A.C.I.T., Circle -3(1), Gwalior V. M/s Singh Associates, Gwalior

ITA 419/AGR/2011

• Counselvise Citation: 41920314 RSA 2011
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-09-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 04-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Opportunity of being heard; Assessment record; Commercial expediency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 410/AGRA/2011 ASSTT. YEAR : 2001-02 SINGH ASSOCIATES, VS. INCOME-TAX OFFICER, OPP. CENTRAL PARK HOTEL, WARD 3(2), GWALIOR. CITY CENTRE GWALIOR. (PAN : AAHFM 9188 M) ITA NO. 419/AGRA/2011 ASSTT. YEAR : 2001-02 A.C.I.T., 3(1), VS. SINGH ASSOCIATES, GWALIOR. OPP. CENTRAL PARK HOTEL, CITY CENTRE GWALIOR. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 11.09.2012 DATE OF PRONOUNCEMENT OF ORDER : 14.09.2012 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE OR DER OF LD. CIT(A), GWALIOR DATED 16.08.2011 FOR THE ASSESSMENT YEAR 2001-02. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, A PARTNERSHIP FIRM IS ENGAGED IN THE BUSINESS OF SALE OF COUNTRY LIQUOR & IMFL (I NDIAN MADE FOREIGN LIQUOR). AS ITA NO. 410 & 419/AGRA/2011 2 PER ITS RETURN FILED ON 31.10.2001, IT HAS DECLARED INCOME OF RS.3,92,06,090/- ON TOTAL SALES & BID MONEY OF RS. 48.21 CRORES AND RS. 33.54 CRORES RESPECTIVELY. ORIGINAL ASSESSMENT HAS BEEN COMPLETED ON 26.03.200 4 US/ 143(3) ON TOTAL INCOME OF RS.4,19,29,340/- BY MAKING ADDITION OF RS.27,23, 250/- BY ESTIMATING SALES OF RS. 83,85,86,580/- AT 2.5 TIMES OF BID MONEY AND TH EN APPLYING NET PROFIT RATE OF 5% ON THESE SALES WHICH COMES TO RS.4,19,29,332/- A S AGAINST RS.3,92,06.082/- DECLARED BY THE ASSESSEE. THE THEN CIT(A), GWALIOR VIDE ORDER DATED 30.11.2004 HAS DELETED THE SAID ADDITION OF RS.27,23,250/-.THE ITAT, AGRA IN ITA NO. 170/AGR/2005/1136 VIDE ORDER DATED 23.05.2008 HAS R ESTORED THE MATTER TO THE A.O. TO CONSIDER ADMISSIBILITY OF THE ASSESSEES CLAIM W ITH REGARD TO CERTAIN EXPENSES, BEING APPARENTLY UN-EVIDENCED. ACCORDINGLY, REASSES SMENT PROCEEDINGS HAVE BEEN INITIATED BY THE A.O. BY ISSUE OF FIRST NOTICE U/S. 143(2) ON 13.11.2009. CONSEQUENTLY, THEY HAVE BEEN COMPLETED ON 31.12.200 9 BY MAKING ESTIMATED DISALLOWANCE OF 20% OF THOSE EXPENSES BY MENTIONING AS UNDER :- 'AFTER GIVING THE REASONABLE AND PROPER OPPORTUNITY FROM TIME TO TIME, SHRI GAJENDRA JAIN, AUTHORIZED REPRESENTAT IVE OF THE ASSESSEE ATTENDED THE CASE AND SUBMITTED THE WRITTEN SUBMISS ION ALONGWITH DETAIL OF SHOP EXPENSES, FREIGHT AND CARTAGE EXPENS ES, VEHICLE EXPENSES, TRAVELLING AND CONVEYANCE EXPENSES, SHOP RENT AND ELECTRICITY EXPENSES, PRINTING AND STATIONERY EXPEN SES, POSTAGE AND TELEPHONE EXPENSES AND COMPARATIVE CHART OF GROSS P ROFIT AND NET PROFIT WITH COMPARABLE CASES OF M/S. LAKSHMI NARAYA N RAMSWAROOP SHIVHARE & CO., VINOD KUMAR RAI AND LAKSHMI NARAYAN RAMSWAROOP SHIVHARE. HE HAS ALSO FILED COPY OF ASSE SSMENT ORDER OF M/S. GWALIOR SYNDICATE FOR THE ASSTT. YEAR 2004-05 AND COPY OF ORDER PASSED BY THE TRIBUNAL (AGRA BENCH) IN THE CASE OF LAKSHMI NARAYAN RAMSWAROOP SHIVHARE. BUT THE BOOKS OF ACCOUNTS ALON GWITH BILLS AND ITA NO. 410 & 419/AGRA/2011 3 VOUCHERS ARE NOT PRODUCED FOR VERIFICATION OF GENUI NENESS OF CLAIM OF EXPENDITURE DEBITED TO THE PROFIT AND LOSS ACCOUNT. THE ORDERS IN THE CASE OF M/S. GWALIOR SYNDICATE AND M/S. LAKSHMI NAR AYAN RAMSWAROOP SHIVHARE ARE DISTINGUISHED OF FACTS AND ON DIFFERENT FOOTING AND NOT APPLICABLE TO THE CASE OF THE ASSES SEE. IN THE CASE OF M/S. GWALIOR SYNDICATE, THE ASSESSING OFFICER HAS O BSERVED THAT CERTAIN BILLS ARE MISSING AND VOUCHERS ARE NOT PROP ERLY MAINTAINED. BUT IN THE CASE, THE ASSESSEE HAS NOT PRODUCED THE BILLS AND VOUCHERS AT ALL. THEREFORE, THE REFERENCE OF THAT CASE DOES NOT FIND ANY FAVOUR. SIMILARLY, DECISION IN THE CASE OF ITO V S. LAKSHMI NARAYAN RAMSWAROOP SHIVHARE (2009) 119 ITD 15 (AGRA) TM, AS REFERRED BY THE AUTHORIZED REPRESENTATIVE IS OF NO USE BECAUSE IN THAT CASE THE ISSUE WAS ACCEPTABILITY OF GROSS PROFIT RATE DECLAR ED BY THE ASSESSEE. BUT IN THIS CASE, THE TRIBUNAL HAS GIVEN SPECIFIC D IRECTION TO THE LIBERTY TO ASSESSEE TO SUBMIT ANY ADDITIONAL MATERIAL IN SU PPORT OF ITS CASE. THE AUTHORIZED REPRESENTATIVE, ALTHOUGH HAS SUBMITT ED THE DETAILS OF EXPENDITURE AND PERCENTAGE OF VARIOUS EXPENDITURES WITH REFERENCE TO SALES, CALCULATION OF GENERAL SHOP EXPENSES ON MONT HLY BASIS AND DAILY BASIS, CALCULATION OF PRINTING AND STATIONERY EXPENSES WITH REFERENCE TO SHOP BASIS, ELECTRICITY EXPENSES ON SH OP BASIS AND MONTHLY BASIS, VEHICLE EXPENSES ON MONTHLY BASIS AN D PERCENTAGE WITH REFERENCE TO SALES. BUT, THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNTS ALONGWITH BILLS AND VOUCHERS TO VERIFY THE CLAIM OF EXPENDITURE AS DIRECTED BY THE TRIBUNAL. THE ASSESS EE HAS DEBITED THE EXPENDITURE UNDER THE HEADS WHICH ARE TO BE VERIFIE D AS PER DIRECTIONS OF THE TRIBUNAL. THE AMOUNT OF THE EXPENDITURE DEBI TED UNDER THOSE HEADS IS AS UNDER :- SL. NO. HEAD OF EXPENDITURE AMOUNT 1. FREIGHT AND CARTAGE EXPENSES RS.12,34,512/- 2. GENERAL SHOP EXPENSES RS.24,14,523/- 3. VEHICLE EXPENSES RS.50,03,757/- 4. SHOP RENT AND ELECTRICITY EXPENSES RS.41,56,497 /- --------------------- RS.1,28,09,289/- --------------------- THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNT S ALONGWITH BILLS AND VOUCHERS IN SUPPORT OF ITS CLAI M OF EXPENDITURE DEBITED TO THE PROFIT AND LOSS ACCOUNT AS DIRECTED BY THE TRIBUNAL. THE ASSESSEE HAS SUBMITTED THE DETAILS AND CALCULATION SHOP-WISE, MONTH- WISE FOR WHICH THE TRIBUNAL ALREADY SAID THAT THE D ETAIL OF EXPENDITURE ITA NO. 410 & 419/AGRA/2011 4 SHOP-WISE AND MONTHWISE CANNOT BE THE SOLE BASIS FO R THEIR DISALLOWANCE. THE ASSESSEE BEING OBLIGED TO PROVE I TS RETURN TO EXPLAIN THE DISCREPANCIES AND JUSTIFY ITS CLAIM OF EXPENDITURE. SINCE THE ASSESSEE COULD NOT JUSTIFY THE CLAIM OF EXPENDI TURE BY PRODUCING THE BOOKS OF ACCOUNTS ALONGWITH BILLS AND VOUCHERS IN SPITE OF ALLOWING THE REASONABLE AND PROPER OPPORTUNITY OF H EARING, HENCE, THE CLAIM OF EXPENDITURE REMAIN UNVERIFIED AND NOT ACCE PTABLE AS CLAIMED. HOWEVER, CONSIDERING THE COMMERCIAL EXPEDIENCY AND NECESSITY OF THE EXPENDITURE FOR THE PURPOSE OF THE BUSINESS, THE AL LOWANCE OF EXPENDITURE IS RESTRICTED TO 80% OF THE EXPENDITURE CLAIMED AND ACCORDINGLY 20% OF THE EXPENDITURE, WHICH COMES TO RS.25,61,857/- UNDER ABOVE HEADS WILL BE DISALLOWED AND ADDED TO T HE TOTAL INCOME.' 2.1 DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE ASSESSEE HAS SUBMITTED AS UNDER : 'BEFORE THE LD. ITO IT WAS SUBMITTED THAT THE NATUR E OF THE BUSINESS, ITS METHOD OF OPERATION AND POSSIBILITY O F MAINTAINING BOOKS OF ACCOUNTS, VOUCHERS ETC. THE ASSESSEE ALSO FURNISHED DETAILS OF THESE EXPENS ES. HOWEVER THE VOUCHERS COULD NOT BE FURNISHED AS THE MATTER B ECAME OLD AND THE BUSINESS OF LIQUOR CONTRACT WAS NOT CARRIED ON AFTE R 2001-02. THEY COULD NOT BE LOCATED AND, THEREFORE, COULD NOT BE P RODUCED. THE DIRECTION OF HON'BLE ITAT IS THERE TO JUSTIFY E XPENSES. THE HON'BLE ITAT HAS ACCEPTED THE METHOD OF ACCOUNTING FOLLOWED BY ASSESSEE HAVING NO SALE BILLS ETC. IS CORRECT AND J USTIFIED LOOKING TO THE NATURE OF THE BUSINESS OF THE ASSESSEE. AFTER PASSING OF ORDER IN OUR CASE WHICH WAS PASSED WHEN NOBODY ATTENDED ON BEHALF OF ASSESSEE, THE SAME ITA T 3 MEMBER BENCH HAS DECIDED IN IDENTICAL CIRCUMSTANCE NO SUCH EXPENSES HELD AS DISALLOWABLE. IT WAS ALSO URGED THAT FOR THE SAKE OF ALLOWABILITY THE NATURE, CIRCUMSTANCES AND POSSIBILITIES SHOULD BE CONSIDERE D. AS SUCH EXPENSES WERE WORKED OUT SHOP-WISE ANNUALLY AS ALSO MONTH-WISE. THE TOTAL PERCENTAGE OF EXPENSES CLAIMED WERE ALSO GIVEN. ITA NO. 410 & 419/AGRA/2011 5 THE LD. ITO HAS NOT CONSIDERED ANY OF THESE ISSUES BUT CONFIRMED THE SAME ONLY ACCEPTING STATIONERY EXPENS ES. THE DISALLOWANCE OF 20% EXPENSES IS VERY EXCESSIVE CONS IDERING ALL THESE EXPENSES THE NET PROFIT RATE SHOWN BY ASSESSEE IS F AR BETTER THAN EVEN ACCEPTED BY THE HON 'BLE ITAT. THE ASSESSEE HAS SHOWN TAXABLE INCOME AT RS. 3,92,0 6,090/- AND BID MONEY OF RS.33,54,34,632/- WHICH GIVEN NP R ATE OF 11.68%. IF THE ASSESSED INCOME IS CONSIDERED THAN INCOME IS RS .4,17,67,947/- AND RATIO WITH BID MONEY COMES TO 12.45%. IN SIMILA R CASE OF ACIT VS. GENDALAL HAZARILAL & CO. THE HON'BLE M.P. HIGH COURT HAS ACCEPTED LESS THAN 3% NET PROFIT RATE. 263 ITR 679 (M.P.) THE HONBLE ITAT 3 MEMBER DECISION IN CASE OF ITO V . LAXMINARAIN RAMSWAROOP 119 ITD 15 (AGRA) TM, SIMILA R NET PROFIT RATE HAS BEEN ACCEPTED. CONSIDERING ALL THESE FACTS AND REASON OF NON AVAIL ABILITY OF VOUCHERS DUE TO TIME GAP AND DISSOLUTION OF LIQUOR BUSINESS, IT IS PRAYED TO YOUR HONOUR TO KINDLY GRANT RELIEF AND OBLIGE.' 2.2 THE LD. CIT(A), CONSIDERING THE EXPLANATION OF THE ASSESSEE IN THE LIGHT OF THE TRIBUNAL ORDER RESTRICTED THE DISALLOWANCE OF E XPENSES @ 10% AS AGAINST 20% MADE BY THE AO. HIS FINDINGS IN PARA 4 AND 4.1 OF T HE APPELLATE ORDER ARE REPRODUCED AS UNDER : 4. APPELLANT'S SUBMISSIONS ALONGWITH ASSESSMENT OR DER HAVE BEEN CONSIDERED CAREFULLY. ASSESSMENT RECORDS ALONG WITH CASE LAWS RELIED ON BY IT HAVE ALSO BEEN PERUSED. THERE IS NO DENYING THE FACT AND AS PER APPELLANT'S OWN SUBMISSIONS, VOUCHER AND BILLS OF EXPENSES PERTAINING TO FREIGHT & CARTAGE (RS.12,34,512/-), G ENERAL SHOP/KITCHEN (RS.24,14,523/-), VEHICLE (RS.50,03,75 7/-) AND SHOP RENT & ELECTRICITY RS. 41,56,497/-) HAVE NOT BEEN PRODUC ED AT ANY STAGE. RATHER, THE APPELLANT HAS EXPRESSED ITS INABILITY T O DO SO ON ACCOUNT OF TIME GAP, DISCONTINUANCE OF BUSINESS, NATURE OF BUS INESS ETC. DEDUCTION IS A MATTER OF PROOF AND PAYMENT HAS TO B E PROVED BY THE ITA NO. 410 & 419/AGRA/2011 6 APPELLANT WITH SUPPORTING DOCUMENTS, BILLS & VOUCHE RS. EVEN HON'BLE ITAT, AGRA IN ITS ORDER DTD. 23.05.2008 PASSED IN C ASE OF THE APPELLANT HAS MENTIONED CATEGORICALLY IN PARA 6.3 & 6.4 AS UNDER:- 'THE ASSESSEE HAS SOUGHT TO EXPLAIN THE SAID DISCRE PANCIES AND JUSTIFY ITS CLAIM, PARTICULARLY WITH REGARD TO : (A) NON-MAINTENANCE OF ANY VOUCHERS/EVIDENCE IN R ESPECT OF ITS CLAIM TOWARD EXPENSES ON FREIGHT AND CARTAGE, S HOP EXPENSES, VEHICLE REPAIR AND MAINTENANCE AND SHOP RENT ; (B) THE CLAIM OF KITCHEN EXPENSES UNDER THE ACCOU NT HEAD 'GENERAL SHOP EXPENSE' ONLY ON THE BASIS OF THE PUR PORTED REASONABILITY OF THE EXPENDITURE, WHEN RECKONED ON PER SHOP PER MONTH BASIS, AND WHICH. THOUGH RELEVANT, CANNOT BE THE SOLE BASIS FOR THEIR ALLOWANCE; THE ASSESSEE BEING OBLIGED TO PROV E ITS RETURN AND REASONABLY EXPLAIN THE QUERIES OR DISCREPANCIES, IF ANY, OBSERVED BY THE ASSESSING AUTHORITY. IN VIEW THEREOF WE, WHILE UPHOLDING THE ACCEPTANCE OF ITS BOOKS OF ACCOUNT BY THE LD. CIT(APPEALS), SO THAT NO ESTI MATION OF PROFIT WOULD HOLD, ONLY CONSIDER IT FIT AND PROPER THAT TH E MATTER BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO CONSID ER THE ADMISSIBILITY OF THE ASSESSEES CLAIM WITH REGARD TO THE FOREGOING E XPENSES (REFER PARA 6.3), BEING, AS APPARENT, UNEVIDENCED, IN THE MAIN. FURTHER, IN DECIDING THE MATER, FOR WHICH REASONABLE OPPORTUNIT Y FOR REPRESENTATION WOULD ALSO TAKE INTO CONSIDERATION THE PRACTICAL REALITIES OF THE TRADE AS WELL AS THE FACT-SITUATIO N OBTAINING, VIZ. THE MERE FACT THAT THE RENT AGREEMENTS ARE NOT AVAILABL E IN RESPECT OF SHOPS CANNOT BE A GROUND FOR NON-ACCEPTANCE OF THE SAME, WHERE THE SAME STAND PAID, AS EVIDENCED BY RECEIPTS TO THE SH OP OWNERS, IN CONSISTENCE OR IN LINE WITH THAT BEING PAID IN THE PAST. THE ASSESSEE WOULD ALSO BE AT LIBERTY TO PLACE ANY ADDITIONAL MA TERIAL WITH IT BEFORE THE ASSESSING OFFICER IN SUPPORT OF ITS CASE. WE DE CIDE ACCORDINGLY.' 4.1 THE APPELLANT HAS FAILED MISERABLY TO SUBMIT AN Y EVIDENCE IN RESPECT OF ABOVE MENTIONED EXPENSES PARTICULARLY SO WHEN ALL OF THEM HAVE BEEN PAID IN CASH AS PER COPY OF ACCOUNTS FOR THEM. FURTHER THE CASE LAWS RELIED ON BY THE APPELLANT ACCEPTING DECLARED NET PROFIT RESULTS ALSO DO NOT HELP THE APPELLANT AS THE A.O. HAS NOT DISTURBED THE ITA NO. 410 & 419/AGRA/2011 7 TRADING RESULTS AND HAS ACCEPTED SALES & PURCHASES SHOWN BY THE APPELLANT. A.O. HAS ASKED THE APPELLANT TO SUBSTANT IATE ITS CLAIM OF EXPENSES IN PURSUANCE OF HON'BLE ITAT DIRECTIONS WH ICH THE APPELLANT HAS FAILED TO DO SO. IN A TAXING STATUTE, THERE CAN NOT BE PRESUMPTION AS TO-THE FACTS. THE PERSON WHO CLAIMS THE BENEFIT UNDER THE PROVISIONS OF THE ACT, HAS TO PROVE BEFORE THE AUTHORITIES THA T HE IS ENTITLED TO THE BENEFIT OF DEDUCTION BY PLACING PROPER AND SUFFICIE NT MATERIAL TO THAT EFFECT. WHERE AN APPELLANT IS UNABLE TO FURNISH DET AILS OF EXPENDITURE AND TO SUBSTANTIATE THE CLAIM WITH THE HELP OF VOUC HERS, DISALLOWANCE OF EXPENDITURE CAN BE JUSTIFIED. MERELY BECAUSE ACC OUNTS ARE AUDITED AND AN AUDIT REPORT IS AVAILABLE, THERE IS NO FETTE R ON THE POWER OF THE A.O. TO REQUIRE THE APPELLANT TO JUSTIFY ITS CLAIM WITH REFERENCE TO THE RECORDS, MATERIALS AND EVIDENCE. SUCH A POWER IS IN HERENT IN AN A.O. IN THE SCHEME OF THE ACT. [GOODYEAR INDIA LTD. VS. CIT (2000) 246 ITR 116, 118 (DEL.)]. THUS, THE A.O. IS FOUND JUSTI FIED IN MAKING DISALLOWANCE OF SUCH UNSUBSTANTIATED EXPENDITURE. H OWEVER, KEEPING IN VIEW THE APPELLANT'S NATURE & VOLUME OF BUSINESS , HON 'BLE ITAT 'S OBSERVATIONS IN THE APPELLANT'S CASE AND PROFIT DEC LARED BY THE APPELLANT AS COMPARED WITH SIMILAR TRADERS, DISALLO WANCE @ 10% OF THESE EXPENSES IS FOUND REASONABLE & JUSTIFIED PART ICULARLY SO WHEN THE A.O. HAS NOT GIVEN ANY BASIS FOR AD-HOC DISALLO WANCE MADE @ 20%. ACCORDINGLY, ADDITION OF RS.12,80,928/- IS, HE REBY, CONFIRMED. 3. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF L D. CIT(A) IN CONFIRMING THE DISALLOWANCE OF 10% OUT OF EXPENSES AND THE REVENUE IS IN APPEAL AGAINST THE ORDER OF THE LD. CIT(A) IN DELETING THE DISALLOWANC E OF EXPENSES @ 10%. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE T IME OF HEARING OF APPEALS DESPITE SERVICE OF NOTICE. IT MAY BE NOTED THAT ON 01.05.2012, THE APPEALS WERE ADJOURNED ON THE REQUEST OF THE ASSESSEES COUNSEL. AGAIN ON 08.08.2012, THE APPEALS WERE ADJOURNED ON THE REQUEST OF BOTH THE P ARTIES. AGAIN ON 31.08.12, THE APPEALS WERE ADJOURNED TO 11.09.2012 ON THE REQUEST OF THE LD. COUNSEL FOR THE ITA NO. 410 & 419/AGRA/2011 8 ASSESSEE WITH THE DIRECTION THAT NO FURTHER ADJOURN MENT SHALL BE GRANTED. THE DATE WAS ALSO NOTIFIED THROUGH REGISTERED POST. DESPITE THE ABOVE, AT THE TIME OF HEARING OF APPEALS, NONE APPEARED ON BEHALF OF THE ASSESSEE , THEREFORE, BOTH THE APPEALS ARE DECIDED ON THE BASIS OF MATERIAL ON RECORD. THE LD. DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT THE ASSESSEE, DESPITE GIVING OPPORTUNITY OF BEING HEARD, COULD NOT PRODUCE THE BOOKS OF ACCOUNT ALONG WITH B ILLS AND VOUCHERS TO VERIFY THE CLAIM OF EXPENSES AS DIRECTED BY THE TRIBUNAL. THER EFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING PART OF THE ADDITION. 5. ON CONSIDERATION OF THE FACTS OF THE CASE IN THE LIGHT OF THE FINDINGS OF THE AUTHORITIES BELOW, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS NOT JUSTIFIED EVEN IN DELETING THE DISALLOWANCE @ 10%. IT IS ADMITTED FAC T THAT EARLIER THE MATTER TRAVELED TO THE TRIBUNAL AND WAS RESTORED TO THE AO TO CONSI DER THE ADMISSIBILITY OF ASSESSEES CLAIM WITH REGARD TO CERTAIN EXPENSES BE ING APPARENTLY UN-EVIDENCED. THE AO AFTER GIVING OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE AS PER DIRECTION OF THE TRIBUNAL HELD ENQUIRY INTO THE CLAIM OF ASSESSE E FOR VERIFICATION OF THE EXPENDITURE. THE AO SPECIFICALLY NOTED IN THE ASSES SMENT ORDER THAT THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNT ALONG WITH B ILLS AND VOUCHERS TO VERIFY THE CLAIM OF EXPENDITURE AS DIRECTED BY THE TRIBUNAL. T HE AO WAS DUTY BOUND TO VERIFY THE EXPENDITURE AS PER DIRECTIONS OF THE TRIBUNAL, BUT THE ASSESSEE DID NOT PRODUCE ANY BILLS OR VOUCHERS IN SUPPORT OF THE CLAIM OF EX PENDITURE DEBITED TO THE PROFIT ITA NO. 410 & 419/AGRA/2011 9 AND LOSS ACCOUNT. SINCE THE ASSESSEE CLAIMED DEDUCT ION OF EXPENDITURE, THEREFORE, THE BURDEN WAS UPON THE ASSESSEE TO PROVE THAT THE SAME EXPENDITURES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND ARE SUPPORTED BY BILLS AND VOUCHERS. HOWEVER, NOTHING WAS PRODUCED B EFORE THE AO TO SUPPORT SUCH A CLAIM. EVEN BEFORE THE LD. CIT(A), THE ASSESSEE A DMITTED THAT THE VOUCHERS COULD NOT BE FURNISHED IN THIS MATTER, BEING THE MATTER V ERY OLD. IT IS, THEREFORE, ADMITTED FACT THAT NO BILLS/VOUCHERS WERE PRODUCED EITHER BE FORE THE AO OR BEFORE THE LD. CIT(A) FOR VERIFICATION OF THE SAME. IN THE EARLIER ROUND PROCEEDINGS, THE TRIBUNAL ALSO GRANTED LIBERTY TO THE ASSESSEE TO PLACE ADDIT IONAL MATERIAL BEFORE THE AO IN SUPPORT OF THE CLAIM, BUT THE ASSESSEE SHOWED INABI LITY TO PRODUCE ANY MATERIAL BEFORE THE AO. THE LD. CIT(A) HAS GIVEN FINDING OF FACT AGAINST THE ASSESSEE WITH REGARD TO THE CLAIM OF EXPENSES AND JUSTIFIED THE A CTION OF THE AO IN MAKING THE DISALLOWANCE OF SUCH UN-SUBSTANTIATED EXPENDITURE. THE LD. CIT(A), HOWEVER, CONSIDERING THE NATURE AND VOLUME OF BUSINESS AND O THER CASES REDUCED THE DISALLOWANCE OF EXPENDITURE FROM 20% TO 10%. WE DO NOT AGREE WITH THE FINDING OF THE LD. CIT(A) IN REDUCING THE DISALLOWANCE FROM 20% TO 10% WITHOUT ANY REASONS. THE LD. CIT(A) FAILED TO NOTE THAT IT WAS SET ASIDE PROCEEDINGS IN WHICH THE AO WAS BOUND TO FOLLOW THE DIRECTIONS OF THE TRIBUN AL. THEREFORE, NO COMPARISON COULD BE MADE FROM OTHER TRADERS. THE ISSUE BEFORE THE AO WAS WITH REGARD TO ADMISSIBILITY OF EXPENDITURE AS PER DIRECTIONS OF T HE TRIBUNAL, THEREFORE, THE AO WAS CONFINED TO THAT MATTER ONLY AND THE AO RIGHTLY CONSIDERED THE ISSUE IN PROPER ITA NO. 410 & 419/AGRA/2011 10 PERSPECTIVE AS PER DIRECTIONS OF THE TRIBUNAL AND R IGHTLY DISALLOWED 20% OF THE EXPENSES. THE LD. CIT(A) WITHOUT ANY REASONS REDUCE D THE DISALLOWANCE TO 10%. WE ARE, THEREFORE, OF THE VIEW THAT THE ORDER OF TH E LD. CIT(A) IN REDUCING THE DISALLOWANCE FROM 20% TO 10% IS WHOLLY UNJUSTIFIED WITHOUT BASIS. WE, ACCORDINGLY, SET ASIDE THE ORDER OF THE LD. CIT(A) IN REDUCING THE DISALLOWANCE OF EXPENSES FROM 20% TO 10% AND RESTORE THE ORDER OF T HE AO. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED AND THE DEPARTMENTAL APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY