERUSING THROUGH THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER AND FOR TH E REASON S RECORDED IN HIS ORDER WHICH IS ON RECORD HELD THAT THE AO WAS JUSTIFIED IN MAKING THE ADDITION OF RS. 77,3 8 , 7 05/ - WHICH WAS THEREBY CONFIRMED. 7 . THAT , BEING FURTHER AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE US AND ON THIS GROUND THE LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE SUBORDINATE AUTHORITIES AND ALSO PLACED RELIANCE ON VARIOUS JU DICIAL DECISION S WHICH ARE PLACED ON RECORD. 8 . THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF THE AO AS WELL AS THE LD. CIT(A). 9 . WE HAVE H EARD THE RIVAL CONTENTION S , PERUSED THE CASE RECORDS, FACTS AND CIRCUMSTANCES OF THE CASE AND WE ARRIVE AT OUR CONSIDERED VIEW THAT ACCORDING TO THE PRINCIPLES OF ACCOUNTANCY PROVIDED BY THE ICAI AND AS WELL AS RECOGNIZED UNDER THE INCOME TAX LAWS THE METH OD OF VALUATION OF CLOSING STOCK CAN BE VALUED AT EITHER THE COST PRICE OR MARKET PRICE . T HAT AS PER THE COMMERCIAL PRACTICE, ESTABLISHED RULE OF ACCOUNTANCY WHICHEVER IS LOWER CAN BE ADOPTED. 10 . THE LD. CIT(A) IN HIS ORDER WHILE CONFIRMING THE ADDITION STATED THAT THE SUBMISSIONS OF ASSESSEE ARE NOT BONA FIDE IN NATURE SPECIALLY, SINCE MARKET PRICE MENTIONED IN THE AUDIT REPORT AND THEN THE ASSESSEE HAS SAID THAT IT IS NOT CORRECTLY MENTIONED AS THEY HAVE ALWAYS FOLLOWED THE COST PRICE METHOD. THE 6 LD. CI T(A) DID NOT CONDUCT ANY ENQUIRY TO BRING ON RECORD WHETHER THE CLAIM OF THE ASSESSEE WAS CORRECT OR NOT AND HAS NOT ASSIGNED ANY CLEAR REASON FOR SAYING WHY THE ADOPTION OF COST PRICE METHOD BY THE ASSESSEE IS NOT A BONA FIDE ONE. THAT THE ASSESSEE AT THE TIME OF HEARING BROUGHT TO OUR NOTICE THE DECISION OF HON BLE JUSTICE BOSE OF THE SUPREME COURT IN THE CASE OF SIR KIKABAHI PREMCHAND VS. CIT [1953] 24 ITR 506 (SC) WHERE IT WAS OPINED AND HELD THAT THE VALUATION OF CLOSING STOCK AT MARKET VALUE INVARIABL Y WILL CREATE PROBLEM. FOR IF THE MARKET VALUE IS HIGHER THAN COST, THE ACCOUNTS WILL REFLECT NOTIONAL PROFITS NOT ACTUALLY REALIZED. ON THE OTHER HAND, IF THE MARKET VALUE IS LESS, THE ASSESSEE WILL GET THE BENEFIT OF A NOTIONAL LOSS HE HAS NOT INCURRED. NEVERTHELESS, AS MENTIONED ORDINARY PRINCIPLES OF COMMERCIAL ACCOUNTING PERMIT VALUATION AT COST OR MARKET PRICE, WHICHEVER IS LOWER. THE RATIONAL BEHIND THIS HAS BEEN EXPLAINED BY HONBLE CHIEF JUSTICE PATANJALI SASTRI OF THE SUPREME COURT IN THE CASE OF CHAINRUP SAMPATRAMS (SUPRA). THE ASSESSEE FURTHER SUBMITTED THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF SANJEEV WOOLEN MILLS VS. CIT (2005) 149 TAXMAN 431(SC) WHEREIN IT WAS HELD THAT BY PUTTING STOCK AT MARKET VALUE DID NOT AND COULD NOT BRING IN ANY REAL PROFIT WHICH WAS NECESSARY FOR TAXING INCOME UNDER THE INCOME TAX ACT. THAT, FURTHER IN THE CASE OF CHAI N RUP SAMPATRAM (SUPRA) IT WAS OBSERVED BY THE HONBLE APEX COURT THAT VALUATION OF UNSOLD STOCK AT THE CLOSE OF AN ACCOUNTING PERIOD IS A NE CESSARY PART OF THE PROCESS OF DETERMINING THE TRADING RESULTS OF THAT PERIOD, AND CAN IN NO SENSE BE REGARDED AS THE SOURCE OF SUCH PROFIT. NOR CAN THE PLACE WHERE SUCH 7 VALUATION IS MADE BE REGARDED AS THE SITUS OF THEIR ACCRUAL. THE SOURCE OF THE PROFI TS AND GAINS OF A BUSINESS IS UN DOUBTEDLY THE BUSINESS, AND THE PLACE OF THEIR ACCRUAL IS WHERE THE BUSINESS IS CARRIED ON. THAT ON THE BASIS OF THESE JU DICIAL PRINCIPLES CERTAIN PERTINENT FACTORS EMERGES THEREFROM : I . TAXATION CANNOT BE DONE ON NOTIONAL I NCOME IT HAS TO BE ALWAYS REAL AND ACCRUED INCOME. II . THE VALUATION OF CLOSING STOCK IF IT IS DONE ON BASIS OF MARKET PRICE THERE IS EVERY POSSIBILITY OF SOME NOTIONAL INCOME OR NOTIONAL LOSS. III . IT IS ACCEPTED ACCOUNTANCY PRINCIPLES BY THE ICAI AND UN DER THE INCOME TAX LAWS , T HAT VALUATION OF CLOSING STOCK CAN BE D ONE EITHER AT COST PRICE OR MARKET PRICE WHICHEVER IS LOWER. IV . THE ASSESSEE IS A BUSINESS PERSON AND CAN ADOPT WHICHEVER PRICING METHOD HE THINKS IT BEST, SUITABLE FOR HIM SINCE EVEN PUTTI NG STOCK ONLY AT MARKET VALUE D OES NOT AND COULD NOT BRING IN ANY REAL PROFIT NECESSARY FOR TA X ING INCOME UNDER THE INCOME TAX ACT 1961. 11. THAT ON BASIS OF THE AFORESAID DISCUSSIONS AND THE VARIOUS JUDICIAL PRONOUNCEMENTS ANALYSED HEREIN BEFORE WE CONSI DER IT APPROPRIATE TO ORDER THAT THE ASSESSEE WAS CORRECT IN ADOPTING THE COST PRICE METHOD FOR STOCK VALUATION AND ACCORDINGLY WE REVERSE THE FINDINGS OF THE LD. CIT(A) ON THIS GROUND AND DELETE THE ADDITION OF RS. 77,38 ,7 05/ - AND WE ORDER ACCORDINGLY . 1 2. THIS GROUND OF APPEAL BY THE ASSESSEE IS ALLOWED. 8 13. THE NEXT GROUND OF APPEAL RELATES TO THE CONFIRMATION OF LUMP SUM DISALLOWANCE OF INTEREST TO THE EXTENT OF RS. 50,000/ - MADE BY THE AO ON APPLICATION OF PROVISION OF SECTION 40A(2)(B) OF THE ACT. 1 4. THE AO OBSERVED THAT THE ASSESSEE HAD SHOWN TOTAL INTEREST RECEIPT TO THE TUNE OF RS. 22,43,498/ - WHEREAS INTEREST PAYMENT WAS CLAIMED AT RS. 32,83,838/ - . THUS THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED NET INTERESTS PAYMENT TO THE TUNE OF RS. 10,40, 340/ - IN THE P&L ACCOUNT. THE AO FURTHER OBSERVED THAT OUT OF THE TOTAL INTEREST PAID THE ASSESSEE HAD PAID INTEREST TO THE EXTENT OF RS. 28,17,65/ - TO THE PERSONS SPECIFIED UNDER SECTION 40A(2)(B) OF THE ACT. THE AO POINTED OUT THAT THE ASSESSEE HAS PAID INTEREST @12% TO THESE PERSONS WHEREAS IT HAS CHARGED INTEREST @10% FROM ITS SISTER CONCERN M/S SHIV SHANKAR FLOOR MILLS, NEW DELHI. ACCORDINGLY, THE AO SOUGHT AN EXPLANATION IN THIS REGARD AND THE ASSESSEE VIDE REPLY DT. 21/11/2014 FURNISHED ITS EXPLANATI ON WHICH IS GIVEN AT PAGE NO. 9 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE REPLY, THE AO MENTIONED THAT THE ASSESSEE HAS PAID INTEREST AT HIGHER RATE TO ITS RELATIVES WHEREAS IT CHARGED INTEREST AT LOWER RATE FROM ITS SISTER CONCERN. THE AO DID NOT ACC EPT THE ASSESSEES EXPLANATION OF NOT HAVING CHARGED INTEREST AT A HIGHER RATE FROM M/S SHIV SHANKAR FLOOR MILLS, NEW DELHI. THE AO, NOT BEING SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE PROCEEDED TO MAKE THE LUMP SUM DISALLOWANCE OF RS. 50,000/ - OUT OF THE TOTAL CLAIM OF INTEREST PAYMENT. 9 15. THAT THE LD. CIT(A) IN HIS ORDER HELD THAT THE FACT S MENTIONED IN THE ASSESSMENT ORDER HAVE NOT BEEN DENIED BY THE ASSESSEE. IN VIEW OF THE PROVISION OF SECTOIN 40A(2)(B) ANY DUE BENEFIT TO SPECIFIED PERSONS AS C OVERED BY THESE PROVISIONS IS REQUIRED TO BE DISALLOWED TO THE EXTENT PROVIDED. THEREFORE DISALLOWANCE ARE MADE UNDER SECTION 40A(2)(B) OF THE ACT. THE LD. CIT(A) FURTHER STATED IN HIS ORDER THAT THE WRITTEN SUBMISSION FILED BY THE ASSESSEE ALSO DO NOT PR OVE AS TO HOW THE DECISION OF THE AO ARE INCORRECT. THE LD. CIT ACCORDINGLY CONFIRMED THE DISALLOWANCE OF RS. 50,000/ - 16. WE HAVE PERUSED THE RECORDS IN THE CASE, FACTS AND CIRCUMSTANCES AND WE ARRIVE AT OUR CONSIDERED VIEW THAT THE ASSESSEE GOT AN OPPORT UNITY IN FRONT OF THE FIRST APPELLATE AUTHORITY TO PROVIDE EVIDENCE AND SUPPORTING DOCUMENTS THAT NO UNDUE BENEFIT TO SPECIFIED PERSONS AS COVERED BY THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT WAS PROVIDED. THAT IN ABSENCE OF SUCH PROOF THE DISALLOWANC E ARE REQUIRED TO BE MADE UNDER THE SAID PROVISIONS. WE THEREFORE FIND NO INFIRMITY WITH THE FINDINGS OF THE LD. CIT(A) ON THIS GROUND AND THEREBY UPHOLD THE SAME. 17. THIS GROUND OF APPEAL BY THE ASSESSEE IS DISMISSED. 18. THAT THE NEXT GROUND OF APPEAL RELATES TO LUMP SUM DISALLOWANCE OF RS. 20,000/ - . 19. THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED EXPENSES OF RS. 22,678/ - RS. 24,659/ - AND RS. 1,40,950/ - ON ACCOUNT OF TELEPHONE EXPENSES , LABOUR AND WAGES EXPENSES RESPECTIVELY. THE ASSESSEE STATED BEFOR E THE AO THAT NO 10 VOUCHER S WERE KEPT AND ONLY BILLS ARE KEPT FOR THESE EXPENSES. THE AO MENTIONED THAT EXPENSES ARE NOT AMENABLE FOR VERIFICATION. HE ALSO EXPRESSED APPREHENSION REGARDING INVOLVEMENT OF PERSONAL ELEMENT IN THESE EXPENSES. CONSIDERING THE FA CTS, THE AO MADE LUMP SUM DISALLOWANCE OF RS. 20,000/ - OUT OF THE ABOVE SAID EXPENSES. 20. THAT BEFORE THE LD. CIT(A) AS APPEARING IN HIS ORDER , THE ASSESSEE HAS CONTENDED THAT ALL EXPENSES ARE WHOLLY RELATED TO BUSINESS. THE LD. CIT(A) STATED IN HIS ORDE R THAT NO EVIDENCE HAVE BEEN FILED IN SUPPORT OF THESE CLAIM OF EXPENSES A S INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS BY THE ASSESSEE. THE ONUS UNDER SECTION 37(1) OF THE ACT REMAINS TO BE DISCHARGED. THAT IN ABSENCE OF PROPER BILLS AND V OUCHERS, THE ASSESSEES CLAIM OF EXPENSES CANNOT BE ACCEPTED. FURTHER, THE NATURE OF EXPENSES ARE SUCH THE PERSONAL USE CANNOT BE DENIED. ACCORDINGLY THE LD. CIT(A) CONFIRMED THE LUMP SUM DISALLOWANCE OF RS. 20,000/ - . 21. WE HAVE PERUSED THE CASE RECORDS A ND WE NOTICED THAT THE LEGAL RESPONSIBILITY IS ON THE ASSESSEE TO PROVE THAT THESE EXPENSES ARE FOR THE PURPOSES OF BUSINESS WHOLLY AND THIS IS NOT PROVED EITHER BEFORE T HE AO NOR BEFORE THE LD. CIT(A). T HAT IT IS CLEARLY STATED AS PER THE ORDER OF THE LD. CIT(A) NO PROPER BILLS AND VOUCHERS WERE PRODUCED NOR ANY EVIDENCE HAVE BEEN FILED BEFORE THE LD. CIT(A) TO DEMONSTRATE THAT THESE EXPENSES WERE INCURRED EXCLUSIVELY FOR BUSINESS PURPOSES. THAT IT IS ALSO PRACTICAL IN BUSINESS PARLANCE THAT THE NATURE OF EXPENSES ARE SUCH WHERE CERTAIN AMOUNT OF PERSONAL USE CANNOT 11 BE DENIED AND AS SUCH WE UPHOLD THE FINDINGS OF THE LD. CIT(A) AND SUSTAIN THIS ADDITION. 22. THIS GROUND OF APPEAL BY THE ASSESSEE IS DISMISSED. 23. IN THE RESULT, APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT . SD/ - SD/ - (B.P. JAIN) ( PARTHA SAR A THI CHAUDHURY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14/12/2016 AG COPY TO: 1. THE APPE LLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR