ACIT, Circle-33, Kolkata, Kolkata V. Goutam Paul, Kolkata

ITA 1748/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1561 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 08-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH
• Assessee Lawyers: S M SURANA
• Keywords: Unexplained cash credit; Business expenditure
• Section: 143(3); 37(1); 80G; 68; 145; 144

Judgement Text

I.T.A. NO. 1748/KOL./2014 ASSESSMENT YEAR : 2011-2012 & C.O. NO. 98/KOL/2014 (IN ITA NO. 1748/KOL/2014) ASSESSMENT YEAR: 2011-2012 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1748/KOL/ 2014 ASSESSMENT YEAR: 2011-2012 ASSISTANT COMMISSIONER OF INCOME TAX,.............. ......................APPELLANT CIRCLE-33, KOLKATA, 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-700 071 -VS.- GOUTAM PAUL,....................................... ......................................RESPONDENT SIRISH BHAWAN, 8313, DUM DUM ROAD, DUM DUM, KOLKATA-700 074 [PAN: AIXPP 7758 D] & C.O. NO. 98/KOL/2014 (ARISING OUT OF ITA NO. 1748/KOL/2014) ASSESSMENT YEAR: 2011-2012 GOUTAM PAUL,....................................... .....................................CROSS OBJECTOR SIRISH BHAWAN, 8313, DUM DUM ROAD, DUM DUM, KOLKATA-700 074 [PAN: AIXPP 7758 D] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX,.............. ......................RESPONDENT CIRCLE-33, KOLKATA, 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-700 071 APPEARANCES BY: SHRI KALYAN NATH, ADDL. CIT, SR. D.R., FOR THE DEPA RTMENT SHRI S.M. SURANA, ADVOCATE, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JULY 06, 2017 DATE OF PRONOUNCING THE ORDER : JULY 12, 2017 I.T.A. NO. 1748/KOL./2014 ASSESSMENT YEAR : 2011-2012 & C.O. NO. 98/KOL/2014 (IN ITA NO. 1748/KOL/2014) ASSESSMENT YEAR: 2011-2012 PAGE 2 OF 9 O R D E R PER SHRI P.M. JAGTAP, A.M. .: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIX, KOLKATA D ATED 09.06.2014 AND THE SAME IS BEING DISPOSED OF ALONG WITH THE CR OSS OBJECTION FILED BY THE ASSESSEE BEING C.O. NO. 98/KOL/2014. 2. IN GROUND NO. 1 OF ITS APPEAL, THE REVENUE HAS C HALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN DELETING THE ADDITION OF RS.31,83,273/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED EXC ESS LIABILITY TOWARDS SUNDRY CREDITOR. 3. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION IN THE NAME AND STYLE OF HIS PROPRIETARY CONCERN M/S. B.P. CONSTRUCTION. THE RETURN OF INCOM E FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE ON 30.09.20 11 DECLARING TOTAL INCOME OF RS.25,79,730/-. IN THE BALANCE-SHEET FILE D ALONG WITH THE SAID RETURN, A LIABILITY OF RS.57,71,953/- WAS SHOWN BY THE ASSESSEE IN THE NAME OF M/S. L.K. BUILDERS. THE ENQUIRY CONDUCTED B Y THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS , HOWEVER, REVEALED THAT THE AMOUNT RECEIVABLE FROM THE ASSESSEE IN THE BOOKS OF M/S. L.K. BUILDERS WAS SHOWN AT RS.25,88,860/-. SINCE THIS DI FFERENCE OF RS.31,83,273/- COULD NOT BE EXPLAINED BY THE ASSESS EE TO THE SATISFACTION OF THE ASSESSING OFFICER, THE SAME WAS ADDED BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE ADDITION OF RS.31,83,273/- MADE BY THE ASSES SING OFFICER ON ACCOUNT OF UNEXPLAINED EXCESS LIABILITY WAS CHALLEN GED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND AF TER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MAT ERIAL AVAILABLE ON I.T.A. NO. 1748/KOL./2014 ASSESSMENT YEAR : 2011-2012 & C.O. NO. 98/KOL/2014 (IN ITA NO. 1748/KOL/2014) ASSESSMENT YEAR: 2011-2012 PAGE 3 OF 9 RECORD, THE LD. CIT(APPEALS) DELETED THE SAME FOR T HE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 3.3 OF HIS IMPUGNED ORDER:- 3.3. AGAINST THE BACKDROP OF THE ASSESSMENT ORDER, I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT FILED ALONG WITH THE VA RIOUS CASE LAWS AS WELL AS SUPPORTING DOCUMENTS TO DRIVE HOME HIS POINT. ON AN ANALYSIS OF THE ACTION OF THE AO AND THE CONTENTION OF THE APPELLANT, I FIND THAT TH E ISSUE REVOLVES AROUND THE QUESTION WHETHER THE LIABILITY OF THE APPELLANT VIS-A-VIS M/ S. L.K. BUILDERS IS GENUINE OR NOT. THE AO HAS NOT COME UP WITH ANY CONVINCING FINDING THAT THE LIABILITY CAME UNDER THE PURVIEW OF SECTION OF SECTION 41 OF THE ACT. THE NE XT POINT IN THIS REGARD WOULD BE WHETHER THE TRANSACTIONS WERE GENUINE OR NOT FOR WH ICH ALSO THE AO HAS NOT MADE ANY CONVINCING FINDING WITH CORROBORATIVE EVIDENCE APPELLANT HAS EXPLAIN THAT THE LIABILITY IS GENUINE AND RECORDED IN THE AUDITED BO OKS OF ACCOUNTS AND IN SUPPORT OF HIS CONTENTION SUBMITTED COPY OF LEDGER ACCOUNT WIT H M/S L.K BUILDERS SINCE FY 2006- 2007 WITH COPY OF EACH AND EVERY INVOICE RAISED BY M/S L.K. BUILDERS, DULY RECEIVED PAYMENT VOUCHER, BANK STATEMENT, TAX DEDUCTION CERT IFICATE OF INCOME TAX (FORM- 16) AND TAX DEDUCTION CERTIFICATE OF SALES TAX (FOR M-18), AGREEMENT COPY WITH M/S L.K. BUILDERS, MEMORANDUM OF WORK SCHEDULE ETC AND THOSE WERE FULLY CHECKED AND VERIFIED BY THE LD AO IN THE ASSESSMENT PROCEEDINGS . I FIND THAT THERE IS NO ADVERSE COMMENT ON THIS COUNT BY THE AO AT ANY STAGE WITH A NY CONVINCING MATERIAL. I ALSO FIND THAT SECTION 68 OF THE ACT WOULD NOT BE APPLIC ABLE IN AS MUCH AS THE SAID SECTION REFERS TO UNEXPLAINED CREDIT IN THE BOOKS OF ACCOUN T WHEREAS IN THE PRESENT CASE THE IMPUGNED AMOUNT REPRESENTED A LIABILITY OF THE APPE LLANT AND NOT A CREDIT APPEARING IN THE BOOKS OF ACCOUNT. I ALSO FURTHER FIND THAT T HE SAME SUNDRY CREDITOR WAS ACCEPTED AS GENUINE BY THE AO IN THE PREVIOUS AY AS CONTENDED BY THE APPELLANT FOR WHICH ALSO THERE IS NO ADVERSE FINDING BY THE AO ON THIS COUNT. IN A NUTSHELL, WHEN THE DOCUMENTARY EVIDENCES LEAD TO THE FINDING THAT THE SAID SUNDRY CREDITOR EXISTS AND STILL HAVING FINANCIAL AS WELL AS TRADING DEALS AS DISCUSSED (SUPRA), I DO NOT FIND ANY MERIT IN THE AO TAKING A VIEW, WITHOUT ANY CORROBOR ATIVE EVIDENCE, THAT THE LIABILITY OF THE APPELLANT WAS BOGUS OR OTHERWISE. THE AO HAS NOT COME UP WITH ANY MATERIAL FACT TO SUPPORT HIS STAND THAT THE LIABILITY AGAINS T THE SUNDRY CREDITOR WAS A FARCE, BUT RATHER THE APPELLANT HAS ADDUCED ENOUGH MATERIAL EV IDENCE TO SUBSTANTIATE HIS POINT (SUPRA). THE VARIOUS CASE LAWS AS CITED (SUPRA) ALS O LEND SUPPORT TO THE APPELLANTS CASE. I AM UNABLE TO SUPPORT THE ACTION OF THE AO B UT TO ALLOW THE RELIEF AS SOUGHT FOR BY THE APPELLANT AND HENCE THE ADDITION MADE BY THE AO ON THIS COUNT IS HEREBY DELETED TO THE EXTENT OF RS.31,83,273/-. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE DIFFERENCE OF R S.31,83,273/- POINTED OUT BY THE ASSESSING OFFICER IN THE LIABILITY SHOWN BY THE ASSESSEE IN THE NAME OF M/S. L.K. BUILDERS ACTUALLY PERTAINED TO TH E EARLIER YEAR, INASMUCH AS, THE SAID DIFFERENCE WAS IN THE OPENING BALANCE. HE HAS CONTENDED THAT THE SAID DIFFERENCE OF RS.31,83,273/ - THUS IN NO CASE CAN BE TREATED AS THE INCOME OF THE ASSESSEE FOR THE YE AR UNDER CONSIDERATION. I.T.A. NO. 1748/KOL./2014 ASSESSMENT YEAR : 2011-2012 & C.O. NO. 98/KOL/2014 (IN ITA NO. 1748/KOL/2014) ASSESSMENT YEAR: 2011-2012 PAGE 4 OF 9 THE LD. D.R., ON THE OTHER HAND, HAS CONTENDED THAT THIS PLEA TAKEN BY THE LD. COUNSEL FOR THE ASSESSEE FOR THE FIRST TIME BEF ORE THE TRIBUNAL REQUIRES VERIFICATION BY THE ASSESSING OFFICER. WE FIND MERI T IN THIS CONTENTION OF THE LD. D.R. AND SINCE THE LD. COUNSEL FOR THE ASSE SSEE HAS ALSO NOT RAISED ANY OBJECTION IN THIS REGARD, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF VERIFY ING AS TO WHETHER THE DIFFERENCE IN QUESTION WAS PERTAINING TO THE EARLIE R YEAR AND IF SO, NO ADDITION CAN BE MADE ON ACCOUNT OF THE SAID DIFFERE NCE DURING THE YEAR UNDER CONSIDERATION. GROUND NO. 1 OF THE REVENUES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. IN GROUND NO. 2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN DELETING THE ADDITION OF RS.1,07,70 6/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DONATION & SUBSCRIP TION. 7. IN THE PROFIT & LOSS ACCOUNT FILED ALONG WITH TH E RETURN OF INCOME, A SUM OF RS.1,07,706/- WAS DEBITED BY THE ASSESSEE ON ACCOUNT OF DONATION AND SUBSCRIPTION. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, IT WAS EXPLAINED BY THE ASSESSEE THAT HE HAD TO PAY SEVERA L DONATIONS AT LOCAL PLACES FOR VARIOUS PUJAS AND SOCIAL FUNCTIONS IN OR DER TO ENSURE SMOOTH RUNNING OF HIS BUSINESS. THIS EXPLANATION OF THE AS SESSEE, HOWEVER, WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. ACCO RDING TO HIM, THE EXPENSES ON DONATION AND SUBSCRIPTION WERE PERSONAL IN NATURE AND THERE WAS NO EVIDENCE TO SHOW THAT THE SAME QUALIFIED FOR DEDUCTION UNDER SECTION 80G. HE ACCORDINGLY DISALLOWED THE EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF DONATION AND SUBSCRIPTION. 8. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER O N ACCOUNT OF DONATION AND SUBSCRIPTION WAS CHALLENGED BY THE ASS ESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDE RING THE SUBMISSIONS MADE BY THE ASSESSEE AND THE MATERIAL AVAILABLE ON RECORD, THE LD. I.T.A. NO. 1748/KOL./2014 ASSESSMENT YEAR : 2011-2012 & C.O. NO. 98/KOL/2014 (IN ITA NO. 1748/KOL/2014) ASSESSMENT YEAR: 2011-2012 PAGE 5 OF 9 CIT(APPEALS) DELETED THE SAID DISALLOWANCE FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 4.2 OF HIS IMPUGNED ORDER:- 4.2. I HAVE CAREFULLY CONSIDERED THE ACTION OF THE AO AS WELL AS THE SUBMISSION OF THE APPELLANT IN ARRIVING AT A DECISION ON THE ISSU E INVOLVED, THE ONLY LIMITED QUESTION ON THE ISSUE IS WHETHER THE PAYMENTS MADE TO LOCAL CLUBS AND ORGANIZATIONS WOULD QUALIFY FOR DEDUCTION AS U/S 37(1) OF THE AD OR NOT THE AO IS OF THE OPINION THAT THESE EXPENSES WERE OF PERSONAL IN NATURE FOR WHICH NO EV IDENCE WAS FILED BY THE ASSESSEE IN SUPPORT OF HIS STAND THAT THE EXPENSES IN THIS REGA RD WERE COVERED U/S 80G OF THE ACT. I FIND THAT THE AO IS TOTALLY OFF MARK ON THE ISSUE SINCE THE APPELLANT DID NEVER CLAIM DEDUCTION U/S 80G OF THE ACT FOR CLAIMING THE IMPUG NED DEDUCTION. THE CLAIM WAS MADE U/S 37(1) OF THE ACT AS BUSINESS EXPENSE AND I N SUCH A SITUATION, IT WAS FOR THE AO TO PROVE THAT THE IMPUGNED EXPENDITURE WAS NOT I NCURRED ON ACCOUNT OF BUSINESS EXPEDIENCY FOR WHICH THERE IS NO FINDING BY THE AO IN THIS REGARD. THE APPELLANT HAS ADDUCED MUCH MATERIAL BY WAY OF CASE LAWS (SUPRA) I N SUPPORT OF HIS STAND THAT THE PAYMENTS WERE NECESSITATED OUT OF BUSINESS EXPEDIEN CY. IN THE CASE OF COMMISSIONER OF INCOME TAX VS.- BATA INDIA. LIMITED [1993] 201 ITR 884 (CAL), THE JURISDICTIONAL KOLKATA HIGH COURT HELD THAT CONTRIBUTION TO LOCAL PUJA AND FESTIVAL COMMITTEES OR ORGANIZATION ARE EXPENDITURE INCIDENTAL TO THE BUSI NESS AND IS ALLOWABLE AS BUSINESS EXPENDITURE. CONSIDERING THE FACTS AND CIRCUMSTANCE S OF THE ISSUE AGAINST THE BACKDROP OF THE COURT DECISIONS (SUPRA), I DO NOT F IND ANY REASON TO ENDORSE TILE ACTION OF THE AO IN DISALLOWING THE PAYMENT OF RS.1 ,07,706/- MADE U/S 37(1) OF THE ACT AND THEREFORE, THE ADDITION MADE BY THE AO IN T HIS REGARD IS HEREBY DELETED. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. ALTHOUGH THE LD. D.R. HAS MADE AN ATTEMPT TO CONTEND THAT NO EVIDENC E WAS FILED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM FOR DONATION AND S UBSCRIPTION AS POINTED OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDE R, IT IS OBSERVED THAT THE LACK OF EVIDENCE AS MENTIONED IN THE ASSESSMENT ORDER WAS IN RESPECT OF QUALIFYING THE AMOUNT OF DONATION AND SUBSCRIPTI ON FOR DEDUCTION UNDER SECTION 80G OF THE ACT. IT IS ALSO OBSERVED T HAT A SIMILAR ISSUE HAS BEEN DECIDED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS.- BATA INDIA LIMITED (SUPRA) RELIED UPON BY THE LD. C IT(APPEALS) IN HIS IMPUGNED ORDER, WHEREIN IT WAS HELD THAT CONTRIBUTI ONS TO LOCAL PUJA AND FESTIVAL COMMITTEES OR ORGANIZATION ARE DEDUCTIBLE BEING EXPENDITURE INCIDENTAL TO THE BUSINESS. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DONATION AND SUBSCRIPTION AND I.T.A. NO. 1748/KOL./2014 ASSESSMENT YEAR : 2011-2012 & C.O. NO. 98/KOL/2014 (IN ITA NO. 1748/KOL/2014) ASSESSMENT YEAR: 2011-2012 PAGE 6 OF 9 UPHOLDING HIS IMPUGNED ORDER ON THIS ISSUE, WE DISM ISS GROUND NO. 2 OF THE REVENUES APPEAL. 10. IN GROUND NO. 3, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN DELETING THE ADDITION OF RS.2,01,04 2/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OUT OF VARIOUS EXPENSES. 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF COOLIE CHARGES AMOUNTING TO RS.2,60,059/-, SITE EXPENSES AMOUNTING TO RS.7,25,6 03/-, CONSUMABLES AMOUNTING TO RS.5,16,288/- AND LABOUR HUTMENT AMOUN TING TO RS.5,08,092/- WAS EXAMINED BY THE ASSESSING OFFICER . ON SUCH EXAMINATION, HE FOUND THAT SOME OF THE PAYMENTS HAD BEEN MADE THROUGH SELF-MADE VOUCHERS WITHOUT COMPLETE NAMES AND ADDRE SSES OF THE RECIPIENTS. HE, THEREFORE, DISALLOWED A SUM OF RS.2 ,01,042/- BEING 10% OF THE SAID EXPENSES CLAIMED BY THE ASSESSEE. 12. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF VARIOUS EXPENSES WAS DISPUTED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AND THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(A PPEALS) DELETED THE SAME FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH N O. 5.2 OF HIS IMPUGNED:- 5.2. IN THE LIGHT OF THE ACTION OF THE AO, THE SUB MISSION OF THE AR OF THE APPELLANT HAS BEEN DULY CONSIDERED BASED ON THE MATERIAL FACT S ON RECORD AND SUPPORTED BY THE VARIOUS CASE LAWS AS CITED. ON PERUSAL OF THE ASSES SMENT ORDER, I FIND THAT THE BASIS OF MAKING THE AD HOC OR LUMP SUM DISALLOWANCES ON ACCO UNT OF (A) COOLIE & CARTAGE (B) SITE EXPENSES (C) LABOUR HUTMENT AND (D) CONSUMABLE STORES WAS DUE TO THE FINDING OF THE AO THAT SOME OF THESE EXPENSES WERE SELF VOUCHE D WITHOUT ANY COMPLETE NAMES AND ADDRESSES OF THE RECIPIENTS. ON FACTS, I FIND T HAT THE CASE OF THE APPELLANT WAS SUBJECTED TO AUDIT BY A CHARTERED ACCOUNTANT WHEREB Y THERE WAS NO ADVERSE COMMENTS OR QUALIFICATION IN THE TAX AUDIT REPORT A ND THE BOOKS OF ACCOUNT WERE ALSO PRODUCED AND THOROUGHLY CHECKED BY THE AO FOR WHICH THERE WAS NOT A SINGLE OCCASION ON WHICH THE AO POINTED OUT ANY DEFECTS OR SHORTCOMINGS WITH REGARD TO EITHER EXPENSES OR RECEIPTS. I FIND THAT THIS IS NO T A MATTER OF DISPUTE BY THE AO. THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT U/S 145 OF THE ACT NOR HAS HE COMPLETED THE I.T.A. NO. 1748/KOL./2014 ASSESSMENT YEAR : 2011-2012 & C.O. NO. 98/KOL/2014 (IN ITA NO. 1748/KOL/2014) ASSESSMENT YEAR: 2011-2012 PAGE 7 OF 9 ASSESSMENT U/S 144 OF THE ACT BUT COMPLETED THE ASS ESSMENT U/S 143(3) OF THE ACT WHICH MEANS THAT HE HAS DONE THE ASSESSMENT BASED O N THE CLAIMS OF THE ASSESSEE FOR WHICH THERE WAS NO ADVERSE FINDING RECORDED EXCEPT THAT SOME NAMES AND ADDRESSES OF THE RECIPIENTS WERE NOT THERE IN SOME OF THE VOU CHERS. IN THIS CASE, THE AO HAS NOT BROUGHT ON RECORD ANY FINDING TO THE EFFECT THAT TH E CLAIMS OF THE ASSESSEE WERE NOT ACCEPTABLE BASED ON ANY COGENT MATERIAL OR CORROBOR ATIVE EVIDENCES, WHEREAS THE APPELLANT HAS MAINTAINED LEDGER ACCOUNTS WHICH ARE SUPPORTED BY THE BILLS AND VOUCHERS RELATING TO SUCH EXPENSES. IT IS NOT A CAS E THAT THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL FACTS THAT THESE EXPENSES WERE NOT INCURRED FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. AS HELD BY VARIOUS COURT S, NO AD HOC DISALLOWANCE CAN BE MADE BY THE AO WITHOUT ANY BASIS. IN THE CASE OF MO NARCH FOODS P LTD -VS- A.C.I. T. (1996) 54 TTJ (AHD) 405 IT WAS FOUND THAT THERE IS NO JUSTIFICATION FOR SUSTAINING ANY AD HOC OR LUMP SUM DISALLOWANCE OUT OF MISCELLA NEOUS EXPENSES WHERE THE ACCOUNTS ARE AUDITED AND THE ASSESSING OFFICER HAS NOT POINTED OUT A SINGLE INSTANCE OF ANY SUCH EXPENSES WHICH IS NOT SUPPORTED BY A VO UCHER. IN THE CASE OF SMT. RUBY BISWAS VS. INCOME-TAX OFFICER, VV'D-41(3), KOLKATA, I.T.A NOS. 1666 & 1667/KOL/2012 ASSESSMENT YEARS: 2005-06 & 2006-07, ITAT, KOLKATA BENCH A DECIDED ON 14.05.2013 AS FOLLOWS: 'WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO HAS MERELY MADE AD HOC DISALLOWANCE OF 5% OR 10% OF THE ABOVE EXPENSES WIT HOUT ANY BASIS. SIMILARLY, CIT(A) ALSO CONFIRMED THE SAME. WE FIND THAT THERE IS NO BASIS FOR MAKING DISALLOWANCES I.E. AD HOC DISALLOWANCES BY THE AO. IN OUR VIEW, NO SUCH AA HOC DISALLOWANCES CAN BE MADE BY A O, WITHOUT ANY BASIS. GOING THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DELETE THE SAME IN BOTH YEARS. ' I ALSO FIND THAT THE CASE OF JAMSHEDPUR ACCESSORIES STORES VS. CIT [1974] 95, TAXMAN 664 (PAT.) IS RELEVANT ON THE ISSUE IN THIS GROUND OF APPEAL WHEREIN IT WAS RULED THAT 'UNLESS THERE IS A LIMITATION PUT BY THE LAW ON THE AMOUNT OF EXPENDITURE, A LESSER AMOUNT THAN THE AMOUNT EXPENDED CANNOT BE ALLOWED M ERELY BECAUSE THE ASSESSING AUTHORITY THINKS THAT THE ASSESSEE COULD HAVE MANAG ED BY PAYING A LESSER AMOUNT AS A PRUDENT BUSINESSMAN.' IN THE CASE OF CIT V. DHANRAJGIRJI RAJA NARASINGIRJ I [1973] 91 ITR 544 (SC), IT WAS RULED THAT LT IS NOT OPEN TO THE DEPARTMENT TO P RESCRIBE WHAT EXPENDITURE AN ASSESSEE SHOULD INCUR AND IN WHAT CIRCUMSTANCES HE SHOULD INCUR THAT EXPENDITURE. EVERY BUSINESSMAN KNOWS HIS INTEREST BEST.' GOING BY BOTH FACTS AND LAW, I FIND THAT THE ADDITI ONS MADE BY THE AO UNDER THE FOUR HEADS OF EXPENDITURE AS DISCUSSED (SUPRA), TOTALLIN G RS.2,01,042/-, STANDS TO NO MERIT AND HENCE THE SAME IS DIRECTED TO BE DELETED. 13. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES O N THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. AS RIGHTLY OBSERVED BY THE LD. CIT(APPEALS) IN HIS IMPUGNED OR DER, NOT A SINGLE INSTANCE WAS POINTED OUT BY THE ASSESSING OFFICER T O SHOW SPECIFICALLY I.T.A. NO. 1748/KOL./2014 ASSESSMENT YEAR : 2011-2012 & C.O. NO. 98/KOL/2014 (IN ITA NO. 1748/KOL/2014) ASSESSMENT YEAR: 2011-2012 PAGE 8 OF 9 THAT THE RELEVANT EXPENSES CLAIMED BY THE ASSESSEE INVOLVED ANY UNVERIFIABLE ELEMENT. AS RIGHTLY NOTED BY HIM, THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE DULY AUDITED AND IN THE TAX AUDIT REP ORT, THERE WAS NO ADVERSE COMMENTS OR QUALIFICATION MADE BY THE AUDIT OR. MOREOVER, THE DISALLOWANCE OF 10% OF THE RELEVANT EXPENSES WAS MA DE BY THE ASSESSING OFFICER ON AD HOC BASIS WITHOUT GIVING ANY JUSTIFIABLE REASON TO SUP PORT AND SUBSTANTIATE THE SAME. KEEPING IN VIEW ALL THES E FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) DELETING THE AD HOC DISALLOWANCE OF 10% MADE BY THE ASSESSING OFFICER OUT OF THE RELEVANT EXPENSES AND UPHOLDING HIS IMPUGNED ORDER ON THIS ISSUE, WE DISMISS GROUND NO 3 OF THE REVENUES APPEAL. 14. AS REGARDS THE CROSS OBJECTION FILED BY THE ASS ESSEE, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE SAME IS ONL Y SUPPORTING THE ORDER OF THE LD. CIT(APPEALS) ON THE ISSUES RAISED IN THE REVENUES APPEAL. SINCE WE HAVE ALREADY UPHELD THE IMPUGNED ORDER OF THE LD . CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON ALL THE ISSUES INVOLVED I N THE APPEAL OF THE REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND THE SAME IS DISMISSED ACCORDINGLY. 15. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E CROSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 12, 2017 . SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT ME MBER KOLKATA, THE 12 TH DAY OF JULY, 2017 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-33, KOLKATA, 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-700 071 I.T.A. NO. 1748/KOL./2014 ASSESSMENT YEAR : 2011-2012 & C.O. NO. 98/KOL/2014 (IN ITA NO. 1748/KOL/2014) ASSESSMENT YEAR: 2011-2012 PAGE 9 OF 9 (2) SHRI GOUTAM PAUL, SIRISH BHAWAN, 8313, DUM DUM ROAD, DUM DUM, KOLKATA-700 074 (3) COMMISSIONER OF INCOME TAX (APPEALS)-XIX, KOL KATA (4) COMMISSIONER OF INCOME TAX ,KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/DDO INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.