IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.3437/AHD/2008 ASSESSMENT YEAR:2005-06 DATE OF HEARING:28.10.10 DRAFTED:29.10.10 SURESHKUMAR K DHOKA (HUF), PROP: WELLCOME GIFT CENTRE, PLOTNO.C-2/8 1 ST PHASE, GIDC, VAPI (GUJARAT) PIN 396191 PAN NO.AAENS2524K V/S . INCOME TAX OFFICER, WARD-3 VAPI, VAPI (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI P.F. JAIN, AR RESPONDENT BY:- SHRI K. MADHUSUDAN, SR-DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-VALSAD IN APPEAL NO. CIT(A)/VL S/165/07-08 DATED 26-06- 2008. THE ASSESSMENT WAS FRAMED BY ITO, WARD-3 VAPI U/S143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED NIL FOR ASSESSMENT YEAR 2005-06. 2. THE INTER-CONNECTED ISSUES IN THIS APPEAL OF ASS ESSEE IS AGAINST THE ORDER OF CIT(A) IN UPHOLDING THE ADDITION OF RS.6,44,212/- F OR WANT OF CONFIRMATION FROM THE PARTIES ON SALE PROMOTION EXPENSES AND ALSO ADDITIO N OF RS.1,65,117/- CONFIRMED ON THE BASIS OF ESTIMATE IN THE ABSENCE OF RECONCILIAT ION STATEMENT. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.1-2 :- 1 THE LD. CIT(APPEAL) HAS ERRED IN LAW AND THE FAC TS IN UPHOLDING THE ADDITION OF RS.6,44,212/- FOR WANT OF CONFIRMATION FROM THE PARTIES & RS.165117/- ON ESTIMATED BASIS. IN THE ABSENCE OF R ECONCILIATION STATEMENT REGARDING VALUE. THE LD CIT(APPEAL) HAD NOT APPRECI ATED THE FACTS THAT THE ASSESSEE CHARTERED ACCOUNTANT WAS ILL FOR THE LONG TIME & THE ASSESSEE COULD NOT ABLE TO EXPLAIN THE REQUIRED DETAILS TO LD ITO ITA NO.3437/AHD/2008 A. Y. 2005-06 SURESHKUMAR K DHOKA HUF V.ITO WD-3 VLS PAGE 2 2 THE LD CIT(APPEAL) HAS NOT CONSIDER THE FACTS THA T THE AO HAS NOT GIVEN THE SUFFICIENT TIME TO PRODUCE ALL EVIDENCE REGARDING S ALES PROMOTION EXPENSES FROM THE PARTIES WHOM CONFIRMATION TO BE OBTAINED W AS OUTSIDER & DELAY TO GIVE THE CONFIRMATION WE HAVE TO SUFFER. DUE TO ILL NESS OF OUR CA SHRI H.P SHAH WE HAD NOT RECEIVED THE TIMELY GUIDANCE TO ATT END OUR CASE. THE LETTER OF ADJOURNMENT IN THIS REGARD HAS BEEN GIVEN BY THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDING. THE ORDER HAS BEEN PASSED WI THOUT CONSIDERING OUR GENUINE PROBLEMS & NOT GIVEN THE REASONABLE OPPORTU NITY TO SUBMIT ALL REQUIRED CONFIRMATION, OUR CASE IS TIME BARRED IN D ECEMBER 31 ST & THERE WAS SUFFICIENT TIME FOR PASSING THE ORDER. THE LD CIT(A PPEAL) HAS NOT CONSIDER THE ABOVE FACTS & PASS THE ORDER & REJECTED THE APPEAL. 3. THE BRIEF FACTS LEADING TO THE ABOVE INTER-CONNE CTED ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER DISALLOWED THE SALE PROMOTION EXPENSES OF RS.6,44,212/- FOR WANT OF CONFIRMATION OF THE PARTIES AND ALSO MADE ADDITION OF RS.1,65,117/- ON ESTIMATE BASIS IN THE ABSENCE OF RECONCILIATION STATEMENT OUT OF THE BALANCE CONFIRMATION RECEIVED AT RS. 8,25,585/- @ 20%. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE ADDITIONS ON BOTH ISSUES VIDE PARAS 6.4 AND7.1 OF HIS APPELLATE ORDER AS UNDER:- 6.4 I HAVE CONSIDERED THE RIVAL CONTENTIONS AND TH E ADDITIONAL EVIDENCES BY THE AR OF THE APPELLANT. THE PLEA TAKEN BY HE AR OF THE APPELLANT IS NOT GENUINE ONE WITH REGARD TO THE REASONABLE OPPORTUNI TY, AS THE AO HAD ISSUED SUMMONS TO THE APPELLANT FOR THE REQUIRED DETAILS A ND HAD GIVEN HIM ENOUGH OPPORTUNITIES OVER A PERIOD OF THREE MONTHS TO PROD UCE THE DETAILS OF PAYMENT SPENT ON THESE GIFTS. FURTHER, FROM THE DETAILS OF ADDITIONAL EVIDENCES SUBMITTED, IT IS SEEN THAT THE SO-CALLED LETTERS TO THE DEALERS IS DATED 01.04.2004, THEN WHY THEY WERE NOT SUBMITTED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. FURTHER, IT IS SEEN THAT CO NFIRMATION LETTER FROM THE DEALERS IS ALSO UNDATED, WHICH MAKES IT A SUSPECTED EVIDENCE. HENCE, THE ADDITIONAL EVIDENCES FIELD BY THE AR IS NOT ACCEPTE D UNDER RULE-46A AND HENCE, REJECTED. THE AO IS, THUS, JUSTIFIED IN MAKING THE ADDITION O F RS.6,44,212/-. THE ASSESSEES GROUND OF APPEAL NO.1 IS DISMISSED. 7.1 THE AO CONTENDED THAT THOUGH THE APPELLANT FILE D THE CONFIRMATION LETTERS, THE AMOUNT INVOLVED AGAINST THE GIFT ARTICLES ARE M ISSING. THE APPELLANT FAILED RE-CONCILE THE AMOUNT INVOLVED EVEN IN RESPECT OF T HE CONFIRMATION FURNISHED BY HIM. IN ABSENCE OF RECONCILIATION OF AMOUNT THE AO MADE AN ADDITION @ 20%, AMOUNTING TO RS.1,65,117/-. IN ABSENCE OF ANY SUBMISSION FROM THE AR OF THE APPELLANT IN THIS REGARD, I FOUND AO TO BE J USTIFIED IN MAKING THE ADDITION. THE ADDITION IS, THEREFORE, UPHELD AGGRIEVED, AGAINST THE ORDER OF CIT(A) ASSESSEE CAM E IN SECOND APPEAL BEFORE US. ITA NO.3437/AHD/2008 A. Y. 2005-06 SURESHKUMAR K DHOKA HUF V.ITO WD-3 VLS PAGE 3 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSE E HAS CLAIMED EXPENDITURE OF GIFT ARTICLES ON ACCOUNT OF SALES PROMOTION EXPENSES AT RS.14,69,795/- AND THE ASSESSING OFFICER HAS ACCEPTED THE EXPENSES AT RS.8 ,25,585/- ON ACCOUNT OF CONFIRMATION RECEIVED FROM THE VARIOUS PARTIES BUT OUT OF THIS ALSO, AD HOC DISALLOWANCE AT 20% WAS MADE IN THE ABSENCE OF RECO NCILIATION. FOR THE BALANCE RS.6,44,212/- THE AO DISALLOWED IN THE ABSENCE OF A NY PROOF. BEFORE CIT(A) THE ASSESSEE FILED COMPLETE DETAILS IN REGARD TO GIFT A RTICLES AND THE AO REFERRED THE MATTER FOR OBTAINING REMAND REPORT, WHO VIDE DATED 09-04-2008 ONLY CONTENDED THAT THE ASSESSEE WAS PROVIDED OPPORTUNITY FOR EXPLAININ G THE SALES PROMOTION EXPENSES DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HENCE HE REFUSED TO ADMIT ADDITIONAL EVIDENCES UNDER RULE 46A IT RULES, 1962. WE FIND FR OM THE DETAILS FIELD BEFORE US IN THE ASSESSEES PAPER BOOK CONTAINING PAGES NO.1 TO 103, WHEREIN THE PARTY-WISE OF DETAILS OF SCHEME OF GIFTS GIVEN TO CUSTOMERS ALONG WITH CONFIRMATION AND BILLS OF THE DISTRIBUTOR CELLO WORLD FOR PURCHASE SCHEME. WE F IND FROM THE DETAILS SUBMITTED BEFORE US THAT THE ASSESSEE IS ABLE TO DEMONSTRATE BEFORE US THAT THE GIFTS WERE GIVEN IN LIEU OF SALES PROMOTION SCHEME. WE ARE OF THE VIEW THAT THESE ARE GENUINE EVIDENCES AND CIT(A) SHOULD HAVE ADMITTED DESPITE P ROTEST FROM THE ASSESSING OFFICER. WE ARE OF THE VIEW THAT THE SALES PROMOTIO N EXPENSES INCURRED BY ASSESSEE ARE GENUINE AND ACCORDINGLY WE ALLOW THE SAME. THIS INTER-CONNECTED ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 19/11/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 19/11/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 4. THE CIT CONCERNS. 2. THE REVENUE. 5. THE DR, ITAT, AHMEDA BAD 3. THE CIT(APPEALS)-VLS 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD