ACIT CEN. CIR. - 25, MUMBAI V. M/s. PARLE PRODUCTS P. LTD., MUMBAI

ITA 6964/MUM/2004

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8751 (ITAT-MUMBAI)
• Duration Of Justice: 14 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 1998-1999
• Appeal Filed On: 29-09-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Depreciation; Business expenditure; Earning of tax free income; Revenue expenditure; Capital expenditure; Rule 8D; Set aside
• Section: 14A; 195; 32; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI R.C. SHARMA (ACCOUNTANT MEMBER) AND SHRI PAWAN SINGH (JUDICIAL MEMBER) ITA NO. 6964/MUM/2004 - AY 1998-99 ITA NO. 6529/MUM/2005 - AY 2002-03 ITA NO. 3891/MUM/2007 - AY 2003-04 ITA NO. 5946/MUM/2012 - AY 2009-10 ITA NO. 6713/MUM/2011 - AY 2008-09 ITA NO. 6714/MUM/2011 - AY 2007-08 ITA NO. 6715/MUM/2011 - AY 2006-07 ITA NO. 397/MUM/2015 - AY 2010-11 ACIT, CENT.CIR.25, MUMBAI / DCIT 13(1)(2), MUMBAI / DCIT 9(2), MUMBAI / DCIT, CENT.CIR.25, MUMBAI / ACIT, CENT.CIR.25, MUMBAI VS M/S PARLE PRODUCTS PVT LTD, NORTH LEVEL CROSSING, VILE PARLE (E), MUMBAI 400 057 PAN : AAACP0486A APPELLANT RESPONDEDNT APPELLANT BY SHRI AWUNGSHI GIMSON CIT- DR SHRI ABI RAM KARTIKEYAN SR DR RESPONDENT BY SHRI KETAN VED (AR) DATE OF HEARING 03-09-2019 DATE OF PRONOUNCEMENT 13-09-2019 O R D E R PER PAWAN SINGH, JUDICIAL MEMBER : THIS GROUP OF EIGHT APPEALS WERE INITIALLY ADJUDIC ATED BY THE TRIBUNAL VIDE CONSOLIDATED ORDER DATED 22-01-2018 I N ALL APPEALS. HOWEVER, THE ORDER WAS RECALLED QUA CERTAIN GROUNDS OF APPEAL AS MENTIONED IN ORDER DATED 13-05-2019 IN MA NO(S) 518 TO 515/M/2018. PARLE PRODUCT PRIVATE LTD 2 IN THE SAID ORDER, THE FOLLOWING GROUNDS IN RESPECT OF VARIOUS APPEALS WERE RECALLED. A.Y. SR.NO. OF GOP LEFT FOR ADJUDICATION NATURE OF GROUND 1998-99 ITA NO.6964/M/04 1(B) DELETING THE ADDITION OF RS.36,55,041/- ON ACCOUNT OF SUPPRESSION OF SALE / SALES OF CONFECTIONERY. 2002 - 03 ITA NO.6529/M/05 3 DELETING THE PART ADDITION OF RS.15,55,396/- OUT OF TOTAL ADDITION OF 26,17,190 ON ACCOUNT OF SUPPRESSION OF SALE / SALES OF CONFECTIONERY 2003-04 ITA NO.3891/M/07 2 & 5 2. PARTLY DELETING ADDITION OF RS.17,05,406/- OUT OF TOTAL ADDITION OF RS.68,21,627/-. 5. DELETING THE EXPENDITURE OF ADVERTISEMENT EXPENDITURE. 2006 - 07 ITA NO.6715/M/11 4 & 5 4. DELETING THE ADDITION U/S 41(1) OF RS.496/- ON ACCOUNT OF DEFERRED SALES TAX WRITTEN OFF. 5. ALLOWING THE EXPENDITURE INCURRED ON CELEBRITIES FOR BRAND PROMOTION BEING CAPITAL EXPENDITURE. 2007 - 08 ITA NO.6714/M/11 4 & 5 4. DELETING THE ADDITION U/S 41(1) OF RS.496/- ON ACCOUNT OF DEFERRED SALES TAX WRITTEN OFF. 5. DISALLOWANCE U/S 14A. 2008 - 09 ITA NO.6713/M/11 4 & 5 4. DELETING THE ADDITION U/S 41(1) OF RS.496/- ON ACCOUNT OF DEFERRED SALES TAX WRITTEN OFF. 5. ALLOWING THE EXPENDITURE INCURRED ON CELEBRITIES FOR BRAND PROMOTION BEING CAPITAL EXPENDITURE 2009-10 ITA NO.5946/M/12 4 DELETING THE ADDITION U/S 41(1) OF RS.496 ON SALES ACCOUNT OF DEFERRED TAX WRITTEN OFF. 2010 - 11 ITA NO.397/M/15 4 DELETING THE ADDITION OF RS.99,846/- ON ACCOUNT OF BOGUS PURCHASE 2. THEREFORE, ALL THE APPEALS, QUA THE ABOVE GROUND S WERE HEARD AFRESH. PARLE PRODUCT PRIVATE LTD 3 3. THE LD.AR OF THE ASSESSEE AT THE OUTSET SUBMITS THAT ALL THE GROUNDS OF APPEAL IN THE APPEALS UNDER CONSIDERATIO N, FOR WHICH THE ORDER WAS RECALLED, ARE COVERED IN FAVOUR OF THE AS SESSEE AND AGAINST THE REVENUE BY VARIOUS ORDERS OF THE TRIBUNAL EITHE R IN ASSESSEES OWN CASE, IN ASSESSEES GROUP CASE OR BY THE ORDERS OF THE SUPERIOR COURTS. THE LD. AR OF THE ASSESSEE ALSO FURNISHED THE COPY OF CHART, NARRATING THE GROUND OF APPEAL AND THE DECISION OF TRIBUNAL / SUPERIOR COURTS BY WHICH THE GROUNDS ARE COVERED. THE LD. DR AFTER GO ING THROUGH THE CHARTS AND THE DECISIONS REFERRED IN THE CHARTS SUB MITS THAT HE STILL RELIED ON THE ORDER OF THE ASSESSING OFFICER OR LD CIT(A) AS THE CASE MAY BE. IN THIS BACKGROUND, WE DEAL WITH THE GROUN D IN EACH OF THE APPEALS, AS UNDER:- ITA NO. 6964/MUM/2004(AY 1998-99) 4. THE GROUND NO. 1(B) IN THIS APPEAL FOR OUR CONSI DERATION IS DELETION OF ADDITION OF RS.36,55,041/- MADE ON ACCO UNT OF ALLEGED SUPPRESSED PRODUCTION RESULTING IN SUPPRESSED SALE OF CONFECTIONERY. UPON CONSIDERATION OF THE SUBMISSIONS OF THE PARTIE S, IT EMERGED BEFORE US THAT THIS GROUND OF APPEAL IS SQUARELY COVERED I N FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT IN ASSESSEES OWN CASE OF AY 1997- 98 IN ITA NO.1699/MUM/2018 & 1572/MUM/2018 (ORDER D ATED 09-08- 2019), WHEREIN THE TRIBUNAL DECIDED THE ISSUE AS UN DER:- PARLE PRODUCT PRIVATE LTD 4 10. IN GROUND NO.2, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS. 6.33 CRORE ON ACCOUNT OF SUPPRESSION OF PROD UCTION OF CONFECTIONERY IN MUMBAI UNIT RESULTING IN SUPPRESSION OF SALES. 11. FACTS RELATING TO THIS ISSUE ARE IDENTICAL TO T HE FACTS ON WHICH SIMILAR DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER IN R ESPECT OF PRODUCTION AND SALE OF BISCUITS AT MUMBAI UNIT WHICH WAS THE S UBJECT MATTER OF DISPUTE IN GROUND NO.1, HEREIN BEFORE. THE ASSESSIN G OFFICER NOTICING THAT THE AVERAGE YIELD OF CONFECTIONARY IN CMUS IS 98.90 % INFERRED THAT THE ASSESSEE HAS SUPPRESSED PRODUCTION RESULTING IN SUP PRESSION OF SALES. ACCORDINGLY, HE WORKED OUT THE QUANTUM OF SUPPRESSE D SALES AT ? 6.33 CRORE AND ADDED BACK TO THE INCOME OF THE ASSESSEE. WHILE DECIDING ASSESSEE'S APPEAL, LEARNED COMMISSIONER (APPEALS) F OLLOWED THE DECISION OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE ASSE SSMENT YEAR 1996-97 AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 12. THOUGH, LEARNED DEPARTMENTAL REPRESENTATIVE AGR EED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBU NAL IN ASSESSMENT YEAR 1996-97, HOWEVER, HE RELIED UPON THE OBSERVATIONS O F THE ASSESSING OFFICER. 13. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN ASSESSMENT YEA RS 1996-97 AND 1998- 99. THUS, HE SUBMITTED, THERE IS NO NEED TO INTERFE RE WITH THE DECISION OF LEARNED COMMISSIONER (APPEALS). 14. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. UNDISPUTEDLY, IDENTICAL ISSUE CAME UP FOR C ONSIDERATION BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 1996-97 AND WHILE DECID ING THE ISSUE IN THE ORDER CITED SUPRA, THE TRIBUNAL DELETED THE ADDITIO N MADE BY THE ASSESSING OFFICER. SINCE, THE RELEVANT OBSERVATIONS OF THE TR IBUNAL HAS ALREADY BEEN REPRODUCED HEREIN ABOVE, THERE IS NO NEED TO REPROD UCE THEM AGAIN. PERTINENTLY, WHILE DECIDING IDENTICAL ISSUE IN THE ASSESSMENT YEAR 1998-99 ALSO, THE TRIBUNAL FOLLOWING ITS EARLIER DECISION D ELETED THE ADDITION. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE DECISIO NS OF THE TRIBUNAL, AS REFERRED TO ABOVE, WE UPHOLD THE ORDER OF LEARNED C OMMISSIONER (APPEALS) ON THE ISSUE. GROUND RAISED IS DISMISSED. 5. THE FACTS OF THE YEAR UNDER CONSIDERATION ARE ST ATED TO BE IDENTICAL. THEREFORE, CONSISTENT WITH THE EARLIER DECISION OF THE TRIBUNAL, WE REJECT THE GROUND NO. 1(B) RAISED BY T HE REVENUE WITH SIMILAR DIRECTION. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ITA NO.6529/MUM/2005 (AY 2002-03) PARLE PRODUCT PRIVATE LTD 5 7. THE GROUND NO. 3 IN THIS APPEAL FOR OUR CONSIDE RATION IS DELETING THE ADDITION OF RS.15,55,396/- MADE ON ACCOUNT OF S UPPRESSED PRODUCTION RESULTING IN SUPPRESSED SALE OF CONFECTI ONERY. WE HAVE ALREADY FOUND, WHILE DECIDING THE GROUND FOR ASSESS MENT YEAR 1998-99 THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT IN ASSESSEES OWN CASE OF AY 1997- 98 IN ITA NO.1699/MUM/2018 & 1572/MUM/2018 (ORDER DATED 09-08 - 2019), WHERE WE HAVE QUOTED THE RELEVANT PORTION OF THE TR IBUNAL ORDER. THEREFORE, CONSISTENT WITH THE SAME, WE REJECT THE GROUND NO. 3 RAISED BY THE REVENUE. 8. IN THE RESULT, THE CORRESPONDING GROUND NO. 3 OF APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO. 3892/M/2007 (AY 2003-04) 9. IN THIS APPEAL BY THE REVENUE THE GROUND NO. 2 RELATES TO DELETING THE ADDITION OF RS. 5,16,221/- ON ACCOUNT OF SUPPRESSED PRODUCTION RESULTING IN SUPPRESSED SALE OF CONFECTIONARY. WE H AVE NOTED THAT THIS GROUND OF APPEAL IS IDENTICAL TO THE GROUND NO. 2 O F APPEAL OF THE REVENUE FOR AY 2002-03, WHICH WE HAVE DISMISSED BY FOLLOWING THE ORDER OF TRIBUNAL IN AY 1997-98 DATED 09 TH AUGUST 2019, THEREFORE , THIS GROUND OF APPEAL IS DISMISSED WITH SIMILAR DIR ECTIONS. PARLE PRODUCT PRIVATE LTD 6 10. GROUND NO. 5 RELATES TO DELETING THE ADDITIONS OF RS. 6,97,62,464/- BEING 50% OF DEFERRED ADVERTISEMENT EXPENSES. THE L D.AR OF THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE ISSUE IS SQ UARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEE S SUBSIDIARY COMPANY I.E. PARLE BISCUIT PVT LTD., FOR AY 2003-04 IN ITANO.3890/MUM/ 2007 (ORDER DATED 31 ST AUGUST 2010. THE LD.AR FURTHER PLACED HIS RELIANC E ON THE JUDGMENT OF THE HON BLE APEX COURT IN THE CASE OF TAPARIA TOOLS LTD VS JCIT (2015) 372 ITR 605 (SC) WHEREIN IT HAS BEEN HELD THAT DEDUCTION OF REVENUE EXPENDITURE SHOULD BE ALLOWED IN THE YEAR IN WHICH IT IS INCURRED, NOTWITHSTANDING THE TREATMENT GIVEN IN THE BOOKS OF ACCOUNT. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT FOR ASSESS MENT YEAR 2003-04, THE TRIBUNAL IN ASSESSEE S SUBSIDIARY COMPANY I.E. PARLE BISCUIT PVT LTD., FOR AY 2003-04 IN ITANO.3890/MUM/2007 (ORDER DATED 31 ST AUGUST 2010 HAS DELETED SIMILAR ADDITION, BY OBSER VING AS UNDER:- 38. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE FACTS ARE NOT IN DISPUTE IN AS MUCH AS THE ASSESSEE HAS INCUR RED EXPENDITURE OF RS.16.88 CRORES ON PUBLICITY AND BRAND ADVERTISING AND OUT OF IT THE ASSESSEE HAS DEBITED 50% OF TOTAL EXPENDITURE I.E. 8.44 CRORES IN ITS BOOKS OF ACCOUNTS AND BALANCE EXPENDITURE OF RS. 8,44,41, 448/- HAS BEEN PARLE PRODUCT PRIVATE LTD 7 CLAIMED IN THE COMPUTATION OF INCOME FILED ALONGWIT H RETURN OF INCOME. THE A.O IN VIEW OF THE ENTRIES RECORDED IN THE BOOK S OF ACCOUNTS TREATED THE BALANCE EXPENDITURE OF RS.8,44,41,448/- AS DEFE RRED REVENUE EXPENDITURE AND ALLOWED ONLY RS. 8.44 CORES AS DEBI TED IN THE BOOKS OF ACCOUNTS. ON APPEAL ID. CIT(A) OBSERVED THAT THERE IS NO DISPUTE THAT THE IMPUGNED ADVERTISEMENT EXPENDITURE IS REVENUE IN NA TURE AND THE EXPENDITURE IS LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND THAT THE ONLY DISPUTE IS WHERE THE ENTIRE EXPEN DITURE IS TO BE ALLOWED AS DEDUCTION DURING THE YEAR OR IT IS TO BE ALLOWED IN TWO YEARS AS PER TREATMENT GIVEN IN THE BOOKS OF ACCOUNTS, RELIED ON CERTAIN DECISIONS HELD THAT THE ENTIRE ADVERTISEMENT EXPENDITURE IS ALLOWA BLE IN THIS YEAR AND HENCE DELETED THE DISALLOWANCE MADE BY THE AO. 39. HERE IT IS NECESSARY TO TAKE NOTE OF THE FOLLOW ING CASES ON THIS ISSUE. 40. IN CIT VS. BERGER PAINTS (INDIA) LTD.[NO.2](CAL .][SUPRA], IT HAS BEEN HELD(PAGE 504 HEAD NOTE]: 'HELD,[I) THAT IF ACCORDING TO THE REVENUE LAWS THE ASSESSEE IS ENTITLED TO TREAT A SUM AS A REVENUE EXPENDITURE, T HEN THAT LEGAL RIGHT OF THE ASSESSEE IS NOT ESTOPPED BY THE TREATMENT GI VEN BY THE ASSESSEE TO IT IN ITS OWN BOOKS OF ACCOUNT. ADVERTISEMENT EX PENSES ARE NORMALLY TO BE TREATED AS REVENUE EXPENDITURE. THE TRIBUNAL WAS JUSTIFIED IN LAW IN ALLOWING A SUM OF RS.8,29,723/- AS REVENUE EXPENDITURE..........' 41. IN CIT VS. SAKTHI SOYAS LTD. (SUPRA), IT HAS BE EN HELD[PAGE 195 HEAD NOTE): '.....(II) THAT IN RESPECT OF THE PROJECT LAUNCHING EXPENSES AMOUNTING TO RS.16,41,125/- ALSO THE ASSESSEE HAD SPENT T HE MONEY MAINLY FOR ADVERTISEMENT THROUGH VISUAL AND PRINT MEDIA AN D ALSO FOR DESIGNING AND PRINTING LEA/LETS, BROCHURES, E TC. AND HENCE THESE EXPENSES WERE ALSO IN THE NATUR E OF BUSINESS EXPENDITURE ENTITLED FOR DEDUCTION IN COMPUTING THE ASSESSEE'S INCOME,' 42. IN CIT VS. BHOR INDUSTRIES LTD.[SUPRA], IT HAS BEEN OBSERVED AND HELD [PAGE 185): PARLE PRODUCT PRIVATE LTD 8 '.....APPLYING THE RATIO OF JUDGMENT OF THE SUPREME COURT TO THE FACTS OF THIS CASE, IN THE PRESENT MATTER, THE VRS EXPENS ES WERE INCURRED BY THE COMPANY TO SAVE ON THE EXPENSE. THE EXPENSE WAS NOT REFERABLE TO ANY INCOME-YIELDING ASSET. IT IS WELL SETTLED THAT, ORDINARILY REVENUE EXPENDITURE, WHICH IS INCURRED W HOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, MUST BE AL LOWED IN ITS ENTIRETY IN THE YEAR IN WHICH IT IS INCURRED AND IT CANNOT BE SPREAD OVER A NUMBER OF YEARS EVEN THOUGH THE ASSESSEE HAS WRITTEN IT OFF IN ITS BOOKS OVER A PERIOD OF YEARS EVEN THOUGH THE AS SESSEE HAS WRITTEN IT OFF IN ITS BOOKS OVER A PERIOD OF YEARS.....' 43. IN ACIT VS. ASHIMA SYNTEX LTD.(2009) 310 ITR(AT ) L(AHMEDABAD) (SB) THE SPECIAL BENCH OF THE TRIBUNAL WHILE CONSID ERING THE DECISION OF HON'BLE SUPREME COURT IN MADRAS INDUSTRIAL CORP LTD . VS. C1T (1997] 225 ITR 802 OBSERVED AND HELD ASUNDER (PAGE-15): '.....THIS JUDGMENT RELIED UPON BY THE ID. DEPARTME NTAL REPRESENTATIVE ITSELF CLARIFIES THAT THOUGH THE TAX PAYER MAY HAVE WRITTEN OFF THE EXPENDITURE IN ITS BOOKS OF ACCOUNT OVER A PERIOD SAY OF FIVE YEARS, IT MUST BE ALLOWED IN ITS ENTIRETY I N THE YEAR IN WHICH IT WAS INCURRED, IF IT IS REVENUE EXPENDITURE, AND IF IT IS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSES OF BUSINESS. IN THE CASE UNDER CONSIDERATION, THERE IS NOTHING TO SUGGEST THAT WIT H THIS EXPENDITURE, ANY ASSET, TANGIBLE OR INTANGIBLE, HAS BEEN CREATED . THERE IS NO EVIDENCE ON RECORD REGARDING ACCRUAL OF ANY SPECIFI C REVENUE IN THE YEARS UNDER CONSIDERATION OR SUBSEQUENTLY OVER A DE FINED PERIOD WITH THE INCURRING OF THE SAID EXPENDITURE. THE ASS ESSING OFFICER HIMSELF ADMITTED THE PORTION OF EXPENDITURE DEBITED IN THE PROFIT AND LOSS ACCOUNT AS REVENUE EXPENDITURE. IN THESE CIRCU MSTANCES, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE FI NDINGS OF THE ID. COMMISSIONER OF INCOME TAX (APPEALS).' 44. IN CIT VS. JAI PARABOLIC SPRINGS LTD., (2008) 3 06 ITR 42 (DEL) IT HAS BEEN OBSERVED AND HELD AS UNDER- 'THE ASSESSEE FILED A RETURN OF INCOME DECLARING A NET LOSS AT RS. 4,40,36,000/- FOR THE ASSESSMENT YEAR 1990-91. THE LOSS WAS COMPUTED AT USD 4,27,63,353, INTER ALIA, BY MAKING SEVERAL PARLE PRODUCT PRIVATE LTD 9 ADDITIONS AND DISALLOWANCES. THE ASSESSEE INCURRED AN EXPENDITURE OF RS. 19,48,125/- AS EXPENDITURE ON ACCOUNT OF CUS TOMER INTRODUCTION CHARGES WHICH WERE DEBITED AS 'DEFERRE D REVENUE EXPENSES' IN THE BALANCE-SHEET. THE EXPENDITURE WAS WRITTEN OFF OVER A PERIOD OF FIVE YEARS STARTING FROM THE ASSESSMENT YEAR 1990-91 AND ACCORDINGLY THE ASSESSEE CLAIMED REDUCTION OF RS, 3 ,89,625 IN THE RETURN. THE CLAIM WAS ALLOWED BY THE ASSESSING OFFI CER. IN APPEAL BEFORE THE COMMISSIONER (APPEALS), THE ASSESSEE CLA IMED AN ADDITIONAL GROUND THAT THE ENTIRE DEFERRED REVENUE EXPENSES WERE DEDUCTIBLE IN THE ASSESSMENT YEAR IN APPEAL. THE AP PEAL WAS ALLOWED. THE TRIBUNAL RESTORED THE MATTER TO THE AS SESSING OFFICER. THE ASSESSING OFFICER ALLOWED ONLY A REDUCTION OF R S. 3,89,625 AND DISALLOWED THE CLAIM OF RS. 15,58,500 ON THE GROUND THAT THIS WAS NOT CLAIMED BY THE ASSESSEE IN ITS RETURN OF INCOME IN THE ASSESSMENT YEAR 1990-91. THE COMMISSIONER (APPEALS) HELD THAT THE ASSESSING OFFICER ERRED IN DISALLOWING THE EXPENDITURE ON THE SOLE GROUND THAT NO CLAIM FOR DEDUCTION OF THE AMOUNT WAS MADE IN THE RETURN OF INCOME. THIS ORDER WAS CONFIRMED BY THE TRIBUNAL ON APPEAL: HELD, DISMISSING THE APPEAL, THAT THERE WAS NO PROHIBITIO N ON THE POWERS OF THE TRIBUNAL TO ENTERTAIN AN ADDITIONAL G ROUND WHICH ACCORDING TO THE TRIBUNAL AROSE IN THE MATTER AND F OR THE JUST DECISION OF THE CASE. THERE WAS NO INFIRMITY IN THE ORDER OF THE TRIBUNAL' 45. IN SILICON INTERFACES PRIVATE LIMITED, 1TA NO.7 434/M/03, A.Y. 2001-02 DATED 30.6.2005, THE TRIBUNAL WHILE RELYING ON THE DECISION OF THE TRIBUNAL IN AMAR RAJA BATTERIES LTD. VS. AC1T, 272 1TR 1 [AT]; 91 1TD 280 AND THE RATIO OF DECISION OF KEDARNATH JUTE MANUFACTURING CO. LTD. VS. C1T 82 1TR 363 (SC) HOLDING THAT THE BOOKS OF ACCOUNTS DO NOT DETERMINE THE ALLOWABILITY OR OTHERWISE EXPENDITURE , AGREEING WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL AND DELETED THE DISALLOWANCE MADE BY THE AO. 46. APPLYING THE RATIO OF AFORESAID LEGAL POSITION TO THE FACTS OF THE PRESENT CASE WE ARE OF THE VIEW THAT MAKING OF AN E NTRY OR ABSENCE OF AN PARLE PRODUCT PRIVATE LTD 10 ENTRY DOES NOT DETERMINE THE ALLOWABILITY OR OTHERW ISE OF THE ITEM OF EXPENDITURE AND THE SAME CAN NOT BE CONSIDERED TO B E A FACTOR ADVERSE, IF THE EXPENDITURE IS OTHERWISE OF ALLOWABLE NATURE. I T IS NOT THE CASE OF THE REVENUE THAT THE EXPENDITURE INCURRED BY THE ASSESS EE ON PUBLICITY AND BRAND ADVERTISING ARE NOT REVENUE IN NATURE OR HAVE NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THERE IS NOTHING TO SUGGEST THAT WITH THIS EXPENDITURE, ANY ASSET TANGI BLE OR INTANGIBLE, HAS BEEN CREATED. THERE IS NO LAW UNDER THE ACT TO SAY THAT THE REVENUE EXPENDITURE IS DEFERRED REVENUE EXPENDITURE. THE A. O HIMSELF ADMITTED THE PORTION OF EXPENDITURE DEBITED IN THE P&L ACCOU NT AS REVENUE EXPENDITURE. THIS BEING SO, WE ARE OF THE VIEW THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON PUBLICITY AND BRAND ADV ERTISING ARE ALLOWABLE AS REVENUE EXPENDITURE. ACCORDINGLY, WE ARE INCLINE D TO UPHOLD THE FINDING OF THE ID. CIT(A) IN DELETING THE DISALLOWA NCE MADE BY THE AO. THE GROUND TAKEN BY THE REVENUE IS, THEREFORE, REJE CTED. 12. FACTS OF THE APPEAL UNDER CONSIDERATION ARE STA TED TO BE UNDISPUTEDLY IDENTICAL. THEREFORE, CONSISTENT WITH THE EARLIER VIEW TAKEN BY THE TRIBUNAL IN ASSESSEE S GROUP CASE IN PARLE BISCUITS PRIVATE LTD (SUPRA), WE DO NOT FIND ANY MERIT IN TH E GROUND RAISED BY THE REVENUE. THE SAME IS REJECTED. 13. IN THE RESULT, THE GROUND NO. 2 &5 OF THE APPEA L FILED BY THE REVENUE ARE DISMISSED. ITA NO.5946/MUM/2012 (AY 2009-10) 14. IN THIS APPEAL BY THE REVENUE, THE GROUND NO.4 RELATES TO DELETION OF ADDITION OF RS.2,47,27,756/- MADE U/S 41(1) ON ACCOUNT OF DEFERRED SALES TAX WRITTEN OFF . UPON CONSIDERATION OF THE SUBMISSIONS OF THE PARTIES, IT EMERGED BEFORE US THAT THE ISSUE IS SQU ARELY COVERED IN PARLE PRODUCT PRIVATE LTD 11 FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT IN A SSESSEES OWN CASE FOR AY 2004-05 IN ITA NO.445/MUM/2009 (ORDER DATED 13 TH MARCH, 20189), WHEREIN THE TRIBUNAL HAS HELD AS UNDER:- 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. COUNSEL OF THE ASSESSEE CONTENDED THAT ASSESSEE HAS CONSTRU CTED VIEWING GALLERIES IN THE CONTRACT MANUFACTURING UNITS. HE SUBMITTED T HAT ASSESSEE HAS NO OWNERSHIP RIGHTS UPON THE SAID CONSTRUCTION. HENCE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE SAID EXPENDITURE CANNOT BE SAID TO BE CAPITAL EXPENDITURE IN THE HANDS OF THE ASSESSEE LIABLE FOR DEPRECATION. HE SUBMITTED THAT SINCE THE ASSESSEE HAS CONSTRUCTED T HE VIEWING GALLERIES FOR THE PROMOTION OF BUSINESS AND FOR SMOOTH CONDUCT OF THE FUNCTIONING OF THE CONTRACT MANUFACTURING UNIT AND PROPER SUPERVISION THEREOF THE SAME SHOULD BE ALLOWED AS REVENUE EXPENDITURE. PER CONTR A LD. DR RELIED UPON THE ORDERS OF THE LD. CIT(A). 7. UPON CAREFUL CONSIDERATION WE FIND THAT THE INCO ME LAX LAW PROVIDING FOR CAPITAL EXPENDITURE LIABLE FOR DEPRECIATION IS CONTAINED UNDER SECTION 32 OF THE IT. ACT. AS PER THE PROVISIONS OF LAW OWNERS HIP THE PROPERTY IS SINE QUO NON FOR DEPRECIATION. HENCE SINCE THE ASSESSEE DOES NOT HAVE OWNERSHIP IT CANNOT BE TREATED AS CAPITAL EXPENDITU RE IN THE HANDS OF THE ASSESSING LIABLE FOR DEPRECATION. THE SUBMISSION OF THE ASSESSEE THAT THE SAID CONSTRUCTION ENABLES THE ASSESSEE TO CARRY ON HIS BUSINESS MORE EFFICIENTLY AND PROFITABLY AND HENCE THE SAME SHOUL D BE ALLOWED UNDER SECTION 37 OF THE I.T. ACT HAS CONSIDERABLE COGENCY . IN THIS REGARD WE ARE IN AGREEMENT WITH THE SUBMISSION OF THE LEARNED COU NSEL OF THE ASSESSEE THAT THE BENEFIT FROM THE SAID EXPENDITURE MAY BE O F SOME ENDURING BENEFIT BUT, THE SAID EXPENDITURE WAS NECESSARY FOR THE BUS INESS TO THE CARRIED ON MORE EFFICIENTLY AND PROFITABLY. HENCE ON THE TOUCH STONE OF FOLLOWING CASE LAWS THE ASSESSEE DESERVES TO SUCCEED. CIT V. EMPIRE JUTE 124 ITR I (SC) CIT V. ASSAM BENGAL CEMENT 27 ITR 34 ISC) ALEMBIC CHEMICAL WORKS CO. LTD. V. CIT 177 ITR 377 (SC) PARLE PRODUCT PRIVATE LTD 12 9. ACCORDINGLY WE SET ASIDE THE ORDERS OF AUTHORITI ES BELOW AND DECIDE THE ISSUE IN FAVOUR OF ASSESSEE. HENCE ALL THE GROUNDS AS CONSIDERED ABOVE ARE DECIDED IN FAVOUR ASSESSEE. THE OVERALL DECISIONS O F THE APPEALS HAVE TO BE READ IN CONJUNCTION WITH THE ITAT ORDER PASSED EARL IER. 15. THE FACTS FOR THIS ASSESSMENT YEAR ARE STATED T O BE IDENTICAL. THEREFORE, FOLLOWING THE PRECEDENT OF EARLIER YEAR AND RESPECTFULLY FOLLOWING THE SAME, WE REJECT THE GROUND NO. 4 RAIS ED BY THE REVENUE. 16. IN THE RESULT, GROUND NO. 4 OF THE APPEAL FILED BY REVENUE IS DISMISSED. ITA NO.6715/MUM/2011 (AY 2008-09) 17. FIRST ISSUE/ GROUND NO. 4 RELATES TO DELETION OF ADDITION OF RS.4,96,28,000 MADE U/S 41(1) ON ACCOUNT OF DEFERRED SALES TAX WRITTEN OFF . UPON HEARING PARTIES FROM BOTH THE SIDES, WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF T HE TRIBUNAL FOR AY 2004-05 IN ITA NO.445/MUM/2009 VIDE ORDER DATED 13- 03-2019, THE RELEVANT PORTION OF WHICH, WE HAVE ALREADY QUOTED ABOVE, WHILE DECIDING THE APPEAL OF REVENUE FOR AY 2009-10(SUPRA ). THE FACTS AND CIRCUMSTANCES FOR THIS ASSESSMENT YEAR ARE SIMILAR. THEREFORE, FOLLOWING THE PRECEDENT, WE REJECT THE GROUND NO.4 RAISED BY THE REVENUE. 18. GROUND NO. 5 RELATES TO EXPENSES ON CELEBRITIES FOR PUBLICITY AND SALES PROMOTION. THE LD. AR FOR THE ASSESSEE SUBMIT S THAT THIS ISSUE IS PARLE PRODUCT PRIVATE LTD 13 ALSO COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF TRIBUNAL IN ASSESSEES SUBSIDIARYS CAS E IN CIT VS PARLE BISCUITS PVT LTD. IN ITA NO. 3890/MUM/2007 FOR AY 2 003-04. ON THE OTHER HAND THE LD. DR SUPPORTED THE ORDER OF THE AO . 19. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE RECORD. WE HAVE NOTED THAT THIS GROUND OF APPEAL IS IDENTICAL TO THE GROUND NO. 5 IN REVENUES APPEAL F OR AY 2003-04 (SUPRA), WHICH WE HAVE ALREADY DISMISSED BY FOLLOWI NG THE ASSESSEES GROUP CASE. HENCE, THIS GROUND OF APPEAL IS ALSO DI SMISSED WITH SIMILAR OBSERVATION. 20. IN THE RESULT THE APPEAL THE GROUND NO. 4&5 OF THE REVENUE IS DISMISSED. ITA NO. 6713/MUM/2011 (AY 2006-07 ) 21. THE FIRST ISSUE IN THIS APPEAL THAT REMAINED TO BE ADJUDICATED UPON IS GROUND NO. 4, WHICH RELATES TO APPEAL FOR D ELETION OF ADDITION OF RS.4,96,28,000/- MADE U/S 41(1) ON ACCOUNT OF DEFERRED SALES TAX WRITTEN OFF. UPON HEARING PARTIES FROM BOTH THE SIDES, WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF THE TRIBUNAL FOR AY 2004-05 IN ITA NO.445/MUM/2009 VIDE ORDER DA TED 13-03- 2019, THE RELEVANT PORTION OF WHICH, WE HAVE ALREA DY QUOTED ABOVE, PARLE PRODUCT PRIVATE LTD 14 WHILE TAKING THE GROUNDS OF APPEAL FOR AY 2009-10 A ND 2008-09. THE FACTS AND CIRCUMSTANCES FOR THIS ASSESSMENT YEAR AR E STATED TO BE IDENTICAL. THEREFORE, FOLLOWING THE PRECEDENT, WE REJECT THE GROUND NO4 RAISED BY THE REVENUE. 22. THE OTHER ISSUE IN THIS APPEAL THAT REMAINED T O BE ADJUDICATED IS GROUND NO. 5, WHICH RELATES DELETION OF DISALLOWANC E MADE ON ACCOUNT OF EXPENDITURE ON CELEBRITIES FOR PUBLICITY AND SAL ES PROMOTION. UPON HEARING PARTIES FROM BOTH THE SIDES, WE FIND THAT T HIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF T HE TRIBUNAL FOR AY 2004-05 IN ITA NO.445/MUM/2009 VIDE ORDER DATED 13- 03-2019, IN ASSESSEES GROUP CASE. WE HAVE NOTED THAT BY FOLLOW ING THE AFORESAID ORDER WE HAVE GRANTED RELIEF TO THE ASSESSEE IN APP EAL FOR AY 2003-04 AND IN AY 2008-09 AND DISMISSED THE SIMILAR GROUNDS OF APPEAL. THEREFORE, FOLLOWING THE PRINCIPAL OF CONSISTENCY T HIS GROUND NO 5 OF APPEAL IS DISMISSED WITH SIMILAR OBSERVATIONS. 23. IN THE RESULT, GROUND NO. 4&5 OF THE APPEAL OF REVENUE IS DISMISSED. ITA NO.7314/MUM/2011(AY 2007-08) 24. THE FIRST ISSUE WHICH LEFT FROM ADJUDICATION I S GROUND NO.4, WHICH RELATES TO DELETION OF ADDITION UNDER SECTION 41(1) ON ACCOUNT OF WRITE PARLE PRODUCT PRIVATE LTD 15 BACK OF SALES TAX DEFERRAL LOAN. WE HAVE SEEN THAT THIS GROUND OF APPEAL IS IDENTICAL TO THE GROUND NO. 4 OF APPEAL FOR AY 2 006-07, WHICH WE HAVE DISMISSED BY FOLLOWING THE ORDER OF TRIBUNAL I N APPEAL FOR AY 2004-5 IN ITA NO. 445/MUM/2009. THEREFORE, IN VIEW OF THE CONSISTENCE ORDER OF THE TRIBUNAL THIS GROUND OF AP PEAL NO.4 IS DISMISSED WITH SIMILAR DIRECTION. 25. THE SECOND GROUND, I.E. GROUND NO. 5 RELATES TO DELETION OF DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D. T HE LD. AR FOR THE ASSESSEE SUBMITS THAT THE PROVISIONS OF RULE 8D IS APPLICABLE FROM AY 2008-09. THE AO MADE DISALLOWANCE BY INVOKING THE P ROVISIONS OF RULE 8D. THE LD CIT(A) MADE DISALLOWANCE OF RS.7,68 ,000/-, WHICH ARE REASONABLE ONE. THE DISALLOWANCE SUSTAINED BY LD CI T(A) INCLUDES SALARY OF ONE ACCOUNTS MANAGER OF RS. 3,25,000/-, P ROPORTIONATE SALARY 20% OF THE FINANCE CONTROLLER OF RS.1,47,998/- AND OTHER ADMINISTRATIVE EXPENSES OF RS.50,000/-. IN SUPPORT OF HIS SUBMISSI ONS THE LD AR FOR ASSESSEE RELIED ON THE DECISION OF SUPREME COURT IN CIT VS ESSAR TECHNOLOGY LTD. [(2018) 401 ITR 445 (SC) ]. 26. ON THE HAND THE LD. DR FOR THE REVENUE SUPPORTE D THE ORDER OF THE ASSESSING OFFICER. PARLE PRODUCT PRIVATE LTD 16 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE PERUSED THE ORDER OF THE LOWER AUTHORITIES. DURING THE RELEVANT PERIOD THE ASSESSEE EARNED EXEMPT INCOME OF RS. 13,25,76,7 69/- ON ACCOUNT OF INTEREST ON TAX FREE BONDS AND RS.5,86,05,674/- AS DIVIDEND INCOME. THE ASSESSEE MADE SUO MOTO DISALLOWANCE OF RS. 2,18,000/-. THE ASSESSEE HAS PAID PORTFOLIO MANAGEMENT SERVICES (PMS) OF RS. 79,94,781/- FOR MANAGING THE INVESTMENT. THE ASSESSING OFFICER ISSU ED SHOW CAUSED NOTICE TO THE ASSESSEE FOR MAKING DISALLOWANCE UNDE R SECTION 14A RWS RULE 8D. THE ASSESSEE FILED ITS REPLY. IN THE REPLY THE ASSESSEE STATED THAT THE DIVIDEND AND INTEREST INCOME WERE DIRECTLY CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAS NOT INCUR RED ANY OTHER EXPENSES EXCEPT THE PAYMENTS MADE TO THE PMS AND AC CORDINGLY NO DISALLOWANCE UNDER SECTION 14A CAN BE MADE. THE RE PLY OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO. THE AO INVOKED THE PROV ISIONS OF RULE 8D AND MADE DISALLOWANCE OF RS.46,72,378/-, WHICH C ONSIST OF RS. 2,18,000/- ON ACCOUNT OF DEMAT CHARGES AS DIRECT EX PENSES AND RS. 44,54,378/- BEING .5% OF AVERAGE VALUE OF INVESTMEN TS, NO INTEREST DISALLOWANCE WAS MADE. THE AO FURTHER CONCLUDED THA T THE ASSESSEE WHILE COMPUTING TAXABLE INCOME HAS ALREADY DISALLOW ED RS. 2,18,000/-, THEREFORE, THE DISALLOWANCE UNDER SECTION14A WAS RE STRICTED TO RS. 44,54278/-. PARLE PRODUCT PRIVATE LTD 17 28. ON APPEAL BEFORE CIT(A), THE ASSESSEE STATED TH AT THE ASSESSEE HAS NOT INCURRED ANY OTHER EXPENSES, EXCEPT OF DEMAT CH ARGES OF RS.2,18,000/- FOR MAKING INVESTMENT IN THE SHARES, WHICH IS ALREADY DISALLOWED BY THE ASSESSEE. NO EXPENSES CAN BE ATTR IBUTED ON ESTIMATED AS PER RULE 8D. THE ASSESSEE ALSO RELIED ON A NUMBE R OF DECISIONS OF TRIBUNAL AND HIGH COURTS AS RECORDED BY LD CIT(A) I N PARA 9.4 OF HIS ORDER. THE ASSESSEE SPECIFICALLY RELIED ON THE DECI SION OF HONBLE BOMBAY HIGH COURT IN GODREJ & BOYCE (ITA NO. 626/20 10), WHEREIN IT WAS HELD THAT THE RULE 8D IS APPLICABLE FROM AY 2008-09 AND THE EXPENSES WHICH HAVE DIRECT AND INDIRECT PROXIMITY W ITH THE EARNING THE EXEMPT INCOME TO BE DISALLOWED. THE ASSESSEE ALSO S UBMITTED THAT IF THE DIRECT AND INDIRECT EXPENSES ARE CONSIDERED FOR DIS ALLOWANCES, IT WOULD BE RS. 7,68,000/- ONLY AND THAT THE ASSESSEE HAS AL READY DISALLOWED RS. 2,18,000/-. THE LD CIT(A) AFTER CONSIDERING HE SUBM ISSION OF THE ASSESSEE CONCLUDED THAT THE PROVISION OF RULE 8D IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION, IN VIEW OF THE DECISI ON OF HONBLE BOMBAY HIGH COURT IN GODREJ & BOYCE LTD. (SUPRA). I T WAS FURTHER HELD THAT DISALLOWANCE CAN BE MADE ON A REASONABLE BASIS. THE ASSESSEE HAS ALREADY OFFERED RS. 2,18,000/- AS SUO-MOTO DISA LLOWANCE RELATED TO DEMAT CHARGES ATTRIBUTABLE FOR EARNING TAX FREE INC OME. THE LD. CIT(A) AFTER RELYING UPON THE DECISION IN ASSESSEES SUBSI DIARY CASE OF M/S PARLE PRODUCT PRIVATE LTD 18 PARLE BISCUITS LTD. FOR ASSESSMENT YEAR 2006-07 WHI CH WAS A SUBJECT MATTER BEFORE DRP, WHEREIN DRP DIRECTED THE ASSESSI NG OFFICER TO ALLOW ONLY DIRECT AND INDIRECT EXPENSES WHICH HAVE PROXIMITY WITH THE EARNING OF EXEMPT INCOME. THE LD CIT(A) FURTHER NOT ED THAT THE ASSESSEE HAS ALREADY ADDED RS. 2,18,000/- BEING SUO -MOTO DISALLOWANCE WHILE COMPUTING TAXABLE INCOME. THE INDIRECT EXPEN SES CONSIST SALARY OF ACCOUNTS MANAGER WHICH IS RS. 3,25,229/-. THE AS SESSEE HAS ATTRIBUTED THAT THE ACCOUNTS MANAGER HAS DEVOTED 20 % OF HIS TIME IN THE INVESTMENTS ACTIVITY HENCE, ONLY 20% OF HIS SAL ARY CAN BE REASONABLY LINKED TO THE EARNING OF EXEMPT INCOME. FURTHER, THE ASSESSEE HAS ALSO SUO-MOTO OFFERED RS. 50,000/- AS OTHER ADMINISTRATIVE EXPENSES SUCH AS TELEPHONE, E-MAIL CHARGES AND ANY OTHER CHARGES. AFTER CONSIDERING ALL DIRECT AND INDIRECT EXPENSES THE LD CIT(A) CAME TO THE CONCLUSION THAT THE REASONABLE DISALLOWANCE UND ER SECTION 14A WOULD BE RS. 550,000/-, IN ADDITION TO THE DEMAT CH ARGES OF RS. 218,000/-, AND RESTRICTED THE DISALLOWANCE TO THAT EXTENT ONLY. IN OUR VIEW THE LD CIT(A) MADE REASONABLE DISALLOWANCE UND ER SECTION 14A, WHICH DO NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY, THE ORDER PASSED BY LD. CIT(A) ON GROUND NO.5 OF THE APPEAL IS AFFIRMED . IN THE RESULT, THE GROUND NO.5 OF THE APPEAL IS DISMISSED. PARLE PRODUCT PRIVATE LTD 19 29. IN THE RESULT, THE GROUND NO. 4& 5 OF THE APPEA L OF THE REVENUE IS DISMISSED. ITA NO.397/MUM/2015 ((AY 2010-11) 30. THE SOLE ISSUE IN THIS REVENUES APPEAL THAT RE MAINED TO BE ADJUDICATED IS GROUND NO.4, WHICH RELATES TO DELETI ON OF ADDITION OF RS.99,846/- MADE ON ACCOUNT OF BOGUS PURCHASES. 31. THE LD.AR OF THE ASSESSEE, AT THE OUTSET SUBMIT S THAT THE ASSESSING OFFICER HAS MADE ADDITION MERELY BECAUSE THE ASSESSEE- COMPANY COULD NOT PRODUCE THE PARTY BEFORE HIM FOR CONFIRMATION AND THE NAME OF THE CONCERNED PARTY WAS APPEARING IN TH E LIST OF PARTIES OF HAWALA TRADERS PREPARED BY THE INVESTIGATION WING O F THE SALES TAX DEPARTMENT OF STATE GOVERNMENT. THE SAID HAWALA DEA LERS WERE ALLEGEDLY INDULGING IN THE PRACTICE OF PROVIDING TH E BOGUS PURCHASE BILLS. THE ASSESSEE HAS CONTENDED THAT THE TRANSACT ION WAS GENUINE AND SUBMITTED EVIDENCES SUCH AS COPY OF THE INVOICES, I NVOICE NUMBER, INWARD REGISTER NUMBER, LEDGER ACCOUNT, PAYMENT OF INVOICES BY CHEQUE, ETC. THE LD. AR FURTHER SUBMITS THAT THE I SSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF JURISDICT ION HIGH COURT IN THE CASE OF CIT VS NIKUNJ EXIMP ENTERPRISES (P) LTD (20 15) 372 ITR 619 (BOM), WHEREIN IT HAS BEEN HELD THAT SINCE SALE SUP PORTED THE PURCHASES MADE BY THE ASSESSEE AND THE PAYMENTS WERE ALSO MAD E THROUGH BANKS, PARLE PRODUCT PRIVATE LTD 20 THE PURCHASE COULD NOT BE REJECTED AS BOGUS MERELY BECAUSE THE SUPPLIERS HAD NOT APPEARED BEFORE THE ASSESSING OFF ICER. ALSO THAT, SPECIAL LEAVE PETITION FILED BY THE DEPARTMENT AGAI NST THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT HAS BEEN DISMISSED BY THE HONBLE APEX COURT VIDE ORDER DATED 30 TH AUGUST, 2013 IN SLP (CIVIL) NO.14828/2013). THE LD.AR FURTHER PLACED HIS RELIA NCE ON THE DECISION OF ITAT, MUMBAI IN THE CASE OF DC IT VS RA JEEV G KALATHIL (2015) 67 SOT 52 (MUMBAI TRIB). 32. THE LD. DR, ON THE OTHER HAND THE LD. DR FOR TH E REVENUE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. THE L D. DR FOR THE REVENUE SUBMITS THAT THE INVESTIGATION WING OF THE INCOME-T AX DEPARTMENT MADE FULL FLAGGED INVESTIGATION ON THE INFORMATION RECEI VED FROM THE SALES TAX DEPARTMENT OF STATE GOVERNMENT AND CAME TO THE CONCLUSION THAT THESE FIRMS WERE FICTITIOUS AND WAS PROVIDING THE B OGUS BILLS WITHOUT ACTUAL DELIVERY OF GOODS. THE ASSESSEE IS ONE OF TH E BENEFICIARIES OF SUCH BOGUS ENTRY. 33. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL PLACED ON RECORD. DURING THE ASSESSING OF FICER NOTED THAT INFORMATION IS RECEIVED FROM THE INVESTIGATION WING THAT SOME OF THE HAWALA TRADERS ARE INDULGING IN PROVIDING BOGUS BIL LS WITHOUT DELIVERY OF GOODS. THE ASSESSEE IS ALSO ONE OF THE BENEFICIA RIES WHO HAS AVAILED PARLE PRODUCT PRIVATE LTD 21 SUCH BOGUS ENTRIES. THE ASSESSEE HAS SHOWN PURCHASE FROM LAKSHMI TRADING COMPANY OF RS. 99,846/-. ACCORDINGLY, THE A SSESSEE WAS ASKED TO SUBSTANTIATE THE PURCHASES SHOWN FROM LAKS HMI TRADING COMPANY. THE ASSESSEE WAS ALSO ASKED TO PRODUCE THE PARTY AND TO FURNISH THE TRANSACTION DATE, CHALLAN NO., AND INWA RD AND OUTWARD REGISTER NUMBER ALONG WITH DOCUMENTARY EVIDENCE. TH E ASSESSEE IN ITS REPLY STATED THAT THEY TRY TO CONTACT M/S LAKSHMI T RADING COMPANY ON THE TELEPHONE NUMBER PROVIDED ON THE BILLS. HOWEVER , THEY WERE TOLD THAT THE TELEPHONE NUMBER IS WRONG, ACCORDINGLY THE ASSESSEE ARE UNABLE TO PRODUCE THE SAID PARTY. THE REPLY OF ASSE SSEE WAS NOT ACCEPTED BY ASSESSING OFFICER THE ASSESSING OFFICER ON THE BASIS OF REPORT OF SALES TAX AUTHORITY CONCLUDED THAT THE SA ID PARTY ADMITTED BEFORE SALES TAX AUTHORITY ABOUT INDULGING IN PROVI DING BOGUS BILLS. SINCE, THE ASSESSEE FAILED TO DISCHARGE ITS ONUS AB OUT THE GENUINENESS OF TRANSACTION. THE ASSESSING OFFICER MADE THE DISA LLOWANCE OF ENTIRE PURCHASES SHOWN FROM MESSAGE LAKSHMI TRADING COMPAN Y. 34. ON APPEAL BEFORE LD. CIT(A) THE ASSESSEE SUBMIT TED THAT THE TRANSACTION WITH LAKSHMI TRADING CO WERE GENUINE. T HE ASSESSEE FURNISHED ALL THE DETAIL REQUIRED BY ASSESSING OFFI CER TO PROVE THE GENUINENESS OF TRANSACTION, TRANSACTION DATE, BILLS / INVOICES, DELIVERY CHALLAN, IN OUTWARD AND INWARD ENTRY EVIDENCING THE DELIVERY OF GOODS PARLE PRODUCT PRIVATE LTD 22 AND THE PAYMENTS THROUGH CHEQUES. THE LEARNED CIT ( A) AFTER CONSIDERING THE CONTENTION OF ASSESSEE CONCLUDED TH AT THE ASSESSEE PRODUCED RELEVANT DOCUMENTS ABOUT THE TRANSACTION. THE PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. THE BANK S TATEMENT REFLECTS THAT PAYMENT WAS MADE TO THE SAID PARTY. T HE ASSESSEE IS A REPUTED COMPANY AND HAVING TURNOVER IN SEVERAL HUND RED CRORES, WHEREAS THE AMOUNT IN DISPUTE IS BELOW THE 1 LAKH ONLY. THE ASSESSEE HAS SHOWN INCOME OF MORE THAN RS. 46 CRORE. IT WAS FURTHER CONCLUDED THAT IT IS NOT CONVINCING THAT THE ASSESSEE WOULD P ROCURE SUCH BOGUS BILL OF RS.99,846/- ONLY. THE LEARNED CIT(A) ALSO CONCLU DED THAT THE SELLING PARTY, AFTER COLLECTION OF VAT MAY NOT HAVE DEPOSIT ED IT WITH THE GOVERNMENT TREASURY, WHICH MAY LEADS TO TREAT THE S AID PARTY AS HAWALA TRADERS. IT WAS CONCLUDED BY LD CIT(A) THAT THE ASSESSING OFFICER HAS NOT MADE ANY CONSEQUENTIAL ENQUIRIES; W HETHER ANY MONEY HAS BEEN RECEIVED BACK BY THE ASSESSEE OR NOT. WE HAVE NOTED THAT THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACC OUNT OF THE ASSESSEE. THE LEARNED ASSESSING OFFICER IS NOT DISPUTED THE C ONSUMPTION OF THE MATERIAL PURCHASED BY ASSESSEE. THE ASSESSING OFFIC ER WITHOUT MAKING ANY INDEPENDENT ENQUIRY DISALLOWED ENTIRE PURCHASES FROM LAKSHMI TRADING COMPANY. THE LEARNED CIT(A) THE ENTIRE ADDI TION AFTER CONSIDERING THE MATERIAL PLACED BEFORE HIM. IN VIEW OF THE DETAILED AND PARLE PRODUCT PRIVATE LTD 23 REASONED ORDER PASSED BY LEARNED CIT(A), WE DO NOT FIND ANY REASON TO DEVIATE FROM IT, WHICH WE AFFIRMS . IN THE RESULT THIS GROUND NO. 4 OF APPEAL RAISED BY THE REVENUE IS DISMISSED AND THE D ETAILED APPEAL OF THE ASSESSEE IS DISMISSED. 35. IN THE RESULT, THE GROUND NO. 4 OF APPEAL FILED BY THE REVENUE IS DISMISSED. 36. IN THE RESULT, ALL THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13-09-2019. SD/- SD/- (R.C. SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 13 TH SEPTEMBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI