DCIT 4(1)(2), MUMBAI V. DINDAYAL JALAN TEXTILE LTD, MUMBAI

ITA 3736/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5407 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 22-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI
• Assessee Lawyers: D C JAIN
• Keywords: Gift; Charitable institution; Corroborative evidences
• Section: 143(3)

Judgement Text

1 ITA 3736/MUM/2017 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO.3736/MUM/2017 (ASSESSMENT YEAR : 2013-14) THE DCIT-4(1)(2), MUMBAI VS M/S DINDAYAL JALAN TEX TILE LTD 3 RD FLOOR, JAI HIND ESTATE NO.1A, DR. A.M. ROAD, BHULESHWAR, MUMBAI 400 002 PAN : AABCD2310E APPELLANT RESPONDEDNT APPELLANT BY SHRI DG PANSARI RESPONDENT BY SHRI D.C. JAIN DATE OF HEARING 02-05-2018 DATE OF PRONOUNCEMENT 15-05-2019 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE CIT(A)-9, MUMBAI DATED 15-02-2017 AND IT PERTAINS TO AY 2013- 14. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT{A) ERRED IN DIRECTING THE ASSESSEEING OFFICER TO RESTR ICT THE DISALLOWANCE OF EXPENSES TO RS. 11,97,281/-AND DELETING THE BALANCE DISALLOW ANCES OF RS. 1,07,75,5317- WITHOUT APPRECIATING THE FACTS THAT THERE IS FALL I N THE GROSS PROFIT OF THE ASSESSEE COMPANY IN SPITE OF INCREASE IN TURNOVER AND ALSO T HE ASSESSEE HAS FAILED TO SUBMIT ANY EVIDENCES OF THESE EXPENSES. 2 ITA 3736/MUM/2017 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF WHOLESALE AND RETAIL TRADING OF ALL SORTS OF CLOTH AND OTHER CONSUMER GOODS, FILED ITS RETURN OF INCOME FOR AY 2 013-14 ON 23-09-2013 DECLARING TOTAL INCOME OF RS.1,62,35,960. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE ACT ON 22- 03-2016 DETERMINING THE TOTAL INCOME AT RS.2,97,93, 880, WHERE THE AO HAS MADE ADDITIONS TOWARDS DISALLOWANCE OF RS.1,19,72,8 12 IN RESPECT OF EXPENDITURE INCURRED UNDER THE HEAD, DEEPAVALI EXP ENSES, DONATION, GENERAL CHARGES, MARKETING MANAGEMENT SPECIALISATION EXPENS ES, TRAVELLING EXPENSES, BUSINESS PROMOTION AND OTHER EXPENSES ON THE GROUND THAT THERE IS SUBSTANTIAL INCREASE IN EXPENDITURE, WHEN COMPARED TO PREVIOUS FINANCIAL YEAR FOR WHICH NO EXPLANATION HAS BEEN OFFERED BY THE ASSESSEE JUS TIFYING THE SUDDEN SURGE IN EXPENSES. THE RELEVANT OBSERVATION OF THE AO ARE A S UNDER:- 3, DISALLOWANCE OF UNREASONABLE INCREASE IN EXPENSES DURING THE ASSESSMENT PROCEEDINGS IT HAS ALSO NOTIC ED THAT THERE WAS SUBSTANTIAL INCREASE IN EXPENSES, DESPITE THE FACT THAT THERE W AS - (1) NOMINAL INCREASE IN THE TURNOVER OF ABOUT 14%. HOWEVER, THE NET PROFIT IS REPORTED AT 0.38% WHICH IN THE PRECEDING YEAR WAS AT 0.42%. IT IS ALSO NOTICED THAT SOME ITEMS OF EXPENSES, HAS SHOWN VERY STEEP I NCREASE , SUCH TYPE OF VERTICAL INCREASE IN THE EXPENSES PRIMA FACIE APPEARED TO BE, UNREASONABLE, AND NOT UNDERSTANDABLE. THEREFORE THE ASSESSEE VIDE NOT ICE/ ORDER SHEET DATED 28/01/2016, WAS SPECIFICALLY ASKED TO EXPLAIN THE NATURE OF THE EXPENSES CLAIMED IN THE P & L A/C, HE WAS ALSO ASKED TO EXPLAIN & JUSTIFY THE UNREASON ABLE INCREASE IN THE EXPENSES, HE WAS REQUIRED TO PRODUCE EVIDENCE TO PROVE HIS CLAIM S & ESTABLISH GENUINENESS OF SUCH EXPENSES: - 3.1 IN REPLY TO THE ABOVE AR VIDE HIS LETTER DATED 28/01/2016 HAS SUBMITTED A VERY SHORT EXPLANATION AND NO SATISFACTORY EXPLANATION AND EVIDENCE TO PROVE HIS CLAIM WAS FILED. ALSO NO EVIDENCE TO PROVE THE GENUINENESS OF SUCH EXPENSES WAS FILED. 3.2 THE REPLY OF THE ASSESSEE HAD BEEN CONSIDERED , HOWEVER THE SAME IS NOT FOUND TO BE SATISFACTORY & THUS CANNOT BE ACCEPTED. 3 ITA 3736/MUM/2017 I IN ITS REPLY THE FOLLOWING EXPENSES THE ASSESSEE HAVE ONLY STATED AS MENTIONED BE LOW:- DEEPAWALI EXPENSES - GIFTS I.E. SWEETS, CLOTH ETC. GIVEN TO EMPLOYEES & OTHER RELATED TO BUSINESS OF THE COMPANY, DONATION - GIVEN TO CHARITABLE INSTITUTIONS, GENERAL CHARGES - MISCELLANEOUS EXPENSES I.E. WASHI NG OF CHANDANI, FLOOR COVER, CLEANING MATERIALS ETC,, MARKET MANAGEMENT SPECIALIZATION EXPENSES - EDUCATI ON FEES, PAID BY THE COMPANY FOR MANAGEMENT COURSE OF EMPLOYEE SO THAT THEIR SKILL C AN BE UTILIZED TO INCREASE THE SALES OF THE COMPANY, TRAVELLING EXPENSES - INCURRED BY THE EMPLOYEES FOR VISITING VARIOUS BRANDIES OF THE COMPANY AND SUPPLIERS PLACES, BUSINESS PROMOTION EXPENSES (GIFT) - SALE S PROMOTION GIFTS GIVEN BY THE F.RT.. COMPANY TO ITS CUSTOMERS UNDER VARIOUS SALES PROMOT IONS SCHEMES, BUSINESS PROMOTION (OTHER) EXPENSES - CALANDER, DIA RIES AND BAGS GIVEN TO CUSTOMERS OF THE COMPANY, MUHURT EXPENSES - COMPANY ORGANISE 'MUHURT SALES' F OR SEVEN DAYS EVERY YEAR IN WHICH SUPPLIERS, THEIR REPRESENTATIVES PARTICIPATE AND GOODS ARE SOLD TO CUSTOMERS ALLOWING THEM SALES BASED TRADE DISCOUNTS. ALL THE EXPENSES I.E. FOOD, LODGING & BOARDING OF SUPPLIERS AND THEIR REPRESENTATIVES ARE BEARED B Y THE COMPANY AND THE SAME ARE DEBITED UNDER 'MUHURT EXPENSES' SHIVRATRI SANGEET MAHOTSAV EXPENSES - DONE UNDER TH IS HEAD TO PROPAGATE THE COMPANY'S BUSINESS WITH MEDIUM OF MUSIC ETC. THE PRODUCTS OF THE COMPANY ARE INTRODUCED TO INTERSTATE CUSTOMERS OF BIHAR/JHARKAND AND M P TOO THROUGH MUSIC CONFERENCES/PROGRAMMES OF ARTISTS ETC. AT ONE PLATF ORM RESULTING SALES PROMOTION. THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE OF HAVI NG ITS CLAIMED THESES EXPENSES AND HAVE ALSO FAILED TO PROVE THAT THE EXPENSES WERE IN CREASED THE PURPOSE OF THE BUSINESS. WHERE THERE IS ANY FALL IN THE G. P. ON THE MERE IN CREASE THE BUSINESS, THEN IN SUCH CIRCUMSTANCES ALSO, THERE IS EXPECTED ON INCREASE I N THE TOTAL PROFIT. THUS THE ACHIEVING OF THE TOTAL PROFIT IS THE APPROACH OF ALL THE BUSINES S MEN'S. A MERE GENERAL STATEMENT OF THE ASSESSEE CANNOT BE TREATED AS SUFFICIENT TO EXPLAIN & EVIDENCE THE SUCH UNREASONABLE INCREASE IN THE EXPENSES. IF IT WAS SO, THERE WAS N O NEED TO MAINTAIN RECORD & EVIDENCE TO EXPLAIN & PROVE THE CLAIM OF EXPENSES, INCOMES ETC. HERE, THE ONLY COURSE COULD HAVE BEEN ADOPTED BY TH E ASSESSEE WAS TO FURNISH A FACTUAL EXPLANATION OF INCREASE IN THE EXPENSES & PRODUCE T HE EVIDENCE IN SUPPORT OF SUCH EXPENSES. HOWEVER, DESPITE HAVING BEEN ALLOWED SUFF ICIENT TIME AND OPPORTUNITY THE ASSESSEE COULD NOT SATISFACTORY EXPLAIN & PROVE THE GENUINENESS OF THESE EXPENSES CLAIMED IN THE P & L ACCOUNT. HE COULD NOT EVEN SAT ISFACTORILY SHOW THAT ALL THE EXPENSES CLAIMED IN THE P & L A/C WERE INCURRED EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. FROM THE PERUSAL OF THE PROFIT AND LOSS ACCOUNT IT IS NOTICED THAT THERE WAS NOTICED, VERY HIGH INCREASE IN THE FOLLOWING EXPENSES:- S.NO. NAME OF MAJOR HEAD OF EXPENSES IN P&L A/C SPECIFIC ITEM OF EXPENSES CLAIMED AMOUNT OF EXPENDITURE CLAIMED OF A.Y. 2013- 14 AMOUNT OF EXPENDITURE CLAIMED IN AY 2012-13 TOTAL INCREASE IN EXPENSES IN A.Y. 2013-14 AND THE A.Y. 2012- 13 % OF INCREASE IN AY 2013-14 OVER THE A.Y. 2012-13 REMARKS 1. OTHER EXPENSES DEEPAWALI EXPENSES 1207790 841170 366620 43.58% NON BUSINESS/ PERSONAL NATURE 2. OTHER MARKETING 2203579 0 2203679 100% NOT EXPLA INED 4 ITA 3736/MUM/2017 EXPENSES MANAGEMENT SPECIALISATION EXPENSES 3. OTHER EXPENSES TRAVELLING EXPENSES 9458115 5561367 3896748 70 UNREASONABLE & UNEXPLAINED 4. OTHER EXPENSES BUSINESS PROMOTION 14099542 10352216 3747326 36 UNREASONABLE & UNEXPLAINED 5. OTHER EXPENSES BUSINESS PROMOTION 1794733 772059 1022674 132 NON BUSINESS / UNEXPLAINED 6. OTHER EXPENSES MUHURT EXPENSES 4619046 3488825 1130221 32 NON BUSINESS / UNEXPLAINED 7. OTHER EXPENSES SHIVRATRI SANGEET MAHOTSAV EXPENSES 1064982 129125 935857 724 NON BUSINESS / PERSONAL EXPENSES THE RETURNED TOTAL INCOME OF THE ASSESSEE FOR THE A Y IN REFERENCE WAS ONLY RS. 1,62,33,960/- , THEREFORE THE ABOVE CLAIMED EXPENSE S ARE ON A VERY PERCENTAGE OF THE RETURNED INCOME. WHEN THESE EXPENSES ARE NOT OF COM PULSIVE NATURE AND ALSO NEED NOT BE MANDATORILY HAVE TO BE INCURRED THEN IN SUCH CIRCUM STANCES , IN ABSENCE OF ANY EVIDENCE BEING PRODUCED BY THE ASSESSEE , THE GENUINENESS OF THESE EXPENSES AND ALSO THEIR BUSINESS UTILITY CANNOT BE ESTABLISHED. THE PERUSAL OF THE ABOVE TABLE AND THE ITEMS OF THE EXPENSES MENTIONED SHOW THAT: (1) IT IS NOTICED THAT THE TOTAL EXPENDITURE OF DEEPAWALI EXPENSES, DONATIONS, GENERAL CHARGES, MARKETING MANAGEMENT SPECIALIZATION EXPENS ES, TRAVELLING EXPENSES, BUSINESS PROMOTION (GIFT), BUSINESS PROMOTION (OTHERS), MUHURR.T PENSES & SBIVRATRI SANGEET MAHOTSAV EXPENSES, DURING THE A. Y. 2012-13 WAS/RS. 34,47,887/ ZI __ THE EXPENDITURE ON THESE ITEM DEEPAWALI EXPENSES' DONATIONS, GENERAL CHARGES, MARKETING MANAGEMENT SPECIALIZATION EXPENSES, TRAVELLING EXPENSES, BUSINESS PROMOTION (GIFT), BUSINESS PROMOTION (OTHERS), MUHURAT EXEPENSES & SHLVRATRI S ANGEET MAHOTSAV EXPENSES HAS INCREASED TO RS. 21,14,47,62/- I. E. THERE IS AN AB SOLUTE INCREASE REPORTED OF AMOUNT OF RS. 13,30,31,25/-. THE EXPENDITURE HAS INCREASE BY A PERCENTAGE OF 62 % OF THE LAST YEAR. SUCH TYPE OF HIGH I. E. 62% INCREASES IN THESE EXPE NSES IS BEYOND NORMAL COURSE & NOT EXPLAINED & IS NOT UNDERSTANDABLE. FURTHER, DESPITE HAVING BEEN ASKED THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO PROVE THE CORRECT NESS. REASONABLENESS, OF INCREASE & NEITHER THE GENUINENESS OF THESE EXPENSES HAVE BE EN PROVED, DESPITE THE FACT THAT PROVING THE GENUINENESS OF THESE : 'EXPENSES, WOULD HAVE BEEN IN THE INTEREST OF THE ASSESSEE ITSELF. BUT STILL THE ASSESSEE HAS CHOSEN NOT TO PLACE EVID ENCE IN SUPPORT OF CLAIMING THESE EXPENSES . EVEN PRODUCING THE BILL & VOUCHER OF EXPENDITURE IN SUPPORT OF SUCH INCREASED EXPENSES COULD NOT HAVE HELPED UNTIL THE ASSESSEE D ID NOT COME FORWARD TO EXPLAIN & JUSTIFY THE INCREASE IN THE EXPENSES AS GENUINENESS ;''HAVING BEEN INCREASED EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN ABSENCE OF ANY SATISFACTORY EXPLANATION, JUSTIFI CATION AND FOR NON-PRODUCING EVIDENCE TO PROVE THAT THESE EXPENSES WERE INCURRED EXCLUSIV ELY FOR THE PURPOSE OF THE BUSINESS, THE GENUINENESS OF THESE EXPENSES IS THUS NOT ESTABLISH ED. SINCE ASSESSEE HAS BROUGHT NO SATISFACTORY & SUPPORTABLE EVIDENCE & REASON TO JUS TIFY SUCH VERTICAL INCREASE IN THE EXPENSES & EXPENDITURE ON THE NEW ITEMS OF EXPENDIT URE. THEREFORE SUCH UNUSUAL INCREASE IN TAKEN TO BE UNEXPLAINED & THE EXPENSES CANNOT BE TAKEN AS GENUINENESS & HAVING BEEN INCURRED EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE CLAIM OF SUCH EXPENSES CANNOT BE ACCEPTED FOR THESE REASONS THE ABOVE EXPE NSES ARE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. (THE DISALLOWANCE OF THESE EXPENSES IS COMES AT RS 1,19,72,812/-) 5 ITA 3736/MUM/2017 3. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), ASSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS ON THE ISSUE WHICH HAS BEEN REPRODUCED AT PARA 7.1 ON PAGES 14 TO 22 OF ORDER OF LD.CIT(A). THE SUM AND SUBSTANCE OF ARGUMENTS O F THE ASSESSEE BEFORE THE LD.CIT(A) ARE THAT THE REASONS FOR INCREASE IN EXPE NSES IS COMMENSURATE WITH INCREASE IN TURNOVER OF THE ASSESSEE FOR THE YEAR U NDER CONSIDERATION, FOR WHICH NECESSARY DETAILS HAS BEEN FILED. THE ASSESS EE FURTHER CONTENDED THAT ITS TURNOVER HAS BEEN INCREASED TO RS.387.97 CRORES FROM 184.02 CRORES AND DUE TO THIS, CORRESPONDING EXPENSES UNDER VARIOUS H EADS HAVE BEEN PROPORTIONATELY INCREASED WHICH IS NEITHER EXCESSIV E NOR UNREASONABLE. THE AO, WITHOUT RECORDING ANY REASON AS TO HOW EXPENDIT URE INCURRED UNDER VARIOUS HEADS IS NOT ALLOWABLE, SIMPLY DISCLOSED ON THE BASIS OF INCREASE IN EXPENDITURE WITHOUT CONSIDERING CORRESPONDING INCRE ASE IN TOTAL BUSINESS FOR THE YEAR. THE LD.CIT(A), AFTER CONSIDERING RELEVAN T SUBMISSIONS OF THE ASSESSEE AND ALSO TAKING NOTE OF OBSERVATIONS MADE BY THE AO DURING ASSESSMENT PROCEEDINGS SUSTAINED ADDITION MADE BY THE AO TOWAR DS EXPENDITURE TO 10% AND DELETED THE BALANCE AMOUNT ON THE GROUND THAT T HE AO HAS NOT BROUGHT OUT ANY CONCRETE MATERIAL TO MAKE SUCH HUGE DISALLO WANCES. THE RELEVANT OBSERVATIONS OF THE LD.CIT(A) ARE AS UNDER:- 6 ITA 3736/MUM/2017 7.3. I HAVE CONSIDERED THE FACTS OF THE CASE, ASSE SSMENT ORDER PASSED BY THE AO AND THE SUBMISSION OF THE APPELLANT. THIS GROUND OF APPEAL IS AGAINST THE DISALLOWANCE OF RS.111972812/- OUT OF EXPENSES STA TING STEEP INCREASE IN THE EXPENSES. I HAVE PERUSED FACTS AT THE CASE AND DETAILS AND SU BMISSIONS FILED BY THE APPELLANT BEFORE THE AO AND PULING THE APPELLATE PR OCEEDINGS, I FIND THAT AT THE FIRST PLEA THE APPELLANT HAS DEVELOPED WHOLESALE BU SINESS WHICH WAS ONLY 784.02 CRORES IN THE YEAR 2011-12 HAS JUMPED TO 387 .94 CRORES IN THE YEAR UNDER CONSIDERATION. THE EXPENSES ON DIWALI, TRAV ELLING, BUSINESS PROMOTION, MUHURAT SHIVRATRI, SANGEET MAHOTSAV ETC. ARE REGULA R FROM YEAR TO YEAR, THERE IS INCREASE IN EXPENSES IN COMPARISON TO EARLIER YEARS DUE TO VARIOUS REASONS E.G. INCREASE IN VALUE OF ITEMS INCREASE IN VALUE O F WORK, PARTIES CUSTOMERS ETC. LOOKING AT THE NATURE OF EXPENSES AND THE OBS ERVATION OF THE AO, IT WILL BE DIFFICULT TO SUSTAIN THE ENTIRE .ESTIMATED DISALLOWANCE BECAUSE THE AO HAS NOT BROUGHT ANY CONCRETE MATERIAL TO MAKE AN Y SUCH HUGE DISALLOWANCE. THEREFORE, KEEPING IN VIEW OF THE NA TURE OF EXPENSES AND THE FACTS AND CIRCUMSTANCES OF THE CASE IT WILL BE REAS ONABLE TO RESTRICT THE DISALLOWANCE TO RS.11,97,281/- AND THEREFORE THE AO IS DIRECTED TO DELETE THE BALANCE DISALLOWANCE OF RS. 1,07,75,531. 4. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS IN APPEAL BEFORE US. 5. THE LD.DR SUBMITTED THAT THE LD.CIT(A) WAS ERRED IN SCALED DOWN DISALLOWANCE OF EXPENSES TO RAS.11,97,281 AS AGAINS T TOTAL DISALLOWANCE MADE BY THE AO FOR RS.1,19,72,812 WITHOUT APPRECIATING T HE FACT THAT THE ASSESSEE NEITHER JUSTIFIED INCREASE IN EXPENDITURE NOR FILED ANY DETAILS TO SHOW THAT THE EXPENDITURE IS COMMENSURATE WITH ITS BUSINESS FOR T HE YEAR UNDER CONSIDERATION. THE LD.CIT(A), WITHOUT ASSIGNING AN Y REASONS, MADE ADHOC DISALLOWANCE OF EXPENSES WITHOUT APPRECIATING THE F ACT THAT THERE IS A FALL IN GROSS PROFIT OF THE ASSESSEE IN SPITE OF INCREASE I N TURNOVER FOR WHICH NO EXPLANATION HAS BEEN OFFERED BY THE ASSESSEE. 7 ITA 3736/MUM/2017 6. THE LD.AR FOR THE ASSESSEE, ON THE OTHER HAND, S UBMITTED THAT THE ASSESSEE HAS FILED COMPLETE DETAILS OF EXPENSES BEF ORE THE AO AND ALSO EXPLAINED HOW EXPENDITURE INCURRED UNDER VARIOUS HE ADS IS COMMENSURATE WITH ITS BUSINESS TURNOVER FOR THE YEAR UNDER CONSI DERATION. THE AO MADE DISALLOWANCES WITHOUT RECORDING ANY OBSERVATION AS TO INCORRECTNESS IN BOOKS OF ACCOUNT OR SUPPORTING EVIDENCE FILED BY THE ASSE SSEE. THEREFORE, THE LD.CIT(A) AFTER CONSIDERING RELEVANT FACTS, HAS RIG HTLY SCALED DOWN DISALLOWANCE OF EXPENSES AND HIS ORDER SHOULD BE UPHELD. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL S AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS AN ADMITTED FACT THAT THERE IS A SUBSTANTIAL INCREASE IN CERTAIN EXPENDIT URE INCURRED UNDER THE HEAD DEEPAWALI EXPENSES, DONATION, GENERAL EXPENSES AND OTHER EXPENSES. IT IS ALSO AN ADMITTED FACT THAT THE TURNOVER OF THE ASSE SSEE HAS BEEN INCREASED FROM 184 CRORES TO RS.387 CRORES. THE AO HAS DISAL LOWED EXPENDITURE INCURRED UNDER VARIOUS HEADS WITHOUT RECORDING ANY OBSERVATI ON AS TO INCORRECTNESS IN BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR THE RELEVANT FINANCIAL YEAR OR SUPPORTING EVIDENCE FILED IN JUSTIFYING EXPENDITURE INCURRED UNDER THOSE HEADS. THE AO HAS COMPARED INCREASE IN EXPENDITURE TO PREV IOUS FINANCIAL YEAR WITHOUT TAKING NOTE OF CORRESPONDING INCREASE IN BU SINESS TURNOVER OF THE ASSESSEE. ON THE OTHER HAND, THE ASSESSEE HAS FILE D NECESSARY DETAILS OF 8 ITA 3736/MUM/2017 EXPENDITURE AND ALSO EXPLAINED REASONS FOR INCREASE IN EXPENDITURE. THE LD.CIT(A), AFTER CONSIDERING RELEVANT FACTS AND ALS O TAKING NOTE OF THE FACT THAT THERE IS NO OBSERVATIONS BY THE AO IN REGARD TO THE INCORRECTNESS OF BOOKS OF ACCOUNT SCALED DOWN DISALLOWANCE TO 10% FOR SUCH EX PENSES. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS RECORDED BY THE LD.CIT(A) WHILE DELETING ADDITION MADE BY THE AO TOWARDS DISALLOWAN CE OF EXPENDITURE. HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF LD .CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15-05-2019. SD/- SD/- (SANDEEP GOSAIN) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 15 TH MAY, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI