Uma Bansal, New Delhi V. ACIT, New Delhi

ITA 3193/DEL/2017

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 2166 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 19-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Business expenditure; Bonafide belief
• Section: 43(5)

Judgement Text

UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 1 OF 15 , , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES G, NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . .. . . .. . ./ ././ ./ I.T.A NO.3193/DEL/2017 / ASSESSMENT YEAR: 2011-12 UMA BANSAL, UNIT NO.205, APRA NORTH-EX PLAZA, PITAMPURA, DELHI 110034. [PAN: AARPB 3141 Q] VS . ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-47(1), NEW DELHI. / APPELLANT !' /RESPONDENT /ASSESSEE BY MS.RANO JAIN, ADVOCATE, MS.MANSI JAIN CA AND PRANSHU SINGHAL CA /REVENUE BY SHRI S.S.RANA CIT-DR / DATE OF HEARING: 05.11.2019 $' /PRONOUNCEMENT ON: 08.11.2019 /O R D E R PER O.P.MEENA, AM: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER OF LD.COMMISSIONER OF INCOME TAX(APPEALS)-16, NEW DELH I DATED 01.03.2017 FOR THE ASSESSMENT YEAR 2011-12. 2. GROUND NO.1 AND 2 ARE GENERAL IN NATURE AND DOES NOT REQUIRE SPECIFIC ADJUDICATION, HENCE TREATED AS DISMISSED A S NOT PRESSED. UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 2 OF 15 3. GROUND NO.3 RELATES TO CONFIRMING OF DISALLOWANCE OF RS.15,92,993/- IN RESPECT OF BUSINESS PROMOTION EXPE NSES DEBITED TO PROFIT AND LOSS ACCOUNT. 4. FACTS APROPOS OF THIS GROUND ARE THAT THE ASSESSEE HAS DEBITED A SUM OF RS.23,64,969/- UNDER THE HEAD BUSINESS PROMOTI ON EXPENSES. ON SCRUTINY, IT WAS FOUND THAT EXPENSES AMOUNTING TO R S.13,35,653/- ARE INCURRED BY THE ASSESSEE CONCERN FOR ARRANGING B USINESS CONFERENCE AT TAJ PALACE HOTEL, NEW DELHI. THE ASSES SING OFFICER(AO) OBTAINED INFORMATION U/S.133(6) FROM THE TAJ PALACE HO TEL, WHO REPLIED VIDE LETTER DATED 14.02.2014 THAT PAYMENT OF RS.13,50,0 00/- HAS BEEN MADE BY THE ASSESSEE IN CONNECTION WITH PRE-WEDDING F UNCTION LUNCH ON 23.01.2011 FOR 500 GUESTS. THEREFORE, THE AO HELD THAT THE CLAIM OF THE ASSESSEE THAT EXPENDITURE WAS FOR BUSINESS CONFEREN CE IS INCORRECT AND THE EXPENSES ARE OF A PERSONAL NATURE, HENCE, THE AMOUNT OF RS.13,50,000/- WAS DISALLOWED. WITH REGARD TO BALANC E EXPENDITURE OF RS.10,14,969/- DEBITED UNDER THE HEAD BUSINESS PROMOTI ON EXPENSES, THE AO NOTED THAT THESE INCLUDES PERSONAL ELEMENT AND SEV ERAL PAYMENTS HAVE BEEN MADE THROUGH THE CREDIT CARDS AND NA RRATION IN 1THIS REGARD CLEARLY SHOWS THAT THE PAYMENTS HAVE BEEN M ADE FOR THE PERSONAL USAGE. HENCE, THE AO DISALLOWED 1/5 TH OUT OF THESE EXPENSES WHICH WORKED OUT TO RS.2,02,993/-. IN VIEW OF THIS, TOTAL DISALLOWANCES OUT OF BUSINESS PROMOTION EXPENSES WERE MADE AT RS.15 ,52,993/-. UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 3 OF 15 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFOR E THE LD.CIT(A) WHO UPHOLD THE ADDITION MADE BY THE AO BY OBSERVING THAT THE AO HAS INVESTIGATED THE CASE PROPERLY AND COLLECTED THE EVIDENCE TO CONFRONT THE APPELLANT. THE LD.CIT(A), FURTHER OBSERV ED THAT THERE WERE 500 DELEGATES IS ITSELF IS UNBELIEVABLE AS THE ASSES SEE HAVE NO SUCH HUGE MAGNITUDE OF THE BUSINESS SO AS TO HAVE 500 BUSIN ESS PARTNERS, THEREFORE THE FUNCTION HAVING 500 IS RELATED TO A PRE-W EDDING FUNCTION IS MORE LOGICAL AND BELIEVABLE. THE ARGUMENT OF THE APPELLANT THAT THERE HAS BEEN NO WEDDING IN THE FAMILY OF THE ASSESS EE IS OF NO CONSEQUENCE AS THE FUNCTION ORGANIZES IN THE TAJ PALAC E HOTEL WAS A PRIVATE FUNCTION, WHETHER IT IS PRE-WEDDING OR SOME OTHE R FUNCTION IS IMMATERIAL. WHAT IS MATERIAL IS THAT IT WAS NOT A BUSINE SS EVENT. FURTHER, THE ARGUMENT OF THE APPELLANT THAT IN CASE OF PRE -WEDDING BILLS SHOULD HAVE BEEN IN THE NAME OF BRIDE OR GROOM FAMIL Y WAS ALSO REJECTED AS THE HOTEL MANAGEMENT WILL ISSUE THE BILL I N THE NAME AS DESIRED BY THE HOST. 6. BEING AGGRIEVED, THE ASSESSEE FILED THIS APPEAL BEFOR E THIS TRIBUNAL. THE LD.COUNSEL SUBMITTED THAT THE ASSESSEE IS RUNNING A PROPRIETORSHIP FIRM, WHO ORGANIZES A BUSINESS CONFER ENCE EVERY YEAR AND SUCH EXPENDITURE HAVE BEEN ALLOWED TO THE ASSESSEE IN ASSESSMENT MADE U/S.143(3) IN EARLIER YEARS FOR A.Y. 2008-09[P B-106-109] AND UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 4 OF 15 A.Y. 2009-10 [PB-110 TO 112]. THESE EXPENDITURES FOR A.Y. 2007-08 ARE REFLECTED AT SALES PROMOTION LEDGER ACCOUNT PB-PAG E 97 AT RS.3,50,000/- AND FOR A.Y. 2008-09 AT RS.3,71,528/- [PB-104]. THE REPLY GIVEN BY THE TAJ PALACE HOTEL IN PURSUANCE TO NO TICE U/S.133(6) [PB-73, 75] CONFIRMS THE FACT THAT THE LUNCH WAS HOSTE D. HOWEVER, IN THE REPLY, IT HAS BEEN STATED TO BE A PRE-WEDDING FUNCTI ON, BUT THERE WAS NO WEDDING SOLEMNIZED IN THE FAMILY OF THE ASSESS EE DURING THE YEAR OR AT ANY NEARBY DATE. IN SUPPORT OF THIS, A FAMI LY TREE OF THE ASSESSEE IS PLACED AT [PB-90] WHICH SHOWS THAT THE WED DING FUNCTION IN THE FAMILY HAPPENED ONLY IN THE YEARS 2004 AND 2014. FURTHER, IN THE REPLY, ONLY CHARGES OF THE LUNCH ARE MENTIONED AND THE RE IS NO CHARGE OF ANY OTHER AMENITIES SUCH AS DJ, FLOWER ARRANGEMEN T, OTHER DECORATIONS AND STAGE ETC., WHICH IS VERY COMMON IN W EDDING FUNCTIONS OF THE COMMUNITY TO WHICH THE ASSESSEE BELONGS, ALSO MOST OF THESE FUNCTIONS HAPPENS IN THE NIGHTS, WHILE IT IS CONFIRM ED THAT IT IS A LUNCH HOSTED. THE FACT REMAIN THAT A STAFF OF THE ASSESSEE WEN T FOR THE BOOKING AND MAY BE COULD NOT EXPLAIN THE PURPOSE PROP ERLY AND THE HOTEL STAFF ARBITRARY RECORDED TO BE A PRE-WEDDING FUN CTION. THE AO HAS MADE DISALLOWANCE OF 1/5 TH OF THE REMAINING EXPENSES, HE HAS ONLY POINTED OUT THE EXPENDITURE OF RS.15,584/-, WHICH IS I N THE NATURE OF PERSONAL EXPENDITURE. THEREFORE, WITHOUT POINTING OU T ANY SPECIFIC INSTANCES OF SUCH PERSONAL EXPENDITURE NO FURTHER DISA LLOWANCE IS UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 5 OF 15 CALLED-FOR. FURTHER, LD.CIT(A) HAS NOT GIVEN ANY FIN DING ON THIS ACCOUNT. 7. THE LD.CIT-(DR) SUBMITTED THAT THE ASSESSEE IS HAVING IN COME OF RS.38 LAKHS ONLY WHEREAS IT IS UNLIKELY THAT THE ASSESS EE WOULD INCUR EXPENDITURE OF RS.23 LAKHS ON BUSINESS PROMOTION. FU RTHER, THE REPLY SUBMITTED BY THE TAJ PALACE HOTEL IS SELF-EXPLANATORY W HICH SPECIFY PRE- WEDDING FUNCTION, THE SAME IS BEING THIRD PARTY, WHY THEY WILL GIVE WRONG INFORMATION!, HENCE THE AO AND LD.CIT(A) HAS RI GHTLY DISALLOWED THE SAME. WITH REGARD TO 1/5 TH DISALLOWANCE OF REMAINING EXPENSES, THE LD.DR RELIED ON THE AO, AS THE LD.CIT(A) HAS NOT GI VEN SPECIFIED FINDING IN THIS REGARD. 8. IN REJOINDER TO THE ABOVE, THE LD.COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ASSESSEE IS CARRYING PROPRIETORSHIP BU SINESS IN THE NAME OF RAM KISHORE CHEMICALS AND THE NET TAXABLE INC OME OF RS.38.15 LAKHS IS SHOWN AS PER RETURN OF INCOME WHER EAS, THE TURNOVER OF ASSESSEE IS AROUND 25 CRORES, HENCE, EXP ENDITURE ON SALES PROMOTION IS REASONABLE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS RUN NING A PROPRIETORSHIP CONCERN AND INCURRING EXPENSES ON BUS INESS PROMOTION EVERY YEAR WHICH IS EVIDENT FROM THE DETAILS FILED FOR A.Y. 2008-09 UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 6 OF 15 PLACED AT PB, PAGE 97 TO 104 AND IT IS NOTICED FROM SU CH DETAILS THAT THE ASSESSEE HAS INCURRED EXPENSES FOR PAYMENT OF CON FERENCE DATED 20.01.2007 AT RS.3,50,000/- [PB-97] FOR THE CONFERENC E ORGANIZED AT THE ASHOK HOTEL AND RS.2,12,376/- FOR THE CONFERENCE O RGANIZED ON 14.03.2008 AT THE IMPERIAL HOTEL, AND EXPENDITURE OF R S.3,71,578/- INCURRED ON 26.02.2009 FOR CONFERENCE AT THE MORYA, N EW DELHI. THESE EXPENSES HAVE BEEN DULY EXAMINED IN THE SCRUTINY ASSE SSMENT BY THE AO IN THE RELEVANT ASSESSMENT YEARS, AND NO DISALLOWAN CE WAS MADE. THIS GOES TO SUGGEST THAT THE ASSESSEE IS ORGANIZING RE GULAR CONFERENCES IN THE MONTH OF JANUARY OR MARCH TO PRO MOTE ITS BUSINESS FOR WHICH EXPENSES ARE BEING INCURRED. HOWEVER, TH E AO HAS DISALLOWED THE SAID EXPENDITURE DURING YEAR SOLELY BA SED ON A LETTER FROM TAJ PALACE HOTEL IN WHICH PRE-WEDDING FUNCTION IS NOTED, WHEREAS THE FACT ON RECORD SUGGEST THAT THERE WAS NO WEDDING CER EMONY TOOK PLACE IN THE FAMILY OF THE ASSESSEE DURING THE YEAR AN D IT WAS HAPPENED ONLY IN THE YEARS 2004 AND 2014. FURTHER, THE FUNCTION WAS ORGANIZED FOR LUNCH ONLY AND THE EXPENDITURE INCURRED DOES NOT S UGGEST ANY EXPENDITURE ON ACCOUNT OF DJ, FLOWER DECORATION, STAGE ETC., SUGGESTING THAT THERE WAS ANY MARRIAGE FUNCTION ORGANIZED IN THE F AMILY. FURTHER, THE INVOICE OF TAJ PALACE HOTEL ISSUED AND BANQUETTE C HALLANS DOES NOT MENTION ANY PRE-WEDDING FUNCTIONS. FURTHER, IF THERE HAD BEEN WEDDING IN FAMILY, THE OTHER EXPENSES ON VARIOUS TRANS ACTIONS COULD UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 7 OF 15 HAVE REFLECTED IN CAPITAL ACCOUNT OF THE ASSESSEE. TH EREFORE, THESE CIRCUMSTANTIAL EVIDENCES LEAD TO INFER THAT THE EXPENDI TURE WAS IN THE NATURE OF BUSINESS PROMOTION ONLY, HENCE, SUCH DISALL OWANCE MADE BY THE AO IS WITHOUT CORROBORATING EVIDENCES AND WITHOUT CROSS EXAMINING THE PARTIES, HENCE SAME ARE DELETED. WITH REGARDS TO 1/5 TH OF THE DISALLOWANCE OF REMAINING EXPENSES, WE FIND TH AT THE AO HAS POINTED OUT THAT SOME OF THE EXPENDITURE WERE INCURRED FOR PERSONAL TRAVELLING AND ARE IN THE NATURE OF PERSONAL, THEREFORE , THE NATURE OF EXPENDITURE IS SUCH IN WHICH PERSONAL ELEMENT CANNOT BE RULED OUT. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT AO WA S JUSTIFIED IN MAKING DISALLOWANCE OF THE REMAINING EXPENSES @1/5 TH , ACCORDINGLY THE DISALLOWANCE OF RS.2,02,993/- CONFIRMED. THIS G ROUND OF APPEAL IS PARTLY ALLOWED. 10. GROUND NO.3 RELATES DISALLOWANCE OF TRAVELLING EXPEN SES BEING 1/4 TH OF THE TOTAL TRAVELLING EXPENSES ON ACCOUNT OF PERSONAL ELEMENT. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS D EBITED A SUM OF RS.12,48,556/- UNDER THE HEAD TRAVELLING EXPENSES AN D CONSIDERING THE SAME OF PERSONAL IN NATURE AND GAVE EXAMPLES OF THE JOURNEY UNDERTAKEN BY THE SOME OF THE FAMILY MEMBERS WHICH WOR KED OUT TO RS.38,379/-. THE AO DISALLOWED @1/4 TH TRAVELLING EXPENSES DEBITED TO UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 8 OF 15 THE PROFIT AND LOSS ACCOUNT. THE LD.COUNSEL CONTENDED THAT THE AO HAS ONLY POINTED OUT SPECIFIC EXPENSES AT RS.38,379/-, THER EFORE, WHOSE DISALLOWANCE AT RS.3,12,139/- BEING 1/4 TH OF THE TOTAL TRAVELLING EXPENSES IS ARBITRARY WITHOUT GIVING ANY REASONING, W HEREAS THE LD.DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 12. AFTER CAREFUL CONSIDERATION OF THE FACTS, WE ARE OF THE VIEW THAT THE AO HAS CITED SOME INSTANCES OF AIR TICKETS WHICH AR E DEFINITELY PERSONAL IN NATURE. IT IS, FURTHER SEEN THAT THE VARIOU S FAMILY MEMBERS HAVE TRAVELLED IN INDIA WHICH ARE NOT FOR THE PURPOSE OF BUSINESS, THEREFORE CONSIDERING THE TOTALITY OF THE FACTS, WE ARE O F THE CONSIDERED OPINION THAT DISALLOWANCES RESTRICTED TO 1/5 TH OF THE TOTAL EXPENSES BY THE LD.CIT(A) ARE APPEARS TO BE REASONABLE, HENCE THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 13. GROUND NO.5 RELATES TO DISALLOWANCE OF VEHICLE EXPEN SES OF RS.2,41,061/-. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS INCURRED TOTAL CAR EXPENSES OF RS.12,05,304/- WHICH INTER-ALIA INCLUDE CAR DEPRECIATION OF RS.8,33,187/-. FURTHER, THE AO DISALLOWED 1/5 TH OF THE SAID AMOUNT AND WORKED OUT THE DISALLOWANCE OF RS.2,41,061/-. TH E LD.CIT(A) HAS ALSO RESTRICTED THE DISALLOWANCES TO 1/5 TH OF THE VEHICLE EXPENSES. UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 9 OF 15 HOWEVER, BEFORE US, THAT THE LD.COUNSEL HAS ARGUED THA T THE DISALLOWANCE ON ACCOUNT OF PERSONAL ELEMENT IN RESPEC T OF CAR DEPRECIATION IS NOT JUSTIFIED AND AGAINST THE LAW. WE FIND THIS ARGUMENT OF THE LD.COUNSEL IS VALID, THEREFORE 1/5THE OF THE DISALLOWANCES ATTRIBUTABLE TO CAR DEPRECIATION OF RS.8,3 3,187/- ARE DELETED. THE AO IS DIRECTED TO RECALCULATE THE DISALL OWANCE, ACCORDINGLY, OUT OF VEHICLE EXPENSE. REMAINING DISA LLOWANCES @1/5 TH RESTRICTED BY LD.CIT(A) ARE UPHELD, ACCORDINGLY, THIS GROUND OF APPEAL IS THEREFORE PARTLY ALLOWED. 15. GROUND NO.6 RELATES TO CONFIRMING ADDITION OF RS.19,9 2,557/- IN RESPECT OF RATE DIFFERENCE ON CANCELLATION OF CONTRACT O F PURCHASE OF GOODS IN SPITE OF VARIOUS DETAILS AND DOCUMENTS FURNIS HED BY THE ASSESSEE. 16. BRIEFLY STATED FACTS OF THIS GROUND ARE THAT THE ASSESSEE HAS DEBITED A SUM OF RS.19,92,557/- UNDER HEAD DISCOUNT /RATE DIFFERENCE. IT WAS EXPLAINED THAT THE ASSESSEE HAS OPERATED ITS BUS INESS ACTIVITIES IN THE NAME OF OM EXIM AND BOOKED THE PURCHASES OF S ODIUM NITRATE. HOWEVER, DUE TO SOME BUSINESS REASONS, THE ASSESSEE C OULD NOT TAKE THE DELIVERY OF THE GOODS BOOKED. IN REPERCUSSION OF THE SAME, AND AS PER THE AGREEMENT WITH THE SELLING PARTY, THE ASSESSE E HAS TO PAY THE DIFFERENCE OF THE RATE OF PRODUCT. IN SUPPORT OF THIS, COPY OF BANK UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 10 OF 15 STATEMENT OF OM EXIM ALONG WITH DEBIT NOTE WAS FILED IN RESPECT OF USHA CHEM, SANDEEP ORGANICS PVT. LTD., AND SANJAY CHE MICALS. THE AO OBSERVED THAT THESE EXPENSES ARE IN THE NATURE OF SPE CULATIVE TRANSACTIONS AND THE NAME OF THE OM EXIM WAS NOT MENTION ED IN THE AUDIT REPORT. THEREFORE, THE ASSESSEE WAS ASKED TO SH OW CAUSE AS TO WHY THESE EXPENSES SHOULD NOT BE TREATED AS SPECULATIVE AS PER SECTION 43(5) OF THE ACT. IT WAS SUBMITTED THAT THE ASSESSEE IN O RDER TO GUARD AGAINST LOSS THROUGH FUTURE PRICES FLUCTUATION OF SUCH CHEMICALS ENTERED INTO THE CONTRACT WITH THE RELEVANT DEALER. SINC E, AT THE TIME OF ACTUAL DELIVERY OF CHEMICALS, THE ASSESSEE NOTICED THAT THE PRICES OF THE CHEMICALS HAS FALLEN SHARPLY THAN THE BOOKED AMOUNT AN D SHE WAS OF BONAFIDE BELIEF THAT IF THE ACTUAL DELIVERY OF THE SAI D COMMODITY WAS TAKEN TO MAKE THE ASSESSEE SUFFER ENORMOUS LOSS. THE ASSESSEE PAID THE DIFFERENCE AMOUNT OF ACTUAL DAY OF DELIVERY TO SAFE GUARD THE FUTURE LOSS OF THE SAID COMMODITY. HOWEVER, THE AO OBSERVE D THAT THIS ARGUMENT OF THE ASSESSEE HAS NO FORCE AS IN HER SUBMI SSIONS, THE ASSESSEE HAS NOT FURNISHED ANY CORRESPONDING DOCUMEN TARY EVIDENCE IN SUPPORTING OF HIS CLAIM NOR THE COPIES OF THE AGREE MENT HAVE BEEN FURNISHED NOR DETAILS OF BUSINESS ACTIVITY OF OM EXI M WERE FURNISHED. THERE IS NO REFERENCE OF OM EXIM IN THE AUDIT REPORT. THEREFORE, MERE FURNISHING OF THE DEBIT NOTES AND WRITTEN SUBMISSIONS DOES NOT SUPPORT THE CLAIM OF THE ASSESSEE, BEING A BUSINESS BOSS IN THE NAME OF RAM UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 11 OF 15 KISHORE CHEMICALS COMPANY, THEREFORE LOSS OF OM EXIM CANNOT BE MERGED WITH RAM KISHORE CHEMICALS COMPANY. THUS, THE ASSESSEE HAS FAILED TO DISCHARGE HER PRIMARY ONUS BY PROVIDIN G NECESSARY DETAILS, HENCE THE LOSS/DISCOUNT CLAIM OF RS.19,92,5 57/- WAS DISALLOWED. 17. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFOR E THE LD.CIT(A). THE LD.CIT(A) OBSERVED THAT THE PRIMARY E VIDENCE WITH RESPECT TO ANY TRANSACTION IS ORDER OR CONTRACT, THEREFORE CASE LAW RELIED UPON BY THE ASSESSEE CLEARLY MENTIONING PURCHASE CONTR ACT ARE NOT APPLICABLE. HOWEVER, IN APPELLANTS CASE, THE PURCHAS E CONTRACT IS IN THIN AIR, APART FROM THE ISSUING DEBIT NOTES BY THE SO-CA LLED SUPPLIER. THERE IS NO DETAILS REGARDING WHEN THE ORDER OF SUPPL IED PLACED AND WHEN WAS DECISION TO PAY THE RATE DIFFERENCE WAS TAKEN . EVERYTHING IS IN THE REALM OF SPECULATIONS. THE STORY OF THE APPELL ANT IS FANTASTIC BUT IS NOT SUPPORTED BY THE EVIDENCES. WHAT AND WHY HAPPEN ED ARE THE QUESTIONS FOR WHICH THERE ARE NO ANSWERS. WHEN THE AP PELLANT WAS CONDUCTING BUSINESS AS PROPRIETORSHIP UNDER THE NAME A ND STILE M/S.RAM KISHORE CHEMICAL COMPANY, WHERE WAS THE NEED FOR HAVING ANOTHER PROPRIETORSHIP FOR THE SAME BUSINESS IN THE N AME OF OM EXIM. THIS ARGUMENT OF APPELLANT IS DEVOID OF ANY LOGIC AND EVIDENCE, THEREFORE THE CLAIM OF THE ASSESSEE WAS REJECTED AND THE FINDINGS OF THE AO WERE CONFIRMED. UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 12 OF 15 18. BEING AGGRIEVED, THE ASSESSEE FILED THIS APPEAL BEFOR E THIS TRIBUNAL. THE LD.COUNSEL SUBMITTED THAT THE ASSESSEE IS AN INDIVIDUAL RUNNING PROPRIETORY CONCERNS IN THE NAME OF RAM KISHO RE CHEMICAL COMPANY DURING THE YEAR UNDER CONSIDERATION BUT A UN IT OF RAM KISHORE CHEMICAL COMPANY WAS OPENED IN MUMBAI BY THE NAME OF OM EXIM. IN ORDER TO DO BUSINESS SALE/PURCHASE OF SODIU M NITRATE FOR WHICH THE ASSESSEE HAD EARLIER EXPERIENCE. THE ASSE SSEE HAS ENTERED INTO THE ORAL AGREEMENT WITH THE THREE CONCERNS DURING TH E YEAR UNDER CONSIDERATION FOR PURCHASE OF SODIUM NITRATE. HOWEVE R, AS A PRUDENT BUSINESS DECISION, IT WAS DECIDED NOT TO TAKE THE DELIVE R OF THESE ITEMS. THE PRICES OF THESE ITEMS ARE FALLING DRASTICALLY AND TAKING DELIVERY WOULD HAVE ENTAIL MUCH LOSSES. THEREFORE, FOR BREAC H OF CONTRACT, THE ASSESSEE HAD TO PAY THE DIFFERENCE IN THE RATES. THUS , THE ASSESSEE HAS INCURRED BUSINESS LOSS WHICH IS SUPPORTED BY COPIES OF DEBIT NOTES FILED WHICH ARE APPEARING AT PAGE 55 TO 57. THE LEARNED, C OUNSEL FURTHER REFERRED THE CONFIRMATION LETTER FROM THE PARTIES WHICH ARE APPEARING AT PAGE 120 TO 122. THE LD.COUNSEL HAS ALSO FILED AN A FFIDAVIT DATED 19.01.2017 OF THE ASSESSEE WHICH IS PLACED AT PAPER B OOK 132-13 WHEREIN SHE HAS DEPOSED THAT DURING THE FINANCIAL YEAR RELEVANT TO A.Y. 2011-12, SHE HAS STARTED A UNIT UNDER THE NAME AND STYL E OF OM EXIM AT BOMBAY, A UNIT OF RAM KISHORE CHEMICAL COMPANY FOR WHICH SEPARATE BANK ACCOUNT NUMBER ENDING WITH 26689 WITH HDFC BANK UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 13 OF 15 WAS OPENED. HOWEVER, THE NECESSARY INFORMATION FOR TH E SAME WAS GIVEN TO SALES TAX DEPARTMENT, MUMBAI AND THE NAME OF OM EXIM WAS ALSO ENTERED IN THE REGISTRATION CERTIFICATE ISSUED BY THE SALES TAX OFFICER [C-110] REGISTRATION BRANCH, MUMBAI. IT WAS F URTHER STATED IN THE AFFIDAVIT THAT AN ORAL AGREEMENT FOR PURCHASE OF VAR IOUS CHEMICALS FROM USHA CHEM, SANDEEP ORGANICS PVT. LTD., AND SANJA Y CHEMICALS, WAS ENTERED INTO, HOWEVER, DUE TO SHARP FALL IN THE PR ICES OF THE PRODUCT TO BE PROCURED BY THE ABOVE SUPPLIERS AND IN ORDER TO AVOID FURTHER LOSS IT WAS DECIDED TO CANCEL THE ORDER AND THE ASSESSEE AGREED TO PAY THE DIFFERENCE AMOUNT PRICES OF RS.19,92,587/- . SINCE, THE AUDIT REPORT IN FORM 3CD AND 3CB WAS TO FURNISH FOR IN DIVIDUAL APPELLANT, THEREFORE THERE WAS NO REQUIREMENT TO MENTION THE NAME OF EACH AND EVERY BUSINESS OF THE APPELLANT. THERE WAS CURRENT ACCOUNT IN THE NAME OF OM EXIM AS A UNIT OF RAM KISHORE CHEM ICAL COMPANY WHOSE PROPRIETOR IS THE ASSESSEE WAS FILED AMENDMENT I N SALES TAX DEPARTMENT FOR ADDITION / ALTERATION OF THE NAME OF THE A PPELLANTS CONCERN WHICH HAS BEEN DULY INCORPORATED, THEREFORE I T IS BEING A BUSINESS LOSS HAS TO BE ALLOWED TO THE ASSESSEE. 19. PER CONTRA, THE LD.DEPARTMENTAL REPRESENTATIVE(DR) SUBMITTED THAT THE ASSESSEE HAD ENTERED INTO AN ORAL AGREEMENT, HO WEVER, NO DETAILS OF ANY WRITTEN AGREEMENT HAS BEEN FILED, WHER EAS THE ASSESSEE COULD HAVE OBTAINED THESE DETAILS FROM THE SISTER CONCER N. THEREFORE, UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 14 OF 15 DEBIT NOTES ISSUED BY THE SUPPLIERS ARE NOT SUFFICIENT F OR ALLOWING THE LOSS. FURTHER, THE NAME OF OM EXIM IS NOT APPEARING I N THE AUDIT REPORT, THEREFORE, THE LD.CIT(A) HAS CORRECTLY UPHELD THE ACTION OF THE AO. 20. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS FURNISHED COPY OF CONFIRMATION ISSUED BY THE THREE SUPPLIERS WHICH ARE A PPEARING AT PB 120-122. IT IS FURTHER NOTICED THAT THE NAME OF OM EXI M HAS BEEN ADDED WITH RAM KISHORE CHEMICAL COMPANY BY THE SALES TAX DEPARTMENT ON 04.03.2011 WHICH IS A EVIDENCING FROM TH E DETAILS FILED AND APPEARING AT PB-118 & 119. WE FURTHER NOTE THAT THE ASSESSEE HAS OPENED A BANK ACCOUNT WITH HDFC BANK IN THE NAME OF M/S.OM EXIM AT BOMBAY, BEING A UNIT OF RAM KISHORE CHEMICAL COMPANY. THUS, THE APPREHENSION OF THE AO THAT THE ASSESSEE HAS N OT DONE ANY BUSINESS WITH THESE PARTIES IS WITHOUT ANY SOUND BASIS . FURTHER, THE DEBIT NOTES ARE APPEARING AT PAGE 55 TO 57 WHICH IS ALS O SUPPORTED BY THE BANK STATEMENT OF HDFC BANK APPEARING AT PAGE 53 & 54. FURTHER, THE TRANSACTION COULD BE EFFECTED BY ORGAL AGR EEMENT, WHICH NOT PROHIBITED BY LAW. SINCE, THE OM EXIM, IS A UNIT O F M/S.RAM KISHORE CHEMICAL CO., THEREFORE, NON-APPEARING THE N AME OF OM EXIM IS OF NO CONSEQUENCE. THE EVIDENCES FILED BY THE AS SESSEE IN THE FORM OF DEBIT NOTES, CONFIRMATION, BANK ACCOUNTS AND PAYMENTS HAS NOT UMA BANSAL VS. ACIT, CIRCLE-47(1), NEW DELHI/ITA NO .3193/DEL/2017 FOR A.Y. 2011-12 PAGE 15 OF 15 BEEN REFUTED BY THE AO. IN VIEW OF THESE FACTS, WE AR E OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS INCURRED A BUSINESS LOS S, HENCE SAME IS ALLOWABLE AS BUSINESS EXPENDITURE, ACCORDINGLY THE D ISALLOWANCE / ADDITIONS MADE BY THE AO ARE THEREFORE DELETED. ACCOR DINGLY, GROUND NO.6 OF APPEAL IS ALLOWED IN FAVOUR OF THE ASSESSEE. 21. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . 22. ORDER PRONOUNCED IN THE OPEN COURT ON 08-11-2019. SD/- SD/- (AMIT SHUKLA) (O.P.MEENA) ( (( ( /JUDICIAL MEMBER) ( /ACCOUNTANT MEMBER) / NEW DELHI , DATED : 8 TH NOVEMBER , 2019/ S.GANGADHARA RAO, SR.PS COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A) / ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, NEW DELHI