Ashish Kumar Gupta, New Delhi V. ITO WARD - 37(1), New Delhi

ITA 1237/DEL/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0782 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 17-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS; Set aside
• Section: 131; 68; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.As. No.1233 & 1234/DEL/2020 Assessment Years 2007-08 & 2008-09 Anish Kumar Gupta, K-28, 3 rd Floor, Sarita Vihar, New Delhi. v. ITO, Ward-37(1), New Delhi. TAN/PAN: AFAPG9859G (Appellant) (Respondent) I.T.As. No.1235, 1236 & 1237/DEL/2020 Assessment Year 2007-08, 2008-09 & 2009-10 Ashish Kumar Gupta, K-28, 3 rd Floor, Sarita Vihar, New Delhi. v. ITO, Ward-37(1), New Delhi. TAN/PAN: AGQPG7405B (Appellant) (Respondent) ITAs No.1452 & 1453/DEL/2020 Assessment Years 2007-08 & 2008-09 ITO, Ward-61(1), New Delhi. v. Anish Kumar Gupta, K-28, 3 rd Floor, Sarita Vihar, New Delhi. TAN/PAN: AFAPG9859G (Appellant) (Respondent) ITAs No. 1450 & 1451/DEL/2020 Assessment Years 2007-08 & 2008-09 ITO, Ward-61(1), New Delhi. v. Ashish Kumar Gupta, K-28, 3 rd Floor, Sarita Vihar, New Delhi. TAN/PAN: AGQPG7405B (Appellant) (Respondent) I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 2 Appellant by: Shri Anish Kumar Gupta CA Respondent by: Shri Kanav Bali, Sr.D.R. Date of hearing: 23 08 2022 Date of pronouncement: 31 08 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The Bunch of captioned appeals relates to different assessment years involving common issues and, as stated, both the assessee are brothersclose relatives. Having regard to commonality of the issues involved, all the matters were heard together and are being disposed of by this common order. 2. To begin with, we shall refer to ITA No.1233/Del/2020 pertaining to Mr. Anish Kumar Gupta concerning Assessment Year 2007-08 as a lead case for the purposes of adjudication. ITA No.1233/Del/2020 (Assessment Year 2007-08) (Anish Kumar Gupta) 3. The grounds of appeal in all cases are similar. For easy reference, the grounds of appeal raised by the assessee in AY 2007-8 are reproduced hereunder: “1. That the Ld. CIT Appeal has erred in passing the impugned order u/s 143(3) of the IT Act which is contrary to facts and provision of law as such the assessment so framed is liable to be set aside/cancelled. 2. That the Ld. CIT Appeal AO has erred and is also not justified in making the addition u/s 68 of IT Act 1961 of Rs. 1,24,37,500/-on account of cash deposit which is perverse, capricious, arbitrary, bad in law and also contrary to the facts and provision of law as such the addition so made is liable to be deleted. I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 3 3. That the Ld. CIT Appeal AO has erred and is also not justified in making the of Rs. 2,76,725/- on account of sundry creditors which is perverse, capricious, arbitrary bad in law and also contrary to the facts and provision of law as such the addition so made is liable to be deleted. 4. That the Ld. CIT Appeal AO has erred and is also not justified in making the addition of Rs. 5,17,758/- on account of expenses payable which is perverse, capricious arbitrary, bad in law and also contrary to the facts and provision of law as such the addition so made is liable to be deleted.” 4. It transpired in the course of hearing that broadly, two issues are involved in all captioned appeals, na mely ( a) addition under S. 68 on account of cash deposits (b) disallowances of expenses and additions on account of sundry creditors pertaining to expenses incurred with referenc e to contract entered with Reliance Industries Ltd.(RIL) for r endering services on behalf of RIL. 5. At the ti me of he aring, Mr. Anish Ku ma r Gupta appearing in person for himself as well as for the other assessee, na mel y, Mr. Ashish Ku mar Gupta (in his capacity of his brother) submitted at the outset that both the assessee captioned above intends to surrender the a mount of cash deposit challenged as per ground no.2 of this appeal as well as simil ar grounds agitated in all other captioned appeals and treat it as their income in respective assessment yea rs with a view to buy peace of mind and avoid protracted litigation. 6. In view of categorical assertions made on behalf of the assessee for himself and for his brother towards withdrawal of first issue in contentions; Ground no.2 of the impugned appeal I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 4 in ITA No.1233/Del/2020 concerning Assessment Yea r 2007-08 is dismissed as not pressed. 7. Likewise, corr esponding grounds of si milar nature se eking to challenge additions on account of cash deposits in all the captioned appeals, pertaining to both assessee, are dis missed as not pressed. 8. Grounds No.3 and 4 relate to second issue i.e. treat me nt of sundry creditors of Rs.2,76,725/- and related issue of disallowance of expenses amounting to Rs.5,17,758/- in the instant case. Similar disallowances and additions towards expenses and sundr y creditors have been made b y the revenue in other captioned appeals also. 8.1 In the Assessmen t order, the Assessing Officer has made aforesaid additions on the ground that no documents/details have been filed by the assessee in support of its clai m. The CIT( A) has also affir med the additions in a mechanical manner with giving any substantive reasons. 8.2. The Ld. Counsel in this regard submitted that in pursuance of an agree ment with Reliance Industries Ltd. (RIL) and all attendant facts, it ma y be observed that before incurring any expenses on the RIL, approval would have to be taken fro m RI L. The assessee mere ly acted as a consultant to RIL and has earned the professional fee of a meager a mount in the process. It was further pointed out that all the expenses incurred on behalf of the RIL has been subject matter of TDS provisions. The payments were fir st received from RIL for onward payments to I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 5 various parties as per approvals. The party na mel y RIL was deducting TDS in such payments where applicable and those a mounts have been paid to other parties on behalf of RIL in consideration of services rendered to RIL. The assessee in turn has also deducted TDS in ter ms of provisions of law. As contended, the assessee has mer el y acted as conduit for RIL to execute transactions on their behalf. A confir mation received fro m RIL towards incurring such expenses on behalf of RIL was also referred. I t was further pointed out that detailed submissions were made before the CIT( A) in this regard giving co mplete details and facts as available with the assessee. The expenses have been incurred in fiduciary capacit y for which additions in the hands of assessee is not justified. 9. We have heard the rival submissions as well as perused the order of the lower authorities as well as material ref er red to and relied upon in the course of hearing. The CIT(A) has confir med the action of AO in a non-descript manner. No rea sons were assigned for not ad mitting the clai m of the asse ssee. The relevant operative para of CIT(A) re ads as under: “ N o d o c u m e n t s / d e t a i l s h a v e b e e n f i l e d i n s u p p o r t o f h i s c l a i m f o r w h i c h t h e a d d i t i o n o f R s . 2 , 7 6 , 7 2 5 / - o n a c c o u n t o f s u n d r y c r e d i t o r s a n d R s . 5 , 1 7 , 7 5 8 o n a c c o u n t o f e x p e n s e s p a y a b l e . T h e s a m e is a l s o d i s a l l o w e d t h i s t i m e a l s o . ” 10. Noticiably, identical issue has been exa mined by th e Co- ordinate Bench in Assessment Ye ar 2006-07. In the identical factual matrix, the co-ordinate bench observed as under: “ 2 . T h e a s s e s s e e i n d i v i d u a l i s a C h a r t e r e d A c c o u n t an t p r o v i d i n g m a n a g e m e n t c o n s u l t a n c y s e r v i c e s t o M / s R e l i a n c e I n du s t r i e s L t d . ( R I L ) . T h e A s s e s s i n g O f f i c e r o b s e r v e d t h a t a s p e r t h e c o n su l t a n c y a g r e e m e n t I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 6 b e t w e e n t h e a s s e s s e e a n d R I L , t h e a s s e s s e e h a d t o re c e i v e ? 2 0 , 0 0 0 / - p e r m o n t h f o r s e r v i c e r e n d e r e d ; t h a t h o w e v e r , a s p er t h e r e c o r d o f p a y m e n t v o u c h e r s , t h e e x p e n s e s , t h e d e t a i l s o f w h i ch h a d b e e n g i v e n b y t h e a s s e s s e e o n b e h a l f o f R I L , w e r e i n f l a t e d . T h e As s e s s i n g O f f i c e r d i s a l l o w e d t h e f o l l o w i n g p a y m e n t s : - Business Promotion entertainment 10% Rs.3342411/- Rs.334241/- Conveyance expenses 10% Rs.2159043 Rs.215904/- Dewali expenses 25% Rs.970457/- Rs. 242115/- Miscellaneous expenses 10% Rs.239291/- Rs.23929/- Parking & Forwarding 10% Rs.224550/- Rs.22455/- Social welfare 20% Rs.3925171/- Rs.785034/- Travel expenses 10% Rs.572914/- Rs.57291/- Vehicle Hire Charges 10% Rs.3956456/- Rs.395645/- Photocopy 10% Rs.421473/- Rs.42147/- Donation and Charity 100% Rs.15420/- Rs.15420/- Rs. 2134181 /- T h e L d . C I T ( A ) d e l e t e d t h e d i s a l l o w a n c e . 4 . T h e L d . D R h a s c o n t e n d e d t h a t w h i l e w r o n g l y d e le t i n g t h e d i s a l l o w a n c e c o r r e c t l y m a d e , t h e L d . C I T ( A ) h a s f ai l e d t o t a k e i n t o c o n s i d e r a t i o n t h e o b s e r v a t i o n s m a d e b y t h e A s s e s s i ng O f f i c e r , t o t h e e f f e c t t h a t t h e e x p e n s e s w e r e i n f l a t e d , w h e r e a s t h e f u l l p a y m e n t h a d b e e n r e c e i v e d b y t h e a s s e s s e e f r o m R I L d u r i n g t h e ye a r . 5 . T h e I d . c o u n s e l f o r t h e a s s e s s e e , o n t h e o t h e r h a n d , h a s s t r o n g l y r e l i e d o n t h e i m p u g n e d o r d e r a n d i t h a s b e e n c o n t e nd e d , a s b e f o r e t h e a u t h o r i t i e s b e l o w , t h a t t h e a s s e s s e e h a d r e c e i v e d th e r e i m b u r s e m e n t o f t h e e x p e n s e s f r o m R I L t h r o u g h b a n k i n g c h a n n e l , a s ev i d e n t f r o m t h e b a n k a c c o u n t d u l y p r o d u c e d ; t h a t c o n f i r m a t o r y l e t t er s f r o m R I L r e g a r d i n g t h e r e i m b u r s e m e n t o f e x p e n s e s u n d e r d i f f er e n t h e a d s , r e l a t i n g t o t h e t h r e e p r o p r i e t a r y c o n c e r n s o f t h e a s s e s s e e du l y s u p p o r t e d t h e r e i m b u r s e m e n t ; t h a t t h e e x p e n s e s w e r e r e i m b u r s e d t o t h e a s s e s s e e a f t e r T D S v i d e T D S c e r t i f i c a t e s , w h i c h w a s f i l e d ; t h a t t he e x p e n s e s w e r e d u l y s u p p o r t e d b y b i l l s a n d v o u c h e r s ; t h a t s e p a r a t e P r o fi t s & L o s s A c c o u n t s o f t h e t h r e e p r o p r i e t a r y c o n c e r n s h a d b e e n p r e p a r e d a n d t h e i n c o m e h a d b e e n s h o w n t o g e t h e r i n t h e r e t u r n b y t h e a s s e s s e e ; t h a t t h e b o o k s o f a c c o u n t o f a l l t h e t h r e e c o n c e r n s w e r e a u d i t e d ; t h at t h e a l l e g a t i o n o f i n f l a t i o n o f e x p e n s e s w a s n o w h e r e p r o v e d b y t h e A s se s s i n g O f f i c e r a n d n o e x p e n s e w a s s h o w n t o b e i n f l a t e d a d a m e r e a d h oc a d d i t i o n w a s m a d e , b a s e d o n n o t h i n g b u t s u s p i c i o n a n d g u e s s w o r k, w i t h o u t f i n d i n g a n y f a u l t w h a t s o e v e r i n t h e b o o k s o f a c c o u n t o f t h e a s s e s s e e ; a n d t h a t t h e L d . C I T ( A ) h a s c o r r e c t l y d e l e t e d t h e d i s a l l o w an c e . 6 . H a v i n g h e a r d t h e r i v a l c o n t e n t i o n s i n t h e l i g h t o f t h e m a t e r i a l a v a i l a b l e o n r e c o r d , w e f i n d t h a t i t w a s i n c o n s o n an c e w i t h t h e a s s e s s e e ' s a g r e e m e n t w i t h R I L t h a t h e h a d r e c e i v e d c o n s u l t a n c y f e e s i n I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 7 h i s t h r e e c o n c e r n s . H e h a d a l s o r e c e i v e d r e i m b u r s e me n t o f a c t u a l e x p e n s e s i n c u r r e d o n b e h a l f o f R I L . T h e A s s e s s i n g Of f i c e r d o u b t e d t h e s e e x p e n s e s a n d d u b b e d t h e m t o b e i n f l a t e d . A s t o h o w i t w a s s o , w a s n o w h e r e d e l i n e a t e d i n t h e a s s e s s m e n t o r d e r a n d t h e A s s e s s i n g O f f i c e r m a d e a d h o c d i s a l l o w a n c e s @ 1 0 % a n d f r o m 2 0 % t o 2 5 % r e s p e c t i v e l y , i n s o m e c a s e s . T h i s w a s d o n e w i t h o u t a s s i g n i n g a n y r e a s o n w h a t s o e v e r , o v e r l o o k i n g t h e f a c t t h a t t h e r e i m b u r s e m e n t b y R I L t o t h e a s s e s s e e w a s t h r o u g h b a n k i n g c h a n n e l a n d t h e p a y m e n t o f t h e e x p en s e s t o t h e r e s p e c t i v e p a r t i e s h a d a l s o b e e n m a d e b y t h e a s s e s se e t h r o u g h c h e q u e s . B e s i d e s , t h e e x p e n s e s w e r e d u l y s u p p o r t e d b y b i l l s a n d v o u c h e r s w h i c h h a d b e e n f i l e d b e f o r e t h e A s s e s s i n g O f f i c e r a n d w h ic h w e r e n o t e i t h e r d i s p u t e d o r e v e n t e s t c h e c k e d . T h e b o o k s o f a c c o u n t o f t h e a s s e s s e e w e r e a u d i t e d u / s 4 4 A B o f t h e I T A c t . T h e c o r r e c t n e ss a n d c o m p l e t e n e s s o f t h e b o o k s o f a c c o u n t w a s n o w h e r e c h a l l e n g e d b y th e A s s e s s i n g O f f i c e r . E v e n s o , t h e A s s e s s i n g O f f i c e r m a d e t h e a d h o c a d d i t i o n o f R s . 2 1 , 3 4 , 1 8 1 / - , d i s a l l o w i n g t h e e x p e n s e s u n d e r d i f f e r en t h e a d s o n a p r e s u m p t i v e b a s i s . T h i s a d d i t i o n w a s e n t i r e l y u n s u st a i n a b l e i n t h e e y e o f l a w a n d t h e L d . C I T ( A ) h a s c o r r e c t l y d e l e t e d t he s a m e , d u l y t a k i n g i n t o c o n s i d e r a t i o n t h e a f o r e s a i d p o s i t i o n a n d t h e fa c t t h a t a l l t h e e x p e n s e s i n q u e s t i o n s t o o d i n c u r r e d f o r b u s i n e s s p ur p o s e s b y t h e a s s e s s e e o n b e h a l f o f R I L a n d i t w a s t h e s e e x p e n s e s w h i c h w e r e r e i m b u r s e d b y R I L t o t h e a s s e s s e e . T h e p a y m e n t s h a d b e e n m a d e b y t h e a s s e s s e e t o t h e p a r t i e s o n d u e T D S , a s a v a i l a b l e f ro m t h e b a n k s t a t e m e n t s a n d t h e T D S w a s d e p o s i t e d w i t h t h e T D S Wa r d . 7 . I n v i e w o f t h e a b o v e , f i n d i n g n o e r r o r w h a t s o e v er t h e r e i n , t h e o r d e r o f t h e L d . C I T ( A ) i s u p h e l d a n d t h e g r i e v a n ce r a i s e d b y t h e D e p a r t m e n t i s r e j e c t e d . ” 11. The co-ordinate bench, in essence, found the claim of expenses on behalf of RIL to be bonafide and reversed the disallowances of expenses. The Expenses payable a nd sundry creditors in question are only offs hoots of such expenses and thus there is no warrant to take a different view on such expenses. 12. The second issue towards expenses incurred, expenses outstanding or payable b y wa y of sundry creditors agitated by assessee thus stands allowed and the action of revenue authorities stands reversed. 13. The facts in case of both the assessee in all the captioned assessment years are identical and flows fro m si milar I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 8 arrange ment fro m RIL. Ther efore the above stated observations made b y the Co- ordinate Bench in Assessment Ye ar 2006-07 shall apply mutatis mutandis to all the assessment yea rs in both assessee. The exp enses incurred and/ or pa yable on account of transaction in relation to RIL are therefore required to be treated as ad missible expenditure incurred on behalf of RIL. The action of the lower authorities is thus reversed in all the assessment years in both assessee. 14. The grounds of appeal raised by the Revenue reads as under: 1. Whet he r th e Ld . CI T (A ) ha s er re d i n d el et in g t he a dd iti on ma de o n acc ou nt of exp en se s in c urr ed f or n on b usi ness pu rp ose s i n re sp on se t o wh ic h, no de t ail s/ co rr es pond en c e w it h RI L ha s b ee n f ur nis he d d ur in g the co ur se o f o rig in al ass es sm en t a nd al s o du ri ng th e co ur s e of cu rr ent asse s sme nt pr oce ed in gs . 2. Whet he r th e ld . C IT (A ) h as e rr ed i n no t ap pr eciat in g the fac t t ha t t he fac ts of t he pr es en t c a se a re di ff er ent fr om the cas e of An is h Ku m ar Gu pt a fo r AY 20 06- 07 a s a d ho c a d dit io n wa s ma de in AY 20 06- 07 .” 15. As per its grounds of appeal, the Revenue has challenged the action of the CIT( A) whereb y t he additions made on account of expenses, treated by the Assessing Officer to be for non business purpose, has been reversed by the CI T( A). 16. The CI T( A) has d ealt with the issue as under: I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 9 “8 . T h e s i x t h g r o u n d r e l a t e s t o a d d i t i o n o f R s . 2 , 7 4, 7 6 , 0 4 3 / - r e p r e s e n t i n g r e c e i p t s f r o m M / s R I L . I n t h e a s s e s s m e n t o r d e r , T h e A O h a s r e c o r d e d a s u n d e r : - " 3 . 1 O n p e r u s a l o f c o p y o f a g r e e m e n t w i t h R e l i a n c e I n d u s t r i e s L t d . ( R I L ) f u r n i s h e d b y t h e a s s e s s e e , i t i s s e e n t h a t b e f o r e in c u r r i n g a n y e x p e n d i t u r e o n b e h a l f o f R I L , a p p r o v a l w o u l d b e t a k e n f r o m R I L . T he c o n d i t i o n l a i d d o w n i n t h e a g r e e m e n t i s r e p r o d u c e d a s u n d e r : - " a ) S a l a r i e s f o r t h e r e t a i n e r s h i p a n d f e e s f o r t h e c o n s u l t a n t s e n g a g e d - s h o u l d b e f o r e e n g a g i n g a n y e m p l o y e e s o r c o n s u l t a n t s , s e e k t h e a p p r o v a l o f R e l i a n c e I n d u s t r i e s L t d . b ) S a l a r i e s f r o m c o n t r a c t u a l e m p l o y e e s h i r e d b y t h em t h r o u g h t h e o u t s o u r c e c o n t r a c t o r . A l l t h e i r o v e r h e a d s e x p e n s e s l i k e c o n v ey a n c e , t e l e p h o n e , r e n t , t r a v e l , e l e c t r i c i t y , p r i n t i n g a n d s t a t i o n e r y , v e h i cl e h i r e , e t c . , f o r t h e o f f i c e ( s ) , t r a n s i t h o u s e ( s ) a n d o t h e r p l a c e s o f e s t a b l i s h m e n t w h i c h t h e c o n s u l t a n t m a y s e t u p . A l l e x p e n s e s t o h a v e a p p r o v a l o f R e l i a n c e I nd u s t r i e s L t d . c ) T h e c o n s u l t a n t s h a l l s u b m i t b u d g e t s t o R I L f o r t h e a b o v e e x p e n d i t u r e a t s u c h f r e q u e n c i e s a s m a y b e r e q u i r e d b y R I L a n d op e r a t e s e p a r a t e b a n k a c c o u n t s f o r t h e R I L c o o r d i n a t i o n w o r k . d ) T h e c o n s u l t a n t s h a l l m a i n t a i n p r o p e r b o o k s o f ac c o u n t f o r R I L C o o r d i n a t i o n a c t i v i t i e s w h i c h w i l l b e s u b j e c t t o a ud i t o r s c r u t i n y b y o r o n b e h a l f o f R I L . T h e c o n s u l t a n t s h a l l a l s o c o m p l y w i th a l l s t a t u t o r y o b l i g a t i o n s i n r e s p e c t o f i t s a c t i v i t i e s r e l a t i n g t o R I L . " 3 . 2 I t i s s e e n f r o m t h e c o n d i t i o n s l a i d d o w n i n t h e a g r e e m e n t , a s s e s s e e h a s t o m a i n t a i n p r o p e r b o o k s o f a c c o u n t f o r R I L , o p e r a t e se p a r a t e b a n k a c c o u n t f o r t h e R I L c o o r d i n a t i o n w o r k a n d b e f o r e i n c u r r i n g a n y e x p e n s e s , a p p r o v a l o f R I L h a s t o b e o b t a i n e d . F o r r e i m b u r s e m e n t o f t h e e xp e n s e s i n c u r r e d , t h e a s s e s s e e w o u l d h a v e m a d e t h e c o r r e s p o n d e n c e w i t h R IL s u c h a s t a k i n g ^ a p p r o v a l b e f o r e e n g a g i n g a n y e m p l o y e e , f u r n i s h i n g bu d g e t s , m a i n t a i n i n g s e p a r a t e b o o k s o f a c c o u n t s f o r R I L . T h e s e d e t a i l s co u l d h a v e b e e n f u r n i s h e d d u r i n g t h e c o u r s e o f o r i g i n a l a s s e s s m e n t p r o c e e d i n gs a s w e l l a s c u r r e n t a s s e s s m e n t p r o c e e d i n g s i n s u p p o r t o f h i s c l a i m a s th e o n u s i s o n t h e a s s e s s e e t o p r o v e h i s c l a i m . " 1 A t t h e a p p e l l a t e s t a g e , t h e a p p e l l a n t h a s s u b m i t te d a s u n d e r : - " 3 . F a c t s o f t h e c a s e i n o r i g i n a l o r d e r b y A O : A . T h a t t h e L d . A O h a s d i s a l l o w e d a s u m o f R s . 2 , 74 , 7 6 , 0 4 3 / - o u t o f d i f f e r e n t h e a d o f e x p e n s e s w h i c h w a s r e c e i v e d b y w ay o f r e i m b u r s e m e n t b y R I L . T h i s d i s a l l o w a n c e i n c h a l l e n g e d i n g r o u n d N o 6 o f t h e o r i g i n a l g r o u n d s . T h e A O o b s e r v e d t h a t t h e a s s e s s e e r e c e i v e d f u n d s f ro m t h e R I L a t R s . 2 , 8 3 , 8 3 , 4 5 0 / - a n d i n c u r r e d e x p e n s e s o f R s . 2 , 7 6 , 9 8 , 34 0 / - . B . T h a t L d . t h e A O a d m i t t e d t h a t t h e a s s e s s e e h a s f i l e d t h e c o n f i r m a t i o n l e t t e r o f R I L s h o w i n g t h e b r e a k u p o f e x p e n s e s o f R s. 2 , 7 6 , 9 8 , 3 4 0 / - . H e a l s o a d m i t t e d t h a t i n s u p p o r t , t h e a s s e s s e e f i l e d t h e o ri g i n a l v o u c h e r s , l a t e r o n , s a i d v o u c h e r w h i c h w e r e i m p o u n d e d b y h i m w i t h t h e ob j e c t t h a t t h e a p p e l l a t e a u t h o r i t i e s c a n e x a m i n e t h e s a m e . T h e A O f u r t h e r n ot e d t h a t t h e a s s e s s e e w a s m a k i n g p a y m e n t t o o t h e r s a g a i n s t t h e b i l l s r a i s e d in t h e n a m e o f R I L . C . T h a t t h e L d . A O a d m i t t e d i n t h e a s s e s s m e n t o r d er t h a t t h e a s s e s s e e r e c e i v e d R s . 2 , 8 3 , 8 3 , 4 5 0 / - f r o m t h e R I L a n d i n c u r r ed e x p e n s e s o f R s . 2 , 7 6 , 9 8 , 3 4 0 / - o n b e h a l f o f t h e R I L f o r w h i c h t h e c on f i r m a t i o n i s s u e d b y t h e I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 10 R I L w a s f i l e d b y t h e a s s e s s e e d u r i n g c o u r s e o f a s s es s m e n t p r o c e e d i n g b e f o r e h i m . T h u s , t h e f i n d i n g o f t h e A O a b o u t t h e b o g u s e xp e n s e s o f R s . 2 , 7 4 , 7 6 , 0 4 3 / - i s c o n t r a d i c t o r y v i s . - a - v i s . t h e r e c ei p t o f R s . 2 , 8 3 , 8 3 , 4 5 0 / - . O n c e , t h e r e c e i p t o f R s . 2 , 8 3 , 8 3 , 4 5 0 / - f r o m t h e R I L t h r o u g h b a n k i n g c h a n n e l , w a s a c c e p t e d b y t h e A . O . , h e w a s r e q u i r e d t o a c c e p t g e n u i n e n e s s o f t h e e x p e n d i t u r e R s . 2 , 7 4 , 7 6 , 0 4 3 / - a l s o , w h i c h w e r e i n c ur r e d o n b e h a l f o f R I L . I t i s a l s o e v i d e n t f r o m t h e B a l a n c e S h e e t o f t h e a p p e ll a n t t h a t s u c h r e c e i p t o f R s . 2 , 8 3 , 8 3 , 4 5 0 / - w a s n e i t h e r s h o w a s g i f t n o r l o a n a n d a d v a n c e s . I n s u b s t a n c e , t h e r e c e i p t f r o m R I L w a s b y w a y o f r e i m bu r s e m e n t o f e x p e n s e s a n d a p p e l l a n t r e m u n e r a t i o n . H e n c e , d i s a l l o w a n c e o f e x p en s e s w h i c h w a s i n c u r r e d o n b e h a l f o f a n d o n t h e d i r e c t i o n o f R I L w a s n o t j us t i f i e d . T h e b a s i s o n w h i c h t h e A O h a s m a d e a d d i t i o n o f t h e r e c e i p t s r e c e i v e d fr o m R I L i s t h e c o n f i r m a t i o n l e t t e r f i l e d b y t h e a s s e s s e e d u r i n g t he c o u r s e o f o r i g i n a l a s s e s s m e n t p r o c e e d i n g s b u t t h e A O h a s d i s r e g a r d e d t h e c o n f i r m a t i o n l e t t e r f i l e d f o r g i v i n g a l l o w a n c e s . 4 . F a c t s o f t h e c a s e i n r e a s s e s s m e n t p r o c e e d i n g s : A s p e r t h e A O t h e a s s e s s e e c o u l d n o t p r o d u c e a n y d oc u m e n t a r y e v i d e n c e s i n h i s s u p p o r t d e s p i t e p r o v i d i n g v a r i o u s o p p o r t u n i t i e s, t h e a l l o w a b i l i t y o f e x p e n d i t u r e c o u l d n o t b e e x a m i n e d t h i s t i m e a l s o . I n v i e w o f t h e a b o v e , a n a m o u n t o f R s . 2 , 7 4 , 7 6 , 0 4 3 /- i s a d d e d b a c k t o t h e t o t a l i n c o m e o f t h e a s s e s s e e . 5 . T h a t f u r t h e r t h e a p p e l l a n t r e c e i v e d r e i m b u r s e m en t o f e x p e n s e s t h r o u g h b a n k i n g c h a n n e l f r o m t h e R I L . T h e c o p y o f ba n k a c c o u n t s h o w i n g t h e r e c e i p t o f r e i m b u r s e m e n t e x p e n s e s a r e e n c l o s e d a s An n e x u r e . T h e s a i d R I L h a s p r o v i d e d t h e c o n f i r m a t o r y l e t t e r s o f r e i m b u r s e me n t o f e x p e n s e s u n d e r d i f f e r e n t h e a d s r e l a t i n g t o a f o r e s a i d p r o p r i e t a r y co n c e r n . T h e c o p y o f c o n f i r m a t o r y l e t t e r s p r o v i d e d b y t h e R I L i s e n c l o s ed a s A n n e x u r e . 6 . T h a t t h e R I L r e i m b u r s e d t h e e x p e n s e s t o t h e a p pe l l a n t a f t e r d e d u c t i n g t h e t a x e s a t s o u r c e a n d p r o v i d e d t h e T D S c e r t i f i c a te s f o r w h i c h t h e c r e d i t w a s c l a i m e d b y t h e a p p e l l a n t i n h i s r e t u r n . T h e c o p y o f T D S c e r t i f i c a t e s a r e e n c l o s e d a s A n n e x u r e . 7 . T h a t t h e a p p e l l a n t h a d a l s o p a i d t h e a f o r e s a i d e x p e n s e s t o t h e r e s p e c t i v e p a r t i e s a f t e r m a k i n g t h e n e c e s s a r y d e d u ct i o n o f t h e t a x e s f o r w h i c h t h e T D S r e t u r n w a s f i l e d t o t h e r e s p e c t i v e A O a n d th e s a m e a r e v e r i f i a b l e f r o m t h e w e b s i t e A n n e x u r e . 8 . T h a t t h e a p p e l l a n t p r e p a r e d t h e s e p a r a t e p r o f i t a n d l o s s a c c o u n t o f t h e a f o r e s a i d p r o p r i e t a r y c o n c e r n a n d s h o w n t h e i n c o m e a l o n g w i t h o t h e r p r o f e s s i o n a l i n c o m e i n t h e r e t u r n . T h e b o o k s a / c o f t h e a s s e s s e e i s a u d i t e d . A l l t h e e x p e n s e s a r e s u p p o r t e d w i t h b i l l s a n d v o u c he r s , w h i c h a r e i m p o u n d e d u / s 1 3 1 o f t h e I . T A c t . , 1 9 6 1 . I n a d d i t i o n t o t h e ab o v e c o n s u l t a n c y f e e s r e c e i v e d f r o m t h e R I L , t h e a p p e l l a n t h a s a l s o s h o w n t h e p r o f e s s i o n a l i n c o m e d e r i v e d f r o m h i s p r a c t i c e . 9 . T h a t i t i s a d m i t t e d t h a t t h e R I L h a s p a i d R s . 2, 8 3 , 8 3 , 4 5 0 / - t o t h e a p p e l l a n t f o r m a k i n g t h e e x p e n d i t u r e o n i t s b e h a l f a n d t h e a p p e l l a n t h a d m a d e t h e p a y m e n t o f R s . 2 , 7 6 , 9 8 , 3 4 0 / - u n d e r d i f f e r en t h e a d s o n t h e d i r e c t i o n o f R I L a n d t h e s a m e w a s c o n f i r m e d b y t h e R I L . O n t h e c o n t r a r y , L d . A . O . w a s r e q u i r e d t o a l l o w t h e w h o l e e x p e n s e s i n c u rr e d o n b e h a l f o f R I L , w h i c h w a s r e c e i v e d b y w a y o f r e i m b u r s e m e n t . T h u s , th e A . O . w a s n o t j u s t i f i e d t o d i s b e l i e v e t h e e x p e n d i t u r e a n d d i s a l l o w t h e s u m o f R s . 2 , 7 4 , 7 6 , 0 4 3 / - u n d e r d i f f e r e n t h e a d s . I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 11 T h a t t h e A O a b o v e o b s e r v a t i o n i s f a c t u a l l y c o r r e c t a s t h e a p p e l l a n t w a s n o t d o i n g h i s o w n b u s i n e s s b u t i t w a s m a k i n g p a y m e n t o n b e h a l f o f a n d o n t h e d i r e c t i o n o f R I L . F u r t h e r , t h e A O o b s e r v a t i o n , " t h e a s s e s s e e c o u l d n o t s u b s t a n t i a t e t h a t t h e e x p e n s e s c l a i m e d w e r e i n c u r r ed f o r h i s o w n b u s i n e s s / p r o f e s s i o n " i s a l s o f a c t u a l l y c o r r e c t a n d a s t h e a pp e l l a n t h a s i n c u r r e d t h e e x p e n s e s o n t h e d i r e c t i o n o f t h e R I L a n d s u c h R I L ha s c o n f i r m e d t h e s e e x p e n s e s . T h e b i l l s / v o u c h e r s m a i n t a i n e d i n t h i s re g a r d w e r e p r o d u c e d b e f o r e t h e A . O . S i n c e a l l t h e e x p e n s e s w e r e i n c u r r e d o n t he d i r e c t i o n o f a n d o n b e h a l f o f R I L a n d t h e s a i d R I L h a s c o n f i r m e d t h e e xp e n s e s u n d e r d i f f e r e n t h e a d s . T h u s , t h e r e w a s n o n e e d t o s u b s t a n t i a t e t h e e x p e n s e s a s h i s o w n b u s i n e s s e x p e n s e s s e p a r a t e l y . T h e R I L h a s a l s o r e i mb u r s e d t h e e x p e n s e s a n d s u c h r e c e i p t , i . e . , t h e r e i m b u r s e m e n t o f e x p e n s e s ca n n o t b e t r e a t e d a s i n c o m e o f t h e a p p e l l a n t . 1 1 . I t i s p e r t i n e n t t o m e n t i o n h e r e t h a t t h e a s s e ss e e h a s p o t r e l i e f o n t h e s a m e s e t o f f a c t s w h e r e i n t h e n a t u r e o f e x p e n s e s w as i d e n t i c a l t o t h e i m p u g n e d y e a r i n t h e a p p e a l . T h e a s s e s s e e i n t h e A .Y 2 0 0 6 - 0 7 g o t r e l i e f f r o m C I T ( A ) o n t h e d i s a l l o w a n c e o f e x p e n s e s m a d e b y t h e A s s e s s i n g O f f i c e r . T h e c o p y o f C I T ( A ) ' s o r d e r i s a n n e x e d h e r e i n a s A n n e x u re . F u r t h e r , R e v e n u e f i l e d a p p e a l b e f o r e I n c o m e T a x A p pe l l a t e T r i b u n a l a g a i n s t t h e o r d e r o f C I T ( A ) . T h e T T A T v i d e o r d e r d a t e d 1 9 .0 6 . 2 0 1 3 c o n f i r m e d t h e o r d e r o f C I T ( A ) i n f a v o u r o f t h e a s s e s s e e w h e r e h e w a s a l l o w e d e x p e n s e s . T h e c o p y o f t h e s a i d o r d e r i s a n n e x e d h e r e i n a s A n n e x u re . I t i s a l s o s u b m i t t e d t h a t t h e a s s e s s e e h a s i n c u r r e d s a m e n a t u r e o f e x p e n s e s o n b e h a l f o f R I L i n t h e a s s e s s m e n t y e a r 2 0 0 9 - 1 0 . T h e As s e s s i n g O f f i c e r i n q u i r e d a b o u t t h e n a t u r e o f e x p e n s e s a n d u p o n b e i n g s a t i s f ie d w i t h t h e e x p l a n a t i o n o f t h e a s s e s s e e , h e m a d e n o d i s a l l o w a n c e f o r t h e e x p e ns e s . T h e c o p y o f t h e s a i d o r d e r i s a n n e x e d h e r e a s A n n e x u r e . I t i s t h e r e f o r e s u b m i t t e d t h a t t h e a d d i t i o n o n a c c ou n t o f e x p e n s e s i n c u r r e d o n b e h a l f o f R I L a r e o f t h e s a m e n a t u r e a s t h e y e a r s me n t i o n e d a b o v e w h e r e a s s e s s e e h a s b e e n g r a n t e d r e l i e f . 1 2 . T h a t t h e L d . A O h a s c o r r e c t l y a d m i t t e d t h a t t he a s s e s s e e h a s r e c e i v e d t h e f u l l p a y m e n t f r o m t h e R I L b y w a y o f r e i m b u r s e m en t o f e x p e n s e s . T h o u g h h e d i d n o t g i v e a n y f i n d i n g t h a t s u c h r e c e i p t b y w ay o f r e i m b u r s e m e n t w a s a t a x a b l e i n c o m e y e t b y d i s a l l o w i n g t h e e x p e n s e s w h i ch w a s p a i d t o d i f f e r e n t p e r s o n s u n d e r d i f f e r e n t h e a d s o n b e h a l f o f a n d o n th e d i r e c t i o n o f s a i d R I L , h a s b e c o m e t h e t a x a b l e i n c o m e i m p l i e d l y . T h u s , t h e a c t i o n o f t h e A O t r e a t i n g t h e r e i m b u r s e m e n t o f e x p e n s e s a s i n c o m e i s a g a i n s t t h e f i n d i n g o f t h e J u r i s d i c t i o n a l H i g h C o u r t d e c i s i o n i n t h e c a s e o f CI T V s F o r t i s H e a l t h C a r e L t d , I T A N o . 8 o f 2 0 0 9 a s r e p o r t e d i n 1 8 1 T a x m a n 25 7 ( e n c l o s e d a s A n n e x u r e ) . I n t h i s c a s e a l s o t h e r e c e i p t b y w a y o f r e i m b u r s e m e n t o f e x p e n s e s f r o m S p e c i a l t y R a n b a x y L i m i t e d ( S R L ) b y t h e F o r t i s H e a l t h c a r e L t d . w a s h e l d a s n o t a n i n c o m e b u t i t w a s t r e a t e d a s a n e x p e n s e s . T h a t t h e f a c t o f a p p e l l a n t c a s e i s v e r y s i m i l a r t o t h e c a s e f o r t i e s H e a l t h c a r e L t d . ( S u p r a ) . I n t h e a p p e l l a n t ' s c a s e a l s o , t h e L d . A . O . i m p l i e d l y a s s e s s e d t h e i n c o m e o f R s . 2 , 7 4 , 7 6 , 0 4 3 / - w h i c h w a s r e c e i v e d b y wa y o f r e i m b u r s e m e n t o f e x p e n s e s . T h u s , t h e A . O . w a s n o t j u s t i f i e d t o a s s e ss t h e i n c o m e b y w a y o f d i s a l l o w a n c e o f e x p e n s e s , w h i c h w e r e r e c e i v e d a s r ei m b u r s e m e n t . F o r t h e s a k e o f c o n v e n i e n c e , t h e r e l e v a n t p o r t i o n i . e . P a r a 6 o f t h e o r d e r o f H o n ' b l e J u r i s d i c t i o n a l H i g h C o u r t d e c i s i o n i s r e p r o d u c e d b el o w : " T h e a s s e s s e e b e i n g a g g r i e v e d p r e f e r r e d a n a p p e a l to t h e C I T ( A ) . T h e C I T ( A ) b y a n o r d e r d a t e d 2 4 - 1 2 - 2 0 0 4 a l l o w e d t h e a p p e a l w i th r e s p e c t t o t h e i s s u e i n I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 12 h a n d a n d d e l e t e d t h e a d d i t i o n m a d e b y t h e A s s e s s i n g o f f i c e r . T h e C I T ( A ) i n i t s o r d e r r e t u r n e d a f i n d i n g o f f a c t t h a t a r e a d i n g o f t h e a g r e e m e n t m a d e i t d e a r t h a t t h e m o n e y r e c e i v e d w a s f o r s h a r i n g o f c o mm o n s e r v i c e s , a n d t h a t s e r v i c e s p r o v i d e d b y t h e a s s e s s e e w e r e p u r e l y b a s e d o n r e i m b u r s e m e n t o f c o s t o n w h i c h t h e a s s e s s e e h a d i n c u r r e d a n e q u i v a l e n t a mo u n t o f e x p e n d i t u r e . T h e C I T ( A ) f u r t h e r h e l d t h a t i n c a s e , e v e n i f , i t i s p re s u m e d t h a t s u m o f R s . 1 8 l a k h s c o u l d b e b r o u g h t t o t a x a s i n c o m e f r o m o t h e r s o u r c e s t h e n , t h e a m o u n t o f e x p e n d i t u r e i n c u r r e d w h i c h i s e q u i v a l e n t t o t h e a m o u n t r e c e i v e d w i l l h a v e t o b e s e t o f f o n a c c o u n t o f t h e f a c t t h a t t h e r e w a s a d i r e c t n e x u s b e t w e e n w h a t w a s r e c e i v e d t h a t w h i c h w a s e x p e n d e d . T h e o b s e r v a t io n s t o t h i s e f f e c t a r e f o u n d i n p a r a 2 , 3 o f t h e o r d e r o f t h e C I T ( A ) . " T h a t H o n ' b l e J u r i s d i c t i o n a l H i g h C o u r t i n t h e c a s e o f C I T \ / s . I n d u s t r i a l E n g i n e e r i n g P r o d u c t s ( P ) L t d . 2 0 2 I T R 1 0 1 4 ( D e l h i ) ( A n n e x u r e ) b y f o l l o w i n g t h e j u d g m e n t o f t h e S u p r e m e C o u r t i n t h e c a s e o f C IT v s . T e j a j i F a r a s r a m K h a r a w a l l a L t d . ( 1 9 6 8 ) 6 7 I T R 9 5 ( S C ) i n w h i c h i t wa s h e l d , " t o t h e e x t e n t o f t h e r e c e i p t r e p r e s e n t i n g r e i m b u r s e m e n t o f t h e e x p e ns e s t h e s a m e a r e n o t t a x a b l e " r u l e d t h a t r e i m b u r s e m e n t o f e x p e n s e s u n d e r n o c i r c u m s t a n c e s a s r e v e n u e r e c e i p t . T h e a p p e l l a n t f u r t h e r r e l y o n t h e d e c i s i o n o f 7 / B e n c h o f I T A T M u m b a i i n t h e c a s e o f D e p u t y D i r e c t o r o f I n c o m e T a x v s . M / s C h u b b P a c i f i c U n d e r w r i t i n g M a n a g e m e n t S e r v i c e s P v t . L t d . , I T A N o . 2 5 0 1 / M u m / 2 0 0 7 A s s e s s m e n t Y e a r : 2 0 0 3 - 0 4 , 2 0 0 9 - T I O L - 7 3 0 - I T A T - M U M ( An n e x u r e ) T h a t r e l y i n g o n t h e j u d g m e n t s o f C I T V s . I n d u s t r i a l E n g i n e e r i n g P r o d u c t s ( P ) L t d . 2 0 2 I T R 1 0 1 4 ( D e l h i ) , C I T v s . D u n l o p R u b b e r C o. L t d . ( 1 9 8 3 ) 1 4 2 I T R 4 9 3 ( C a l ) a n d C I T v s . S t e w a r t s & L l o y d s o f I n d i a L td . ( 1 9 8 7 ) 1 6 5 I T R 4 1 6 ( C a l ) t h e H o n ' b l e B o m b a y H i g h C o u r t i n t h e c a s e o f C I T v s . S i e m e n s A k t i o n g e s e l l s c h a f t ( 2 0 0 9 ) 3 1 0 I T R 3 2 0 ( B o m ) ( A n n e x ur e ) , h e l d , " p a y m e n t b y w a y o f r e i m b u r s e m e n t o f e x p e n s e s i n c u r r e d o n b e h a l f o f p a y e r i s n o t i n c o m e c h a r g e a b l e t o t a x i n t h e h a n d s o f p a y e e . " T h a t , t h e a c t i o n o f L d . A . O . b y d i s a l l o w i n g t h e e x pe n s e s w h i c h w a s r e i m b u r s e d b y t h e R I L h a s b e c o m e t a x a b l e i n c o m e w h ic h w a s n o t p e r m i s s i b l e i n t h e l i g h t o f s e v e r a l j u d g m e n t s i n c l u s i v e o f t h e J u r i s d i c t i o n a l H i g h C o u r t a n d t h e A p e x C o u r t . I t i s a l s o r e l e v a n t t o m e n t i o n t h a t t h e r e a r e c a s e l a w s p r e v e n t i n g t h e a u t h o r i t y f r o m l e v y i n g t h e t a x f r o m i n d i r e c t m o d e s , t h o u g h t h e s a m e w a s p e r m i s s i b l e d i r e c t l y . T h e c o u r t o b s e r v e d , w h a t e v e r c a n n o t b e d o n e d i r e c t l y t h e s a m e c a n n o t b e d o n e i n d i r e c t l y . H e n c e, t h e a c t i o n o f t h e A . O . b y d i s a l l o w i n g t h e e x p e n s e s w h i c h w a s i n c u r r e d o u t o f r e c e i p t b y w a y o f r e i m b u r s e m e n t i s e q u a l t o a s s e s s m e n t o f r e i m b u r s e m en t o f e x p e n s e s a s t a x a b l e i n c o m e . T h u s , t h e a c t i o n o f t h e A . O . i s n o t p e r m i s s i b l e i n t h e e y e o f l a w . T h a t t h o u g h t h e a p p e l l a n t c o u l d n o t g e t a n y c o n t r a di c t o r y d e c i s i o n o n t h i s i s s u e y e t i f t h e r e i s a n y d e c i s i o n f o u n d t o b e c o n tr a d i c t o r y , e v e n t h e n i n t h e l i g h t o f C I T v s V e g e t a b l e P r o d u c t s L t d . ( 1 9 7 3 ) 8 8 I TR 1 9 2 S C , ( A n n e x u r e ) t h e d e c i s i o n f a v o r a b l e t o t h e a s s e s s e e m u s t b e f o l l o w e d. T h e H o n ' b l e A p e x C o u r t i n t h e c a s e o f V e g e t a b l e P r o d u c t s L t d . r u l e d , " I f tw o r e a s o n a b l e c o n s t r u c t i o n s o f a t a x i n g p r o v i s i o n a r e p o s s i b l e , t h a t c o n s t r u c t io n w h i c h f a v o r s t h e a s s e s s e e m u s t b e a d o p t e d . T h i s i s w e l l a c c e p t a b l e o f c o n s t r uc t i o n . " M o r e o v e r , t h e J u r i s d i c t i o n a l H i g h C o u r t a n d t h e A p e x C o u r t i n s e ve r a l c a s e s a s c i t e d i n p r e c e d i n g p a r a h a v e h e l d t h a t t h e r e i m b u r s e m e n t o f e x p e n s e s c a n n o t b e t a x e d a s i n c o m e o f t h e a s s e s s e e . I n t h i s s i t u a t i o n , i f a t a l l c o n t r a d i c t o r y d e c i s i o n i s f o u n d , t h e s a m e c a n n o t b e a p p l i c a b l e t o t h e a p p e l l an t . T h a t i n a d d i t i o n t o a b o v e a r g u m e n t s , i t i s f u r t h e r b r o u g h t t o y o u r k i n d n o t i c e t h a t t h e a b o v e d i s a l l o w a n c e w a s b a s e d o n s u s p i c i o n a n d a s a g u e s s w o r k w i t h o u t h a v i n g a n y s u p p o r t i n g e v i d e n c e a n d m a t e r i a l. H e n c e , t h e s e I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 13 d i s a l l o w a n c e s c a n n o t b e s u s t a i n e d i n t h e l i g h t o f l a n d m a r k d e c i s i o n o f t h e H o n ' b l e S u p r e m e C o u r t i n t h e c a s e o f D h a k e s w a r i C o tt o n M i l l s L i m i t e d V s . C I T 2 6 I T R 7 7 5 ( S C ) , ( A n n e x u r e ) t h e a d d i t i o n s / d i s a ll o w a n c e s b a s e d o n s u r m i s e s , s u s p i c i o n a n d c o n j e c t u r e s w e r e h e l d a s u nj u s t i f i e d a n d t h e s a m e w e r e d e l e t e d . F o r t h e s a k e o f c o n v e n i e n c e o f y o u r go o d s e l f , t h e r e l e v a n t p o r t i o n o f t h e f i n d i n g o f t h i s c a s e i s q u o t e d b e l o w: " W h e r e b o t h t h e I T O a n d t h e T r i b u n a l i n e s t i m a t i n g g r o s s p r o f i t r a t e o n s a l e s d i d n o t a c t o n a n y m a t e r i a l b u t a c t e d o n a p u r e g u es s a n d s u s p i c i o n , i t w a s a f i t c a s e f o r t h e e x e r c i s e o f p o w e r u n d e r A r t , 1 3 6 . " 1 4 . T h a t a l l t h e e x p e n s e s s h o w n i n t h e p r o f i t a n d l o s s a c c o u n t w a s i n c u r r e d f o r t h e b u s i n e s s p u r p o s e a n d a l s o f o r t h e ' c o m m e r c i a l e x p e d i e n c y ' . T h e s e e x p e n s e s w e r e i n c u r r e d o n b e h a l f o f t h e R I L an d t h e s a m e w e r e r e i m b u r s e d b y t h e s a i d R I L . T h e a p p e l l a n t w a s d e p u te d b y t h e R I L t o i n c u r s u c h e x p e n s e s o n i t s b e h a l f f o r w h i c h t h e a p p e l l a n t h a s r e c e i v e d r e m u n e r a t i o n , w h i c h w a s s h o w n i n t h e p r o f i t a n d l o ss a c c o u n t . A l l t h e r e c e i p t a n d e x p e n s e s w e r e r o u t e d t h r o u g h b a n k i n g c h a n n e l . He n c e , d i s a l l o w a n c e o f e x p e n s e s t o e x t e n t o f R s . 2 , 7 4 , 7 6 , 0 4 3 / - i s u n j u s t i f i ed a n d l i a b l e t o b e d e l e t e d . 1 5 . T h a t t h e L d . A . O . a c c e p t e d t h e r e c e i p t f r o m t he R I L b u t d i s a l l o w e d t h e e x p e n s e s , w h i c h w e r e i n c u r r e d o n b e h a l f a n d a l so o n t h e d i r e c t i o n o f R I L . T h u s , t h e a c t i o n o f t h e A . O . i s c o n t r a d i c t o r y , u n j us t i f i e d a n d i l l e g a l . I f a t a l l i t w a s b o g u s e x p e n s e s t h a t m a y b e a b o g u s e x p e n s e of t h e R I L a n d n o t o f t h e a p p e l l a n t . T h e L d . A . O . f a i l e d t o v e r i f y t h e f a c t of r e c e i p t f r o m t h e R I L a n d p a y m e n t m a d e o n t h e d i r e c t i o n a n d o n b e h a l f o f R I L . T h u s , t h e r e c e i p t f r o m t h e R I L a n d e x p e n s e s i n c u r r e d o n b e h a l f o f a n d o n th e d i r e c t i o n o f R I L i s a l l o w a b l e i n t h e c a s e o f t h e a p p e l l a n t . 1 6 . T h a t i t i s t r u e t h a t t h e a p p e l l a n t h a d m a d e t h e p a y m e n t o n b e h a l f a n d o n t h e d i r e c t i o n o f t h e R I L . C o n s e q u e n t l y , t h e R I L h a d r e i m b u r s e d t h e e x p e n s e s o t h e r w i s e t h e r e w a s n o o c c a s i o n f o r r e i m b u r s i n g t h e e x p e n s e s b y R I L , h a d i t b e e n a p p e l l a n t o w n e x p e n s e s . I t i s f u r t h e r b r o u g h t t o y o u r k i n d n o t i c e t h a t t h e R I L h a d n o t o n l y r e i m b u r s e d t h e e x p e n s e s b u t i t h a d m a d e t h e e x c e s s p a y m e n t f o r m e e t i n g o u t t h e a p p e l l a n t o w n e x p e n s e s w h i l e d oi n g t h e R I L w o r k . I t i s e v i d e n t f r o m t h e a s s e s s m e n t o r d e r p a g e 1 1 t h a t t h e a s s e s s e e h a s i n c u r r e d e x p e n s e s R s . 2 , 7 6 , 9 8 , 3 4 0 / - o n b e h a l f o f a n d a l s o o n t h e d i r e c t i o n o f R I L w h i l e t h e s a i d R I L h a v e r e i m b u r s e d t h e e x p e n s e s t o t h e e xt e n t R s . 2 , 8 3 , 8 3 , 4 5 0 / - . " 8 . 2 F u r t h e r , t h e a p p e l l a n t h a s s u b m i t t e d b e f o r e m e a n o r d e r o f H o n ' b l e I T A T , D e l h i B e n c h ' A ' d a t e d 1 9 . 0 6 . 2 0 1 3 i n th e c a s e o f a p p e l l a n t ' s b r o t h e r , S h . A n i s h K u m a r G u p t a f o r A Y 20 0 6 - 0 7 . F r o m t h e H o n ' b l e T r i b u n a l ' s o r d e r , i t i s n o t e d t h a t L d . C I T (A ) h a d d e c i d e d t h e i s s u e a s u n d e r : - " F i n d i n g s I h a v e g o n e t h r o u g h t h e o r d e r o f t h e A s s es s i n g O f f i c e r a n d w r i t t e n s u b m i s s i o n o f t h e a p p e l l a n t . I h a v e a l s o p e r u s e d t he c a s e L a w s r e l i e d u p o n b y t h e a p p e l l a n t . F o l l o w i n g f a c t s e m e r g e f r o m t h e o r d er o f t h e A s s e s s i n g O f f i c e r a n d s u b m i s s i o n o f t h e a p p e l l a n t . 1 . T h e a p p e l l a n t i s a C A a n d d e r i v e s i n c o m e f r o m pr o f e s s i o n a n d r e m u n e r a t i o n f o r m a n a g e m e n t c o n s u l t a n c y s e r v i c e s f ro m R e l i a n c e I n d u s t r i e s L i m i t e d ( R I L ) . T h e a p p e l l a n t m a i n t a i n s b o o k s o f a c co u n t s w h i c h w e r e a u d i t e d u / s 4 4 A B o f t h e I . T A c t . T h e a p p e l l a n t h a d f i l e d r et u r n s h o w i n g t h e i n c o m e o f R s . 2 , 7 7 , 3 2 0 / - w h i c h w a s a s s e s s e d v i d e o r d e r d a t e d 2 9 . 1 2 . 2 0 0 8 p a s s e d u / s 1 4 3 ( 3 ) d e t e r m i n i n g t h e i n c o m e o f R s . 2 4 , 1 1 , 5 0 0 / - . 2 . T h e a p p e l l a n t h a v e c o n s t i t u t e d t h r e e p r o p r i e t o rs h i p b u s i n e s s c o n c e r n s I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 14 n a m e l y , M / s A r n a v L i a s i o n i n g 8 5 C o o r d i n a t i o n S e r v i ce s , D e l h i , M / s A r n a v R e s e a r c h a n d C o n s u l t a n c y S e r v i c e s , J a i p u r a n d M / s Ar n a v C o n s u l t a n c y S e r v i c e s , L u c k n o w . H e e n t e r e d i n t o a n a g r e e m e n t w i th R I L i n t h e n a m e o f a f o r e s a i d t h r e e p r o p r i e t o r s h i p c o n c e r n s a n d a s p e r p a r a 2 . 1 o f t h e a g r e e m e n t s , a n d r e c e i v e d c o n s u l t a n c y f e e s R s . 1 0 0 0 0/ - , R s . 5 0 0 0 / - a n d R s . 5 0 0 0 / - p e r m o n t h r e s p e c t i v e l y i n a f o r e s a i d c o n c e r n s. I n a d d i t i o n t o a f o r e s a i d r e m u n e r a t i o n , a s p e r p a r a 2 . 2 o f t h e s a i d a g r e e m e n ts , t h e a p p e l l a n t r e c e i v e d t h e r e i m b u r s e m e n t o f a c t u a l e x p e n s e s i n c u r r e d o n b eh a l f o f t h e R I L . T h e r e l e v a n t p o r t i o n o f a g r e e m e n t o f p a r a 2 . 1 a n d 2 . 2 , w h i c h a r e i d e n t i c a l i n a l l t h e c o n c e r n s i s r e p r o d u c e d . " A R T I C L E 2 - C O N S I D E R A T I O N / P A Y M E N T 2 . 1 I n c o n s i d e r a t i o n o f t h e c o n s u l t a n t h a v i n g a g r e ed t o r e n d e r / p r o v i d e C o n s u l t a n c y s e r v i c e s t o R I L o n t h e t e r m s a n d c o n d i ti o n s a s s e t o u t i n t h i s A g r e e m e n t , R I L s h a l l p a y a c o n s u l t a n c y f e e o f R s . 50 0 0 . 0 0 p e r m o n t h ( R u p e e s F i v e T h o u s a n d ) t o t h e c o n s u l t a n t w i t h i n 1 0 d a y s f r om t h e r e c e i p t o f a m o n t h l y i n v o i c e f o r t h e a g r e e m e n t p e r i o d f r o m 1 . 7 . 2 0 0 5 t o 31 . 1 2 . 2 0 0 5 . 2 . 2 I n a d d i t i o n t o t h e a b o v e , t h e C o n s u l t a n t s h a l l a l s o b e e n t i t l e d t o r e i m b u r s e m e n t o f t h e a c t u a l e x p e n s e s , i n c u r r e d b y th e C o n s u l t a n t / i t s o f f i c i a l s a n d a n y o t h e r o u t s i d e a g e n c y / c o n s u l t a n t a p p o i n t e d b y t h e c o n s u l t a n t o n r e n d e r i n g o f t h e c o n s u l t a n c y S e r v i c e s i n c l u d i n g t e le p h o n e , t r a v e l l i n g , h o t e l a c c o m m o d a t i o n , l o c a l c o n v e y a n c e , e t c . i n d i s c h a r g e / p e r f o r m a n c e o f t h e o b l i g a t i o n s u n d e r t h i s A g r e e m e n t . S u c h r e i m b u r s e m e nt o f e x p e n s e s d u l y s u p p o r t e d s h a l l b e m a d e w i t h i n 3 0 d a y s o f a m o n t h l y i n v o i c e b e i n g r a i s e d b y t h e C o n s u l t a n t , w h i c h i f r e q u i r e d , c a n o n l y b e r a i se d b y m u t u a l c o n s e n t . " T h e a p p e l l a n t h a s p l a c e d r e l i a n c e i n t h e c a s e o f C IT V s F o r t i s H e a l t h C a r e L t d , I T A N o . 8 o f 2 0 0 9 a s r e p o r t e d i n 1 8 1 T a x m a n 2 57 ( e n c l o s e d a s A n n e x u r e - 1 1 ) . W h e r e i n t h e r e c e i p t b y w a y o f r e i m b u r s e m e n t o f e x p e n s e s f r o m S p e c i a l t y R a n b a x y L i m i t e d ( S R L ) b y t h e F o r t i s H e a l t h c a r e L t d . w a s h e l d a s n o t a n i n c o m e b u t i t w a s t r e a t e d a s a n e x p e n s e s . T h e f a c t o f a p p e l l a n t ' s c a s e i s s i m i l a r t o t h e c a s e c i t e d a b o v e t o t h e e x t e n t t h a t a p p e l l a n t a l s o i n c u r r e d t h e e x p e n s e s o n b e h a l f o f R I L a n d r e c e i v e d t h e s a m e b y w a y o f r e i m b u r s e m e n t o f e x p e n s e s . T o a s s e s s t h e i n c o m e b y w a y o f d i s a l l o w a nc e o f e x p e n s e s o n a d h o c b a s i s w h i c h w e r e r e c e i v e d a s a r e i m b u r s e m e n t i s u n ju s t i f i e d . T h e r e l e v a n t p o r t i o n i . e . P a r a 6 o f t h e o r d e r o f H o n ' b l e j u r i s d ic t i o n a l H i g h C o u r t d e c i s i o n i s r e p r o d u c e d b e l o w : " T h e a s s e s s e e b e i n g a g g r i e v e d p r e f e r r e d a n a p p e a l to t h e C I T ( A ) . T h e C I T ( A ) b y a n o r d e r d a t e d 2 4 - 1 2 - 2 0 0 4 a l l o w e d t h e a p p e a l w i th r e s p e c t t o t h e i s s u e i n h a n d a n d d e l e t e d t h e a d d i t i o n m a d e b y t h e A s s e s s i n g o f f i c e r . T h e C I T ( A ) i n i t s o r d e r r e t u r n e d a f i n d i n g o f f a c t t h a t a r e a d i n g o f t h e a g r e e m e n t m a d e i t d e a r t h a t t h e m o n e y r e c e i v e d w a s f o r s h a r i n g o f c o mm o n s e r v i c e s , a n d t h a t s e r v i c e s p r o v i d e d b y t h e a s s e s s e e w e r e p u r e l y b a s e d o n r e i m b u r s e m e n t o f c o s t o n w h i c h t h e a s s e s s e e h a d i n c u r r e d a n e q u i v a l e n t a mo u n t o f e x p e n d i t u r e . T h e C I T ( A ) f u r t h e r h e l d t h a t i n c a s e , e v e n i f , i t i s p re s u m e d t h a t s u m o f R s . 1 8 l a k h s c o u l d b e b r o u g h t t o t a x a s i n c o m e f r o m o t h e r s o u r c e s t h e n , t h e a m o u n t o f e x p e n d i t u r e i n c u r r e d w h i c h i s e q u i v a l e n t t o t h e a m o u n t r e c e i v e d w i l l h a v e t o b e s e t o f f o n a c c o u n t o f t h e f a c t t h a t t h e r e w a s a d i r e c t n e x u s b e t w e e n w h a t w a s r e c e i v e d t h a t w h i c h w a s e x p e n d e d . T h e o b s e r v a t io n s t o t h i s e f f e c t a r e f o u n d i n p a r a 2 , 3 o f t h e o r d e r o f t h e C I T ( A ) . " T h e A O d i d n o t d i s p u t e t h e c o m p l e t e n e s s a n d c o r r e c tn e s s o f t h e b o o k s o f a c c o u n t s a n d w i t h o u t i n v o k i n g t h e p r o v i s i o n o f s e c ti o n 1 4 5 o f t h e I T A c t , h e d i s a l l o w e d e x p e n s e s o f R s . 2 1 , 3 4 , 1 8 1 / - o u t o f d i f f er e n t h e a d s . T h e d i s a l l o w a n c e m a d e b y t h e A O w i t h o u t i n v o k i n g t h e p ro v i s i o n o f s e c t i o n 1 4 5 i s I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 15 u n j u s t i f i e d . " 8 . 3 I n t h e a b o v e c a s e , o n a p p e a l b y t h e d e p a r t m e n t , H o n ' b l e I T A T u p h e l d t h e a p p e l l a t e o r d e r b y o b s e r v i n g a s u n d e r : - " 6 . H a v i n g h e a r d t h e r i v a l c o n t e n t i o n s i n t h e l i g h t o f t h e m a t e r i a l a v a i l a b l e o n r e c o r d , w e f i n d t h a t i t w a s i n c o n s o n a n c e w i t h th e a s s e s s e e ' s a g r e e m e n t w i t h R I L t h a t h e h a d r e c e i v e d c o n s u l t a n c y f e e s ' i n h i s t h r e e c o n c e r n s . H e h a d a l s o r e c e i v e d r e i m b u r s e m e n t o f a c t u a l e x p e n s e s i n c ur r e d o n b e h a l f o f R I L . T h e A s s e s s i n g O f f i c e r d o u b t e d t h e s e e x p e n s e s a n d d ub b e d t h e m t o b e i n f l a t e d . A s t o h o w i t w a s s o , w a s n o w h e r e d e l i n e a t e d i n t h e a s s e s s m e n t o r d e r a n d t h e A s s e s s i n g O f f i c e r m a d e a d h o c d i s a l l o w a n c e s @ 1 0 % a nd f r o m 2 0 % t o 2 5 % r e s p e c t i v e l y , i n s o m e c a s e s . T h i s w a s d o n e w i t h o u t a s s i g n i n g a n y r e a s o n w h a t s o e v e r , o v e r l o o k i n g t h e f a c t t h a t t h e r e i m b u r s em e n t b y R I L t o t h e a s s e s s e e w a s t h r o u g h b a n k i n g c h a n n e l a n d t h e p a y m e nt o f t h e e x p e n s e s t o t h e r e s p e c t i v e p a r t i e s h a d a l s o b e e n m a d e b y t h e a s s e s se e t h r o u g h c h e q u e s . B e s i d e s , t h e e x p e n s e s w e r e d u l y s u p p o r t e d , b y b i l l s a n d v o u c h e r s w h i c h h a d b e e n f i l e d b e f o r e t h e A s s e s s i n g O f f i c e r a n d w h i c h we r e n o t e i t h e r d i s p u t e d o r e v e n t e s t c h e c k e d . T h e b o o k s o f a c c o u n t o f t h e a s s es s e e w e r e a u d i t e d u / s 4 4 A B o f t h e I T A c t . T h e c o r r e c t n e s s a n d c o m p l e t e n e ss o f t h e b o o k s o f a c c o u n t w a s n o w h e r e c h a l l e n g e d b y t h e A s s e s s i n g O f f i c e r . E ve n s o , t h e A s s e s s i n g O f f i c e r m a d e t h e a d h o c a d d i t i o n o f R s . 2 1 , 3 4 , 1 8 1 / - , d i s a l l o w i n g t h e e x p e n s e s u n d e r d i f f e r e n t h e a d s o n a p r e s u m p t i v e b a s i s . T h i s a d d i t i o n w a s e n t i r e l y u n s u s t a i n a b l e i n t h e e y e o f l a w a n d t h e L d . C I T ( A ) h a s c o r r e c t l y d e l e t e d t h e s a m e , d u l y t a k i n g i n t o c o n s i d e r a t i o n t h e a f o r e s a i d p o s i t i o n a n d t h e f a c t t h a t a l l t h e e x p e n s e s i n q u e s t i o n s t o o d i n c u r r e d f o r b u si n e s s p u r p o s e s b y t h e a s s e s s e e o n b e h a l f o f R I L a n d i t w a s t h e s e e x p e n s e s w h i c h w e r e r e i m b u r s e d b y R I L t o t h e a s s e s s e e . T h e p a y m e n t s h a d b e e n m a d e b y t h e a s s e s s e e t o t h e p a r t i e s o n d u e T D S , a s a v a i l a b l e f r o m t h e b a n k s t a te m e n t s a n d t h e T D S w a s d e p o s i t e d w i t h t h e T D S W a r d . 7 . I n v i e w o f t h e a b o v e , f i n d i n g n o e r r o r w h a t s o e v er t h e r e i n , t h e o r d e r o f t h e L d . C I T ( A ) i s u p h e l d a n d t h e g r i e v a n c e r a i s e d b y t he D e p a r t m e n t i s r e j e c t e d . " 8 . 4 I h a v e c o n s i d e r e d t h e s u b m i s s i o n s m a d e a n d d o cu m e n t s p r o d u c e d b y t h e a p p e l l a n t : I h a v e p e r u s e d t h e a g r e e m e n t e n t e r e d b y t h e a p p e l l a n t w i t h M / s R e l i a n c e I n d u s t r i e s L i m i t e d , c o n f i r m a t i o n a s g i v e n b y M / s R I L a n d c o n s i d e r e d t h e f a c t t h a t T D S w a s d u l y d e d u c t e d b y R I L o n p a y m en t s m a d e t o t h e a p p e l l a n t . 8 . 5 I t I s a l s o p e r t i n e n t t o m e n t i o n t h a t i n t h e o ri g i n a l a s s e s s m e n t o r d e r a s w e l l a s t h e i m p u g n e d a s s e s s m e n t o r d e r , t h e A s s e s s i ng O f f i c e r h a s m e n t i o n e d t h a t b o o k s a n d v o u c h e r s c o u l d n o t p r o d u c e d b y t h e ap p e l l a n t . T h e a p p e l l a n t h a s h o w e v e r s u b m i t t e d d u r i n g t h e a p p e l l a t e p r o c e e d in g s t h a t t h e b o o k s a n d v o u c h e r s w e r e i m p o u n d e d b y t h e A s s e s s i n g O f f i c e r o n 1 9 . 1 2 . 2 0 0 9 . 8 . 6 I n v i e w o f a b o v e o b s e r v a t i o n s , t h e f a c t s f o r th e c u r r e n t y e a r b e i n g s i m i l a r t o t h o s e o f A Y 0 6 - 0 7 i n t h e c a s e o f S h . A n is h K u m a r G u p t a , r e s p e c t f u l l y f o l l o w i n g t h e d e c i s i o n o f H o n ' b l e I T A T, I d e l e t e t h e a d d i t i o n . 8 . 7 G r o u n d N o . 6 i s a l l o w e d . ” 17. The issue has been adjudicated by the CIT(A) in sync with the decision of the Co-ordinate Bench of Tribunal in ITA No5395/Del/2011 for Assess ment Year 2006-07, order dated I.T.A. No.1233 to 1237/Del/2017 & 1450 to 1453/Del/2021 16 19.06.2013 concerning to assessee, Mr. Anish Ku mar Gupta. We find that the CIT(A) has exa mined the issue threadbare and adjudicated the issue raised by the revenue in tune with the decision of the Co-ordinate Bench of the Tribunal. We thus see no perceptible reason to take a different view. The Re venue has not shown any distinguishing features in the present case either. We thus decline to interfere. 18. The appeal of the Revenue is dismis sed. 19. The identical controversy e manates fro m the all the appeal of the revenue in case of both the captioned assessee and thus deserves to simila rl y treated. 20. In the result, all the appeal of the revenue are dismis sed on this score. 21. All the captioned appeals of both the assessees are partly allowed whereas a ll the Revenue’s a ppeals are dis missed. Order pronounced in the open Court on 31/08/2022. Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/08/2022 Prabhat