M/s. Bhatter Silver & Jewels (P) Ltd., Kolkata V. ITO, Ward - 5(3), Kolkata, Kolkata

ITA 2033/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4412 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 04-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 07-11-2014
• Court: TRIBUNAL
• Section: 40A(3)

Judgement Text

I.T.A. NO. 2033/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 2033/KOL/ 2014 ASSESSMENT YEAR: 2010-2011 M/S. BHATTAR SILVER & JEWELS (P) LIMITED,.......... .....................APPELLANT 5, CAMAC STREET, KOLKATA-700 071 [PAN: AABCB 1870 F] -VS.- INCOME TAX OFFICER,................................ ...........................RESPONDENT WARD-5(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE, FOR THE ASSESSEE SHRI RAJAT KUMAR KUREEL, JCIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : AUGUST 04 2016 DATE OF PRONOUNCING THE ORDER : OCTOBER 04, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VI, KOLKAT A DATED 25.08.2014 FOR THE ASSESSMENT YEAR 2010-11. 2. THE ISSUE RAISED IN GROUND NO. 1 (AS REVISED) RE LATES TO THE DISALLOWANCE OF RS.2,20,000/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF ASS ESSEES CLAIM FOR THE EXPENSES INCURRED ON SUPPLY OF SNACKS AND FOODS. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF MAKING AND TRADING OF DIAMOND, GOL D & SILVER ORNAMENTS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 29.09.2010 DECLARING TOTAL INCOME OF RS.5,46,937/-. IN THE I.T.A. NO. 2033/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 2 OF 6 PROFIT & LOSS ACCOUNT FILED ALONG WITH THE SAID RET URN, A SUM OF RS.2,87,260/- WAS DEBITED BY THE ASSESSEE ON ACCOUN T OF BUSINESS PROMOTION EXPENSES. THE SAID EXPENSES CLAIMED BY TH E ASSESSEE WERE INCLUSIVE OF SUM OF RS.2,20,000/- PAID BY THE ASSES SEE TO M/S. RILTON INTERNATIONAL FOR SUPPLY OF SNACKS AND FOODS. IN TH IS REGARD, EXPLANATION OFFERED BY THE ASSESSEE BEFORE THE ASSESSING OFFICE R WAS THAT DIFFERENT SCHEMES WERE FRAMED BY IT FROM TIME TO TIME FOR BUS INESS PROMOTION, WHICH INVOLVED GET TOGETHER OF CUSTOMERS EVERY MONT H AND THE EXPENSES IN QUESTION WERE INCURRED FOR PROVIDING SNACKS AND FOODS TO THE CUSTOMERS DURING SUCH GET TOGETHER. THIS EXPLANATIO N OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER AND H E PROCEEDED TO DISALLOW THE EXPENSES OF RS.2,20,000/-CLAIMED BY TH E ASSESSEE FOR THE FOLLOWING REASONS GIVEN IN THE ASSESSMENT ORDER:- (A) THAT ALTHOUGH THE ASSESSEE CLAIMED THAT THE BI LLS WERE RAISED FOR ALLEGED CATERING SERVICE BY THE CONCERN [M/S RILTON INTERNATIONAL] THROUGHOUT THE YEAR (DURING EACH MON TH), BILL WAS RAISED ONLY ON 31-03-2010. (B) THAT ALTHOUGH THERE IS TWELVE DATES MENTIONED I N THE BILL, THERE IS NO BREAK UP OF BILL AMOUNT FOR EACH DATE. (C) THAT THERE IS NO DETAIL IN THE BILL TO JUSTIFY THE SUBMISSION OF THE AIR OF THE ASSESSEE THAT THE CATERING SERVICES WERE PROVIDED BY THE ALLEGED CONCERN IN EACH MONTH AND EVEN THE P LACE WHERE THE ALLEGED CATERING SERVICE WAS PROVIDED IS ALSO N OT MENTIONED IN THE BILL TO JUSTIFY THE CLAIM. (D) THAT THERE IS NO DETAILS OF SPECIFIC FOODS OR S NACKS SUPPLIED NOR THERE ANY RATE [OF PER PLATE OR PER HEAD] OR QU ANTITY [OR NO. OF DISH OR PLATE] AGAINST EACH DATE. (E) THAT IT IS VERY MUCH IMPRACTICAL & UNREASONABLE FOR A CATERER TO RAISE THE BILL FOR TWELVE DIFFERENT DATE S THROUGHOUT THE YEAR, ONLY AT THE END OF THE YEAR AND THAT IS A LSO A CONSOLIDATED BILL WITHOUT ANY BREAK UP OR DETAILS. (F) THAT THE ALLEGED BILL IS ALSO UNPAID DURING THE F.Y. 2009-10. (G) THAT THE ASSESSEE ITSELF FAILED TO FURNISH THE DETAILS OF SPECIFIC FOODS OR SNACKS SUPPLIED BY THE CATERER OR THE RATE [OF PER PLATE OR PER HEAD] OR QUANTITY [OR NO. OF DISH OR PLATE] AGAINST EACH I.T.A. NO. 2033/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 3 OF 6 DATE AND EVEN THE AMOUNT OF BILL AGAINST EACH DATE TO JUSTIFY ITS CLAIM. (H) THAT THE ASSESSEE OR ITS AIR FAILED TO FILE ANY EVIDENCE TO JUSTIFY THEIR CLAIM OF EXISTENCE OF THE ALLEGED SCH EME OR THE ALLEGED GATHERING OF THE CUSTOMER OR THE ALLEGED CA TERING SERVICE. ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE SAID DISALLOWANCE. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED BEFORE ME T HE SUBMISSIONS MADE BY THE ASSESSEE ON THIS ISSUE BEFORE THE AUTHORITIE S BELOW, I FIND THAT THE SPECIFIC ADVERSE FINDINGS/OBSERVATIONS RECORDED BY THE ASSESSING OFFICER ON VERIFICATION OF THE RELEVANT EVIDENCE FILED BY T HE ASSESESE IN THE FORM OF ONE BILL ISSUED BY M/S. RILTON INTERNATIONAL ARE SUFFICIENT TO SHOW THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO ES TABLISH ON EVIDENCE THAT THE EXPENDITURE IN QUESTION WAS WHOLLY AND EXCLUSIV ELY INCURRED FOR THE PURPOSE OF ITS BUSINESS. THE CLAIM OF THE ASSESSEE OF HAVING PROMOTED DIFFERENT SCHEMES OF BUSINESS PROMOTION AND HAVING ORGANIZED GET TOGETHER OF CUSTOMERS EVERY MONTH IS ALSO NOT SUPPO RTED BY ANY COGENT OR CONVINCING EVIDENCE. I, THEREFORE, FIND NO INFIRMIT Y IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE AND UPHOLDING THE S AME, I DISMISS GROUND NO. 1 OF THE ASSESSEES APPEAL. 5. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN SUSTAINING THE DISALLOWANCE OF 50% MADE BY THE ASSESSING OFFICER OUT OF TOUR AND TRAVEL EXPENSES T O THE EXTENT OF 25%. 6. UNDER THE HEAD OF BUSINESS PROMOTION EXPENSES, A SUM OF RS.67,260/- WAS CLAIMED BY THE ASSESSEE ON ACCOUNT OF TOURS AND TRAVELS UNDERTAKEN BY ITS DIRECTORS AND OTHER PERSONS FOR E XHIBITIONS. BEFORE THE ASSESSING OFFICER, THE ASSESSEE, HOWEVER, COULD NOT ESTABLISH THE BUSINESS I.T.A. NO. 2033/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 4 OF 6 EXPEDIENCY OF THE SAID EXPENDITURE. THE ASSESSING O FFICER ALSO FOUND MANY SHORTCOMINGS AND ANOMALIES IN THE CLAIM MADE B Y THE ASSESSEE ON THIS ISSUE AS SPECIFICALLY POINTED OUT ON PAGES 3 & 4 OF THE ASSESSMENT ORDER. ACCORDINGLY, HE HELD THAT THE CLAIM OF THE A SSESSEE FOR EXPENDITURE INCURRED ON TOURS AND TRAVELS WAS NOT FULLY VERIFIA BLE AND MADE A DISALLOWANCE OF RS.33,630/- BEING 50% OF THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE. ON APPEAL, THE LD. CIT(APPEALS) UPHEL D THE ACTION OF THE ASSESSING OFFICER IN MAKING DISALLOWANCE ON ACCOUNT OF TOURS AND TRAVELS EXPENSES IN PRINCIPLE AFTER HAVING FOUND THAT THE S ON OF ONE OF THE DIRECTORS OF THE ASSESSEE, WHO WAS NOT EVEN AN EMPL OYEE OF THE ASSESSEE- COMPANY, HAD ALSO UNDERTAKEN THE TRAVEL. HE, HOWEVE R, CONSIDERED THE DISALLOWANCE OF 50% MADE BY THE ASSESSING OFFICER T O BE EXCESSIVE AND RESTRICTED THE SAME TO 25%. 6. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE DISALLOWANCE OUT OF EXPENSES CLAIMED BY THE ASSESSE E ON TOURS AND TRAVELS WAS MADE BY THE ASSESSING OFFICER AFTER HAVING FOUN D MANY DISCREPANCIES IN THE CLAIM MADE BY THE ASSESSEE FOR SUCH EXPENSES . KEEPING IN VIEW THESE DISCREPANCIES SPECIFICALLY POINTED OUT BY THE ASSESSING OFFICER, THE LD. CIT(APPEALS) ALSO AGREED IN PRINCIPLE THAT THE DISALLOWANCE OUT OF EXPENSES CLAIMED BY THE ASSESSEE ON TOURS AND TRAVE LS WAS WARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HAVING CON SIDERED ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THA T THE DISALLOWANCE SUSTAINED BY THE LD. CIT(APPEALS) TO THE EXTENT OF 25% OF THE TOTAL EXPENSES IS QUITE FAIR AND REASONABLE AND THERE IS NO CASE FOR GIVING ANY FURTHER RELIEF TO THE ASSESSEE ON THIS ISSUE. GROUN D NO. 2 IS ACCORDINGLY DISMISSED. 7. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 3 RE LATING TO THE DISALLOWANCE OF RS.35,500/- MADE BY THE ASSESSING O FFICER AND CONFIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 40A(3) OF THE ACT, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE AMOUNT OF R S.35,500/- IN QUESTION I.T.A. NO. 2033/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 5 OF 6 HAVING BEEN DEPOSITED BY THE ASSESSEE DIRECTLY IN T HE BANK ACCOUNT OF THE CONCERNED VENDOR, NO DISALLOWANCE UNDER SECTION 40A (3) IS CALLED FOR IN VIEW OF THE DECISION OF THE HONBLE GUJARAT HIGH CO URT IN THE CASE OF ANUPAM TELE SERVICES VS.- ITO (TAX APPEAL NO. 556 OF 2013 DATED 22.01.2014). THIS ISSUE THUS IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE SAID DECISION OF THE HONBLE GUJARAT HIGH CO URT AND RESPECTFULLY FOLLOWING THE SAME, WE DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON TH IS ISSUE UNDER SECTION 40A(3) OF THE ACT. 8. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 4 RE LATING TO THE ADDITION OF RS.20,000/- MADE BY THE ASSESSING OFFIC ER AND CONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF ADVANCE RECEIVED BY THE ASSESSEE TREATING THE SAME AS ITS UNDISCLOSED INCOME, NO MAT ERIAL ARGUMENT HAS BEEN ADVANCED ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING BEFORE ME TO TAKE A DIFFERENT VIEW ON THIS ISSUE. I, THEREFOR E, UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) CONFIRMING THE ADDITI ON MADE BY THE ASSESSING OFFICER ON THIS ISSUE AND DISMISS GROUND NO. 4. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 04, 2 016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 4 TH DAY OF OCTOBER, 2016 COPIES TO : (1) M/S. BHATTAR SILVER & JEWELS (P) LIMITED, 5, CAMAC STREET, KOLKATA-700 071 (2) INCOME TAX OFFICER, WARD-5(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 I.T.A. NO. 2033/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 6 OF 6 (3) COMMISSIONER OF INCOME TAX(APPEALS)-VI, KOLKA TA; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.