DCIT, New Delhi V. M/s VNS Accessories Pvt. Ltd., New Delhi

ITA 1283/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4447 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 08-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: S K GUPTA
• Keywords: Rejection of books of accounts; Capital asset; Business expenditure; Principle of natural justice; Additional evidence; Commercial expediency; Revenue expenditure; Capital expenditure
• Section: 40A(3); 143(1); 68

Judgement Text

1 ITA NO. 1283/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBE R AND MS SUCHITRA KAMBLE, JUDIC IAL MEMBER ITA NO. 1283/DEL/2016 ( A .Y 2012-13) DCIT CIRCLE-26(1) C. R. BUILDING I.P. ESTATE NEW DELHI (APPELLANT) VS VNS ACCESSORIES PVT. LTD. A-11-12, AMRIT NAGAR BEHIND NDSE-1 NEW DELHI AACCV9888N (RESPONDENT) APPELLANT BY SH. SURENDER PAL, SR. DR RESPONDENT BY SH. S. K. GUPTA, CA ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 23/12/2016 PASSED BY CIT(A)-9, NEW DELHI FOR ASSESSMENT YEAR 2 012-13. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ORDER PASSED BY LD.CIT(A) IS ERRONEOUS AND THE LEARNED CI T(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,63,55,509/- MADE BY AO ON ACCO UNT OF S. CREDITORS'. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ORDER PASSED BY LD. CIT(A) IS ERRONEOUS AND THE LEARNED C IT(A) HAS ERRED IN DELETING THE ADDITION OF RS.36,37,392/- MADE BY AO ON ACCOUN T OF CLAIM AND DISCOUNT'. 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ORDER DATE OF HEARING 13.02.2019 DATE OF PRONOUNCEMENT 18.02.2019 2 ITA NO. 1283/DEL/2016 PASSED BY LD. CIT(A) IS ERRONEOUS AND THE LEARNED C IT(A) HAS ERRED IN DELETING THE ADDITION OF RS.20,83,796/- MADE BY AO ON ACCOUN T OF CAPITAL EXPENDITURE'. 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ORDER PASSED BY LD.CIT(A) IS ERRONEOUS AND THE LEARNED CI T(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,78,100/- MADE BY AO ON ACCOUNT OF ENTERTAINMENT EXPENSES'. 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ORDER PASSED BY LD.CIT(A) IS ERRONEOUS AND THE LEARNED CI T(A) HAS ERRED IN DELETING THE ADDITION OF RS.54,346/- MADE BY AO ON ACCOUNT O F BUSINESS PROMOTION EXPENSES'. THE APPELLANT CRAVES, LEAVE OR RESERVING THE RIGHT TO AMEND MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. DURING THE YEAR, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF BAGS, SHOES AND ACCESSORIES. RETU RN DECLARING INCOME OF RS.71,69,850/- WAS FILED ON 27/09/2012. THE CASE W AS PROCESSED U/S 143(1) OF THE ACT 1961. SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY AND NOTICE U/S 143(2) WAS ISSUED AND SERVED TO THE ASSESSEE. IN RESPONSE TO THE STATUTORY NOTICES, THE AR OF THE ASSESSEE ATTENDED FROM TIME TO TIME THE ASSESSMENT PROCEEDINGS AND FILED SOME DETAILS. THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF BUSINESS PROMOTION EXPENSES AMOUNTING TO RS. 54,346/-, ENTERTAINMENT EXPENSES AMOUNTING TO RS.2,78,100/-, CAPITAL EXPENDITURE CHARGE AS REVENUE EXPENDITURE AMOUNTING TO RS. 20,8 3,796/-, CLAIMS AND DISCOUNT AMOUNT TO RS. 36,37,392/- AND SUNDRY CREDI TORS AMOUNTING TO RS. 1,63,55,509/- TREATING THE SAME AS UNEXPLAINED U/S 68 OF THE INCOME TAX ACT, 1961. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE AS SESSEE FILED APPEAL BEFORE 3 ITA NO. 1283/DEL/2016 THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE A SSESSEE. 5. THE LD. DR SUBMITTED THAT AS REGARDS GROUND NO. 1, RELATING TO DELETION OF ADDITION OF RS. 1,63,55,509/- MADE BY THE ASSESS ING OFFICER ON ACCOUNT OF SUNDRY CREDITORS. THE ASSESSING OFFICER HAS RIGHTL Y MADE THIS ADDITION AS THE ASSESSEE DID NOT FILE THE CONFIRMATION AND LEDGER A CCOUNTS OF ANY OF THE SUNDRY CREDITORS DURING THE ASSESSMENT PROCEEDINGS. THUS, THE LD. DR SUBMITTED THAT THE CIT(A) HAS WITHOUT LOOKING INTO THE ASPECT HAS ADMITTED THE ADDITIONAL EVIDENCES, DESPITE GIVING PROPER OPPORTUNITY TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER. 6. THE LD. AR SUBMITTED THAT THE CIT(A) RIGHTLY D ELETED THIS ADDITION OF RS. 1,63,55,509/- AS THE ASSESSING OFFICER IN REMAND R EPORT CALLED BY THE CIT(A) NEVER REJECTED THE BOOKS OF ACCOUNTS. THE ASSESSIN G OFFICER ALSO ACCEPTED THE PURCHASES OF THESE PARTIES AND DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE FILED ALL THE DETAILS RELATING TO CONFIRMATION AND LEDGER ACCOUNTS OF THE SUNDRY CREDITORS ALONG WITH STATEMENT OF THE DIRECTORS OF THOSE COMPANIES. THUS, THE LD. AR SUBMITTED THAT THE CIT(A) RIGHTLY DELETED TH IS ADDITION. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER:- 4. CONSIDERING THE SUBMISSION AND FACTS, THE APPEL LANT ARGUMENTS FOUND ACCEPTABLE. THE APPELLANT HAS SUBMITTED COPIES OF A CCOUNTS OF SUNDRY CREDITORS AND SAME HAS BEEN SENT TO THE AO FOR HIS COMMENT. THE AO HAS MADE OBJECTION REGARDING ADMITTING OF THE EVIDENCES BUT NO COMMENTS HAS BEEN OFFERED ON MERIT. THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS. THE AO HAS ACCEPTED THE PURCHASES OF THESE PARTIES. SO, ON LY ON THE CREDIT BALANCE ADDITION CANNOT BE MADE. REGARDING GENUINENESS NO P OINT WAS RAISED IN THE ASSESSMENT ORDER. IN THE REMAND REPORT ALSO NO POIN T WAS RAISED REGARDING GENUINENESS OR CORRECTNESS OF TRADING RESULTS. ONCE THE PURCHASES HAS BEEN ACCEPTED, THEN THE AO IS NOT JUSTIFIED TO MAKE ADDI TION ON CREDIT BALANCE. THE 4 ITA NO. 1283/DEL/2016 APPELLANT HAS ALSO SUBMITTED COPY OF ACCOUNTS OF TH E CREDITORS. IT WAS ALSO SUBMITTED THAT THE MOSTLY PAYMENTS HAVE BEEN MADE B Y ACCOUNT PAYEE CHEQUES. THE APPELLANT HAS ALSO SUBMITTED THAT THE CREDITORS ARE ASSESSED TO TAX AND IN SUPPORT OF IT HAS FURNISHED THE COPY OF ACKNOWLEDGMENT OF RETURN FILED. THE RATIO LAID DOWN BY THE HONBLE DELHI HIG H COURT IN THESE DECISIONS ARE SQUARELY APPLICABLE IN THE INSTANT CASE. SO, IN VIEW OF THE ABOVE FACTS AND IN VIEW OF THE DECISIONS RELIED THE ADDITION MADE B Y THE AO OF AMOUNTING TO RS.1,63,55,509/- IS HEREBY DELETED AND THE GROUND O F APPEAL IS ALLOWED. THE CIT(A) GAVE THE FINDING ON THE BASIS THAT THE ASSESSEE SUBMITTED COPY OF ACCOUNTS OF CREDITORS AND THE PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. BESIDES THAT THE CIT(A) OBSERVED THA T THE ASSESSEE FURNISHED THE COPY OF ACKNOWLEDGMENT OF RETURN FILED BY THE C REDITORS. BUT, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS NOT DISCHA RGED ITS ONUS REGARDING GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTION . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT FILE ANY DETAILS AS TO CONFIRMATION OF THE CREDITORS AS WELL AS THE RELEVANT LEDGER ACCOUNTS A ND STATEMENTS OF THE DIRECTORS OF THOSE COMPANIES. THESE DOCUMENTS WERE FILED BEFORE THE CIT(A) UPON WHICH THE CIT(A) FAILED TO GIVE JUSTIFIED REAS ON AS TO HOW THE SAID DOCUMENTS ARE RELATING TO THE SUNDRY CREDITORS. THE REFORE, WE ARE OF THE OPINION THAT THE ISSUE CONTESTED HEREIN HAS TO BE REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THESE DOCUMENTS. NEEDL ESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLE S OF NATURAL JUSTICE. GROUND NO.1 OF THE REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 8. AS REGARDS DELETION OF ADDITION TO RS. 36,37,392 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CLAIM AND DISCOUNT EXPENSES, THE LD. DR SUBMITTED THAT THE ASSESSEE HAS GIVEN THE CLAIM AND DISCOUNTS ONLY TO ONE PARTY WHICH IS A RELATED PARTY AND IT IS NOT AN EXPENDITURE OF COMME RCIAL EXPEDIENCY. THEREFORE, THE LD. DR SUBMITTED THAT THE ADDITION WAS RIGHTLY MADE BY THE ASSESSING OFFICER. 5 ITA NO. 1283/DEL/2016 9. THE LD. AR SUBMITTED THAT THE CIT(A) HAS GIVEN A CATEGORICAL FINDING WHILE DELETING THE ADDITION ON ACCOUNT THAT PAYMENT IN RESPECT OF CLAIM & DISCOUNT IS DIRECTLY RELATED TO EXPORT MADE TO M/S MASHROOM ACCESSORIES LTD. UK, TO EXTEND OF RS. 43.50 CRORE AND IT IS NOT A R ELATED PARTY WHICH WAS REFERRED IN THE NOTE NO. 2.29 OF THE AUDITED BALANC E SHEET OF THE ASSESSEE WHICH IS VERIFIABLE. THUS, THE LD. AR SUBMITTED THAT THE CIT(A) RIGHTLY DELETED THIS ADDITION. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER:- 4.2. I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT AND ORDER OF THE AO AND DETAILS SUBMITTED DURING THE COURSE OF APPELLAN T PROCEEDINGS. IN THE HEAD CLAIM & DISCOUNT THE AO MADE ADDITION OF RS.36,37,3 92/-. THE AO HAS MADE DISALLOWANCE ON ACCOUNT OF THE REASONS THAT PARTY I S A RELATED PARTY AND EXPENDITURE INCURRED IS NOT FOR THE PURPOSE OF BUSI NESS. FURTHER NO COMPLIANCE WAS MADE OF SHOW CAUSE NOTICES ISSUED IN THIS REGARD. AS AGAINST THE APPELLANT HAS SUBMITTED THAT THE PAYMENT IN RES PECT OF CLAIM AND DISCOUNT IS DIRECTLY RELATED TO EXPORT MADE TO M/S MUSHROOM ACCESSORIES LIMITED, UK TO EXTENT OF RS.43.50 CRORE. AS REGARDS RELATED PARTY THE APPELLANT HAS DENIED THIS FACT AND REFERRED THE NOTE NO. 2.29 OF THE AUDITED BALANCE SHEET. THE CLAIM IS VERIFIABLE FROM THE AUDITED ACCOUNTS FOR W HICH THE COPY HAS BEEN SUBMITTED. THE AO HAS ALSO NOT DOUBTED THE GENUINEN ESS OF THE TRANSACTION. THE AOS ARGUMENT THAT THE APPELLANT HAS NOT MADE C OMPLIANCE OF SHOW CAUSE NOTICES ISSUED. IN THIS REGARD, DETAILS DISCU SSIONS HAVE BEEN MADE IN GROUND NO. 3 WHERE ADDITIONAL EVIDENCES HAVE BEEN A DMITTED. SINCE, THE AO HAS NOT PROVIDED PROPER OPPORTUNITIES THEREFORE, ON THE SAME REASONS THE DETAILS SUBMITTED, ADMITTED UNDER RULE 46A OF THE I .T. ACT. FROM THE ABOVE DISCUSSION IT IS VERY CLEAR THAT THE ABOVE EXPENDIT URE WAS INCURRED FOR THE PURPOSE OF BUSINESS. THE AO HAS NOT BROUGHT OUT ANY FACTS WHICH PROVES THAT EXPENDITURE CLAIMED WAS NOT GENUINE OR NOT INCURRED FOR THE PURPOSE OF 6 ITA NO. 1283/DEL/2016 BUSINESS. SO ONLY ON MERE SUSPICION THE AO IS NOT J USTIFIED TO MAKE ADDITION IN THIS REGARD. THE HONBLE SUPREME COURT HAS HELD IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. VS. CIT (1954) 26 ITR 775 THAT IN MAKING AN ASSESSMENT UNDER SEC. 143(3), THE ASSESSING OFFI CER IS NOT ENTITLED TO MAKE A PURE GUESS AND MAKE AN ASSESSMENT WITHOUT REFEREN CE TO ANY EVIDENCE OR MATERIAL AT ALL. THERE MUST BE SOMETHING MORE THAN BARE SUSPICION TO SUPPORT THE ASSESSMENT UNDER SEC. 143(3). SO, IN VIEW OF THE FACTS DISCUSSED ABOVE, THE ADDIT ION MADE BY THE AO IS HEREBY DELETED. HENCE, THE GROUND OF APPEAL IS ALLO WED. FROM THE RECORDS IT CAN BE VERIFIED THAT THE PAYME NT IN RESPECT OF CLAIM & DISCOUNT IS DIRECTLY RELATED TO EXPORT MADE TO M/S MASHROOM ACCESSORIES LTD. UK, TO EXTEND OF RS. 43.50 CRORE AND IS NOT A RELAT ED PARTY PAYMENT AS REFERRED IN THE NOTE NO. 2.29 OF THE AUDITED BALANCE SHEET O F THE ASSESSEE. THUS, THE CIT(A) RIGHTLY DELETED THIS ADDITION. GROUND NO.2 O F THE REVENUES APPEAL IS DISMISSED. 11. AS REGARDS GROUND NO.3, REGARDING DELETION OF THE ADDITION OF RS.20,83,766/- MADE BY THE ASSESSING OFFICER ON AC COUNT OF CAPITAL EXPENDITURE, THE LD. DR SUBMITTED THAT THE ASSESSIN G OFFICER OBSERVED THAT THE EXPENDITURE GAVE ENDURING BENEFITS TO THE ASSESSEE COMPANY AND THUS TREATED THE SAME AS CAPITAL EXPENDITURE. 12. THE LD. AR SUBMITTED THAT THE CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEES PREMISES WERE RENTED PREMISES AND EX PENDITURE WAS INCURRED FOR RUNNING BUSINESS SMOOTHLY. THEREFORE, EXPENDIT URE WAS RELATED TO THE BUSINESS ACTIVITIES OF THE ASSESSEE. HENCE, THE LD . AR RELIED UPON THE ORDER OF THE CIT(A). 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER:- 7 ITA NO. 1283/DEL/2016 5.2. THE APPELLANT HAS FURNISHED THE DETAILS OF RE PAIRING AND MAINTENANCE OF RS. 36,15,444/- OUT OF WHICH THE EXPENDITURE INCURR ED OF RS. 23,15,399/- WAS TREATED AS CAPITAL IN NATURE. THE APPELLANT HAS SUB MITTED THAT THESE EXPENSES WERE IN CONNECTION WITH RENTAL PREMISES. THE APPELL ANT HAS FURNISHED THE DETAILS OF THESE EXPENSES. AS DETAILS DISCUSSED IN GROUNDS NO. 3 THE DETAILS FURNISHED IS HEREBY ADMITTED UNDER RULE 46A OF THE IT ACT. IT HAS CLAIMED THAT NO NEW ASSET HAS COME TO INTO EXISTENCE. THESE EXPE NSES WERE ROUTINE IN NATURE AND REQUIRED FOR SMOOTH RUNNING OF BUSINESS. THE PREMISES IS ALSO RENTED SO INTENTION OF THE ASSESSEE COULD NOT BE TO BRING INTO EXISTENCE OF NEW ASSET. IN THIS REGARD THE HONBLE SUPREME COURT AND HONBLE HIGH COURT HAS DECIDED THE ISSUE IN VARIOUS DECISION AS UNDER:- CIT VS. MADRAS AUTO SERVICE (P) LTD. 233 ITR 468 TH E APEX COURT, WHILE DECIDING CIVIL APPEAL RELEVANT FOR THE ASSESSMENT Y EAR 1968-69, OBSERVED THAT AS REVENUE IN NATURE. CIT V. HI LINE PENS 306 ITR 182(DEL) BUSINESS EXPENDITURE REPAIRS CURRENT REPAIRS DISTINCTION ASSESSEE INCURRING EXPENSES TOWARDS REPAIRING RENTED PREMISE S FOR ITS BUSINESS ACTIVITY NO INTENTION OF ASSESSEE TO BRING ANY NEW CAPITAL ASSET SUCH EXPENSES FALLING WITHIN EXPRESSION REPAIRS TO PREMISES IN SECTION 30(A)(I) ALLOWABLE INCOME-TAX ACT, 1961, S. 30(A)(I) CIT V. INSTALLMENT SUPPLY 149 ITR 52(DEL) DEDUCTIONS REPAIRS TENANT OF PREMISES TAKEN ON LEASE EXPENDITURE BY TENANT TO SUIT INCREASED OFFICE NEED , AND FOR BETTER FITTINGS AND MARBLE FLOORING AND WOOD WORK ADVANTAGEOUS IN COMMERCIAL SENSE ALLOWABLE AS EXP ENSES TOWARDS REPAIRS EVEN IF CAPITAL IN NATURE INCOME- TAX ACT, 1961, S. 30(A)(I), (II) 8 ITA NO. 1283/DEL/2016 FROM THE ABOVE FACTS DISCUSSED AND IN VIEW OF THE D ECISION, IT IS VERY CLEAR THAT ASSESSEE PREMISES S RENTED. THE EXPENDITURE WE RE INCURRED FOR RUNNING BUSINESS SMOOTHLY. SO, IN THE ABOVE CIRCUMSTANCES T HE ADDITION MADE BY THE AO IS HEREBY DELETED. HENCE, THE GROUNDS OF APPEAL IS ALLOWED. FROM THE RECORDS IT CAN BE SEEN THAT THE ASSESSEES PREMISES WERE RENTED PREMISES AND EXPENDITURE WAS INCURRED FOR RUNNING B USINESS SMOOTHLY AND THE SAME WAS RELATED TO THE BUSINESS ACTIVITIES OF THE ASSESSEE. THUS, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). GROUND NO. 3 IS DISMISSED. 14. AS REGARDS GROUND NO. 4 RELATING TO DELETION OF ADDITION OF RS.2,78,100/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ENTERT AINMENT EXPENSES. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER RIGHTLY MAD E ADDITION AS NO EXPLANATION OR DETAILS WERE FILED DURING THE ASSESS MENT PROCEEDINGS. 15. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A). 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE BEFORE THE APPELLATE AUTHORIT Y FILED ALL THE RELEVANT DETAILS IN RESPECT OF THESE EXPENDITURE WHICH WAS FORWARDED TO THE ASSESSING OFFICER. NO DISCREPANCY AS REGARDS THE DETAILS AND HENCE THE CIT(A) HAS RIGHTLY DELETED THIS ADDITION. THE CIT(A) HELD AS UNDER:- 6.1. THE APPELLANT HAS SUBMITTED THAT THE ASSESSI NG OFFICER HAS CONSIDERED THE ABOVE SAID DISALLOWANCE ON THE GROUND THAT BILL S AND EVIDENCE OF THESE EXPENSES WERE NOT FURNISHED. IN THIS CONNECTION, WE MAY SUBMIT THAT THESE EXPENSES WERE IN CONNECTION WITH BUSINESS ACTIVITIE S AND MAINLY IN RELATION TO FOREIGN BUYERS. THE ASSESSEE IS ENGAGED IN THE BUSI NESS OF EXPORT AND AS A PART OF BUSINESS AND COMMERCIAL EXPEDIENCY, VISIT O F FOREIGN PARTIES IS A REGULAR FEATURE AND AS SUCH THESE EXPENSES ARE OF R OUTINE BUSINESS NATURE. FURTHER, THE JUSTIFICATION OF THESE EXPENSES IS ALS O SUPPORTED FROM RESOLUTION OF BOARD OF DIRECTORS. WE ARE PLEASED TO ENCLOSE THE RELEVANT DETAILS ALON GWITH COPIES OF THE BILLS 9 ITA NO. 1283/DEL/2016 AND VOUCHERS FOR YOUR KIND CONSIDERATION. IT MAY BE CLARIFIED THAT THE ASSESSING OFFICER HAS NOT ALLOWED PROPER AND ABLE O PPORTUNITY FOR SUBMITTING THE RELEVANT BILLS AND AS SUCH ADVERSE OBSERVATION OF THE ASSESSING OFFICER ARE IRRELEVANT AND UNCALLED FOR. THE ASSESSING OFFI CER CALLED FOR RELEVANT DETAILS AND ISSUED SHOW CAUSE NOTICE DTD. 28/2/15 W HICH WAS RECEIVED ONLY ON 03/03/15 AND NEXT DATE OF HEARING ON 15.03/15. I N THE ABSENCE OF PROPER AND REASONABLE OPPORTUNITY, IT WAS NOT POSSIBLE TO FURNISH BILLS AND VOUCHERS IN SUPPORT OF THE ABOVE SAID CLAIM DURING THE COURS E OF ASSESSMENT PROCEEDINGS AND AS SUCH SAME ARE BEING SUBMITTED AS PART OF ADDITIONAL EVIDENCE. EVEN OTHERWISE, THESE EXPENSES ARE SUPPORTED FROM A UDITED ACCOUNTS AND TAKING INTO CONSIDERATION THE FACT THAT THE TOTAL T URNOVER OF THE APPELLANT IS ABOUT 48 CRORES AND AS SUCH NOMINAL CLAIM TO THE EX TENT OF RS. 2,78,100/- SHOULD BE CONSIDERED AS PROPER AND REASONABLE. 6.2. THE ADDITION OF RS. 2,78,100/- AS ENTERTAINM ENT EXPENDITURE. THE REASON FOR ADDITION WAS ONLY NOT COMPLIANCE OF THE SHOW CAUSE NOTICE ISSUED. BUT, NOW THE APPELLANT HAS FURNISHED THE DETAILS AN D SAME WAS FORWARDED TO THE AO FOR COMMENTS. THE AO HAS OBJECTED ADMITTING ADDITIONAL EVIDENCES. BUT AS DETAILS DISCUSSED MADE IN GROUND NO. 3. THE ADDITIONAL EVIDENCES ARE ADMITTED. SINCE, THE ASSESSEE HAS SUBMITTED THE DET AILS DURING THE APPELLATE PROCEEDING. THEREFORE, THE ADDITION MADE BY THE AO IS HEREBY DELETED. HENCE, THE GROUNDS OF APPEAL IS ALLOWED. THESE EXPENSES ARE SUPPORTED FROM AUDITED ACCOUNTS. THE TOTAL TURNOVER OF THE ASSESSEE IS ABOUT RS. 48 CRORES AND THE CIT(A) ALLO WED NOMINAL CLAIM TO THE EXTENT OF RS. 2,78,100/- AS PROPER AND REASONABLE. THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). GROUND N O. 4 IS DISMISSED. 17. AS REGARDS GROUND NO.5 RELATING TO DELETION OF ADDITION OF RS.54,346/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BUSINE SS, THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 10 ITA NO. 1283/DEL/2016 18. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A) . 19. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD IN PARA 7.2 AS UNDER:- 7.2 THE APPELLANT HAS SUBMITTED THIS EXPENDITURE W AS INCURRED FOR LUNCH. BUT THIS EXPENDITURE IS NOT INCURRED IN ONE DAY, SO, AOS FINDING THAT PAYM ENT MADE IN CASH ABOVE RS. 20,000/- IS VIOLATION OF PRO VISION OF SECTION 40A IS NOT ADMISSIBLE. DURING THE APPELLATE PROCEEDING THE APP ELLANT HAS SUBMITTED THAT THE PAYMENT HAS BEEN MADE FOR FULL YEAR AND EACH PA YMENT IS LESS THAN 20,000/-. SO, IN VIEW OF THE SUBMISSION OF THE APPE LLANT, IT IS CLEAR THAT THERE IS NO VIOLATION U/S 40A(3) OF THE IT ACT. THEREFORE , THE ADDITION MADE BY THE AO IS HEREBY DELETED. HENCE, THE GROUNDS OF APPEAL IS ALLOWED. THE CIT(A) HAS GIVEN DETAILED FINDINGS AND DOES NO T REQUIRE ANY INTERFERENCE. GROUND NO. 5 IS DISMISSED. 20. IN RESULT, APPEAL OF THE REVENUE IS PARTLY ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH FEBRUARY, 2019 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 18/02/2019 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 11 ITA NO. 1283/DEL/2016 ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 13.02.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.02.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 8 . 02.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 8 . 02.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 8 . 02.2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER