Shri Sadhu Ram, Jind V. ITO, W-2, Bhiwani camp at, Jind

ITA 1333/CHANDI/2019

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 1050 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 06-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Business income; Principle of natural justice; Assessment record; Onus to prove
• Section: 69C; 133(6); 13

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “बी” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH ी एन.के .सैनी, उपा य! एवं ी स ु धांश ु ीवा&तव, या(यक सद&य BEFORE: SHRI. N.K.SAINI, VP & SHRI. SUDHANSHU SRIVASTAVA, JM आयकर अपील सं./ ITA NO. 1333/Chd/2019 नधा रण वष / Assessment Year : 2015-16 Shri Sadhu Ram S/o Shri Sohan Lal, H.No. 2721, Urban Estate, Jind Haryana बनाम The ITO, W-2, Bhiwani Camp at Camp Office Jind, Haryana थायी लेखा सं./PAN NO: BNQPR7698K अपीलाथ&/Appellant '(यथ&/Respondent नधा )रती क+ ओर से/Assessee by : Shri K.L. Goyal, Sr. Advocate Shri Navdeep Monga, Advocate राज व क+ ओर से/ Revenue by : Shri Sarabjeet Singh, CIT DR स ु नवाई क+ तार0ख/Date of Hearing : 19/05/2022 उदघोषणा क+ तार0ख/Date of Pronouncement : 02/08/2022 आदेश/Order PER N.K. SAINI, VICE PRESIDENT This is an appeal by the assessee against the order dt. 14/08/2019 by the Ld. CIT(A)-5, Ludhiana. 2. Following grounds have been raised in this appeal. 1. That the Learned CIT(A) erred in law and in facts of the case in confirming the addition of Rs. 5,01,20,544 under Section 69C of the Income Tax Act without considering and appreciating the explanation of the assessee that net sale after deducting License Fee paid was recorded in the books. 2. That on the facts and circumstances of the case the learned CIT(A) erred in confirming the addition of Rs. 63,000 under Section 40A subsection 3 of the Income Tax Act. 3. That the learned CIT(A) has erred in law and on facts in confirming addition of Rs. 1,00,000 on the ground of disallowance of expenses in arbitrary manner without any evidence and basis surmises and conjectures. 4. That on facts and circumstances of the case the learned CIT(A) erred in confirming addition of Rs. 32,699 on the issue of a difference in balance sheet claimed receivable or payable by the assessee without seeking any explanation before such disallowances. The assessee had paid the amount and duly entered in the books. Thus, the addition made is liable to be deleted. 2 5. That the Id. ITO has erred in law and against natural justice in making the addition without issuing a show cause notice and giving adequate opportunity of being heard to the assessee. 6. Any other grounds as may be urged at the time of hearing. 3. Ground Nos. 2, 4 and 5 were not pressed while Ground No. 6 is general in nature so these grounds do not require any comment on our part. 4. Vide Ground No. 1 the grievance of the assessee relates to the confirmation of addition of Rs. 5,01,20,544/- made by the AO under section 69C of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’). 5. Facts of the case in brief are that the assessee e-filed the return of income on 12/10/2016 declaring an income of Rs. 6,70,650/- which was processed under section 143(1) of the Act. Later on the case was selected for scrutiny. 5.1 During the course of assessment proceedings the AO called information under section 133(6) of the Act from Dy. Excise & Taxation Commissioner(Excise), Jind regarding payments made on account of License Fee and Excise Duty during the year by the assessee. The information supplied by the Dy. Excise & Taxation Commissioner (Excise), Jind revealed that the assessee during the year had paid a total amount of Rs. 5,10,48,700/- on account of License Fee and Excise Duty whereas in its P&L Account the assessee had not debited any expenses under this head. When the AO asked the assessee to explain, it was submitted that the License Fee and Excise Duty was paid out of sales, after deducting these expenses, net sales was credited to trading and P&L Account. In support of his claim the assessee furnished copies of sales ledger and License Fee ledger. The AO however was of the view that the assessee made up story and furnished copies of sales ledger during the assessment proceedings which reflected the same figure as shown in the trading and P&L Account. He was of the view that the assessee had paid expenditure of Rs. 5,10,48,700/- out of books and furnished no plausible justification. He accordingly made the addition of Rs. 5,10,48,700/- by invoking the provision of Section 69C of the Act. 6. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted as under: 3 Assessee individual, engaged in business of trading of liquor and claimed expenses towards License Fee paid to the Excise and taxation commissioner, Jind amounting to Rs. 51048700.00. The License Fee paid by the assessee out of sale receipts and after deducting these expenses, net sale is credited to trading account. Relevant details of the License Fee and sales were produced before the AO at the time of assessment in support of the same information from the Excise and Taxation commissioner were called by the AO and confirmed by the department in written that the same has been paid by the assessee. Copies of the, License Fee a/c and Sales a/c maintained in books of account of assess were also placed on record pointing out the net sales after deducting the License Fee was credited in the trading account. The Audit report is enclosed herewith as Annexure- PI. As per Para No 6 of the order the Learned AO made addition on account of unexplained expenditure u/s 69C of Rs.51048700.00 without appreciating the explanation offered by the AR of the assessee, as he supplied copies of sales ledger and License Fee ledger in support of the assessee claim. The AR of the assessee has furnished the details or License Fee paid and sales are as under: Gross sales as per books Rs. 156033500.00 License Fee paid as per books Rs. 51048700.00 Net Sales shown in trading a/c Rs. 104984800.00 The addition cannot be made on suspicion and guesswork and without bringing the corroborative material on record. I am submitting the additional explanation in the shape reconciliation statement of sales as per books of accounts and as per Audited Trading & Profit and loss Account for the year under consideration as Annexure-P2 The assessee has got his accounts audited. As the proper audit for the purposes would ensure that the books of accounts and other records are properly maintained. That they faithfully reflect the income of tax payer and claim for deduction are correctly made by him. Statutory Auditor of the firm also issued a certificate regarding Gross Sale and Licenses Fee paid. He has also stated in his certificate that he has entered net figure (Sale -License Fee) in his Audit Report. Annexure - P2A. As for as the application of section 69C is concerned, it can be examined on the following points: iii) Whether provisions of section 69C can be applies in the matters where all the purchases and sales transactions part of regular books of accounts. iv) The recognized principles of accountancy and tax jurisprudence hold that no sales can take place without purchases. v) The AO have not rejected the books of accounts of the assessee nor have doubted the License Fee paid by it. vi) The assessee has offered satisfactory explanation about the source of License Fee paid and the copy of License Fee and sales accounts produced. In the light of above, the addition made by AO u/s 69C could have not been made. The assessee relied upon the cases decided by the various appellate authorities are as under: 4 In the case of Parekh Corporation UI Building (32 CCH 129) the Tribunal has discussed the applicability of provisions of section 69C of the Act and held as under: "In so for as application of 69C is concerned, we find that the same cannot be attracted because section 69C applies here in any financial year and assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof or the explanation, if any, of by the assessee is not satisfactory. It is then that the amount covered by such expenditure or part thereof is deemed as income of the assessee for such financial year. The bedrock for making an addition under section 69C is that there must have been some expenditure incurred by the assessee, the source of which is not disclosed. If our expenditure is recorded in the books of accounts, there cannot be any reason to invoke the provisions of section 69C of the Act. In that view of the matter is it is held that provisions of section 69C were strongly restored by the AO for making this addition." In the case of CIT Vs Radhika Creation, the Hon'ble Delhi High Court (2010) 47 DTR 60 held: "As the expenditure was accounted in the regular books, the source is obviously explained. The provisions of section 69C are not applicable as there was no accounted expenditure." The Hon'ble Kerala High court (2012) 347 ITR 367: (2011) 245 CTR 471 in the case of CIT Vs Lakshmi Hospital held: That section 69C will not apply to a case of expenditure made out of gross receipts. In the case of Sibnath Dawn Vs ITO the Hon'ble Kolkata Tribunal 2017 ITL 2889 ITA No 307/Kol/2017 held: "The assessee has contended from the beginning that the source of payment was sale proceeds of these unrecorded purchases were made and thus, no addition is called for the unrecorded purchases as the GP on this unrecorded purchases has already been taxed. The assessee has explained the reconciliation of purchases and sales which are not recorded. Therefore, the source of purchases was explained by the assessee and hence, it is not a fit case to make addition u/s 69C of the Income Tax Act, 1961." Further it has been held in the case of Saraswthi Oil Traders Vs CIT 254 ITR 259 (SC) that: 'When the sales have not been doubted then there was no question to doubt the purchases and the addition should have been made only to the extent of gross profit." The Mumbai Tribunal In the case of Income Tax Officer Vs Smt. Alka N Madhani 2017 ITL 2107 ITA No 2397/Mum/2017 held: The AO has not proved that the impugned purchases have not been sold, an item cannot be sold without purchasing the same. Hence, there is no reason to disallow the amount of purchases." In the light of the above, no addition could have been made under section 69C of the Act. 5 6.1 The Ld. CIT(A) after considering the submissions of the assessee observed that the contention of the assessee that the gross sales were of Rs. 15,60,33,500/- out of which License Fee of Rs. 5,10,48,700/- was paid and the net sales of Rs. 10,49,84,800/- were declared, was not found acceptable as it was not supported by the document on record. He further observed that the audit report for the assessment year under consideration revealed that the gross sales / turnover for year under consideration was shown at Rs. 10,49,84,800/- and not at Rs. 15,60,33,500/- as claimed by the assessee. And the same figure of gross turnover of Rs. 10,49,84,800/- had been adopted for calculating various ratios and similarly as per the audit report for the A.Y. 2016-17 the gross sales / total turnover for F.Y. 2015-16 had been shown at Rs. 21,90,08,104/-, in the preceding year’s figures i.e; assessment year under consideration had been shown at Rs. 10,49,84,800/-. The Ld. CIT(A) reproduced the extract of the audit report at page no. 9 to 11 of the impugned order and extract of the income tax return had been reproduced at page no. 12 to 13 of the impugned order, for the cost of repletion the same is not reproduced herein. 6.2 The Ld. CIT(A) further observed that there was merit in the observations of the AO that when the assessee was confronted about the payment of License Fee of Rs. 5,10,48,700/- his claim / explanation stating that this amount was paid out of the sales and only net sales were recorded in the P&L Account was a made up story of the assesse because the assessee had earlier furnished copies of sale ledger during the assessment proceedings which reflected the total sales at Rs. 10,49,84,800/-, same had been shown in P&L Account as against later claim of total sales at Rs. 15,60,33,500/-. The Ld. CIT(A) mentioned that the assessee earlier furnished ledger account of sale of liquor reflecting date wise sale at pages 41 to 52 and summary of monthly sales was also reflected, the total sales for the year had been shown at Rs. 10,49,84,800. 6.3 The Ld. CIT(A) observed that when the information obtained from the Excise & Taxation Department about the License Fee was confronted to the assessee, another set of ledger account for sale bearing page no. 125 to 136 was filed which revealed that total sales had been shown at Rs. 15,60,33,500/- out of which the License Fee of Rs. 5,10,48,700/- had been reduced and net sales had been worked out at Rs. 10,49,84,800/-. The Ld. CIT(A) reproduced the copy of the ledger account (page no. 6 143) at page no. 16 of the impugned order. The Ld. CIT(A) was of the view that it was an afterthought which was clearly established from the facts that the assessee had filed (before he was confronted by the AO about non-accounting of the License Fee amounting to Rs. 5,10,48,700/-) a ledger account (page no. as 71) of the License Fee the details was reproduced at page no. 17 of the assessee’s compilation. He further observed that the amount of Rs. 9,28,156/- mentioned at page no. 71 of the ledger account had been transferred to purchase account on 31/03/2015. The Ld. CIT(A) reproduced copy of the ledger having purchase account at page no. 17 of the assessee’s compilation, for the cost of repetition the same is not reproduced herein. 6.4 The Ld. CIT(A) was of the view that the ledger account filed initially during assessment proceedings revealed that the claim regarding payment of License Fee of Rs. 5,10,48,700/- out of sales was a false story created after the assessee was confronted by the AO on this issue of non-accounting of this amount of License Fee. The Ld. CIT(A) did not accept this contention of the assessee that the addition had been made on suspicion and guesswork without bringing the corroborative material on record, and that the addition had been made after calling for information from the Excise & Taxation Department which was duly confronted to the assessee during the assessment proceedings before passing the order and before making the addition. 6.5 The Ld. CIT(A) did not accept this contention of the assessee that in the succeeding year the same accounting terminology method of the assessee had been accepted. He also did not accept this contention of the assessee that the gross sales for the succeeding year had been entered into sale accounts and License Fee had been debited from that account and net amount of Rs. 21,90,08,104/- had been entered in the Audit Report. He reproduced the copies of the ledger account from 01/04/2015 to 31/03/2016 at page no. 18 of the impugned order and observed that said ledger account revealed that total sales of Rs. 21,90,08,104/- had been shown without reducing the License Fee as claimed by the assessee. The Ld. CIT(A) further observed that total License Fee for the succeeding year was Rs. 7,11,35,098/- which had been credited in the purchase account on 31/03/2016 and net purchase amounting to Rs. 21,64,04,119/- after including the License Fee had been debited to the P&L Account in succeeding year, and similar a practice was adopted by the assessee during the year under consideration where the License Fee of Rs. 9,28,156/- was accounted for in the 7 purchase account. The Ld. CIT(A) observed that the ledger account revealed that neither the License Fee nor the Excise Duty was subtracted by the assessee from the gross sales of F.Y. 2014-15 relevant to the A.Y. 2015-16 under consideration. The Ld. CIT(A) pointed out that from the perusal of the assessment record for the A.Y. 2015-16 and 2016-17, it emerges that gross sales as per the ledger account of the sales were reflected in the P&L Account by the assessee as such and the License Fee and Excise Duty were credited to the purchase account during the F.Y. 2015-16 relevant to the A.Y. 2016-17, the assessee debited (wrongly mentioned as credited) License Fee of Rs. 7,11,35,098/- and Excise Duty of Rs. 2,56,77,000/- to the purchase account giving the total of purchase account at Rs. 21,64,04,119/- which was debited to the P&L Account for the said year whereas during the F.Y. relevant to the A.Y under consideration, the assessee debited License Fee of Rs. 9,28,156/- only to the purchase of Rs. 10,23,57,982/- giving the details of the net purchase at Rs. 10,32,86,138/-. 6.6 The Ld. CIT(A) observed that during the year under consideration the assessee had not accounted for the full License Fee of Rs. 5,10,48,700/- in its books of accounts and only an amount of Rs. 9,28,156/- had been accounted for and added in the purchase account. The balance payment on account of License Fee amounting to Rs. 5,01,20,544/- (Rs. 5,10,48,700 – Rs. 9,28,156/-) remained unexplained and required to be added to the income of the assessee under section 69C of the Act as unexplained expenditure of the assessee. The Ld. CIT(A) sustained the addition to the extent of Rs. 5,01,20,544/-, 7. Now the assessee is in appeal. 8. The Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee furnished all the relevant details to the AO and the License Fee was debited in the sales account, reference was made to page no. 49 to 54 of the assessee compilation which is the copy of the Contingency Ledger Account from 01/04/2014 to 31/03/2015 wherein the License Fee had been shown to be debited to the sale account on the various dates for the period from 01/04/2014 to 31/03/2015 amounting to Rs. 5,10,48,700/-. 8.1 The Ld. Counsel for the assessee also drew our attention towards page no. 21 to 32 of the assessee’s paper book which are the copies of sales account and summary of 8 the sales had been given at page no. 32 which revealed that the total sales from 01/04/2014 to 31/03/2015 was Rs. 15,60,33,500/- from which the License Fee of Rs. 5,10,48,700/- was reduced and net sales was shown at Rs. 10,49,84,800/-. 8.2 It was reiterated that the assessee reduced the License Fee from the sales account and net sales was shown in the P&L Account. It was submitted that the assessee furnished all the details before the AO and no defect was pointed out in those details furnished by the assessee therefore there was no justification for making the addition on account of License Fee which was reduced from the sales. 8.3 The Ld. Counsel for the assessee drew our attention towards page no. 56 to 76 of the assessee’s paper book which is the copy of the Audit Report and submitted that in the said report in Form No. 3CB the Auditor has mentioned at page no. 56 that the account read with notes thereon give true and fair view in the case of balance sheet as at 31/03/2015 and in the case of P&L Account of the profit for the year ended on that date. It was stated that the assessee had not debited the License Fee separately during the year under consideration as well as in the succeeding year and this fact had been admitted by the Ld. CIT(A) also who stated that in the succeeding year the License Fee was debited in the purchase account which clearly shows that the assessee was not showing License Fee separately and for the year under consideration it had been reduced from the sales account, therefore, there was no justification on the part of the AO in holding that the assessee made the payment of License Fee from undisclosed sources, therefore, the Ld. CIT(A) was not justified in sustaining the addition made by the AO. The reliance was placed on the following case laws: • CIT, Bangalore Vs. J.H. Gotla, Yadagiri (1985) 156 ITR 323 (SC) • Principal CIT Vs. Vaman International P. Ltd. (2020) 422 ITR 520 (Bom) • CIT Vs. Lakshmi Hospital (2012) 347 ITR 367 (Ker) • CIT Vs. Smt. P.K. Noorjahan (1999) 237 ITR 570 (SC) • CIT Vs. HCL Technologies Ltd. (2018) 16 SCC 709 (SC) 9. In his rival submissions the Ld. DR reiterated the observations made by the authorities below in their respective orders and strongly supported the impugned order passed by the Ld. CIT (A). It was further stated that the assessee did not reflect License Fee in the P&L Account and the Department got the information from the Excise Department that the payment of License Fee amounting to Rs. 5,10,48,700/- had been 9 made by the assessee, as the same was not reflected in the P&L Account, the addition was rightly made by the AO and the Ld. CIT(A) was fully justified in sustaining the addition made by the AO. He strongly supported the impugned order passed by the Ld. CIT(A). 10. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case it is not in dispute that the addition on account of License Fee had been made by the AO for the reasons that the same was not reflected in the P&L Account and as per the information supplied by the DETC (Excise) Jind, the assessee had paid a total amount of Rs. 5,10,48,700/- on account of License Fee for the year under consideration. In the present case the AO admitted that the assessee had supplied the copies of sales ledger and License Fee ledger and claimed that the License Fee was reduced from the sales, the AO considered the said contention of the assessee as a made up story. However, no discrepancy was pointed out in the copies of the sales ledger and the License Fee furnished by the assesse and even the Auditor in its Audit Report (copy of which is placed at page nos. 56 to 65 of the assessee’s paper book) clearly stated in Column No. 11 that the assessee maintained books prescribed under section 44AA of the Act in the form of Cash Book Ledger & Journal. In the instant case, it is noticed that the assessee had entered the day to day sales in the sales account (liquor), copy of which is placed at page no. 21 to 32 of the assessee’s paper book and the typed coy of the same is placed at page no. 33 to 40 which revealed that the total sales during the year relevant to the A.Y. under consideration was at Rs. 15,60,33,500/- out of which License Fee amounting to Rs. 5,10,48,700/- had been reduced and the net sales was shown at Rs. Rs. 10,49,84,800/-, the assessee had shown the License Fee in ledger account separately copy of which is placed at page no. 55 of the assessee’s compilation, the total of the license was Rs. 5,10,48,700/- the said amount was reduced out of figures of the sales. The assessee had taken the net sales receipt in the “trading and P&L account” amounting to Rs. 10,49,84,800/- which was arrived at after reducing the License Fee of Rs. 5,10,48,700/- from gross sales of Rs. 15,60,33,500/-. In the instant case the assessee instead of crediting the gross sales in the “Trading and P&L Account” and debiting the “License Fee” separately in the said account, had taken the net amount of the sales after reducing the License Fee which is evident from the copies of the ledger account furnished by the assessee before the AO and the Ld. CIT(A), copies of 10 the same are available at page nos. 21 to 32 and 55 of the paper book furnished by the assessee. It is also noticed that the Ld. CIT(A) in the impugned order had mentioned that in the succeeding year also the assessee had not shown License Fee separately in the “Trading and P&L Account” and debited the same to the purchase account. The Ld. CIT(A) accepted that the assessee debited License fee of Rs. 9,28,156/- on 31/03/2015 to the purchase account but doubted the remaining amount of License from 01/04/2014 onwards amounting to Rs. 5,10,48,700/- which was debited in the sales account and accordingly net figure of sales amounting to Rs. 10,49,84,800/- after reducing the license fee of Rs. 5,10,48,700/- from the gross sales of Rs. 15,60,33,500/-, was shown by the assessee in the “Trading and P&L Account”. In the present case, for the year under consideration the assessee instead of debiting the License Fee in the purchase account reduced it from the sales as such the impact on the profitability was NIL because the License Fee if not reduced from the sales then the figure of the sales account will increase with the same amount of the License Fee which was to be debited separately under the head License Fee in the Trading and P&L Account. We therefore by considering the totality of the facts as discussed herein above are of the view that when the AO has accepted the gross sales reflected by the assessee in its ledger account and also not doubted the License Fee shown in the ledger account, there was no occasion to deny the benefit of the payment of License Fee which was reduced from the gross sales by the assessee. In that view of the matter we do not see any justification on the part of the Ld. CIT(A) in sustaining the addition made by the AO. Accordingly the same is deleted. 11. Vide Ground No. 3 the grievance of the assessee relates to the confirmation of addition of Rs. 1,00,000/- out of the disallowance made by the AO on account of possible leakage in the revenue out of the various expenses. 12. The facts related to this issue in brief are that the AO made the disallowance of Rs. 2,08,142/- out of the various expenses by observing in para 4 of the assessment order dt. 30/12/2017 as under: 4. Further, from the perusal of profit & loss account it has been observed that the assessee has claimed following expenses:- Sr. No. Item Amount 1. Wages 156900 2. Salary 720000 11 3. Welfare expenses 68520 4. Travelling expenses 27200 5. Misc. expenses 35940 6. Telephone 32150 Total 1040710 As per the questionnaire issued on 31.07.2017, the assessee was asked to produce the details of expenses alongwith documentary evidences as claimed in P&L account. But the assessee failed to do so despite of giving various opportunities from time to time. The onus to prove the genuineness o f any expense claimed in the profit and loss account lies upon the assessee, which he fails to do so and in these circumstances it is expedient to disallow some of the expenses in order to cover any possible leakage in the revenue. Hence, I consider an amount equal to 1/5 th i.e. Rs. 2,08,142/- of the above expenses as non-genuine and add it towards the returned income of assessee for the year under consideration. 13. Being aggrieved the assessee carried the matter to the Ld. CIT(A) who sustained the disallowance of Rs. 1,00,000/- by observing in para 4.3 of the impugned order as under: The facts of the case, basis of addition/disallowance made by the AO and the arguments of the AR during the course of appellate proceedings have been considered Even during the appellate proceedings, the assessee has not offered to get the expenses verified by producing the relevant bills/vouchers or any other document in support of genuineness of the expenses. It is also relevant to mention that during the appellate proceedings, the AR filed a copy of the assessment o rde r da t ed 29 .1 2 .20 18 f o r a ss e ss m en t year 2 01 6- 1 7 , p er u sa l o f w h i c h s h o w s t h a t in the similar circumstances, the addition of Rs. 1 ,0 0 ,00 0 /- was made after discussion w i t h t he c o un s el a n d a c c o un t a n t of t h e a s se s se e fo r I rreg ul a ri t i e s a n d t h e di sc r e p an c i e s reg a rdi n g expense in c a sh w i t h o ut c o m p l et e n a m e and address or p rep a ra t i on of v o u c h er s and on account of un-vouched expenses. Therefore, keeping in view the facts and circumstances of the case and the history of the case, the disallowance d uri n g the year is a l so re st ri c t e d t o Rs. 1,00,000/- and the appellant gets relief of the balance amount. 14. Now the Assessee is in appeal. 15. The Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that neither the AO nor the Ld. CIT(A) pointed out any instance where the expenses incurred in the regular course of business were utilized for any purpose other than the business of the assessee, alternatively it was submitted that the disallowance sustained by the Ld. CIT(A) was on higher side. 16. In his rival submissions the Ld. DR reiterated the observations made by the AO and strongly supported the impugned order passed by the Ld. CIT(A). 12 17. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is noticed that the AO disallowed the expenses under the head Wages, Salary, Welfare expenses, Travelling expenses, Misc expenses and Telephone expenses totaling to Rs. 1040710/-. He disallowed 1/5 th of the said expenses. However no specific defect was pointed out to substantiate that a particular expense was incurred for non business purposes. The Ld. CIT(A) also sustained the disallowance of Rs. 1,00,000/- without pointing out any specific instance where the expenses were not incurred for the business purposes. At the same time, some of the expenses were unvouched and in such type of cases personal use out of Travelling, Telephone, Welfare expenses and Misc. expenses cannot be ruled out. The assessee incurred the expenses under these heads amounting to Rs. 27200/-, Rs. 32150/-, Rs. 68520/- and Rs, 35940/- totaling to Rs. 1,63,810/-. We therefore in order to cover any possible leakage in the revenue and to meet the ends of justice deem it appropriate to sustain the disallowance of Rs. 50,000/- out of the aforesaid expenses. Accordingly the assessee will get further relief of Rs. 50,000/-. 18. In the result, appeal of the assessee is partly allowed. (Order pronounced in the open Court on 02/08/2022) Sd/- Sd/- स ु धांश ु ीवा&तव एन.के .सैनी, (SUDHANSHU SRIVASTAVA) ( N.K. SAINI) या(यक सद&य/ JUDICIAL MEMBER उपा य! / VICE PRESIDENT AG Date: 02/08/2022 आदेश क+ ' त6ल7प अ8े7षत/ Copy of the order forwarded to : 1. अपीलाथ&/ The Appellant 2. '(यथ&/ The Respondent 3. आयकर आय ु 9त/ CIT 4. आयकर आय ु 9त (अपील)/ The CIT(A) 5. 7वभागीय ' त न>ध, आयकर अपील0य आ>धकरण, चAडीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायक पंजीकार/ Assistant Registrar