M/s Inscol HealthcareLimited, Chandigarh V. ACIT, Chandigarh

ITA 1244/CHANDI/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90252 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 29-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: YOGESH MONGA
• Keywords: Bogus purchase; Business expenditure; Corroborative evidences
• Section: 69C; 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI. BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 1244/CHD/2012 ASSESSMENT YEAR: 2007-08 M/S INSCOL HEALTHCARE LIMITED, VS. THE ACIT, CIR CLE 4(1), CHANDIGARH CHANDIGARH PAN NO. AAACI3572N (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI AJAY JAIN & YOGESH MONGA RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 02.07.2015 DATE OF PRONOUNCEMENT : 09.07.2015 ORDER PER T.R.SOOD, A.M. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 01.10.2012 OF CIT(A), CHANDIGARH. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. THAT THE ORDER OF LD. CIT(A)IS BAD AND AGAINST THE FACTS & LAW. 2. THAT THE LD. CIT(A) HAS ERRED BY CONFIRMING THE ADD ITION OF RS. 29,05,343/- ON ACCOUNT OF COMMISSION PAID TO DO CTORS WITHOUT ANY MATERIAL EVIDENCE ON RECORD. 3. THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED ADDITION AMOUNTING TO RS. 9,86,750/- ON ACCOUNT OF NON BUSIN ESS EXPENDITURE WITHOUT APPRECIATING THE FACTS THAT ALL THE EXPENSE ARE INCURRED THROUGH CREDIT CARDS & IN THE ORDINARY COURSE OF BUSINESS FOR HOSPITAL PURPOSE ONLY. 2 4. THAT THE LD. CIT(A) HAS WRONGLY ENHANCED DISALLOWAN CE ON ACCOUNT OF NON-BUSINESS EXPENDITURE BY RS. 2,13,751 /- WITHOUT APPRECIATING THE FACTS THAT ALL EXPENSES WERE INCUR RED THOUGH CREDIT CARDS & IN ORDINARY COURSE OF BUSINESS FOR H OSPITAL PURPOSES. 5. THAT LD. CIT(A) HAS WRONGLY UPHELD THE DISALLOWANCE OF INTEREST ON ACCOUNT OF ADVANCES TO SISTER CONCERN W ITHOUT APPRECIATING THE FACT THAT THE ADVANCES HAS BEEN GI VEN FOR BUSINESS PURPOSES. 6. THAT THE LD. CIT(A) HAS WRONGLY UPHELD THE DISALLOW ANCE OF RS. 49,252/- U/S 14A OF THE ACT. 3. OUT OF ABOVE, GROUND NOS. 5 & 6 WAS NOT PRESSED BEFORE US AND THE SAME ARE DISMISSED AS NOT PRESSED. 4. GROUND NO.1 IS OF GENERAL NATURE AND DOES NOT RE QUIRE SEPARATE ADJUDICATION. 5. GROUND NO. 2: AFTER HEARING BOTH THE PARTIES WE FIND THAT A SURVEY WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE AND CERT AIN INCRIMINATING DOCUMENTS ETC. WERE FOUND. DURING ASSESSMENT PROCEEDINGS, FRO M THE DOCUMENTS SENT BY ADDL. COMMISSIONER REGARDING PAYMENT OF COMMISSION, CERTA IN DISCREPANCIES WERE FOUND AND ULTIMATELY 5% OF SUCH COMMISSION AMOUNTING TO R S. 29,05,343/- WAS ADDED TO THE INCOME OF THE ASSESSEE. 6. ON APPEAL, THE ADDITION WAS CONFIRMED BY LD. CIT (A). 7. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN EARLIER YEARS IN THE CASE OF ASSESSEE. IT WAS POINTED OUT THAT AGAINST THE HOSPITAL RECEIPTS OF R S. 4.35 CRORES AND RS. 5.98 CRORES FOR ASSESSMENT YEARS 2005-06 AND 2006-07, ADDITION WAS MADE AMOUNTING TO RS. 21,76,000/- AND RS. 21,94,000/-. THESE ADDITIONS W ERE REDUCED TO RS. 5 LAKHS AND 3 RS. 6 LAKHS FOR RESPECTIVE ASSESSMENT YEARS BY THE TRIBUNAL. THEREFORE, THE SAME ESTIMATE MAY BE MADE IN THIS YEAR. 8. ON THE OTHER HAND LD. DR STRONGLY SUPPORTED THE ORDER OF CIT(A). 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS ISSUE HAS BEEN ADJUDICATED BY THE TRIBUNAL IN ASSESSEES OWN CASE OF ASSESSMENT YEARS 2005-06 AND 2006-07 IN ITA NO. 409 & 410/CHD/2010. THIS IS SUE WAS ADJUDICATED VIDE PARA 29 WHICH IS AS UNDER:- 29. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE STATEMENT OF THE EMPLOYEE OF THE ASSE SSEE WAS RECORDED IN THE PRESENCE OF THE LEARNED COUNSEL FOR THE ASSESSEE AND WAS ALSO SIGNED BY HIM. THE ASSESSEE WAS CONFRONTED VIDE ORDER SHEET DATED 23.11.2007 TO EXP LAIN AS TO WHY THE ADDITION SHOULD NOT BE MADE TO ITS INCOM E IN VIEW OF THE SAID STATEMENT. THE ASSESSEE NEVER ASK ED FOR ANY CROSS EXAMINATION EVEN WHEN HE WAS CONFRONTED WITH THE STATEMENT, EXCEPT REPLY GIVEN BY THE ASSESSEE T HAT NO PAYMENTS WERE MADE DIRECTLY TO THE DOCTORS FOR REFE RRING THE PATIENTS TO THE HOSPITAL. IN THE SAID REPLY D ATED 20.12.2007 WHICH IS REPRODUCED UNDER PARA 13. 21 AN D 22 OF THE ASSESSMENT ORDER, THE ASSESSEE MADE AN ALTER NATE SUBMISSION THAT IF THE ASSESSING OFFICER WAS NOT SA TISFIED WITH THE SAID REPLY, THEN IT MAY BE PRESUMED THAT T HE PAYMENTS TO THE DOCTORS FOR REFERRING THE PATIENTS TO THE HOSPITAL HAD BEEN MADE FROM THE CASH RECEIVED AGAIN ST THE PURCHASES FOR WHICH THE ASSESSING OFFICER HAD ALLEG ED THAT THE PAYMENTS HAD BEEN WITHDRAWN FROM THE BOOKS OF ACCOUNT FOR THE BENEFIT OF DIRECTORS OF THE ASSESSE E COMPANY. IN VIEW OF THE ALTERNATE SUBMISSION MADE BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE A SSESSEE INDIRECTLY ADMITTED THAT THE QUANTUM OF SUCH PAYMEN T OF COMMISSION WAS COVERED BY THE QUANTUM OF BOGUS PURCHASES WHICH WERE TO THE TUNE OF RS.38,10,500/-. IT MAY BE BROUGHT ON RECORD THAT THOUGH THE ASSESSEE H AD RAISED THE GROUND OF APPEAL NOS.6 AND 7 IN RELATION TO THE BOGUS PURCHASES BUT THE SAME WERE NOT PRESSED BY TH E ASSESSEE. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE ARE IN CONFORMITY WITH THE ORDERS OF THE AUTHORITIES BELOW THAT THE DISALLOWANCE ON ACCOUNT OF COMMISSION PAID TO THE DOCTORS FOR REFERRING THE PA TIENTS TO THE HOSPITAL ARE TO BE ADDED AS INCOME IN THE HANDS OF THE 4 ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 69C O F THE ACT. HOWEVER, WE RESTRICT THE SAID ADDITION TO RS .5 LACS FOR THE YEAR UNDER CONSIDERATION. THE GROUND OF A PPEAL NO.9 RAISED BY THE ASSESSEE IS THUS PARTLY ALLOWED. THEREFORE, FOLLOWING THIS ORDER WE SET ASIDE THE OR DER OF LD. CIT(A) AND RESTRICT THE ADDITION DURING THE YEAR TO RS. 6 LAKHS. 10. GROUND NO. 3 ; AFTER HEARING BOTH THE PARTIES W E FIND THAT DURING ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT CERTAIN EXPENSES HA VE BEEN BOOKED ON THE BASIS OF CREDIT CARD PAYMENTS MADE BY DIRECTORS. THE DETAILS OF TOTAL PAYMENTS MADE THROUGH VARIOUS CARDS ARE AS UNDER:- S.NO. PARTICULARS AMOUNT 1 AMERICAN EXPRESS CARD 1,54,104 2 ICICI BANK CREDIT CARD 1,04,538 3 HDFC CREDIT CARD 7,514 4 CITI BANK CREDIT CARD 2,27,493 5 CITI BANK DINERS CLUBS 90.489 6 SBI CREDIT CARD 2,96,924 7 CITI CARD 3,19,456 TOTAL 12,00,501 OUT OF THE ABOVE IT WAS NOTED THAT FOLLOWING EXPENS ES RELATES TO BUSINESS PURPOSES:- S.NO. PARTICULARS AMOUNT 1 WEIGHT MACHINE 1711/- 2 BUSINESS PROMOTION / CANTEEN 87096 3 DSG ROAD LIEN 1,19,472 TOTAL 2,08,279/- 5 11. THE ASSESSING OFFICER OBSERVED THAT MOST OF THE OTHER EXPENSES THROUGH CREDIT CARDS HAVE BEEN MADE FOR PERSONAL SHOPPING F OR BUYING CLOTHES OF THE CHILDREN, JEWELLERY, EXPENSES OF BEAUTY PARLOUR ETC . AND ACCORDINGLY HE DISALLOWED A SUM OF RS. 9,64,860/-. 12. ON APPEAL, LD. CIT(A) CONFIRMED THIS ADDITION. HE FURTHER ENHANCED THE ADDITION BY RS. 2,13,751/- VIDE PARAS 3.3 AND 3.3. 4. 13. BEFORE US LD. COUNSEL FOR THE ASSESSEE FAIRLY A DMITTED THAT THIS ISSUE WAS DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE FOR TH E EARLIER YEAR. 14. ON THE OTHER HAND LD. DR STRONGLY SUPPORTED THE ORDER OF CIT(A). 15. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS ISSUE WAS ADJUDICATED BY US IN THE EARLIER ASSESSMENT YEARS V IDE PARAS 8 TO 10 WHICH ARE AS UNDER:- 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE PERUSAL OF THE ASSESSMENT ORDER REFLE CTS THE ASSESSING OFFICER TO HAVE CONSIDERED COMPLETE EVIDE NCE OF CREDIT CARDS PAYMENTS PRODUCED BY THE ASSESSEE. HOWEVER, THE ASSESSEE HAD FAILED TO PRODUCE BILLS AND VOUCHERS I N SUPPORT OF THIS CLAIM THAT THE SAID EXPENDITURE WAS INCURRED F OR THE BUSINESS PURPOSES. THE ASSESSING OFFICER HAD ALSO EXHAUSTI VELY CONSIDERED EACH ITEM OF EXPENDITURE AND TABULATED T HE DISALLOWANCE. THE ASSESSEE DURING THE ASSESSMENT P ROCEEDINGS WAS SHOW CAUSED TO SPECIFY THE PURPOSE OF EXPENDITU RE AND ALSO TO SHOW THAT THE EXPENDITURE BOOKED THROUGH CREDIT CARD PAYMENTS WERE FOR THE PURPOSE OF BUSINESS OF THE AS SESSEE. VIDE REPLY DATED 23.11.2007 IT WAS SUBMITTED BY THE ASSESSEE THAT THE BILLS FOR WHICH PAYMENTS WERE MADE TO AMERICAN EXPRESS WERE NOT TRACED. FURTHER IT WAS POINTED OUT THAT SUM OF RS.3,73,800/- WAS PAID DURING THE FINANCIAL YEAR 20 04-05 AND EXPENSES WERE BOOKED UNDER DIFFERENT HEADS. THE A SSESSEE CATEGORICALLY SUBMITTED THAT WE HEREBY SUBMITTED TH AT YOU MAY ADD 10% TO 20% OF RS.3,73,800/- IN THE INCOME. WH ILE GIVING 6 SUMMARY OF TRANSACTIONS THE ASSESSEE CATEGORICALLY ADMITTED THAT INVOICES RELATING TO CERTAIN PURCHASES WERE NOT AVA ILABLE AND COULD NOT BE PRODUCED. HOWEVER, IT WAS POINTED OU T THAT PART OF THE PAYMENTS RELATED TO NMC/CGFNS EXAMS FEE. THE PAYMENT TOTALING RS.16,89,203/- THROUGH SEVERAL BANKS WERE CLAIMED TO HAVE BEEN MADE. THE BREAK UP OF THE CREDIT CARDS WISE PAYMENTS ARE TABULATED BY THE ASSESSING OFFICER AT PAGE 3 OF THE ASSESSMENT ORDER. THE ASSESSEE THEREAFTER PROVIDED BREAK UP OF SOME PAYMENTS RELATING TO EXPENDITURE THROUGH CREDI T CARDS TOTALING RS.10,24,588/-. HOWEVER, REGARDING BALANCE PAYMEN T OF RS.6,89,423/- NO INFORMATION WAS FURNISHED THOUGH T HE ASSESSEE HAD CLAIMED THE SAID EXPENDITURE TO BE BUSINESS EXP ENDITURE UNDER DIFFERENT HEADS. THE ASSESSING OFFICER FURT HER NOTED THAT MANY A TIMES THERE WAS NO CO-RELATION AT ALL I.E. E XPENSES OF RS.2841/- WAS BOOKED ON 16.7.2004 UNDER THE HEAD C ANTEEN EXPENSES INCLUDING ANNUAL FEE FOR THE CREDIT CARD OF RS.810/-. FURTHER THE EXPENDITURE INCURRED ON PURCHASE FOR KI DS MADE FROM KAPKIDS, SECTOR 17, CHANDIGARH, PURCHASES MADE FROM VARIOUS SHOWROOMS OF BRANDED ITEMS I.E. CLOTHING AND JEWELL ERY, EXPENSES IN BEAUTY PARLORS HAVE BEEN BOOKED AS STAFF WELFARE EXPENSES OR BUSINESS PROMOTION EXPENSES. THE ASSESSING OFFICE R THEN PREPARED DETAILED LIST OF PAYMENTS THROUGH CREDIT C ARDS AND STATEMENT GIVEN BY THE BANK, WHICH IS ENCLOSED AS ANNEXURE-A-1 OF THE ASSESSMENT ORDER. AFTER TABULATING THE DE TAILS THE ASSESSING OFFICER OBSERVED AS UNDER: (A) THE DETAILS ON THE BASIS OF CREDIT CARD STATEME NTS GIVEN BY THE BANKS HAS BEEN PREPARED AND IS ENCLOSED AS ANNEXURE A-1 TO THIS ORDER. TOTAL PAYMENTS MADE THROUGH CREDIT CARD ARE SUMMARIZED AS FOLLOWS:- TABLE A B C CARD AMOUNT AS PER CREDIT CARD STATEMENT AMOUNT AS PER ASSESSEE DIFF. * AMOUNT HSBC 1,51,297 1,78,370 27,073 CITY BANK 7,04,624 6,36,107 ** STANDARD CHARTERED BANK 62,775 92,775 30,000 ICICI BANK 1,44,043 1 ,42,448 ** AMERICAN EXPRESS 2,65,385 3,73,800 1,08,415 SB! CREDIT CARD 3,01,629 2,65,703 ** TOTAL 16,29,755 16,89,2037- 1,65,488 ................. *DIFF. AMOUNT IS THE AMOUNT FOR WHICH CREDIT CARD S TATEMENTS WERE NOT PRODUCED BUT AMOUNT REFLECTED IN BOOKS AS EXPENSES. SO THE AMO UNT GIVEN BY ASSESSEE IS ADOPTED AS SUCH AND AMOUNT OF RS.1,65,488/- IS TREA TED AS 'NOT ALLOWED' CATEGORY. **AMOUNT SHOWN IN STATEMENT IS MORE THAN THAT SHOWN BY ASSESSEE BY RS1,06,038/- 7 (B)IN THE ANNEXURE, THE TRANSACTIONS AGAINST WHICH 'ALLOWED' IS MENTIONED IN 'REMARKS' COLUMN ARE TREATED AS BUSINESS EXPENDITUR E, AS THE TRANSACTIONS RELATE TO THE BUSINESS ACTIVITY OF THE ASSESSEE. THE TOTAL AMOUNT IS RS.6,77,607.21. (C) THE TRANSACTIONS AGAINST WHICH 'NOT ALLOWED' IS MENTIONED ARE DISALLOWED AS THE SAME ARE EVIDENTLY PERSONAL EXPEN DITURE INCURRED BY MRS. NIMRAT GUJRAL/SHRI DALJEET SINGH GUJRAL, THE DIRECTORS OF THE COMPANY. THIS BECOMES VERY MUCH CLEAR FROM THE NAME OF THE VENDOR, WITH WHOM TRANSACTIONS WERE HERE, THAT THE EXPENSES CAN ONLY BE OF PERSONAL NATURE OF THE DIRECTORS AND THE SAME DO NOT HAVE ANY RELATION TO THE BUSINE SS ACTIVITIES OF THE ASSESSEE. THE ASSESSEE HAS FAILED TO PRODUCE THE INVOICES OF SUCH TRANSACTIONS AND HAS FAILED TO PROVE THE PURPOSE OF PURCHASES MADE FROM THESE VENDORS. T HE TOTAL AMOUNT IS RS.9,76,396/- . (D) THE TRANSACTIONS AGAINST WHICH 'MIXED' IS MENTIONED CAN BE OF BOTH PERSONAL EXPENSES OF THE DIRECTORS OR FOR BUSINESS PURPOSES OF THE ASSESSEE. THE TOTAL AMOUNT IS RS.1,50,238/-, HOWEVER, SINCE NO EVIDENCE HAS BEEN PRODUCED TO SHOW THE BUSINESS PURPOSE, AND ALSO LOOKING INTO THE FACT THAT MOST O F THE EXPENSES/OTHER THAN FEE PAYMENTS TO NMC/(GFNS) THROUGH THESE CREDIT CARDS R ELATE TO PERSONAL EXPENSES OF THE DIRECTORS, SO THE PROBABILITY OF SUCH EXPENSES, CAT EGORIZED AS MIXED, BEING OF SIMILAR NATURE I.E. NON-BUSINESS PURPOSE, IS VERY HIGH. CON SIDERING THIS ASPECT ONLY 20% OF SUCH EXPENSES BEING RS,30,048/ -ARE CONSIDERED AS F OR BUSINESS PURPOSE AND REMAINING AMOUNT IS TREATED AS NON-BUSINESS EXPENDI TURE. 9. THE ASSESSING OFFICER VIDE PARA 2.4 THUS CALCULA TED DISALLOWANCE AT RS.9,89,548/- OBSERVING AS UNDER: 2.4 TOTAL AMOUNT ALLOWED AS BUSINESS EXPENSE IS RS. 7,Q7,655/- AND TOTAL AMOUNT DISALLOWED ON ACCOUNT ON BEING NON-EXPENDITU RE IS RS.9,81,548/- (RS.9,76,396 + RS.1,20,190- RS. 1,06,138).- A FURTH ER ALLOWANCE OF RS.1,06,138/- HAS BEEN GIVEN AS EXPENSES INCURRED T HROUGH CREDIT CARDS AND DEBITED TO THE PROFIT AND LOSS ACCOUNT DURING THE Y EAR UNDER CONSIDERATION WERE RS. 16,89,203/- ONLY. SINCE ASSESSEE HAS TRIED TO CONCEAL ITS INCOME BY CLAIMING NON-BUSINESS EXPENSES, PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED FOR CONCEALING PARTICULARS OF INCOME. 10. THE ASSESSEE BEFORE US HAS FAILED TO PRODUCE AN Y EVIDENCE TO ESTABLISH THAT THE EXPENDITURE INCURRED UNDER VARIOUS HEADS OF EXPENDITURE WAS RELATABLE TO THE B USINESS OF THE ASSESSEE AND IN THE ABSENCE OF ANY EVIDENCE BEI NG FILED BY THE ASSESSEE TO PROVE ITS STAND, WE ARE IN CONFORMI TY WITH THE ORDER OF THE AUTHORITIES BELOW IN UPHOLDING THE ADD ITION OF RS.9,81,548/-. THE GROUND OF APPEAL NO.2 RAISED B Y ASSESSEE IS DISMISSED. 8 FOLLOWING THE ABOVE ORDER IN ASSESSEE,S OWN CASE WE DECIDE THIS ISSUE AGAINST THE ASSESSEE. 16. GROUND NO.4: AFTER HEARING BOTH THE PARTIES WE FIND THAT LD. CIT(A) HAS ENHANCED THE DISALLOWANCE ON ACCOUNT OF EXPENDITURE INCURRED THROUGH CREDIT CARDS VIDE PARAS 3.3 AND 3.3.4 WHICH ARE AS UNDER:- 3.3.3 AS ALREADY DISCUSSED, THE EXPENSES INCURRED THROUGH CREDIT CARDS WERE FOR PURCHASES OF ITEMS OF PERSONA L NATURE OR EXPENSES OF PURCHASE NATURE. THE APPELLANT HAS TR IED TO CLAIM THESE EXPENSES AS 'STAFF WELFARE EXPENSES' OR BUSINESS PR OMOTION EXPENSES, BUT THIS IS ACTUALLY NOT CORRECT SINCE THE EXPEN SES ARE ENTIRELY OF PERSONAL NATURE, NOT HAVING ANY RELATIONSHIP TO THE BUSINESS ACTIVITY OF THE APPELLANT. THE ASSESSING OFFICER HAD ALLOWED PART EXPENDITURE TO BE OF BUSINESS NATURE, BUT THE FACTU AL POSITION IS THAT WHOLE OF THESE EXPENSES ARE ALSO NOT FOR BUSINESS P URPOSES AND WHEN ENHANCEMENT NOTICE WAS ISSUED IN RESPECT OF THE EXP ENSES ALLOWED BY THE ASSESSING OFFICER, THE APPELLANT PREFERRED N OT TO REPLY TO THE ENHANCEMENT NOTICE. 3.3.4 IN VIEW OF THE ABOVE DISCUSSION, THE AD DITION MADE BY THE ASSESSING OFFICER OF RS. 9,86,750/- IS UPHELD. THE TOTAL IN COME OF THE APPELLANT IS ALSO ENHANCED BY RS. 2,13,751/- (12,00,501 - 9,86,750). GROUND OF APPEAL NO. 2 IS DISMISSED. SINCE THERE WAS NO REASONABLE BASIS FOR THE APPELLANT TO CLAIM DEDUCTION FOR THE EXPENSES, WHICH IT HAS CLAIMED IN THE RETURN OF INCOME, IT IS APPARENT THA T THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME IN THE RETU RN OF INCOME FILED. THEREFORE, PENALTY PROCEEDINGS U/S 271(L)( C) HAVE BEEN INITIATED AND NOTICE U/S 274 READ WITH SECTION 271(L)(C)'' OF THE INCOME TAX ACT,1961 HAS BEEN ISSUED SEPARATELY . 17. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT ASSESSING OFFICER SPECIFICALLY ALLOWED EXPENDITURE ON ACCOUNT OF PAYM ENTS MADE FOR BUSINESS 9 PURPOSES AND THERE WAS NO OCCASION FOR LD. CIT(A) T O ENHANCE THE SAME WITHOUT ANY MATERIAL. 18. ON THE OTHER HAND LD. DR STRONGLY SUPPORTED THE ORDER OF CIT(A). 19. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS ISSUE HAS BEEN DISCUSSED BY ASSESSING OFFICER VIDE PARAS 2.3 TO 2. 6, WHICH ARE AS UNDER;- 2.3 SO OF TOTAL EXPENDITURE OF RS. 12,00,501/- THROUGH CRE DIT CARDS ASSESSEE FURNISHED A BREAKUP OF RS. 2,08,279/ - (ALTHOUGH WITHOUT ANY SUPPORTING EVIDENCE) UNDER DIFFERENT HE ADS OF EXPENDITURE WHICH IS ALLOWED TO THE BUSINESS AS IT PERTAINS TO THE BUSINESS. EXPENSES INCURRED ON PURCHASES FOR KIDS M ADE FROM 'KAPSONS SEC 17, CHANDIGARH, PURCHASES MADE FROM VA RIOUS SHOWROOMS OF BRANDED ITEMS E.G. CLOTHING AND JEWELL ERY, EXPENSES IN BEAUTY PARLORS ETC HAVE ALL BEEN BOOKED AS STAFF WELFARE EXPENSE OF BUSINESS PROMOTION EXPENSES. SO AFTER TAKING INT O CONSIDERATION THE REPLIES OF THE ASSESSEE, THE ISSUE OF PAYMENTS THROUGH CREDIT CARDS IS DECIDED AS FOLLOWS: TOTAL AMOUNT THROUGH CREDIT CARD 12,00,501/- LESS ALLOWED PARA 2.3 2,08,279/- LESS 'MIXED' 27,362/- DISALLOWED 9,64,860/- 2.4 THE EXPENDITURE INCURRED BY MRS. NIMRAT GUJRAL / SHRI GUJRAL, THE DIRECTORS OF THE COMPANY. THIS BECOMES VERY MUCH CLEAR FROM THE NAME OF THE VENDOR WITH WHOM TRANSAC TIONS WERE THERE, THAT THE EXPENSES CAN ONLY BE OF PERSONAL NA TURE OF THE DIRECTORS AND THE SAME DO NOT HAVE ANY RELATION TO THE BUSINESS ACTIVITIES OF THE ASSESSEE. THE ASSESSEE HAS FAIL ED TO PRODUCE THE INVOICES OF SUCH TRANSACTIONS AND HAS FAILED TO PRO VE THE BUSINESS PURPOSE OF PURCHASES MADE FROM THESE VENDORS. THE T RAVELLING EXPENSES ARE NOT ALLOWED AS THE ASSESSEE HAS FAILED TO PRODUCE THE VOUCHERS IN SUPPORT OF IT. IT HAS ALSO FAILED TO ME NTION THE PURPOSE 10 OF TRAVELLING AND ITS RELATION WITH THE BUSINESS 2.5 THE TRANSACTIONS AGAINST WHICH 'MIXED' IS MENTI ONED CAN BE OF BOTH PERSONAL EXPENSES OF THE DIRECTORS OR FO R BUSINESS PURPOSES OF THE ASSESSEE. THE TOTAL AMOUNT IS RS. 27,362/-. HOWEVER, SINCE NO EVIDENCE HAS BEEN PRODUCED TO SHO W THE BUSINESS PURPOSE, AND ALSO LOOKING INTO THE FACT TH AT MOST OF THE EXPENSES THROUGH THESE CREDIT CARDS RELATE TO PERSO NAL EXPENSES OF THE DIRECTORS, SO THE PROBABILITY OF SUCH EXPENSES, CATEGORIZED AS MIXED, BEING OF SIMILAR NATURE I.E. NON-BUSINESS PU RPOSE, IS VERY HIGH. CONSIDERING THIS ASPECT ONLY 20% OF SUCH EXP ENSES BEING RS. 5,472/- ARE CONSIDERED AS FOR BUSINESS PURPOSE AND REMAINING AMOUNT IS TREATED AS NON-BUSINESS EXPENDITURE. 2.6 TOTAL AMOUNT DISALLOWED AMOUNTS TO RS. 21,890/- (80% OF 27,362/-) AND RS. 9,64,860/- AS PER PA R 2(III) WHICH COMES OUT TO BE AMOUNT TO RS. 9,86,750/-. SINCE AS SESSEE HAS TRIED TO CONCEAL ITS INCOME BY CLAIMING NON-BUSINESS EXPE NSE, PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED FOR CONCEAL ING PARTICULARS OF INCOME. PERUSAL OF THESE PARAS CLEARLY SHOWS THAT ADDITION HAS BEEN CONSIDERED AFTER ALLOWING THE AMOUNTS SPENT TOWARDS BUSINESS EXPENDI TURE THOUGH THERE WAS NO EVIDENCE AND THE MIXED EXPENDITURE HAS BEEN DISTRIB UTED PROPORTIONATELY AND OUT OF THE MIXED EXPENDITURE, 80% HAVE BEEN DISALLOWED. WE HAVE ALREADY REPRODUCED THE REASONING GIVEN BY LD. CIT(A) IN PARAS 3.3 TO 3 .3.4. THERE DOES NOT SEEMS TO BE ANY NEW MATERIAL BEFORE CIT(A) TO MAKE AN ENHANC EMENT, THEREFORE, WE DELETE THE ADDITION OF RS. 2,13,751/- ON ACCOUNT OF ENHANC EMENT. 20. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.07.2015 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 9 TH JULY, 2015 RKK 11 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR