U.P Processing & Construction Co-operative Federation Ltd., Lucknow V. DY. Commissioner of Income Tax, Lucknow

ITA 136/LKW/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6595 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 23-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J S MINHAS
• Assessee Lawyers: P K KAPOOR
• Keywords: Business expenditure; Competent authority
• Section: 43B; 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 136/LKW/2017 ASSESSMENT YEAR: 2012 - 13 U.P. PROCESSIN G & CONSTRUCTION CO - OPERATIVE F EDERATION G 4/5B, SECTOR 4, GOMTI NAGAR EXTENSION, LUCKNOW V. DCIT RANGE 2 LUCKNOW T AN /PAN : AAAAU2337D (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI P. K. KAPOOR, C.A. RESPONDENT BY: SHRI J.S. MINHAS, CIT (DR) DATE OF HEARING: 16 0 5 201 8 DATE OF PRO NOUNCEMENT: 17 0 5 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - 1, LUCKNOW DATED 31/10/2016 ON THE FOLLOWING GROUNDS OF APPEAL: - IMPUGNED ORDER DATED MARCH 26, 2015 PASS ED UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 ('THE ACT') AND AS PARTLY UPHELD BY COMMISSIONER OF INCOME - TAX (APPEALS) - I, LUCKNOW UNDER PROVISIONS OF SECTION 250 IS ERRONEOUS AND NOT IN ACCORDANCE WITH PROVISIONS OF LAW INTER - ALIA ON THE FOLLOWING GROUNDS, WHICH ARE WITHOUT PREJUDICE TO EACH OTHER: 1. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - I, LUCKNOW (HEREINAFTER REFERRED AS 'LEARNED CIT - A') HAS GROSSLY ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE TO UPHOLD THE ACTION OF THE DEPUTY COMMISS IONER OF INCOME - TAX, RANGE - II, LUCKNOW (HEREINAFTER REFERRED AS 'LEARNED DCIT') IN PARTLY DISALLOWING THE AMOUNT PAID TOWARDS TRADE TAX AMOUNTING TO RS 5,86,692 ON ITA NO.136/LKW/2017 PAGE 2 OF 9 GROUND OF NON - FURNISHING OF SUPPORTING DOCUMENTS WITHOUT APPRECIATING THE FACT THAT APPELLA NT WAS IN THE PROCESS OF COLLATING THE RELEVANT DETAILS THROUGH ITS 23 BRANCHES SITUATED ACROSS THE STATE OF UTTAR PRADESH AND TILL THE TIME OF DISPOSAL OF APPEAL BY CIT(A) COULD FURNISH ONLY TO THE TUNE OF RS 18,01,105; 2. THE LEARNED CIT - A HAS ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE BY UPHOLDING THE DISALLOWANCE OF EXPENDITURE UNDER THE HEAD GROUP GRATUITY SCHEME AMOUNTING TO RS 42,91,126 ON THE BASIS THAT NECESSARY APPROVAL AS ENVISAGED UNDER SECTION 36(L)(V) OF THE ACT WAS NOT AVAILABLE. THE LEAR NED CIT - A HAS FAILED TO APPRECIATING THE FACT THAT THE APPLICATION FOR GRAN TING APPROVAL UNDER SECTION 36(1 )(V) HAS BEEN PENDING FOR DISPOSAL BY COMMISSIONER OF INCOME - TAX - I, LUCKNOW SINCE AUGUST 17, 2005 WITHOUT ANY CAUSE ATTRIBUTABLE TO THE APPELLANT 3. THE LEARNED CIT - A HAS GROSSLY ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE BY NOT APPRECIATING THE PLEA OF THE APPELLANT THAT THE CONTRIBUTION TO GROUP GRATUITY SCHEME HAS BEEN MADE FOR THE BENEFIT OF THE EMPLOYEES AND THE APPELLANT HAD NO CONTROL OVER T HE SUM CONTRIBUTED AND ACCORDINGLY THE EXPENSE SHOULD BE ALLOWED AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX V. TEXTOOL CO. LTD (35 TAXMANN.COM 639; 4. THE LEARNED CIT - A HAS GROSSLY ERRED IN FACTS AND CIRCUMSTANCES OF TH E CASE BY NOT ACCEPTING THE ALTERNATE PLEA OF THE APPELLANT THAT THE CONTRIBUTION MADE TOWARDS GROUP GRATUITY SCHEME MAY BE ALLOWED AS A BUSINESS EXPENDITURE UNDER SECTION 37(1) OF THE ACT; 5. THE LEARNED CIT - A HAS GROSSLY ERRED IN FACTS AND CIRCUMSTANCE S OF THE CASE BY UPHOLDING THE DISALLOWANCE TOWARDS EXPENSES PERTAINING TO BEVERAGE TO STAFF, MISCELLANEOUS EXPENSES AND COOPERATIVE WEEK EXPENSES IN MAKING AN ADHOC DISALLOWANCE COMPUTED @ 5% OF THE TOTAL EXPENSES UNDER THESE HEAD OF EXPENSES; THE ABOVE G ROUNDS OF APPEALS ARE INDEPENDENT OF, AND WITHOUT PREJUDICE TO EACH OTHER. ITA NO.136/LKW/2017 PAGE 3 OF 9 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, VARY OR WITHDRAW FROM ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL AS MAY BE CONSIDERED NECESSARY EITHER BEFORE OR DURING THE TIME OF H EARING. 2 . THE BRIEF FACTS HEREIN ARE THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY DULY REGISTERED UNDER THE U.P. COOPERATIVE SOCIETIES ACT, 1965 VIDE CERTIFICATE DATED 2 5.11.1974 ISSUED BY REGISTRAR ( CENTRAL), COOPERATIVE SOCIETIES LUCKNOW . IT IS ENTRUSTED W ITH WORK RELATING TO CIVIL CONSTRUCTIONS, FABRICATION/INSTALLATION OF COLD STORAGES, AGRICULTURAL SERVICE CENTERS AND PROCESSING UNITS. BESIDES, IT IS ALSO AUTHORIZED AS CONSTRUCTION AGENCY TO CARRY OUT CIVIL CONSTRUCTION WORK OF PUBLIC INSTITUTIONS, LOCAL BODIES/AUTHORITIES, CORPORATIONS, PRIVATE INSTITUTIONS, ETC. THE ASSESSEE HAS ITS HEAD OFFICE AT LUCKNOW AND 30 UNITS IN VARIOUS DISTRICTS OF U.P. THE RETURN OF INCOME WAS FILED ON 26.09.201 2 DECLARING TOTAL INCOME OF RS. 67,28,87,680/ - . THE ASSESSMENT WAS COMPLETED ON 26.03.2015 U/S 143(3) OF THE ACT ON TOTAL INC OME OF RS. 68,11 ,15,825/ - AFTER MAKING VARIOUS ADDITIONS/DISALLOWANCES AS APPEARING IN THE ASSESSMENT ORDER. 3 . WITH REGARD TO THE FIRST GROUND OF APPEAL, THE LD. CIT(A) HAS OBSERVED THAT ASSESSEE FIL ED COPY OF CHALLANS IN SUPPORT OF PAYMENT OF TRADE TAX LIABILITY TO THE EXTENT OF RS.18,01,105/ - AND REMAINING RS.5,86,692/ - ASSESSEE FAILED TO FURNISH COPY OF CHALLANS EITHER IN ASSESSMENT PROCEEDINGS OR IN THE APPELLATE PROCEEDINGS. THOUGH THE ASSESSEE CLAIMED AND STATED THAT ENTIRE TRADE TAX LIABILITY OF RS.23,87,797/ - WAS PAID BEFORE DUE DATE OF FILING OF ITR, THEREFORE, THE ASSESSING OFFICER HAS WRONGLY MADE ADDITION UNDER SECTION 43B OF THE ACT OF RS.23,87,797/ - . A REMAND REPORT HAS ALSO BEEN OBTAIN ED FROM THE ASSESSING OFFICER AND COUNTER COMMENT OF THE ASSESSEE HAS ALSO BEEN CONSIDERED BY THE LD. CIT(A) . THE ASSESSEE ADMITTED THAT THE CHALLANS TO THE EXTENT OF RS.5,86,692/ - IN RESPECT OF PAYMENT OF TRADE TAX LIABILITY ARE NOT AVAILABLE TO THE ASSE SSEE. HOWEVER, COPY OF CHALLANS ITA NO.136/LKW/2017 PAGE 4 OF 9 FURNISHED ALONG WITH DETAILS OF PAYMENT OF TRADE TAX LIABILITY TO THE EXTENT OF RS.18,01,105/ - WAS PROVIDED. CONSIDERING THE FACTS OF THE ASSESSEES CASE, LD. CIT(A) OBSERVED AND HELD THAT ASSESSING OFFICER WAS JUSTIFIED I N MAKING DISALLOWANCE TO THE EXTENT OF RS. 5,86,692/ - AND REST AMOUNT I.E. RS.18,01,105/ - FOR WHICH ASSESSEE HAS FILED COPY OF CHALLANS IN PROOF OF PAYMENT OF TRADE TAX WAS DELETED BY THE LD. CIT(A). 4 . THE ASSESSEE IS IN APPEAL ON THIS ISSUE BEFORE US ON THE ADDITION SUSTAINED OF RS.5,86,692/ - AND THE LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE LD. CIT(A) DID NOT PROVIDE THEM ENOUGH OPPORTUNITY AND TIME TO FURNISH THE REMAINING CHALLANS. SINCE ASSESSEE WAS IN THE PROCESS OF COLLECTING RELEVANT DETAILS THROUGH ITS 23 BRANCHES SITUATED ACROSS THE STATE OF U.P. AND TILL THE TIME LD. CIT(A) DISPOSED OF THE APPEAL, HE COULD ONLY FURNISH CHALLANS TO THE EXTENT OF RS.18,01,105/ - . THE LD. A.R. OF THE ASSESSEE PRAYED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AND THAT THEY ARE READY WITH THE REMAINING CHALLANS AND DETAILS , THEREFORE, AN OPPORTUNITY WAS PRAYED FOR. 5 . THE LD. D.R. DID NOT HAVE ANY OBJECTION FOR RESTORING THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER. 6 . WE HAVE PERUSED THE CASE RECORDS AND HEARD THE CONTENTIONS OF THE PARTIES AND WE FIND THAT REGARDING PAYMENT OF TRADE TAX LIABILITY AT THE ASSESSMENT STAGE AND ALSO AT THE APPELLATE STAGE ASSESSEE WAS UNABLE TO FURNISH DETAILS WITH REGARD TO RS.5,86,692/ - WHICH WAS THEREFORE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. BEFORE US, THE LD. A.R. OF THE ASSESSEE HAS PRAYED FOR AN OPPORTUNITY TO PRODUCE THE RELEVANT DETAILS SINCE THEY WERE ACCUMULATING FROM ALL THEIR CENTRES SPREAD ACROSS U.P., SO COULD NOT MAKE IT AT THE TIME OF APPELLATE PROCEEDINGS AND SINCE THEY ARE NOW IN THE POSSESSION OF THE DETAILS, THE LD. A.R. OF THE ASSESSEE, THEREFORE, PRAYED FOR AN OPPORTUNITY FOR ITA NO.136/LKW/2017 PAGE 5 OF 9 VERIFICATION OF THE SAME BEFORE THE ASSESSING OFFICER. WE ARE OF THE CO NSIDERED VIEW IN THE INTEREST OF JUSTICE AS DISCUSSED HEREINABOVE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER AND DIRECT THE ASSESSEE TO FURNISH BEFORE THE ASSESSING OFFICER REMAINING D ETAILS AND CHALLANS PERTAINING TO RS.5,86,692/ - AND THE ASSESSING OFFICER MAY VERIFY THE DETAILS AND PASS APPROPRIATE ORDER REGARDING THE SAME AFTER PROVIDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 7 . WITH REGARD TO GROUNDS NO.2, 3 AND 4, THE OBSERVATION OF THE LD. CIT(A) IS THAT THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF ASSESSEE BECAUSE OF THE GROUP GRATUITY SCHEME IN WHICH THE ASSESSEE HAS MADE THE CONTRIBUTION AMOUNTING TO RS. 42,91,126/ - AND CLA IMED EXPENDITURE IN PROFIT AND LOSS ACCOUNT. SINCE THE ASSESSEE DID NOT FURNISH ANY EVIDENCE IN SUPPORT OF THE FACT THAT THE SAID GROUP GRATUITY SCHEME FUND WAS RECOGNIZED BY THE COMPETENT AUTHORITY I.E. COMMISSIONER OF INCORNE - TAX - 1, LUCKNOW AND S INCE NO KIND OF APPROVAL GRANTED BY COMPETENT AUTHORITY FOR RE COGNI TION OF THE GROUP GRATUITY SCHEME AS PROVIDED UNDER SECTION 36( 1 )(V) OF THE ACT WAS FURNISHED BEFORE THE LD. CIT(A), THEREFORE, HE HELD THAT THE THE ASSESSING OFFICER HAS CORRECTLY MADE THE ADDITIO N BY DISALLOWING THE EXPENDITURE CLAIMED BY THE ASSESSEE UNDER THE HEAD EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND OF RS. 42,91,126/ - . 8 . AT THE TIME OF HEARING BEFORE US ON THIS ISSUE, THE LD. A.R. OF THE ASSESSEE STATED THAT REASON WHY LD. CIT(A) HAS NOT ALLOWED THIS GROUND IS THAT SINCE IT WAS NOT APPROVED BY THE COMPETENT AUTHORITY AND THAT THE GROUP GRATUITY FUND WAS YET TO RECEIVE SANCTION OF COMPETENT AUTHORITY. THE LD. A.R. OF THE ASSESSEE, HOWEVER, STATED THAT THE ASSESSEE HAS ALREADY MADE CONTRIBU TION IN THE GROUP GRATUITY SCHEME AND THAT THE FUNDS WERE OUTSIDE THE CONTROL OF THE ASSESSEE AND THE LD. ITA NO.136/LKW/2017 PAGE 6 OF 9 A.R. OF THE ASSESSEE FURTHER PLACED RELIANCE ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S SCOOTERS INDIA LTD. VS. CIT I N ITA NO.1 OF 2015 WHEREIN THEY HAVE ANALYSED THE ALLOWABILITY OF PAYMENT OF GRATUITY UNDER GROUP GRATUITY SCHEME OF LIC AND HAVE TAKEN INTO CONSIDERATION THE VIEW OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. TEXTOOL CO. LTD. [2013] 216 TAXMAN 327 (SC) . 9 . WE HAVE PERUSED THE CASE RECORDS, ANALYSED THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAVE CONSIDERED THE JUDICIAL PRONOUNCEMENTS PLACED BEFORE US. WITH REGARD TO THESE GROUNDS NO.2, 3 & 4, AT THE OUTSET IT IS NOT DISPUTED THAT THE CONTRIBUTION HAS BEE N ALREADY MADE BY THE ASSESSEE IN THE GROUP GRATUITY SCHEME WHICH IS ALSO ACCEPTED BY THE DEPARTMENT. AT THE TIME WHEN THE ASSESSMENT WAS DONE, THIS GRATUITY SCHEME DID NOT HAVE SANCTION OF THE CONCERNED AUTHORITY FOR WHICH CONTRIBUTION WAS NEGATED BY THE DEPARTMENT. THE JUDICIAL INTERPRETATION GIVEN IN THE SCOOTERS INDIA (SUPRA) CASE WHEREIN THEY HAVE ALSO RELIED ON THE DECISION OF THE HON'BLE APEX COURT IN TEXTOOL CO. LTD. (SUPRA) , MAY BE LOOKED INTO FOR ANALYSIS . HERE IS A SITUATION WHERE CONTRIBUTION WAS MADE TO THE GRATUITY INSURANCE SCHEME AND IT WAS ACCEPTED BY THE DEPARTMENT AND THERE IS NO DISPUTE ON THAT. THE FUNDS PAID IS ALREADY BEYOND THE CONTROL OF THE ASSESSEE AND IN SUCH SITUATION , THERE IS REQUIREMENT OF APPLICATION OF PRINCIPLES OF REAS ONABLE CONSTRUCTION TO GIVE EFFECT TO T HE PURPOSE AND INTENTION OF ANY PARTICULAR PROVISIONS OF THE ACT. FROM A BARE RE A DING OF SECTION 36(1)(V) OF THE ACT, IT IS MANIFEST THAT THE REAL INTENTION BEHIND THE PROVISION IS THAT THE EMPLOYER SHOULD NOT HAVE A NY CONTROL OVER THE FUNDS OF THE IRREVOCABLE TRUST CREATED EXCLUSIVELY FOR THE BENEFIT OF THE EMPLOYEES. IN THE INSTANT CASE, IT IS EVIDENT FROM THE FINDINGS RECORDED BY THE DEPARTMENT THAT THE ASSESSEE HAD ABSOLUTELY NO CONTROL OVER THE FUND CREATED FOR THE BENEFIT OF THE EMPLOYEES FOR WHICH CONTRIBUTION HAS ALREADY BEEN MADE BY THE ASSESSEE. IT HAS BEEN DULY OBSERVED BY THE ITA NO.136/LKW/2017 PAGE 7 OF 9 HON'BLE JURISDICTION HIGH COURT IN THE SCOOTERS INDIA CASE (SUPRA) AS FOLLOWS: - 25. NOW COMING TO QUESTIONS - (III), (IV), (V), (V I) AND (VII), LEARNED COUNSELS FOR PARTIES, AT THE OUTSET, COULD NOT DISPUTE THAT THESE QUESTIONS STAND COVERED BY SUPREME COURT'S JUDGMENT IN CIT VS. TEXTOOL CO. LTD. 2013 (216) TAXMAN 327 IN FAVOUR OF ASSESSEE. TRIBUNAL, HAD DISALLOWED PAYMENT MADE TO L .I.C. UNDER GRATUITY INSURANCE SCHEME BY REFERRING TO SECTION 40(A)(VII) OBSERVING THAT FUND WAS NOT RECOGNIZED BY DEPARTMENT. A SIMILAR QUESTION WAS CONSIDERED IN CIT VS. TEXTOOL CO. LTD. (SUPRA) WHERE ALSO PAYMENT WAS MADE TO L.I.C. TOWARDS GROUP LIFE AS SURANCE SCHEME AND THIS WAS HELD TO BE AN APPROVED SCHEME AND THERE WAS NO VIOLATION OF SECTION 36(1 )(V) OF ACT, 1961. COURT HELD THAT A NARROW INTERPRETATION STRAINING LANGUAGE OF SUB - CLAUSE (V) SO AS TO DENY DEDUCTION TO ASSESSEE SHOULD NOT BE FOLLOWED SINCE THE OBJECTIVE OF FUND WAS ACHIEVED. PARA - 8 OF JUDGMENT IS REPRODUCED AS UNDER: '8. HAVING CONSIDERED 'THE MATTER IN THE LIGHT OF THE BACKGROUND FACTS, WE ARE OF THE OPINION THAT THERE IS NO MERIT IN THE APPEAL. TRUE THAT A FISCAL STATUTE IS TO BE CON STRUED STRICTLY AND NOTHING SHOULD BE ADDED OR SUBTRACTED TO THE LANGUAGE EMPLOYED IN THE SECTION, YET A STRICT CONSTRUCTION OF A PROVISION DOES NOT RULE OUT THE APPLICATION OF THE PRINCIPLES OF REASONABLE CONSTRUCTION TO GIVE EFFECT TO THE PURPOSE AND INT ENT ION OF ANY PARTICULAR PROVISION OF THE ACT. (SEE : SHREE SAJJAN MILLS LTD, V. CIT [1985] 156 ITR 585/23 TAXMAN 37 (SC). FROM A BARE RENDING OF SECTION 36(1)(V) OF THE ACT, IT IS MANIFEST THAT THE REAL INTENTION BEHIND THE PROVISION IS THAT THE EMPLOYER SHOULD NOT HAVE ANY CONTROL OVER THE FUNDS OF THE IRREVOCABLE TRUST CREATED EXCLUSIVELY FOR THE BENEFIT OF THE EMPLOYEES. IN THE INSTANT CASE, IF IS EVIDENT FROM THE FINDINGS RECORDED BY THE COMMISSIONER AND AFFIRMED BY THE TRIBUNAL THAT THE 'ASSESSEE HAD ABSOLUTELY NO CONTROL OVER THE FUND CREATED BY THE LIC FOR THE BENEFIT OF THE EMPLOYEES OF THE ASSESSEE AND FURTHER ALL THE CONTRIBUTION MADE BY THE ASSESSEE IN THE SAID FUND ULTIMATELY CAME BACK TO THE TEXTOOL EMPLOYEES ITA NO.136/LKW/2017 PAGE 8 OF 9 GRATUITY FUND, APPROVED BY THE COMM ISSIONER WITH EFFECT FROM THE FOLLOWING PREVIOUS YEAR. THUS, THE CONDITIONS STIPULATED IN SECTION 36(1)(V) OF THE ACT WERE SATISFIED. HAVING REGARD TO THE FACTS FOUND BY THE COMMISSIONER AND AFFIRMED BY THE TRIBUNAL, NO FAULT CAN BE FOUND WITH THE OPINIO N EXPRESSED BY THE HIGH COURT, WARRANTING OUR INTERFERENCE.' 26. IN VIEW THEREOF, WE ANSWER QUESTIONS - (III) TO (VII) IN FAVOUR OF ASSESSEE AND AGAINST REVENUE. 10 . RESPECTFULLY FOLLOWING THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT, WE ALLOW THIS ISSU E IN FAVOUR OF THE ASSESSEE. THEREFORE, GROUNDS NO.2, 3 AND 4 OF THE GROUNDS OF APPEAL ARE ALLOWED. 11 . WITH REGARD TO GROUND NO.5, THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSING OFFICER HAS DISALLOWED 5% EXPENDITURE OUT OF EXPENSES CLAIMED UNDER THE HEAD OF BEVERAGE TO STAFF, MISC ELLANEOUS EXPENSES, CO - OPERATIVE WEEK EXPENSES. SINCE THE ASSESSEE DID NOT PRODUCE THE BILLS AND VOUCHERS AND COULD NOT ESTABLISH NEXUS BETWEEN THESE EXPENSES WITH THE BUSINESS ACTIVITY OF THE ASSESSEE , THEREFORE, THE ASSESSING OFFIC ER HAS DISALLOWED THE EXPENSES TO THE EXTENT OF 5% ONLY. THE LD. CIT(A) FURTHER STATED THAT DISALLOWANCES MADE BY ASSESSING OFFICER CANNOT BE SAID TO BE UNJUSTIFIED CONSIDERING THE BOOKS OF ACCOUNT, BILLS AND VOUCHERS ETC. WERE NOT PRODUCED BEFORE ASSESSIN G OFFICER FOR VERIFICATION. CONSIDERING THESE FACTS, THE LD. CIT(A) HAS UPHELD THE DISALLOWANCE OF RS.80,256/ - MADE BY THE ASSESSING OFFICER UNDER VARIOUS HEADS MENTIONED IN THE ASSESSMENT ORDER. 12 . THE LD. A.R. OF THE ASSESSEE AT THE TIME OF HEARING STATED THAT DISALLOWANCES WERE MADE BY THE DEPARTMENT , BUT NO SPECIFIC REASONS ARE PROVIDED FOR THE SAME AND THE DISALLOWANCES WERE MADE ON AD HOC BASIS AND THEREFORE IT IS ARBITRARY, ILLEGAL AND UNJUSTIFIED AND LIABLE TO BE DELETED. ITA NO.136/LKW/2017 PAGE 9 OF 9 13 . WE HAVE PERUSED THE CASE RECO RDS AND WE FIND THAT THE LD. CIT(A) IN HIS ORDER HAS UPHELD THESE DISALLOWANCES MADE BY THE ASSESSING OFFICER ON THE GROUND THAT ASSESSEE WAS UNABLE TO SUBSTANTIATE THOSE EXPENSES BY FURNISHING THE BILLS AND VOUCHERS. FURTHERMORE, ASSESSEE IS A GOVT. ORGA NIZATION AND IN ANY GOVT. ORGANIZATION ALL EXPENSES ARE PROPERLY VOUCHED AND VERIFIED. IN THE ABSENCE OF BILLS AND VOUCHERS, THE LD. CIT(A) COULD HAVE CONDUCTED INDEPENDENT ENQUIRY. IN THE ABSENCE OF ANY FINDINGS, SPECIFIC REASON ON BOARD/RECORD, THESE D ISALLOWANCES TAKE THE SHAPE OF AD - HOC DISALLOWANCES, WHICH IS THEREFORE UNJUSTIFIED, ARBITRARY AND LIABLE TO BE DELETED. IN VIEW OF THE ABOVE, WE DELETE THESE AD - HOC ADDITIONS. GROUND NO.5 IS ALLOWED. 14 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 / 0 5 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 TH MAY , 201 8 JJ: 1605 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR