DERAJ ENTERPRISES Pvt Ltd, Nashik V. INOCME TAX OFFICER Ward-1(1), Nashik, Nashik

ITA 256/PUN/2023

AI Insights

Deraj Enterprises Pvt. Ltd. appealed against the order of the CIT(A) which confirmed the addition of Rs.25,87,143 to their income for the assessment year 2018-19. This amount was claimed as deduction for Sales Promotion Expenses, which involved purchases of gold articles from National India Billion Refinery HCA and Arihant Jewellers. The assessee did not provide details of the recipients of these gold items, citing confidentiality. The Assessing Officer and the CIT(A) both rejected the claim due to insufficient evidence linking the expenses to business purposes. The tribunal, hearing the appeal ex parte due to the absence of the assessee, agreed with the lower authorities and dismissed the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124104 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 12-06-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 02-03-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gift; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT आयकर अपील सं. /ITA No.256/PUN/2023 नधा रण वष / Assessment Year : 2018-19 Deraj Enterprises Pvt. Ltd., ASG-87, Opp.Ambad Police Station, Ashwin Nagar, CIDCO, Nashik – 422 009 Maharashtra PAN : AACCD8502D Vs. ITO, Ward-1(1), Nashik Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP: This appeal by the assessee arises out of the order dated 06-01- 2023 passed by the CIT(A) in National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2018-19. 2. The assessee is aggrieved by the confirmation of addition of Rs.25,87,143/- towards Sales Promotion Expenses. 3. Briefly stated, the facts of the case, are that the assessee furnished its return declaring income of Rs.9,05,140/-. During the course of assessment proceedings, the Assessing Officer (AO) Assessee by None Revenue by Smt. Mugdha Sardeshponde Date of hearing 13-06-2023 Date of pronouncement 13-06-2023 ITA No. 256/PUN/2023 Deraj Enterprises Pvt. Ltd. 2 observed that deduction of Rs.25,87,143/- was claimed towards Sales Promotion Expenses. On verification of the ledger details, it was observed that the assessee had paid the amount periodically to National India Billion Refinary HCA and Arihant Jewellers. On being called upon to submit the details, the assessee stated that it purchased Gold articles from the above parties for gifting. However, no further details of the persons to whom such gold items were distributed was furnished on the ground of “Confidentiality”. The AO made the addition, which came to be affirmed in the first appeal. 4. I have heard the ld. DR and gone through the relevant material on record. There is no appearance from the side of the assessee despite notice. I am, therefore, proceeding to dispose of the appeal ex parte qua the assessee. 5. Adverting to the facts of the case, it is seen that the assessee claimed deduction of Rs.25.87 lakh towards purchase of Gold articles. However, no detail of the recipients of such gold items was furnished by the assessee by stating “for the sake of confidentiality and oral non-disclosure agreement with the customers, we are unable to provide the details of Name and address of the parties to whom the gifts have been paid/given”. The same position prevailed before the ld. CIT(A) as well. It is clear from the above that the ITA No. 256/PUN/2023 Deraj Enterprises Pvt. Ltd. 3 assessee did not furnish even the primary details of the recipients of the gold items and, as such, the commercial expediency remained to be proved. It is elementary that deduction can be allowed only on showing that the expenditure was incurred for the purpose of business. The assessee has not furnished any detail of recipients. The ld. DR is correct in apprehending that such gold items may have been utilised by the Directors for their personal use. In the absence of any detail of the recipients establishing link of the jewellery gifting with the business purpose, I am satisfied that the authorities were justified in not granting the deduction. I, therefore, affirm the view taken by the ld. CIT(A). 6. In the result, the appeal is dismissed. Order pronounced in the Open Court on 13 th June, 2023. Sd/- ( R.S.SYAL) VICE PRESIDENT पुणे Pune; िदनांक Dated : 13 th June, 2023 सतीश ITA No. 256/PUN/2023 Deraj Enterprises Pvt. Ltd. 4 आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. थ / The Respondent 3. 4. 5. The Pr.CIT concerned DR, ITAT, ‘SMC’ Bench, Pune गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 13-06-2023 Sr.PS 2. Draft placed before author 13-06-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *