Shri Ajit C. Mehta, Ahmedabad V. The DY. CIT, Circle-2(1)(1), Ahmedabad

ITA 206/AHD/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2863 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 25-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Keywords: Business expenditure; Additional evidence
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO.206/AHD/2017 / ASSTT. YEAR: 2013-2014 AJIT C. MEHTA AMI JYOT PARIMAL SOCIETY, ELLISBRIDGE AHMEDABAD 380006. PAN : ACAPM 5876 A VS. DCIT, CIR.2(1)(1) AHMEDABAD. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : NONE REVENUE BY : SHRI LALIT P.JAIN, SR.DR / DATE OF HEARING : 25/10/2018 / DATE OF PRONOUNCEMENT: 0111/2018 +,/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE A SSESSEE AGAINST ORDER OF THE LD.CIT(A)-2, AHMEDABAD DATED 1.12.2016 PASSE D FOR THE ASSTT.YEAR 2013-14. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF B USINESS DEVELOPMENT EXPENDITURE OF RS.8,63,844/-. 3. WHEN THIS APPEAL WAS PRESENTED, AT THAT POINT OF TIME AN OBJECTION WAS POINTED TO THE ASSESSEE IN THE ACKNOWLEDGEMENT-CUM- NOTICE STATING THAT THE ASSESSEE HAS NOT SUBMITTED COPY OF THE ASSESSMENT O RDER. NOTICE OF HEARING ISSUED THROUGH REGISTERED POST HAS BEEN DULY SERVED UPON THE ASSESSEE, BUT NO- ITA NO.206/AHD/2017 2 ONE HAS COME PRESENT. THE LD.DR SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE REVENUE BY THE DE CISION OF THE TRIBUNAL IN ITA NO.746.AHD/2016 FOR THE ASSTT.YEAR 2012-13. 4. WITH THE ASSISTANCE OF THE LD.DR, WE HAVE GONE T HROUGH THE RECORD. WE FIND HAT THOUGH THE ASSESSEE FAILED TO SUBMIT COPY OF THE ASSESSMENT ORDER, BUT THE LD.CIT(A) HAS EXTRACTED FINDING OF THE AO IN TH E IMPUGNED ORDER. THEREFORE, WE TAKE UP FACTS NARRATED IN THE ASSESSM ENT ORDER FROM THE ORDER OF CIT(A) WHERE ASSESSMENT ORDER HAS BEEN REPRODUCED. 5. IT EMERGES OUT THAT THE ASSESSEE WAS RUNNING GEN ERAL INSURANCE AGENCY BUSINESS. IT HAD RECEIVED COMMISSION AND PROFESSIO NAL FEES FROM UNITED INDIA INSURANCE COMPANY. THE ASSESSEE CLAIMED EXPENDITUR E UNDER THE HEAD BUSINESS DEVELOPMENT. HE HAS DEBITED A SUM OF RS.1 7,27,688/-. THE AO DISALLOWED SUCH EXPENDITURE AT 50% AND MADE AN ADDI TION OF RS.8,63,844/-. THE LD.CIT(A) HAS REPRODUCED SUBMISSIONS OF THE ASS ESSEE ON THIS ISSUE, AND THEREAFTER CALLED FOR REPORT FROM THE AO. THE LD.C IT(A) HAS RELIED UPON THE ORDER OF HIS PREDECESSOR PASSED IN ASSESSEES OWN C ASE IN THE ASSTT.YEAR 2012- 13. THE FINDING RECORDED BY THE LD.CIT(A) READS AS UNDER: 2.9. HAVING CONSIDERED THE MERITS OF THE CASE, IT IS NOTICED THAT IN THE IMMEDIATELY PRECEDING YEAR, THE APPELLANT HAS EVEN SUBMITTED THE COPIES OF THE SETT MADE VOUCHERS IN SUPPORT OF THE DISCOUNT GIVEN TO THE PARTIES WHICH HAVE BEEN SUBMITTED IN THE YEAR UNDER CONSIDERATION AS AN. ADDITIONAL EVIDENCE. FURTHER, IN THE PRECEDING YEAR, ON VERIFICATION OF THE VOUCHERS, VARIOUS DISCREPANCIES HAVE BEEN NO TICED. THE IDENTICAL ISSUE HAS ALSO BEEN DECIDED IN APPELLANT'S OWN CASE IN A. Y. 2012-13 VIDE APPELLATE ORDER NO.CLT(A)-2/257/DC. CIR. 4/201 4-15 DATED 21/01/2016. THE FINDINGS GIVEN IN THE ORDER ARE REP RODUCED HEREUNDER:- '2.3. DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE AO HAS MADE THE ITA NO.206/AHD/2017 3 DISALLOWANCE OF RS.20,75,790/- OUT OF THE BUSINESS DEVELOPMENT EXPENSES AT THE RATE OF 50% OF THE TOTAL CLAIM OF E XPENDITURE FOR THE REASON THAT THE ENTIRE EXPENDITURE WAS NOT VERIFIAB LE AND COULD NOT BE INCURRED FULLY AND EXCLUSIVELY FOR THE PURPOSE OF B USINESS. THE AO OBSERVED THAT THERE WAS INCREASE IN THE BUSINESS DE VELOPMENT EXPENDITURE AT THE RATE OF 308.89% IN THE YEAR UNDE R CONSIDERATION AS COMPARED TO PRECEDING YEARS EXPENDITURE. FURTHER TH E INCREASE IN POLICIES WAS 124% AND INCREASE IN THE REVENUE WAS O NLY 47%. THE AO ON VERIFICATION OF THE DETAILS AND SUBMISSIONS HAS OBSERVED THAT THE APPELLANT HAS SUBMITTED A CHART SHOWING NAME-WISE P REMIUM AMOUNT RECEIVED AND CASH DISCOUNTS GIVEN TO 1364 PERSONS W HOSE VEHICLES WERE INSURED. THE ENTIRE PAYMENT TOWARDS THE CASH DISCOU NTS WAS IN CASH. IN SUPPORT OF THE SAME, THE APPELLANT SUBMITTED 51 SEL F MADE INTERNAL DEBIT VOUCHERS WHICH WERE NOT OPEN TO VERIFICATION. THESE SELF MADE VOUCHERS FILED ON SAMPLE BASIS CLEARLY FOUND TO BE PREPARED AND SIGNED BY ONE PARTICULAR PERSON ON SINGLE SITTING. FOR EG THE AO HAS GIVEN THE FOLLOWING INSTANCES WHICH SHOW THE DEFECTS / NON VE RIFICATION OF THE GENUINENESS OF THE CLAIM. VOUCHER NO, 216 DATED 24.07.2011 ISSUED IN THE NAME OF MOHANCHAND MOREMUKUT AGARWAL THE SIGNATURE HAS BEEN MADE AS MO HAN AND IN VOCHER PREPARED AND PASSED BY COLUMN IS LEFT BLANK. VOUCHER NO. 218 DATED 27.07.2011 ISSUED IN THE NAME OF ELITE PHARMA LIMITED AT THE END ILLEGIBLE SIGNATURE IS MADE WITH OUT THE NAME OF THE PERSON TO WHOM PAYMENT IN CASH WAS MADE. IN THE VOU CHER PREPARED AND SIGNED BY COLUMN WAS LEFT BLANK. VOUCHER NO. 961 DATED 2.01.2012 ISSUED IN THE NAME OF GUJARAT POLLUTION CONTROL BOARD THE SIGNATURE OF MR. SANDIP IS MADE WITHOUT FULL DETAILS OF THE PERSON WHO HAD RECEIVED PAYMENT IN CASH. THE VOUCHER PREPARED BY AND PASSED BY COLUMN IS LEFT BL ANK. VOUCHER NO. 959 DATED 3.1.2012 ISSUED IN THE NAME O F GUJARAT COUNCIL OF SCIENCE CITY ONLY AN ILLEGIBLE SIGNATURE IS MADE WITHOUT THE NAME OF THE PERSON WHO HAD RECEIVED IN CASH. VOUCHER PREPAR ED BY AND PASSED BY COLUMN WAS LEFT BLANK. VOUCHER NO. 36 DATED 9.7.2011 ISSUED IN THE NAME OF BUSINESS DEVELOPMENT WHEREIN NO SIGNATURE OF ANYONE BUT AN I LLEGIBLE SIGNATURE UNDER THE HEADING PREPARED BY WITHOUT THE NAME OF T HE PERSON WHO HAD SIGNED IT. EVEN THE AMOUNT COLUMN WAS BLANK AND PAS SED BY COLUMN WAS BLANK. ITA NO.206/AHD/2017 4 VOUCHER NO, 62 DATED 5..5.2011 ISSUED IN THE NAME O F P.U. SYED ONLY SIGNATURE WAS MADE WITHOUT THE NAME OF THE PERSON W HO HAD PREPARED AND PASSED IT. THUS THESE, DEFECTS WERE IN RESPECT OF THE VOUCHERS WHICH HAVE BEEN SELECTED BY THE APPELLANT ITSELF AND COPY PRODUCED BEFORE THE AO IN THE ASSESSMENT PROCEEDINGS. THE SIMILAR POSITION WAS FO UND IN RESPECT OF THE REMAINING VOUCHERS OUT OF THE 51 VOUCHERS PRODU CED. THUS THE CLAIM WAS NOT FULLY VERIFIABLE. ON THE OTHER SIDE, THE APPELLANT HAS CLAIMED THAT T HE CLAIM OF BUSINESS EXPENDITURE WAS INCURRED DUE TO COMMERCIAL EXPEDIEN CY AS PER THE PROVISIONS OF SECTION 37(1] OF IT ACT. THE APPELLAN T FURTHER CLAIMED THAT THE NECESSARY DETAILS HAVE BEEN PROVIDED TO THE AO WHO COULD VERIFY THE GENUINENESS OF THE EXPENDITURE. THE APPELLANT A LSO CLAIMED THAT THE VOUCHERS WERE MADE FOR THEIR INTERNAL CONTROL AND T O CHECK AND TRACK THE EXPENDITURE AND ALSO TO AVOID POSSIBLE DUPLICAT ION OR ANY MALPRACTICES BY THE EMPLOYEES. IT WAS ALSO ARGUED T HAT THE NET PROFITS IN THE YEAR UNDER CONSIDERATION WERE INCREASED BY 31.1 1% AND IT HAS PAID THE TAXES HIGHER BY 29.5%. IN SUPPORT OF ITS CLAIM IT RELIED UPON VARIOUS JUDGMENTS. HAVING CONSIDERED THE FACTS AND SUBMISSIONS IT IS N OTICED THAT IN THE YEAR UNDER CONSIDERATION THE CLAIM OF BUSINESS DEVELOPMENT EXPENDITURE WAS AT RS.41,51,580/- AS COMPARED TO PR ECEDING YEAR'S BUSINESS DEVELOPMENT EXPENDITURE AT RS.10,15 ,310/-. THUS THERE WAS SUBSTANTIAL INCREASE IN THE CLAIM OF BUSI NESS EXPENDITURE IN THE YEAR UNDER CONSIDERATION. ALTHOU GH THE INCREASE IN THE COMMISSION INCOME WAS ONLY AT RS,1, 53,43,355/-. AS HAS BEEN DISCUSSED IN THE PRECEDING THE ENTIRE C LAIM OF EXPENDITURE HAS BEEN PAID IN CASH BY THE APPELLANT AND IN SUPPORT ONLY VOUCHERS SELF MADE HAD BEEN PREPARED W HICH ARE NOT SUBJECTED TO VERIFICATION. MOREOVER VARIOUS DET AILS AND INFORMATION HAVE ALSO NOT BEEN FOUND NOTED ON THE S AID SELF MADE VOUCHERS AND THEY WERE INCOMPLETE. THUS THE CLAIM O F THE APPELLANT WAS NO FULLY VERIFIABLE. IT HAS BEEN NOTI CED THAT IN THE IMMEDIATELY PRECEDING YEAR THE CLAIM WAS 10,15,310/ - AS AGAINST THE TOTAL COMMISSION INCOME OF RS.4,83,32,957/- WHI CH WAS AT THE RATE OF 3.07% WHILE IN THE YEAR UNDER CONSIDERA TION IT WAS 8.58% (RS.41,51,580/74,83,32,957). SINCE THE NATURE OF BUSINESS OF THE APPELLANT WAS SAME IN THE YEAR UNDER CONSIDE RATION BUT THE APPELLANT HAS GIVEN THE REASONS FOR INCREASE IN THE CLAIM DUE ITA NO.206/AHD/2017 5 TO THE HIGH COMPETITION PREVAILING WHICH IS GROWING DAY BY DAY. THUS TO RETAIN AND ATTRACT THE CUSTOMERS THE CASH D ISCOUNT HAS TO BE GIVEN WHICH HAS RESULTED ULTIMATELY IN INCREASE OF COMMISSION OF INCOME AND NUMBER OF POLICIES ISSUED. CONSIDERIN G BOTH .THE ASPECTS FROM THE AO AND APPELLANT IT IS FOUND THAT THE CLAIM OF THE APPELLANT WAS HIGHLY EXCESSIVE IN THE YEAR UNDE R CONSIDERATION BUT CONSIDERING THE SUBMISSION OF THE APPELLANT PARTLY IT WOULD BE FAIR AND REASONABLE TO DISALLOW A LUMPSUM CLAIM @ 2% OF THE COMMISSION INCOME DERIVED BY THE APPELLANT IN THE YEAR UNDER CONSIDERATION. THUS DISALLOWANCE WORKS OUT TO RS. 9666597- (2% OF RS.4,83,32,957/-) WHICH IS CONF IRMED. THE RELIEF IS GRANTED TO THE APPELLANT ON BALANCE WHICH WORKS TO RS.11,09,131/-. THE GROUND OF THE APPELLANT IS PART LY ALLOWED.' 2.10. CONSIDERING THE ABOVE FACTS OF THE CASE AND T HE FACT THAT THE IDENTICAL ISSUE ON SIMILAR FACTS HAS BEEN DECIDED B Y THIS OFFICE .IN IMMEDIATELY PRECEDING YEAR I.E. A. Y. 2012-13, WHER EIN DISALLOWANCE HAS BEEN RESTRICTED TO 2% OF THE TOTAL COMMISSION I NCOME. CONSIDERING BOTH THE ASPECTS FROM THE AO AND APPELLANT, THE DIS ALLOWABLE/EXPENSES WORKS OUT TO RS. 15,31,306/- (2% OF RS.7,65,65,279/ -), BUT THE AO HAS MADE THE DISALLOWANCE OF RS.8,63,844/- BEING 50% OF THE TOTAL, CLAIM. THUS, THE ENTIRE DISALLOWANCE MADE BY THE AO AT RS. 8,63,844/- IS CONFIRMED. 6. WE FIND THAT THIS FINDING HAS BEEN CONFIRMED BY THE ITAT IN ITA NO.746/AHD/2016. THE TRIBUNAL OBSERVED AS UNDER: 7. WE HAVE HEARD THE REPRESENTATIVES OF THE RESPEC TIVE PARTIES. WE HAVE PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. IT APPEARS FROM THE RECORDS THAT THE ASSESSEE FURNISHED THE DETAILS ON 07/10/2014. A CHART SHOWING NAME-WISE PREMIUM AMOUNT RECEIVED AND CASH DISCOUNT GIVEN TO 1364 PERSONS WHOSE VEHICLES WERE INSURED WERE ALSO FURNISHED. IT IS RELEVANT TO MENTION THAT THE ENTIRE AMOUNT WAS MADE TO THE SAID 1364 PERSONS IN CASH. APART FROM THAT, 51 SELF MADE INTERNAL DEBIT VOUCHE RS WERE ALSO FURNISHED BY THE ASSESSEE ON SAMPLE BASIS. THE LD.AO CAME TO A FINDING THAT ALL THESE SELF MADE VOUCHERS WERE PREPARED AND SIGNED BY PARTICULA R PERSON ON SINGLE SITTING. HE ALSO TOOK THE TROUBLE TO CLARIFY THE SAME BY EXPLAINING THOSE VOUCHERS IN DETAILS AND RECORDED IN HIS ORDER. SOME OF THE VOUCHERS DO NOT CONTAIN THE FULL SIGNATURE OF THE PAYEES, SOME OF T HEM WERE BLANK, SOME OF THE SIGNATURES ARE ILLEGIBLE, SOME OF WHICH WERE NOT S PECIFYING THE NAME UPON WHOM THE PAYMENT OF CASH DISCOUNTS WERE MADE. SOME OF THE VOUCHERS HAVING NO SIGNATURE AT THE APPROPRIATE PLACE BUT ILLEGIBLE SIGNATURE WAS FOUND UNDER THE HEAD PREPARED, THE NAME OF THE PERSON WHO HA S SIGNED WAS ALSO NOT ITA NO.206/AHD/2017 6 MENTIONED. THE VOUCHERS ALSO SOMETIMES DO NOT SPEA K ABOUT THE AMOUNT IN THE APPROPRIATE COLUMN. THE VOUCHERS WERE NARRATED ONL Y AT RANDOM BASIS. IN FACT, THESE VOUCHERS WERE SUBMITTED TO ESTABLISH TH E CLAIM OF BUSINESS DEVELOPMENT EXPENDITURE IN THE FORM OF CASH DISCOUN T GIVEN TO THE PERSONS WHOSE VEHICLES WERE INSURED. SINCE THOSE VOUCHERS HAVING NO THIRD PARTY EVIDENCE AND DID NOT PROVIDE THE GENUINENESS OF CAS H DISCOUNT TO THE CONCERNED PERSON, COULD NOT BE VERIFIED BY THE LD. AO. THE ASSESSEE BY AND UNDER HIS WRITTEN SUBMISSIONS BEFORE THE LD.AO PRAY ED FOR TIME TO ENABLE HIM TO PROVIDE FURTHER DETAILS BY WHICH THE PARTIES COU LD BE TRACED UPON WHICH ANOTHER OPPORTUNITY TO THE ASSESSEE TO FURNISH RATI ONALE AND JUST REASON IN THE CLAIM OF BUSINESS DEVELOPMENT EXPENDITURE WAS GIVEN BY THE LD.AO. THE DETAILS OF YEAR-WISE NEW POLICY AND RENEWAL POLICY WITH RATE OF COMMISSION RECEIVED ALONG WITH TOTAL AMOUNT OF COMMISSION RECE IPT WAS ASKED FOR TO MAKE A TRUE AND FAIR COMPARISON OF BUSINESS DEVELOPMENT EXPENDITURE UPON WHICH THE ASSESSEE BY AND UNDER LETTER DATED 30.10.2014 S UBMITTED THE DETAILS OF NUMBERS OF NEW POLICIES ALONG WITH AMOUNT AND THE C OMMISSION AMOUNT OF THE AY 2011-12. THOUGH THE ASSESSEE CLAIMED AN INCREA SE IN REVENUE @ 47% APPROXIMATELY IN COMPARISON TO THE REVENUE EARNED I N THE LAST YEAR ANY COMPARISON ABOUT THE INCREASE OF BUSINESS DEVELOPME NT EXPENDITURE COMPARE TO THE LAST YEAR, HAS NOT BEEN FURNISHED BY HIM THE REBY JUSTIFICATION OF INCREASE IN BUSINESS DEVELOPMENT EXPENDITURE HAS BE EN FAILED TO BE FURNISHED BY THE ASSESSEE. IT APPEARS THAT, THERE WAS INCRE ASE IN POLICIES AT 124% AND THE INCREASE IN THE REVENUE WAS ONLY 47%. THE 5 1 SELF MADE INTERNAL DEBIT VOUCHERS IN SUPPORT OF SUCH CLAIM WERE REALLY NOT O PENED FOR VERIFICATIONS FOR THE REASON AS ALREADY DEALT WITH BY THE LD. AO AS P OINTED OUT BY US AS ABOVE. APART FROM THAT, THE ASSESSEE DURING THE RELEVANT Y EAR RENEWED 1364 POLICIES THE BUSINESS DEVELOPMENT EXPENDITURE WHEREOF WAS RS .41,51,580/-, WHEREAS FOR RENEWAL OF 488 POLICIES DURING THE AY 2011-12 T HE BUSINESS DEVELOPMENT EXPENDITURE WAS INCURRED TO THE TUNE OF RS.10,15,31 0/-. THEREFORE, THE INCREASE IN THE RENEWAL POLICIES IN COMPARISON TO A Y 2011-12 IN TERMS OF PERCENTAGE IS 179.5% WHEREAS INCREASE IN THE BUSINE SS DEVELOPMENT EXPENDITURE IN THE RELEVANT YEAR IS 308.89% WHICH ACCORDING TO US IS EXCESSIVELY HIGH AND DISPROPORTIONATE TOO. THE L D. CIT(A) WHILE DEALING SO CLEARLY OBSERVED AS FOLLOWS: HAVING CONSIDERED THE FACTS AND SUBMISSIONS IT IS NOTICED THAT IN THE YEAR UNDER CONSIDERATION THE CLAIM OF BUSINESS DEVE LOPMENT EXPENDITURE WAS AT RS.41,51,580/- AS COMPARED TO PR ECEDING YEARS BUSINESS DEVELOPMENT EXPENDITURE AT RS.10,15,310/-. THUS THERE WAS SUBSTANTIAL INCREASE IN THE CLAIM OF BUSINESS EXPEN DITURE IN THE YEAR UNDER CONSIDERATION. ALTHOUGH THE INCREASE IN THE COMMISSION INCOME WAS ONLY AT RS.1,53,43,355/-. AS HAS BEEN DISCUSSE D IN THE PRECEDING THE ENTIRE CLAIM OF EXPENDITURE HAS BEEN PAID IN CA SH BY THE APPELLANT AND IN SUPPORT ONLY VOUCHERS SELF MADE HAD BEEN PRE PARED WHICH ARE NOT SUBJECTED TO VERIFICATION. MOREOVER VARIOUS DE TAILS AND INFORMATION HAVE ALSO NOT BEEN FOUND NOTED ON THE SAID SELF MAD E VOUCHERS AND THEY ITA NO.206/AHD/2017 7 WERE INCOMPLETE. THUS THE CLAIM OF THE APPELLANT W AS NOT FULLY VERIFIABLE. IT HAS BEEN NOTICED THAT IN THE IMMEDI ATELY PRECEDING YEAR THE CLAIM WAS 10,15,310/- AS AGAINST THE TOTAL COMM ISSION INCOME OF RS.4,83,32,957/- WHICH WAS AT THE RATE3 OF 3.07% WH ICH IN THE YEAR UNDER CONSIDERATION IT WAS 8.58% (RS.41,51,580/4,83 ,32,957). SINCE THE NATURE OF BUSINESS OF THE APPELLANT WAS SAME IN THE YEAR UNDER CONSIDERATION BUT THE APPELLANT HAS GIVEN THE REASO NS FOR INCREASE IN THE CLAIM DUE TO THE HIGH COMPETITION PREVAILING WH ICH IS GROWING DAY BY DAY. THUS TO RETAIN AND ATTRACT THE CUSTOMERS T HE CASH DISCOUNT HAS TO BE GIVEN WHICH HAS RESULTED ULTIMATELY IN INCREA SE OF COMMISSION OF INCOME AND NUMBER OF POLICIES ISSUED. CONSIDERING BOTH THE ASPECTS FROM THE AO AND APPELLANT IT IS FOUND THAT THE CLAI M OF THE APPELLANT WAS HIGHLY EXCESSIVE IN THE YEAR UNDER CONSIDERATIO N BUT CONSIDERING THE SUBMISSION OF THE APPELLANT PARTLY IT WOULD BE FAIR AND REASONABLE TO DISALLOW A LUMPSUM CLAIM @2# OF THE COMMISSION I NCOME DERIVED BY THE APPELLANT IN THE YEAR UNDER CONSIDERATION. THU S DISALLOWANCE WORKS OUT TO RS.966659/- (2# OF RS.4,83,32,957/-) W HICH IS CONFIRMED. THE RELIEF IS GRANTED TO THE APPELLANT ON BALANCE W HICH WORKS TO RS.11,09,131/-. THE GROUND OF THE APPELLANT IS PAR TLY ALLOWED. 8. THE ASSESSEE IN SUPPORT OF HIS CONTENTION RELIED UPON THE JUDGEMENT PASSED BY THE CO-ORDINATE BENCH IN ITA NOS.2648/AHD /2011 & 2490/AHD/2011 FOR AY 2008-09 (CROSS-APPEALS) IN TH E CASE OF ITO VS. M/S.BUILDCON ENGINEERS PASSED ON 21/08/2015, PARTI CULARLY PARAGRAPH NO.6.1 OF THE SAID JUDGEMENT WHICH IS AS FOLLOWS: 6.1. THE AO HAD MADE DISALLOWANCE OF LABOUR PAYM ENTS ON THE BASIS OF ESTIMATION TO THE EXTENT OF 20% OF THE EXPENDITU RE. THE AO HAS NOT GIVEN ANY BASIS ON WHICH HE HAS BASED HIS FINDING T O DISALLOW AT 20% OF THE EXPENDITURE ON ESTIMATE BASIS. IN OUR CONSIDER ED VIEW, IF THE PAYMENT IS BOGUS, IT WOULD BE 10%. THE LD.CIT(A) H AS GIVEN HIS FINDING ON THE FACT THAT THE PAN FURNISHED DURING T HE APPELLATE PROCEEDINGS WAS FOUND TO BE CORRECT. UNDER THESE F ACTS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CI T(A) SINCE THE REVENUE HAS NOT PLACED ANY CONTRARY MATERIAL ON REC ORD. THUS, GROUND NO.2 OF REVENUES APPEAL IS REJECTED. 8.1. THE FACTS OF THE CASE IS ENTIRELY DIFFERENT FR OM THE INSTANT APPEAL BEFORE US. THE ASSESSEE FAILED TO FURNISH ADEQUATE DETAILS IN SUPPORT OF HIS CLAIM AS DISCUSSED ABOVE BY US. THEREFORE, THE JUDGMENT IS NOT APPLICABLE TO THE INSTANT CASE DUE TO CHANGE OF FACTS. 9. TAKING INTO CONSIDERATION THE ENTIRE FACTS OF TH E MATTERS AND THE ORDERS PASSED BY THE AUTHORITIES BELOW AS WELL AS THE FIN DINGS AND OBSERVATIONS MADE THE LD. CIT(A). WE FIND THAT THE ASSESSEE FAILED TO FURNISH ADEQUATE DOCUMENTS TO SUPPORT HIS CLAIM OF BUSINESS EXPENDIT URE PARTICULARLY FOR ITA NO.206/AHD/2017 8 PROVIDING CASH DISCOUNT UPON INSURANCE OF VEHICLES WHICH ACCORDING TO US IS EXCESSIVE AND HIGHLY DISPROPORTIONATE TO THE EXPEND ITURE INCURRED ON THIS ACCOUNT IN THE EARLIER YEAR. WE FIND NO JUSTIFICA TION IN INTERFERING WITH THE ORDER PASSED BY THE LD.CIT(A). WE, THEREFORE, CON FIRM THE ORDER PASSED BY THE LD.CIT(A) ON THE DISALLOWANCE TO THE TUNE OF RS .9,66,659/-. THUS, THE GROUND OF APPEAL PREFERRED BY THE ASSESSEE IS DISMI SSED. 7. SINCE THERE IS NO DISPARITY ON FACTS, THE LD.CIT (A) HAS RELIED UPON THE ORDERS OF HIS PREDECESSOR WHICH HAS BEEN UPHELD BY THE TRIBUNAL IN EARLIER ORDER. WE DO NOT FIND ANY MERIT IN THE GROUND OF APPEAL. IT IS REJECTED. 8. SO FAR AS DISALLOWANCE UNDER SECTION 14A OF THE ACT IS CONCERNED, WE FIND THAT THE LD.AO HAS MADE DISALLOWANCE OF RS.41, 602/- BY INVOKING PROVISIONS OF SECTION 14A R.W. RULES 8D(2)(III). T HE LD.CIT(A) RESTRICTED THIS ADDITION TO 0.5% OF THE AVERAGE INVESTMENT AND CONF IRMED THE DISALLOWANCE AT RS.20,146/-. 9. ON DUE CONSIDERATION OF THE ABOVE FACTS, WE FIND THAT THE ASSESSEE FAILED TO GIVE PLAUSIBLE EXPLANATION WITH REGARD TO THE EX PENDITURE INCURRED BY HIM FOR EARNING TAX FREE INCOME. THE AO HAS WORKED OUT DISALLOWANCE QUA EXPENDITURE INCURRED UNDER THE HEAD ADMINISTRATIVE EXPENDITURE, AND ACCORDING TO THE FORMULA THE LD.CIT(A) HAS CONFIRME D SUCH EXPENDITURE TO THE EXTENT OF RS.20,146/-. WE FIND NO ERROR IN THE ORDE R OF THE LD.CIT(A). HENCE, THIS GROUND OF APPEAL DISMISSED. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 1 ST NOVEMBER, 2018 AT AHMEDABAD. S D / - (AMARJIT SINGH) ACCOUNTANT MEMBER S D / - (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/11/2018