S.R. FASHION WORLD, MUMBAI V. ITO 21(3)(2), MUMBAI

ITA 2594/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0364 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2013-2014
• Appeal Filed On: 10-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Assessee Lawyers: CHHANGAR S CHAUHAN
• Keywords: Bogus purchase; Corroborative evidences
• Section: 144

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE HONBLE SH. R. C. SHARMA, A M & HONBLE SH. SANDEEP GOSAIN, JM ./ I.T.A. NO . 2594/MUM/2017 (ASSESSMENT YEAR: 2013 - 14) M/S S. R. FASHION WORLD, 232, ASHISH INDL ESTATE GOKHALE ROAD, SOUTH DADAR (W), MUMBAI - 400 025 / VS. ITO 21(3)(2 ) PIRAMAL CHAMBERS, MUMBAI, PIN - ./ ./ PAN NO. A BNFS3823M ( / ASSESSEE ) : ( / RESPONDENT ) / ASSESSEE BY : SHRI CHHANGAR S. CHAUHAN , A R / RESPONDENTBY : SHRI RAJAT MITTAL , D R / DATE OF HEARING : 28.09 .2018 / DATE OF PRONOUNCEMENT : 22.11.2018 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. C OMMISSIONER OF INCOME TAX (A PPEALS ) - 33, MUMBAI DATED 11.01.17 FOR AY 2013 - 14. 2 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF READYMADE GARMENTS ON WHOLESALE AND RETAIL BASIS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SHOWN GROSS TURNOVER OF RS. 7,22,12,996/ - ON WHICH GROSS PROFIT OF RS. 1,60,91,736/ - AND NET PROFIT OF RS. 45,56,280/ - WERE SHOWN. AFTER DEDUCTING REMUNERATION AND INTEREST TO PARTNERS , THE ASSESSEE OFFERED RS. 15,05,410/ - FOR TAXATION. THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, BUT LATER ON, THE CASE WAS S ELECTED OF SCRUTINY UNDER CASS AND AFTER SERVING STATUTORY NOTICES AND SEEKING REPLY OF ASSESSEE, THE AO PASSED ASSESSMENT ORDER U/S 144 OF I.T. ACT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD THEREBY MAKING ADDITIONS UNDER DIFFERENT HEADS . AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIE S, PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW BEFORE US, THE ASSESSEE H AS PREFERRED THE PRESENT APPEAL. 3 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD GROUND NO. 1( 1 .1 TO 1.5 ) . 3 . THESE GROUND S RAISED BY THE ASSESSEE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE BEST JUDGMENT ORDER PASSED U/S 144 OF THE I.T. ACT BY AO, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 4 . WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE A LSO PERUSED THE MATERIAL PLACED ON RECORD , WRITTEN SYNOPSIS, JUDGMENT CITED BY BOTH THE PARTIES AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUAT E THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A ) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE REVENUE IN PARA NO. 7 TO 8 OF ITS ORDER. THE OPERATIVE P ORTION OF THE ORDER OF LD. CIT(A ) IS CONTAINED IN PARA NO. 8 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 8. I HAVE .CAREFULLY GONE THROUGH THE IMPUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER, WRITTEN SUBMISSION OF THE APPELLANT AND REMAND REPORT OF THE AO. FROM THE SEQUENCE OF EVENTS NARRATED BY THE 4 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD AO, IN THE ASSESSMENT ORDER AND THE REMAND R EPORT, IT IS CRYSTAL CLEAR THAT SUFFICIENT OPPORTUNITY WAS GIVEN BY THE AO DURING THE ASSESSMENT PROCEEDINGS. MOREOVER, THE APPELLANT HAS NOT HIGHLIGHTED THE JUDGMENTS OF HON'BLE SUPREME COURT AND HON'BLE JURISDICTIONAL HIGH COURT DECISIONS NOT FOLLOWED BY THE AO AS CONTENDED IN GROUND NO. 3.5. UNDER THESE CIRCUMSTANCES, THE GROUNDS RAISED BY THE APPELLANT HAVE NO MERIT. HENCE, GROUNDS OF APPEAL NO. 3.1 TO 3.6 ARE DISMISSED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS ORDERS PASSED BY REVENUE AUTHORITIES , WE FIND THAT LD. CIT(A) AFTER APPRECIATING THE FACTS OF THE PRESENT CASE HAD RIGHTLY CONCLUDED THAT AT THE TIME OF PASSING THE ASSESSMENT ORDER, REMAND REPORT, THE ASSESSEE WAS GRANTED SUFFICIENT OPPORTUNIT Y. EVEN BEFORE US, THE ASSESSEE HAS FAILED TO DEMONSTRATE AS TO HOW THE OPPORTUNITIES WERE NOT GRANTED. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES AS DIRECTED ABOVE, WE DISMISS THESE GROUNDS OF APPEAL. RESULTANTLY, THESE GROUND S RAISED BY THE ASSES SEE STANDS DISMISSED . 5 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD GROUND NO. 2(2.1 TO 2.9) 5 . THESE GROUND S RAISED BY THE ASSESSEE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF 50% OF THE TOTAL PURCHASE OF MATERIAL TREATING AS HAWAL PURCHASE AND CONFIRMING DISALLOWANCE OF THE PURCHASE MATERIAL ON AD HOC BASIS @ 12.5% AT RS. 17,76,356/ - MADE BY AO, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 6 . WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD, JUDGMENT CITED BY BOTH THE PARTIES AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE REVENUE IN PARA NO. 9 TO 13 OF ITS ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) IS CONTAINED IN PARA NO. 13(13.1 TO 13.8) OF IT S ORDER AND THE SAME IS REPRODUCED BELOW: - 6 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD 13. I HAVE CAREFULLY GONE THROUGH THE IMPUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER, REMAND REPORT OF THE AO, REJOINDER FILED BY THE ID AR OF THE APPELLANT AND THE MATERIAL AVAILABLE ON RECORD. MY OBS ERVATIONS ARE AS UNDER: - 13.1 FROM THE ASSESSMENT ORDER AND REMAND REPORT, IT IS OBSERVED THAT INSPITE OF OPPORTUNITY GIVEN, THE APPELLANT HAS NOT SUBMITTED DETAILS AS CALLED FOR BY THE AO TO ESTABLISH GENUINESS OF THE PURCHASES TO THE EXTENT OF RS. RS. 1,42,10,847/ - . SINCE, CORRESPONDING SALES WERE NOT DISAPPROVED, 12.5% OF THE PURCHASES ARE TREATED AS NON - GENUINE, FOLLOWING VARIOUS JUDICIAL PRONOUNCEMENTS. IN THIS REGARD, I FIND MERIT IN THE ABOVE ACTION OF THE AO. 13.2 THE FACTS AND CIRCUMSTANCES, AS OUTLINED ABOVE, CLEARLY SUGGEST THAT ALTHOUGH THE APPELLANT HAS CLAIMED THAT IT POSSESS ALL DOCUMENTARY EVIDENCES REGARDING PURCHASES OF THE MATERIALS, BUT IT HAS FAILED TO PRODUCE THESE EITHER BEFORE THE AO*OR E VEN DURING THE APPELLATE PROCEEDINGS. AT THE SAME TIME, THE APPELLANT HAS ALSO ADMITTED THAT IT IS NOT IN A POSITION TO PRODUCE THE SUPPLIERS OF THE GOODS SINCE THEY HAVE EITHER CLOSED THEIR BUSINESS OR SIFTED THEIR PLACE OF BUSINESS. HENCE PAN NO. OF A NO . OF SUPPLIERS ARE ALSO NOT PRODUCED AS 7 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD HIGHLIGHTED BY THE AO. ALL THESE FACTS POINT OUT TOWARDS UNVERIFIABLE NATURE OF THE PURCHASES FROM SOME OF THE PURCHASERS IN QUESTION. THUS THE PURCHASE PRICES SHOWN ON THESE INVOICES ARE NOT SUBJECTED TO VERIFICATIO N AND AS SUCH IT WAS DIFFICULT TO ESTABLISH THE CORRECTNESS OF THE PURCHASE PRICES PAID FOR THE MATERIALS PURCHASED FROM THEM. SUCH VERIFICATION OF THE SALE PRICE SHOWN ON THE INVOICES/BILLS WAS NECESSARY TO ASCERTAIN THE CORRECTNESS OF THE PROFITS SHOWN BY THE APPELLANT FOR THE PERIOD UNDER CONSIDERATION. THIS VERIFICATION IS ALSO VITAL TO DETERMINE AS TO WHETHER THE PURCHASE PRICES SHOWN ON THE BILLS/INVOICES, ARE AS PER PREVAILING MARKET PRICES OF THE MATERIALS PURCHASED AND TO ASCERTAIN THAT THE PRICE PAID FOR THE MATERIALS PURCHASED FROM THESE PARTIES ARE NOT OVER INVOICED. IN THE ABSENCE OF ANY SUCH VERIFICATION OF THE CORRECTNESS OF THE PRICE PAID FOR THE MATERIALS PURCHASED BY THE APPELLANT, THE PURCHASE PRICE PAID AS MENTIONED ON THE INVOICES/BILLS CANNOT BE ACCEPTED AS THE CORRECT PRICE PAID FOR THE GOODS PURCHASED FROM SUCH PARTIES. IN VIEW OF THE SAME, THE POSSIBILITY OF OVER - INVOICING OF THE MATERIALS PURCHASED TO REDUCE THE PROFITS CANNOT BE RULED OUT. THEREFORE, THE GROSS PROFIT RATE SHOWN BY THE APPELLANT FOR THE YEAR UNDER CONSIDERATION CANNOT BE RELIED UPON. IN THE CIRCUMSTANCES, THE APPROACH OF THE AO IN ESTIMATING THE ADDITIONAL BENEFIT OR PROFIT EARNED ON 8 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD THESE PURCHASES, ARE FOUND TO BE CORRECT. IN MY VIEW EITHER THE PURCHASES FROM SU CH PARTIES ARE OVER INVOICED OR THE PURCHASES WERE ACTUALLY MADE BUT NOT FROM THE PARTIES FROM WHICH, IT WAS CLAIMED TO HAVE BEEN MADE AND INSTEAD MAY HAVE BEEN PURCHASED FROM GREY MARKET WITHOUT PROPER BILLING OR DOCUMENTATION. 13.3. AS OF NOW THE ISSUE O F SUCH TYPES OF UNVERIFIABLE PURCHASES HAVE BEEN MUCH DISCUSSED AND DEBATED BY THE VARIOUS COURTS AND TRIBUNALS. IN MANY JUDICIAL PRONOUNCEMENTS ON THE ISSUE, THE COURTS HAVE TAKEN A CONSISTENT VIEW THAT IN CASE OF NON - EXISTENT PARTIES FROM WHICH THE PURCH ASES ARE SHOWN TO HAVE BEEN MADE, PART OF SUCH PURCHASES CAN BE DISALLOWED PARTICULARLY IN SUCH CASES WHERE THE CORRESPONDING SALES ARE NOT DOUBTED. ALTERNATIVELY THE PROFIT EMBEDDED IN SUCH SALES AGAINST THE ALLEGED BOGUS PURCHASES SHOULD BE BROUGHT TO TA X. 13.4. IN THE CASE OF CITVS. SIMIT P. SHETH, 1TA NO. 553 OF 2012, ORDER DATED 16/01/2013, WHILE DECIDING A SIMILAR ISSUE, THE HON'BLE HIGH COURT OF GUJARAT HAS HELD THAT: 9 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD 'WE ARE BROADLY IN AGREEMENT WITH THE REASONING ADOPTED BY THE COMMISSIONER (A PPEALS) WITH RESPECT TO THE NATURE OF DISPUTED PURCHASES OF STEEL. IT MAY BE THAT THE THREE SUPPLIERS FROM WHOM THE ASSESSES CLAIMED TO HAVE PURCHASED THE STEEL DID NOT OWN UP TO SUCH SALES. HOWEVER, VITAL QUESTION WHILE CONSIDERING WHETHER THE ENTIRE AMOUNT OF PURCHASES SHOULD BE ADDED BACK TO THE INCOME OF THE ASSESSEE OR ONLY THE PROFIT ELEMENT EMBEDDED THEREIN WAS TO ASCERTA IN WHETHER THE PURCHASES THEMSELVES WERE COMPLETELY BOGUS AND NON EXISTENT OR THAT THE PURCHASES WERE ACTUALLY MADE BUT NOT FROM THE PARTIES FROM WHOM IT WAS CLAIMED TO HAVE BEEN MADE AND INSTEAD MAY HAVE BEEN PURCHASED FROM GREY MARKET WITHOUT PROPER BILL ING OR DOCUMENTATION. IN THE PRESENT CASE, CIT BELIEVED THAT WHEN AS A TRADER IN STEEL THE ASSESSEE SOLD CERTAIN QUANTITY OF STEEL, HE WOULD HAVE PURCHASED THE SAME QUANTITY FROM SOME SOURCE. WHEN THE TOTAL SALE IS ACCEPTED BY THE ASSESSING OFFICER, HE COU LD NOT HAVE QUESTIONED THE VERY BASIS OF THE PURCHASES. IN ESSENCE THEREFORE, THE COMMISSIONER (APPEALS) BELIEVED ASSESSEES THEORY THAT THE PURCHASES WERE NOT BOGUS BUT WERE MADE FROM THE PARTIES OTHER THAN THOSE MENTIONED IN THE BOOKS OF ACCOUNTS. THAT BE ING THE POSITION, NOT THE ENTIRE PURCHASE PRICE BUT ONLY PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES 10 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD CAN BE ADDED TO THE INCOME OF THE ASSESSEE. SO MUCH IS CLEAR BY DECISION OF THIS COURT. IN PARTICULAR, COURT HAS ALSO TAKEN A SIMILAR VIEW IN CASE OF COMMISS IONER OF INCOME TAX - IV VS. VIJAY M MISTRY CONSTRUCTION LTD. VIDE ORDER DATED 10.01.2011 PASSED IN TAX APPEAL NO. 1090 OF 2009 AND IN CASE OF COMMISSIONER OF INCOME TAX - 1 VS. BHOLANATH POLY FAB PVT. LTD. VIDE ORDER DATED 23. 10.2012 PASSED IN TAX APPEAL NO. 63 OF 2012. THE VIEW TAKEN BY THE TRIBUNAL IN CASE OF VIJAY PROTEINS PVT. LTD. VS. CIT REPORTED IN 58 ITD 428 CAME TO BE APPROVED.' 13.5. SIMILARLY WHILE DEALING WITH AN IDENTICAL ISSUE, IN THE CASE OF CIT, VS. BHOLANATH POLY FAB (P) LTD., I.T.A.NO. 63 O F 2012, IN THE ORDER DATED 23/10/2012, THE HON'BLE HIGH COURT OF GUJARAT HAS HELD AS UNDER: - 'WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTED NO ERROR. WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHETHER THE PARTIES FROM WHOM SUCH PURCHASES WERE ALLEG EDLY MADE WERE BOGUS IS ESSENTIALLY A QUESTION OF FACT. THE TRIBUNAL HAVING EXAMINED THE EVIDENCE ON RECORD CAME TO THE CONCLUSION THAT THE ASSESSEE DID PURCHASE THE CLOTH AND SELL THE FINISHED GOODS. IN THAT VIEW OF THE MATTER, AS NATURAL COROLLARY, NOT T HE ENTIRE 11 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD AMOUNT COVERED UNDER SUCH PURCHASE, BU T THE PROFIT ELEMENT EMBEDDED THEREIN WOULD BE SUBJECT TO TAX. THIS WAS THE VIEW OF THIS COURT IN THE CASE OF SANJAY OILCAKE INDUSTRIES V. CIT [2009] 316 ITR 274 (GUJ). SUCH DECISION IS ALSO FOLLOWED BY THIS COURT IN A JUDGMENT DATED AUGUST 16,2011, IN TAX APPEAL NO.679 OF 2010 IN THE CASE OF CITV. KISHOR AMRUTLAL PATEL. IN THE RESULT, TAX APPEAL IS DISMISSED.' 13.6. IN VIEW OF THE FACTS AND CIRCUMSTANCES AND THE JUDICIAL PRONOUNCEMENTS CITED ABOVE, THE ACTION OF THE AO IN DISALLOWING 12.5% OF THE PURCHASES RELATED TO CERTAIN PARTIES ARE FOUND TO BE IN ORDER. 13.7. IN MY OPINION, ALL THE FACTS AND CIRCUMSTANCES OUTLINED ABOVE LEAD TO THE CONCLUSION THAT IT IS DIFFICULT TO ACCEPT THAT THE PURCHASES SHOWN ON THE INVOICES/BILLS ISSUED BY THESE PARTIES ARE AS PER THE PREVAILING MARKET PRICE OF THOSE MATERIALS OR ACTUALLY BEEN MADE FROM SUCH PARTIES AND MIGHT HAVE BEEN PURCHASED IN THE GREY MARKET. THE APPELLANT HAS NOT PLACED ANY EVIDENCE ON RECORD THAT THE GOODS WE RE PURCHASED FROM THE ABOVE PARTIES AT ARMS' LENGTH PRICE. THE APPELLANT HAS ALSO NOT PLACED ON RECORD ANY COMPARABLE BILLS/INVOICES FOR PURCHASES OF SIMILAR ITEMS MADE FROM OTHER PARTIES TO ESTABLISH THAT THE PURCHASES FROM THE ABOVE PARTIES IN QUESTION W ERE AT PAR WITH THE PURCHASES MADE FROM OTHER PARTIES DURING 12 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD THE PERIOD UNDER CONSIDERATION. THE POSSIBILITY OF SUCH PURCHASES FROM UNREGISTERED DEALERS WITHOUT INVOICES CANNOT BE RULED OUT. AT THE SAME TIME, THERE IS NO MERIT IN THE ARGUMENT OF THE APPELL ANT THAT THE DEALERS HAVE ACTUALLY FILED M - VAT RETURNS AS IT WILL NOT ESTABLISH GENUINESS OF PURCHASES BY THE APPELLANT. 13.8. IN VIEW OF THE ABOVE, ADDITION OF RS. 17,76,3567 - BEING 12.5% OF THE TOTAL PURCHASES OF RS. 1,42,10,8477 - , MADE BY THE AO IS FOUN D TO BE REASONABLE AND HENCE CONFIRMED. THUS, GROUNDS OF APPEAL NO. 4.1 TO 4.4 ARE DISMISSED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS ORDERS PASSED BY REVENUE AUTHORITIES, WE FIND THAT LD. CIT(A) AFTER APPRECIATING THE FACTS OF THE PRESENT CASE , REMAND REPORT WHICH IS MENTIONED AT PARA NO. 7 AND 11 OF ITS ORDER HAD RIGHTLY CONCLUDED THAT THE ASSESSEE HAD NOT SUBMITTED THE DETAILS AS CALLED FOR BY THE AO TO ESTABLISH GENUINENESS OF PURCHASES TO THE EXTENT OF RS. 1,42,10,847/ - . TH E AO IN THE REMAND REPORT HAS ALSO CATEGORICALLY SUBMITTED THAT ASSESSEE HAS NOT SUBMITTED ANY OF THE DOCUMENTS AS DETAILED IN PARA NO. 11 OF THE ORDER OF LD. CIT(A) FOR SUBSTANTIATING ITS CLAIM. THE ASSESSEE HAD SUBMITTED 13 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD INCOMPLETE AND UNVERIFIED LIST OF PURCHASES TO PROVE A CLAIM OF PURCHASES OF RS. 2,84,21,695/ - ONLY. THE LD. CIT(A) RIGHTLY APPRECIATED THAT SINCE THE CORRESPONDING SALES WERE NOT DISAPPROVED, THEREFORE 12.5% OF THE PURCHASES WERE TREATED AS NON - GENUINE AFTER FOLLOWING THE JUDICIAL PRONOU NCEMENTS. WE HAVE METICULOUSLY GONE THROUGH THE ENTIRE FACTS OF THE PRESENT CASE, WHICH POINT OUTS THAT ALTHOUGH THE ASSESSEE HAD CLAIMED THAT IT POSSESSES ALL THE DOCUMENTARY EVIDENCES REGARDING THE PURCHASES, BUT HAD FAILED TO PRODUCE THE SAME BEFORE A O OR BEFORE LD. CIT(A) FOR VERIFICATION. IT IS AN ADMITTED FACT THAT ASSESSEE HIMSELF ADMITTED THAT HE CANNOT PRODUCE THE SUPPLIER OF THE GOODS SINCE THEY HAVE EITHER CLOSED THEIR BUSINESS OR SHIFTED THEIR BUSINESS. HENCE PAN NO. OF NUMBER OF SUPPLIERS COU LD NOT BE PRODUCED. IN THESE CIRCUMSTANCES, THE AO SHOWED HIS INABILITY TO VERIFY THE PURCHASES. THE LD. CIT(A) HAS CATEGORICALLY STATED THAT IN THE ABSENCE OF VERIFICATION, IT WAS DIFFICULT FOR THE AO TO ESTABLISH THE CORRECTNESS OF THE PURCHASE PRICES PA ID FOR THE MATERIALS PURCHASED FROM THEM AND HENCE SUCH VERIFICATION OF THE SALE PRICE SHOWN ON THE INVOICE BILLS WAS NECESSARY TO ASCERTAIN THAT THE PRICE PAID FOR THE MATERIALS PURCHASED FROM THESE PARTIES 14 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD ARE NOT OVER INVOICED. THEREFORE, IN THE ABSENCE OF ANY SUCH VERIFICATION OF THE CORRECTNESS OF THE PRICE PAID FOR THE MATERIALS PURCHASED BY THE ASSESSEE, THE PURCHASE PRICE PAID AS MENTIONED ON THE INVOICES/BILLS WERE NOT ACCEPTED AS THE CORRECT PRICE PAID FOR THE GOODS PURCHASED FROM SUCH PARTIES. IN SUCH CIRCUMSTANCES, THE REVENUE HAD NO OPTION BUT TO PRESUME THE POSSIBILITY OF OVER - INVOICING OF THE MATERIALS PURCHASED BY THE ASSESSEE TO REDUCE THE PROFITS. HENCE IN SUCH CIRCUMSTANCES, THE GROSS PROFIT RATE SHOWN BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS NOT RELIED UPON. SINCE IT WAS DIFFICULT TO ACCEPT THAT THE PURCHASES SHOWN ON THE INVOICES/BILLS ISSUED BY THESE PARTIES ARE AS PER THE PREVAILING MARKET PRICE OF THOSE MATERIALS OR ACTUALLY BEEN MADE FROM SUCH PARTIES AND MIGHT HAV E BEEN PURCHASED IN THE GREY MARKET. EVEN THE ASSESSEE HAD NOT LED ANY EVIDENCE ON RECORD TO DEMONSTRATE THAT THE GOODS WERE PURCHASED FROM THE ABOVE PARTIES AT ARMS' LENGTH PRICE. NO RECORD OF ANY COMPARABLE BILLS/INVOICES FOR PURCHASES OF SIMILAR ITEMS M ADE FROM OTHER PARTIES WERE PLACED ON RECORD TO ESTABLISH THAT THE PURCHASES FROM THE ABOVE PARTIES IN QUESTION WERE AT PAR WITH THE PURCHASES MADE FROM OTHER PARTIES DURING THE PERIOD 15 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD UNDER CONSIDERATION. IN THESE CIRCUMSTANCES, THE AO RIGHTLY CONCLUDE TH AT T HE POSSIBILITY OF SUCH PURCHASES FROM UNREGISTERED DEALERS WITHOUT INVOICES CANNOT BE RULED OUT. MOREOVER, N O NEW FACTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THESE GROUND S RAISED BY THE ASSESSEE STANDS DISMISSED . GROUND NO. 3(3 .1 TO 3.7 ) 7 . THESE GROUND S RAISED BY THE ASSESSEE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RENT EXPENSES AT RS. 10,23,902 / - MADE BY AO, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 16 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD 8 . WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD, JUDGMENT CITED BY BOTH THE PARTIES AS WELL AS THE ORDERS PASS ED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE REVENUE IN PARA NO. 24 TO 29 OF ITS ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) IS CONTAINED IN PARA NO. 26 TO 29 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 26. I HAVE CAREFULLY GONE THROUGH THE IMPUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER, REMAND REPORT OF THE AO, REJOINDER FILED BY THE ID AR OF THE APPELLANT AND THE MATERIAL AVAILABLE ON RECORD. MY OBSERVATIONS ARE AS UNDER: - 27. DURING THE APPELLATE PROCEEDINGS, TWO RENT AGREEMENTS ARE SUBMITTED FOR VERIFICATION ON WHICH COMMENTS OF THE AO ARE CALLED FOR DURING REMAND PROCEEDINGS. WITH RESPECT TO THE FIRST AGREEMENT, THE AO HAS REPORTED THAT IT WAS EXECUTED BETWEEN SHRI JAYANTILAL PREMJI SAVLA AND THE APPELLANT FOR INDL. UNIT 17 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD NO.232 AT ASHISH INDL. ESTATE, LOWER PAREL AT MONTHLY LICENSE FEE OF RS. 50,0007 - . THIS AGREEMENT WAS DULY REGIST ERED ON 08.02.2012. THE RENT PAYABLE THEREON IS RS.6,00,000/ - PER ANNUM ON WHICH RS.60,000/ - HAS TO BE DEDUCTED AS TDS. THE LICENSE FEE IS TO BE PAID IN ADVANCE FOR EACH YEAR. BASED ON THIS AGREEMENT, RENT OF RS. 6 LAC WAS PAID BY THE APPELLANT DURING THE YEAR CONSIDERATION. THUS, THE GENUINESS OF THE AGREEMENT AND THE RENT PAID PURSUANT TO THIS CANNOT BEEN DOUBTED. 28. AS FAR AS THE SECOND AGREEMENT IS CONCERNED, IT IS REPORTED THAT THE SAME UNREGISTERED AGREEMENT IS BETWEEN FOUR PERSONS NAMELY, SHRI ANAND S. SHAH, SMT. LATA S. SHAH, SHRI RIDDHI A. SHAH AND SHRI GAJANAN J. DEVALIKAR AS THE FIRST PART AND TWO PERSONS SHRI DEEPAK G. MEHTA AND MRS. SEEMA D. MEHTA AS THE OTHER PART. MRS. SEEMA D. MEHTA IS THE PARTNER OF THE APPELLANT FIRM. THE AGREEMENT IS FOR FOUR ROOMS AT SHOP 33, 34, 42 AND 43, MODERN MILL COMPOUND, MUMBAI - 400025, TO BE USED FOR THE PURPOSE OF STORAGE OF RAW MATERIAL AND GODOWN. THE LICENSE FEE IS FIXED AT RS.15,0007 - PER MONTH TO EACH PERSON OF THE FIRST PART. THOUGH THE PAYMENT PER MONTH COM ES TO RS.60,0007 - AND THEREFORE RS.6,00,0007 - PER ANNUM, NO TDS WAS DEDUCTED. THERE ARE NO WITNESSES TO THE AGREEMENT AND THERE IS NO IDENTIFICATION WHATSOEVER OF THE FOUR PERSONS OF THE FIRST PART. HENCE, THE GENUINESS 18 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD OF THE AGREEMENT HAS NOT BEEN ACCEPT ED BY THE AO. ON CAREFUL VERIFICATION OF THE APPELLANT SUBMISSION, I FIND THE ARGUMENT DEVOID OF MERIT. THERE CANNOT BE ANY REASON FOR NOT REGISTERING THE DOCUMENT, SINCE ARE GALAS ARE SITUATED IN A SLUM AREA. IT IS AN UNDISPUTED FACT THAT THE AGREEMENT IS NOT ENTERED INTO WITH THE APPELLANT AS THE SAME WAS IN THE INDIVIDUAL CAPACITY OF SHRI DEEPAK G. MEHTA AND MRS. SEEMA D. MEHTA. THE CLAIM THAT THE PAYMENTS ARE MADE BY CHEQUES, ARE NOT VERIFIABLE IN THE ABSENCE OF SUPPORTING EVIDENCES. IT IS DIFFICULT TO UNDERSTAND THE REASONS FOR NOT PRODUCING COMPLETE EVIDENCES FOR VERIFICATION INSPITE OF INSISTENCE BY THE AO. 29. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE INVOLVED, IN MY CONSIDERED OPINION, THE APPELLANT HAS ESTABLISHED GENUINESS OF RENT PAYMENT OF RS. 6 LAC ONLY. HENCE, ADDITION TO THE EXTENT OF RS. 10,23,9027 - IS CONFIRMED. THUS GROUNDS OF APPEAL NO. 6.1 TO 6.7 ARE PARTLY ALLOWED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS ORDERS PASSED BY REVENUE AUTHORITIES, WE FIND THAT LD. CIT(A) AFTER APPRECIATING THE FACTS OF THE PRESENT CASE AND ALSO TAKING INTO CONSIDERATION THE REMAND REPORT HAD RIGHTLY CONCLUDED 19 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD THA T OUT OF TOTAL TWO RENT AGREEMENT, ONE AGREEMENT WHICH WAS REGISTERED ON 08.02.12 REFLECTS TOTAL RENT OF 6 LAKHS PER ANNUM ON WHICH 60,000/ - WAS DEDUCTED AS TDS. HENCE THE GENUINENESS OF THIS AGREEMENT WAS NOT DOUBTED. AS PER THE RECORDS, THE SECOND DOCUME NTS WHICH WAS BETWEEN FOUR PERSONS NAMELY, SHRI ANAND S. SHAH, SMT. LATA S. SHAH, SHRI RIDDHI A. SHAH AND SHRI GAJANAN J. DEVALIKAR AS THE FIRST PART AND TWO PERSONS SHRI DEEPAK G. MEHTA AND MRS. SEEMA D. MEHTA AS THE OTHER PART. MRS. SEEMA D. MEHTA IS THE PARTNER OF THE ASSESSEE FIRM WAS UNREGISTERED AGREEMENT. ACCORDING TO THIS AGREEMENT , FOUR ROOMS AT SHOP 33, 34, 42 AND 43, MODERN MILL COMPOUND, MUMBAI - 400025, WAS TO BE USED FOR THE PURPOSE OF STORAGE OF RAW MATERIA L AND GODOWN. THE LICENSE FEE WAS FIXE D AT RS.15,000/ - PER MONTH TO EACH PERSON OF THE FIRST PART. THOUGH THE PAYMENT PER MONTH COMES TO RS.60,000 / - AND THEREFORE RS.6,00,000 / - PER ANNUM. NO TDS WAS DEDUCTED AND EVEN NO WITNESSES WERE RECORDED IN THE SAID AGREEMENT AND THERE WAS NO IDENTIFICATI ON OF THE FOUR PERSONS OF THE FIRST PART. HENCE, IN THIS WAY, TH E GENUINESS OF THE AGREEMENT WAS NOT ACCEPTED BY THE AO. THE ASSESSEE PUT FORTH NO JUSTIFICATION FOR NOT REGISTERING THE 20 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD AGREEMENT. APART FROM THAT, NO SUPPORTING EVIDENCES WERE LED BY THE ASSESSEE TO SUBSTANTIATE ITS CLAIM. MOREOVER, N O NEW FACTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, THERE A RE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THESE GROUND S RAISED BY THE ASSESSEE STANDS DISMISSED . GROUND NO. 4 TO 8 9 . THESE GROUND S RAISED BY THE ASSESSEE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCES OF I) BROKERAGE AND COMMISSION ON ADHOC BASIS AT RS. 6,22,020/ - DEBITED TO P & L ACCOUNT, II) SALARY PAID TO THE TEMPORARY WORKERS RS. 2,96,790/ - , III) TRAVELLING EXPENSES ON AD HOC BASIS AT RS. 1,64,703, IV) DISCOUNT ALLOWED EXPENSES ON AD HOC BASIS AT RS. 5,46,016/ - AND 21 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD V) ELECTRICITY CHARGES AT RS. 76,850/ - MADE BY AO, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 10 . WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD, JUDGMENT CITED BY BOTH THE PARTIES AS W ELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE REVENUE IN PARA NO. 30 TO 45(1 10 ) OF IT S ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) IS CONTAINED IN PARA NO. 45 (1 10 ) OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 45. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT IN THE LIGHT OF FINDINGS MADE IN THE ASSESSMENT ORDER AND REMAND REPORT. IT APPEARS THAT DUE TO LACK OF COMPLETE DETAILS, THE AO HAS RESORTED TO THE IMPUGNED DISALLOWANCES. DURING THE APPELLAT E PROCEEDINGS, ALTHOUGH THE APPELLANT HAS CLAIMED FURTHER EVIDENCES, STILL PART EVIDENCES ARE ONLY PRODUCED. THE AO AFTER VERIFYING THE DETAILS, DURING 22 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD REMAND PROCEEDINGS, HAS POINTED OUT FOLLOWING FINDINGS, WHICH COULD NOT BE EFFECTIVELY REBUTTED & SUBSTA NTIATED BY THE APPELLANT IN THE ABOVE QUOTED SUBMISSION. 1. ADVERTISEMENT EXPENSES RS.29,130/ - IT IS OBSERVED THAT DURING ASSESSMENT PROCEEDINGS, THE APPELLANTHAS SUBMITTED DETAILS FOR RS.7,38,721/ - OUT OF TOTAL CLAIM OF ADVERTISEMENT EXPENSES OF RS.7,97, 341/ - . ACCORDINGLY, 50% OF THE BALANCE EXPENDITURE OF RS.58.620/ - WERE DISALLOWED. DURING REMAND PROCEEDINGS, BILLS FOR RS.48,240/ - FROM MEDIA LOGIC, SPEHTA MULTIMEDIA AND KEE MEDIA SOLUTION WERE SUBMITTED FOR VERIFICATION. THUS, THERE REMAINS UNVERIFIED E XPENDITURE OF RS. 10,400/ - ,THE DISALLOWANCE OF WHICH IS CONFIRMED. 2. DISALLOWED INTEREST ON BANK OVERDRAFT RS.3,64,624/ - : IN THE REMAND REPORT, IT IS REPORTED THAT THIS EXPENDITURE WAS DISALLOWED @ 50% AS THE APPELLANT HAD FAILED TO SUBSTANTIATE THE CLAIM OF RS.7,29,248/ - DURING THE ASSESSMENT PROCEEDINGS. NOW DURING THE REMAND REPORT, THE ASSESSEE HAS SUBMITTED INTEREST 23 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD CERTIFICATES FROM OBC FOR RS. 5,81,9587 - , FROM STANDARD CHARTERED BANK FOR RS.69,698/ - AS ON 01 MARCH 2013 AND RS.77,642/ - AS ON 01 FEBRUARY, 2013 TOTALING TO TO RS.7,29,298/ - . REGARDING STANDARD CHARTERED BANK IT IS EXPLAINED THAT THE HOME SAVER LOAN WAS TAKEN FOR BUSINESS PURPOSES AGAINST MORTGAGE OF THE PARTNERS PERSONAL HOUSE PROPERTY. CONSIDERING THE ABOVE, INTEREST DISALLOWANCE OF RS. 3,64,624/ - IS DELETED. 3. DISALLOWANCE OF BROKER AGE AND COMMISSION RS.6,22,020/ : THE DISALLOWANCE UNDER THE HEAD BROKERAGE AND COMMISSION WAS MADE @ 50% OF THE CLAIM OF RS.12,44,04P/ - , SINCE: THEAPPELLANT DIDNOT SUBMIT DOCUMENTARY EVIDENCES TO SUBSTANTIATE THE CLAIM OF PAYMENTS DURING ASSESSMENT PROCEEDINGS. IT IS REPORTED IN THE REMAND REPORT THAT THEM IS NO CONFIRMATION OF PAYMENT - OF RS7383/ - TO SHRI AJAY GHELANI. WITH RESPECT TO OTHER BROKERAGE AND COMMISSION PAID, ALTHOUGH CONFIRMATIONS WERE PROVIDED BUT NO PAN WAS PROVIDED TO SUBSTANTIATE THE IDENTITY OF THE A GENTS. IT IS ONLY IN THE REJOINDER THAT THE PAN WAS PROVIDED. IN MY OPINION, REPEATED FAILURE ON THE PART OF THE APPELLANT IN PROVING PAN CANNOT BE ACCE PTED, AS THERE EXISTS NO 24 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD JUSTIFIABLE CAUSE FOR THIS ACT WHICH CANNOT BE TREATED AS BONAFIDE. HENCE, THE ADDITIONAL INFORMATION IS REJECTED. THEREFORE, IN THE LACK OF PROOF OF IDENTITY BEING PROVIDED TO THE AO FOR VERIFICATION OF THE COMMISSION AGENT, THE A DDITION OF RS. 6,22,0207 - IS CONFIRMED. 4. DISALLOWANCE OF INSURANCE EX PENSES RS.1,84,202/ - IN THE ASSESSMENT ORDER, THE AO DISAVOWED 50% OF THE CLAIM OF RS.3,68,404/ - SINCE NO PROOF WAS SUBMITTED BY IHE APPELLANT. IN THE REMAND REPORT, IT IS REPORTED THAT THE BILLS SUBMITTED PERTAIN TO PERIOD BEFORE THE POLICY WAS ISSUED. WITH REGARD TO THE POLICY FROM BAJAJ ALLIANCE, IT IS COMMENTED BY THE AO THAT THE PREMIUMS MENTIONED ON THE POLICY ARE RS.42,951/ - , RS.41,380/ - AND RS. 2809/ - WHILEWITH RESPECT TO ANOTHER POLICY WITH PREMIUM OF RS.2809/ - AND RS.24,264/ - . THE POLICY DOCUMENTS WITH PREMIUM OF RS.24.264/ - IS DATED 20.08.2013 (FY 2013 - 14). HENCE, IT WOULD NOT QUALIFY FOR EXPENDITURE IN A.Y. 2013 - 14. THE AR OF IHE APPEIIANT HAS EXPLAINED THAT THERE WAS ALSO A P REMIUM PAYMENT OF RS.2,95,955/ - ON THE SME LOAN DISBURSED ON 31.12.2012 .WHICH IS ALSO VERIFIED BY THE AO. THE AO IS ACCORDINGLY, DIRECTED TO ALLOW THE PREMIUM PAYMENTS MADE DURING THE YEAR UNDER CONSIDERATION 25 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD WHICH ARE ALSO CLAIMED IN THE ;. RETURN OF INC OME AFTER DUE VERIFICATION. 5. DISALLOWANCE OF SALARY EXPENDITURE RS.6,91,208/ - : THE DISALLOWANCE WAS MADE @50% OF CLAIM OF SALARY EXPENSES OF RS. 13,82,4167 - . DURING THE REMAND PROCEEDINGS, THE APPELLANT HAS SUBMITTED COPIES OF MUSTER ROLL CUM WAGES REGISTER AND SALARY LEDGER ALONG WITH JOURNAL VOUCHERS, WHICH ARE EXAMINED BY THE AO. IT IS NOTED BY THE AO THAT TOTAL OF SALARY EXPENSES IS RS. 13,82,4167 - WHILE THE LEDGER MENTIONS ONLY RS. 10,85,6237 - . SIX PAYMENTS ABOVE RS.20,0007 - ARE MADE I.E. 29,800 X 5 + 27,800 X 1 = RS. 1,76,8007 - , TO SHRI VIMAL SHAH. THERE IS NO - PROOF OF PAYMENT BY CROSSED CHEQUE IN THIS REGARD. NAMES OF NINE EMPLOYEES ARE NOT MENTIONED IN THE LEDGER VIZ. SHRI ANKIT KORADIA, MS. SONA SHETH, MS. PRIYANKA RANE, SHRI YASH MEHTA, SHRI MANOJ BHAVSAR, SHRI RAJESH DOSHI, MS. ARCHANA BHOSLE, MS. PALLAVI GOVEKAR AND MS. SMITA GURAV. THE PAYMENTS TO ALL EMPLOYEES TOTAL TO RS. 10,85,6267 - , WHICH ALSO TALLIES WITH THE JOURNAL VOUCHER AND THE SALARY LEDGER. HOWEVER, THE TOTAL SA LARY AS PER LEDGER IS (I) VIMAL N. SHAH RS.3,05,1007 - (II) SAMEENA USHAKOLA RS.2,33,6347 - (III) REKHA KAMBLI RS.75,3337 - AND (IV) 26 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD OM PRAKASH C. GIRI RS.3,94,9097 - AS AGAINST AS PER WAGES REGISTER (I) VIMAL N. SHAH RS. 1,78,0007 - , (II) SAMEENA USHAKOLA RS.8 4,0007 - (III) REKHA KAMBLI RS.867597 - AND (IV) OM PRAKASH C. GIRI RS.I, 10,8587 - . THE AR OF THE ASSESSEE HAS EXPLAINED BEFORE THE AO THAT THERE WAS A GLITCH IN THE SOFTWARE BY WHICH THE ENTIRE MONTHLY EXPENDITURE WAS SHOWN AGAINST THE NAME OF THE FIRST NAM ED EMPLOYEE FOR THE MONTH IN THE LEDGER, HENCE THIS DISCREPANCY. HOWEVER, THE CLAIM OF SALARY EXPENSES IS AT RS 13,82,4167 - AGAINST THE TOTAL PROVED PAYMENT OF RS. 10,85,6267 - . SALARY OF RS.2,96,790/ - STILL REMAINS UNSUBSTANTIATED. EVEN DURING REBUTTAL, NO RECONCILIATION IS GIVEN. HENCE, THE ADDITION OF RS. 2,96,7907 - IS CONFIRMED. BALANCE ADDITION UNDER THE HEAD SALARY IS DELETED. 6. DISALLOWANCE OF SALES PROMOTION EXPENSES RS.3,04,556/ - : DURING THE APPELLATE PROCEEDINGS, COPIES OF BILLS OF SALES PROMOTIO N AND LEDGER ACCOUNTS ARE SUBMITTED FOR VERIFICATION AND THE AO HAS NOT FIND ANY THING WRONG IN IT. HENCE, THE ADDITION OF RS. 3,04,5567 - IS DELETED. 7. DISALLOWANCE OF TRAVELLING EXPENSES RS.1,64,703/ - : 27 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD OUT OF RS.5,33,480/ - THE ASSESSEE HAD SUBMITTED DETAILS OF RS.2,04,075/ - . HENCE 50% OF THE REMAINING RS.3,29,405/ - WAS DISALLOWED DURING THE ASSESSMENT PROCEEDINGS DUE TO LACK OF SUPPORTING EVIDENCES. DURING THE REMAND, THE APPELLANT HAS SUBMITTED COPIES OF LEDGER ACCOUNT. BUT NO BILL/VOUCHER WERE PRODU CED FOR VERIFICATION FOR ESTABLISHING ITS GENUINENESS. IT IS REPORTED BY THE AO THAT AS PER THE LEDGER ACCOUNT, THE TOTAL OF THE - DOMESTIC TRAVELLING EXPENSES ARRIVES AT RS.5,33,480/ - . PAYMENTS ARE CLAIMED TO HAVE BEERTFNADE FOR TICKETS AND STAY DURING LOCA L TRAVEL, INLAND TRAVEL AND FOREIGN TRAL/ETBY DIFFERENT EMPLOYEES INCLUDING SHRI DEEPAK MEHTA TO DUBAI (FOREIGN, TRAVEL).LOOKING TO THE FACT THAT NO BILL/VOUCHER ARE PRODUCED FOR VERIFICATION, EVEN DURING APPELLATE PROCEEDINGS, THE DISALLOWANCE OF RS. 1,64 ,7037 - IS CONFIRMED. 8. DISALLOWANCE OF DISCOUNT EXPENSES RS.5,64,016/ - : IN THE ASSESS MENT ORDER, OUT OF THE DISCOUNT EXPENSES OF RS.11,28,0327 - , 50% WAS DISALLOWED FOR WANT OF ANY PROOF. DURING REMAND PROCEEDINGS, COPY OF DISCOUNT ALLOWED LEDGER IS PRODU CED. HOWEVER, THE ASSESSEE ITSELF HAS MENTIONED THAT 'THIS IS DEDUCTED BY PARTIES. NO SUPPORTING AVAILABLE.' THE TOTAL OF THE LEDGER IS RS. 28 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD 12,74,9467 - . THE ASSES SEE HAS ALSO SUBMITTED COPY OF C HALLAN MTR FORM NO.6 OF THE DEPARTMENT OF SALES TAX SHOWING PA YMENT OF RS.16,400/ - BEING SALES TAX PAID ON 28.03.2013. ACCORDING TO THE AO, THIS DOESN'T ESTABLISH THE DISCOUNT EXPENSES. IN THE REJOINDER, THE APPELLANT HAS JUST SUBMITTED A GENERAL STATEMENT, WHICH DOES NOT EXTEND HIS CASE. CONSIDERING THE ABOVE, THE D ISALLOWANCE OF RS. 5,64,0167 - IS CONFIRMED. 9. DISALLOWANCE OF CLAIM OF ELECTRICITY EXPENSES RS.1,40,0647 - DURING THE ASSESSMENT PROCEEDINGS, TOTAL ELECTRICITY EXPENSES CLAIMED WAS RS.2,80,1287 - OUT OF WHICH 50% I.E. RS.1,40,0647 - WAS DISALLOWED SINCE ELECTRICITY BILLS WERE NOT PRODUCED BEFORE THE AO THOUGH IT WAS CLAIMED TO HAVE BEEN PRODUCED. DURING REMAND, THE APPELLANT HAS SUBMITTED COPIES OF THREE LEDGER ACCOUNTS 1) ELECTRICITY EXPENSES - 232 FOR RS.2,10,617/~, 2) ELECTRICITY EXP PAYABLE - 42 FOR R S.7,6607 - AND 3)ELECTRICITY EXPENSES PAYABLE 232 FOR RS.31,307/ - . THE AO HAS REPORTED THAT ELECTRICITY BILLS OF RS.2,03,278/ - ARE ONLY PROVIDED. SINCE PROOF FOR RS.2,U3,2787 - IS MADE AVAILABLE FOR VERIFICATION DURING REMAND PROCEEDINGS, TH E DISALLOWANCE OF THE BALANCE A MOUNT OF RS. 76,8507 - IS CONFIRMED. 29 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD 10. DISALLOWANCE OF DEDUCTION U/S.80G FOR DONATION RS.34,000/ - : DURING THE REMAND PROCEEDINGS, THE APPELLANT HAS SUBMITTED PROOF OF PAYMENTS OF DONATION DURING THE YEAR. NO DEFECT HAS BEEN FOUND BY THE AO. HENCE, DISALLOWANCE OF RS. 34,0007 - IS DELETED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS ORDERS PASSED BY REVENUE AUTHORITIES, WE FIND THAT LD. CIT(A) AFTER APPRECIATING THE FACTS OF THE PRESENT CASE AS WELL AS REMAND REPORT HAD RIGHTLY CONCLUDED THAT BECAUSE OF LACK OF COMPLETE DETAILS, THE AO HAD MADE DISALLOWANCES. EVEN DURING THE PROCEEDINGS BEFORE LD. CIT(A), THE ASSESSEE COULD NOT PRODUCE THE COMPLETE RECORDS AND WHATEVER RECORDS WERE PRODUCED, THE SAME WERE VERIFIED BY THE AO AND IN THE REMAND REPORT, THE AO HAS POINTED OUT THE DISCREPANCIES. THE DETAILS OF REMAND REPORT ARE CONTAINED IN 45 OF THE ORDER OF LD. CIT(A). WE HAVE CONSIDERED THE REMAND REPORT IN DETAIL AND FOUND THAT LD. CIT(A) AFTER APPRECIATING THE REMAND REPORT HAD RIGHTLY CONCLUDED THAT THE PART OF THE CLAIM RAISED BY THE ASSESSEE REMAIN 30 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD UNVERIFIED AND THOSE HAVE ACCORDINGLY BEEN MENTIONED IN PARA NO. 45 (SUB PARA 1 TO 10) OF THE ORDER OF LD. CIT(A). WE HAVE ALSO CONSIDERED THE JUDGMENTS RELIED UPON BY LD . AR BUT THE PARAMATERIA CONTAINED IN THOSE JUDGMENTS ARE DIFFERENT FROM THE FACTS OF THE PRESENT CASE AND THUS ARE NOT APPLICABLE. MOREOVER, N O NEW FACTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND AR E WE LL REASONED. RESULTANTLY, THESE GROUND S RAISED BY THE ASSESSEE STANDS DISMISSED . 11 . IN THE NET RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED WITH NO ORDER AS TO COST . ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND NOV , 2018 SD/ - SD/ - ( R. C. SHARMA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 22 . 11 .201 8 SR.PS . DHANANJAY 31 I.T.A. NO. 2594 /MUM/201 7 M/S S. R. FASHION WORLD / COPY OF THE ORDER FORWARDED TO : 1. / THE ASSESSEE 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI