The Assistant Commissioner of Wealth-tax, Jalandhar V. M/s. Malhotra Book depot, Jalandhar

ITA 705/ASR/2013

• Counselvise Citation: 70520914 RSA 2013
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 PAN: AABFM2169D THE ASSISTANT COMMISSIONER VS. M/S MALHOTRA BOOK DEPOT OF INCOME TAX, CENTRAL CIRCLE-II, RAILWAY ROAD, JA LANDHAR JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. MAHAVIR SINGH, SR. DR RESPONDENT BY: SH. SUDHIR SEHGAL DATE OF HEARING: 05.06.2014 DATE OF PRONOUNCEMENT: 14.07.2014 ORDER PER A.D. JAIN, J.M. 1. THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YE AR 2009-10, CONTENDING THAT THE LEARNED CIT(A) HAS ERRED IN DE LETING THE ADDITION OF RS. 11,30,130/- OUT OF THE TOTAL ADDITION OF RS. 15 ,43,600/- MADE ON ACCOUNT OF DISALLOWANCE OF BUSINESS PROMOTION EXPEN SES. 2. A SEARCH WAS CARRIED OUT ON THE MBD GROUP OF CAS ES BY THE DIRECTORATE OF INCOME TAX (INVESTIGATION), BATHINDA , ON 22.01.2009. CERTAIN DOCUMENTS WERE SEIZED. THE ASSESSING OFFICE R OBSERVED FROM THE PROFIT AND LOSS ACCOUNT, THAT THE ASSESSEE HAD CLAI MED AN EXPENDITURE OF 2 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 RS. 41,34,707/- AS BUSINESS PROMOTION EXPENDITURE I N RESPECT OF ALL ITS BRANCHES. ALMOST ALL THE EXPENSES WERE IN CASH. WHE N ASKED TO EXPLAIN THE NATURE OF SUCH EXPENDITURE AND PRODUCE VOUCHERS , THE ASSESSEE STATED THAT THE VOUCHERS WERE NOT AVAILABLE, BUT THE ACCOU NT REPRESENTED THE PAYMENT OF COMMISSION IN CASH AGAINST THE SALE OF BOOKS; AND THAT SUCH PAYMENT WAS OBLIGATORY SO AS TO BOOST SALES/GET ORD ERS. A SURVEY HAD BEEN CONDUCTED, IN WHICH, A DIARY HAD BEEN FOUND. T HE ASSESSEE SUBMITTED THAT THE SAID DIARY ITSELF WAS THE EVIDEN CE FOR SUCH EXPENDITURE IN QUESTION. OTHER DOCUMENTS IMPOUNDED DURING THE SURVEY INCLUDED A CONSOLIDATED LEDGER AND PARTY-WISE LEDGER OF THE ME NTIONED CONCERNS, MAINLY FOR FINANCIAL YEARS 2006-07 AND 2007-08, AND PARTY-WISE LEDGER IN SOME CASES, UPTO 30.11.2008. THERE WERE NO REGULAR BOOKS OF ACCOUNT FOUND, EITHER OF THE ASSESSEE, OR THE OTHER CONCERN S, FOR THE YEAR UNDER CONSIDERATION. 3. AS PER THE SEARCH REPORT, THE ASSESSEE WAS PAYIN G SECRET COMMISSIONS TO THE SCHOOL MANAGING COMMITTEES, IN ORDER TO INFLUENCE THE SALE OF MBD BOOKS. THIS, ACCORDING TO THE REPOR T, GOT SUBSTANTIATED FROM THE DIARY IMPOUNDED DURING THE SURVEY. ON VERI FICATION, THE FOLLOWING PERSONS DENIED HAVING RECEIVED ANY SUCH C OMMISSION: I. MRS. CHANDER KANTA, PRINCIPAL, NAVYUG HR. SEC. SCHO OL, SHIV NAGAR, JAMMU. 3 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 II. MRS. PARVEEN AKHTAR, PRINCIPAL, GOVT. HIGH SCHOOL, SATWARI JAMMU. III. MRS. RANDHIR SINGH, CHAIRMAN, NATIONAL PUBLIC SCHOO L, BIRPUR. IV. SH. GOPAL SINGH, LECTURER, GOVT. HR. SEC. SCHOOL, S ARWAL, JAMMU. V. SH. SHANTI SHARMA, PRINCIPAL, NEW ERA PUBLIC SCHOOL , SATWARI. 4. THE ASSESSING OFFICER OBSERVED THAT ONLY THE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR BUS INESS PURPOSES IS ALLOWABLE UNDER SECTION 37(1) OF THE IN COME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT); T HAT THE ASSESSEE HAD NOT PRODUCED ANY VOUCHERS/DOCUMENTS FO R THE PAYMENTS IN QUESTION; AND THAT IN THE ABSENCE OF AN Y DOCUMENTARY EVIDENCE, THE PAYMENTS COULD NOT BE VER IFIED. IT WAS, THEREFORE, THAT OUT OF THE TOTAL EXPENDITURE O F RS. 41,34,707/-, THE ASSESSING OFFICER DISALLOWED AN AM OUNT OF RS. 15,43,600/- ON ACCOUNT OF COMMISSIONS SHOWN TO HAVE BEEN PAID, BUT ACTUALLY NOT PAID. 5. BY VIRTUE OF THE IMPUGNED ORDER, THE LEARNED CIT (A) RESTRICTED THE DISALLOWANCE TO 10%, I.E., RS. 4,13, 470/-. 6. BEFORE US, THE LEARNED DR HAS CONTENDED THAT THE LEARNED CIT(A) HAS WRONGLY RESTRICTED THE DISALLOWA NCE FROM RS. 15,43,600/- TO RS. 4,13,470/-, THEREBY GIVING A N UN-CALLED FOR RELIEF OF RS. 11,30,130/- TO THE ASSESSEE; THAT WHILE DOING 4 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 SO, THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE/PROOF IN SUPPORT OF ITS CONTENTION THAT TH E EXPENDITURE REPRESENTED BUSINESS PROMOTION EXPENDIT URE; AND THAT THE LEARNED CIT(A) HAS ALSO FAILED TO CONSIDE R THAT IN THE ABSENCE OF VOUCHERS, SUCH EXPENSES WERE NOT AT ALL VERIFIABLE. IT HAS BEEN CONTENDED THAT THE LEARNED CIT(A) HAS E RRED IN OBSERVING IN THE CONCLUDING PORTION OF THE IMPUGNED ORDER, THAT THE ASSESSING OFFICER HAD CONCLUDED THAT THE E XPENSES UNDER THE HEAD BUSINESS PROMOTION WERE OF A GENUI NE NATURE AND HAD BEEN INCURRED FOR PROMOTING THE BUSINESS SA LES. IT HAS BEEN CONTENDED THAT NO SUCH OBSERVATION HAS BEEN MA DE IN THE ASSESSMENT ORDER. IT HAS BEEN CONTENDED THAT THE LE ARNED CIT(A) HAS WRONGLY PLACED RELIANCE ON THE FACT THAT FOR THE ASSESSMENT YEAR 2010-11, THE ASSESSING OFFICER HAD MADE DISALLOWANCE @ 10%, AND THAT EACH YEAR IS AN INDEPE NDENT UNIT AND WHERE FOR A PARTICULAR YEAR, THE FACTS ARE CONCRETE, THE HISTORY OF THE CASE NEED NOT BE REFERRED TO, MUCH L ESS, RELIED ON. IT HAS BEEN SUBMITTED THAT FURTHER, THE ENTRIES IN THE ASSESSEES DIARY ARE IRRELEVANT UNLESS PROVED; THAT IN THE 5 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 PRESENT CASE, THE ASSESSEE HAS MISERABLY FAILED TO PROVE THE ALLEGED PAYMENTS; THAT THEREFORE, THE LEARNED CIT(A ) ERRED IN RELYING ON THE ENTRIES IN THE ASSESSEES DIARY; THA T THE LEARNED CIT(A) HAS ALSO ERRED IN NOT TAKING INTO CONSIDERAT ION THE FACT THAT THE PARTIES, TO WHOM THE PAYMENTS WERE ALLEGED TO HAVE BEEN MADE, THEMSELVES DENIED SUCH PAYMENTS; THAT SO MUCH SO, THE ASSESSEE ITSELF ADMITTED THAT THERE WERE NO VOUCHERS TO PROVE THE EXPENDITURE; THAT THE LEARNED CIT(A) DID NOT EVEN TAKE NOTE OF THIS ADMISSION OF THE ASSESSEE. IT HAS BEEN FURTHER CONTENDED THAT, AS PER PARA 3.2 OF THE ASSESSMENT O RDER, THE PAYMENTS WERE MADE TO FOUR MEMBERS, A CHAIRMAN, AND A LECTURER IN GOVERNMENT SCHOOLS; AND THAT THOUGH THE ASSESSEE HAS CONTENDED THAT THE PAYMENT WAS MADE FOR ALMIRAH S, FURNITURE, ETC., THE STATUS OF THE RECIPIENTS OF SU CH PAYMENTS SHOWS THAT IN FACT, IT WAS SECRET COMMISSION. ACCORDING TO THE LEARNED DR, IN SUCH A CASE, THE EXPLANATION TO SEC TION 37(1) OF THE ACT IS SQUARELY APPLICABLE. ACCORDING TO THI S EXPLANATION, ANY EXPENDITURE INCURRED FOR AN OFFENC E, OR FOR A PURPOSE PROHIBITED BY LAW, SHALL NOT BE DEEMED TO H AVE BEEN INCURRED FOR BUSINESS PURPOSES. THEREFORE, THE CONT ENTION THAT 6 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 THE PAYMENT WAS MADE FOR ALMIRAHS, FURNITURE, ETC., IS A MERE STORY CONCOCTED BY THE ASSESSEE. FURTHER, THE DISAL LOWANCE MADE IS A PERCENTAGE OF THE ENTIRE EXPENDITURE OF A N AMOUNT REPRESENTING THE SECRET COMMISSION PAID. THEREFORE ALSO, THE REFERENCE TO THE EARLIER AND SUBSEQUENT YEARS DECI SIONS IS INAPPROPRIATE AND IMPROPER. 7. THUS, THE LEARNED DR CONTENDED THAT THE ACTION O F THE LEARNED CIT(A) IN RESTRICTING THE DISALLOWANCE BE C ANCELLED AND THE ORDER OF THE ASSESSING OFFICER BE REVIVED. 8. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE HAS STRONGLY SUPPORTED THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT THE ASSESSEE HAS NOT PAID ANY S ECRET COMMISSION. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF TEXT BOOKS AND HELP BOOKS, WHICH ARE SUPPLIED TO SCHOOLS. SOME SCHOOLS REQUIRE ALMIRAHS, FURNITUR E, ETC., AND IT IS THIS REQUIREMENT FOR WHICH THE AMOUNT IN QUES TION HAS BEEN SPENT. THE ASSESSMENT ORDER DOES NOT SHOW ANY DISSATISFACTION OF THE ASSESSING OFFICER IN THIS RE GARD. HAD THE ASSESSING OFFICER BEEN DISSATISFIED, THE ENTIRE EXP ENDITURE WOULD OBVIOUSLY HAVE BEEN DISALLOWED. FOR THE ASSES SMENT 7 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 YEARS 2003-04, 2006-07, 2007-08 & 2008-09, SIMILAR DISALLOWANCES WERE MADE, WHICH WERE SIMILARLY RESTR ICTED BY THE LEARNED CIT(A), AS HAS BEEN DONE FOR THE YEAR U NDER CONSIDERATION. FOR THE ASSESSMENT YEAR 2007-08, THE ENTIRE AMOUNT CLAIMED AS EXPENDITURE WAS ALLOWED. AGAINST THE SAID ORDER OF THE LEARNED CIT(A), NO APPEAL HAS BEEN PRE FERRED BY THE DEPARTMENT. FOR THE ASSESSMENT YEAR 2010-11, TH E ENTIRE EXPENSES HAVE BEEN ALLOWED BY THE ASSESSING OFFICER HIMSELF IN SCRUTINY ASSESSMENT PROCEEDINGS UNDER SECTION 14 3(3) OF THE ACT. IT WAS ONLY FOR THE LACK OF VOUCHERS, THAT THE ASSESSING OFFICER MADE THE DISALLOWANCE, HOLDING THE EXPENDIT URE UNVERIFIABLE. FURTHER, THE STAND OF THE ASSESSEE GE TS SUPPORTED BY THE DETAILS CONTAINED IN THE SEIZED DIARY. SO MU CH SO, EVEN THE NAMES AND ADDRESSES OF THE FIVE PERSONS MENTION ED IN THE ASSESSMENT ORDER BECAME AVAILABLE TO THE ASSESSING OFFICER ONLY FROM THE SEIZED DIARY AND NOT FROM THE ASSESSE ES BOOKS OF ACCOUNT. THE ASSESSING OFFICER CAUSED INVESTIGAT ION TO BE MADE ON THE BASIS OF THESE VERY CONTENTS OF THE DIA RY. HOWEVER, HE REFUSED TO ACCEPT THE AMOUNTS MENTIONED IN THE DIARY. THIS IS NOT PERMISSIBLE UNDER THE LAW, AS HE LD IN THE 8 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 CASE OF CIT V. INDEO AIRWAYS PVT. LTD.(2012) REPORT ED IN 349 ITR 85 (DEL). IT HAS BEEN FURTHER CONTENDED THAT THE EXPRE SSION WHOLLY AND EXCLUSIVELY UNDER SECTION 37(1) OF THE ACT IS A WIDE EXPRESSION ENCOMPASSING GENERAL PURPOSES. IN T HE PRESENT CASE, THERE IS NO SECRET COMMISSION PAID. N O EVIDENCE IN THIS REGARD HAS BEEN BROUGHT ON RECORD. THE PAYM ENT REPRESENTS BUSINESS PROMOTION EXPENSES. THIS IS ALS O THE REASON WHY THE ASSESSEE HAS NOT FILED ANY APPEAL AG AINST THE PORTION SUSTAINED BY THE LEARNED CIT(A) AS DISALLOW ANCE. THE EXPLANATION TO SECTION 37(1) OF THE ACT IS NOT AT A LL APPLICABLE, AS HELD IN THE CASES OF COMMISSIONER OF INCOME-TAX VS DALMIA DADRI CEMENT LTD . , REPORTED IN 77 ITR 410 (P&H) AND BERGER PAINTS INDIA LTD. VS. CIT, REPORTED IN 266 I TR 99(SC). EACH ASSESSMENT YEAR IS AN INDEPENDENT UNIT, BUT WH ERE A FACT HAS BEEN ACCEPTED BY BOTH THE PARTIES AND IT REMAIN S A FACT IN THE OTHER YEARS ALSO, CONSISTENCY MUST BE FOLLOWED. 9. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE ISSUE IS AS TO WHETHER THE EXPENDITURE IN QUESTION WAS SECRET COMMISSION, AS CLAIMED BY TH E 9 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 DEPARTMENT, OR BUSINESS PROMOTION EXPENDITURE, AS C LAIMED BY THE ASSESSEE, ALLOWABLE UNDER SECTION 37(1) OF THE ACT. 10. AS PER SECTION 37(1) OF THE ACT, ANY EXPENDITURE LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURP OSES OF THE BUSINESS, SHALL BE ALLOWED IN COMPUTING THE INC OME CHARGEABLE UNDER THE HEAD PROFIT AND GAINS OF BUSI NESS OR PROFESSION. 11. WHILE RESTRICTING THE DISALLOWANCE OF RS. 15,43,6 00/- OUT OF CLAIM OF EXPENSES OF RS. 41,34,707/-, TO RS. 4,13,470/-, THE LEARNED CIT(A) OBSERVED THAT A SIMILAR DISALLOW ANCE HAD BEEN MADE FOR EARLIER ASSESSMENT YEARS 2003-04 AND 2006-07 TO 2008-09 AND SUBSEQUENT ASSESSMENT YEAR 2010-11; THAT FOR ASSESSMENT YEAR 2009-10, I.E., THE YEAR UNDER CONSI DERATION, THERE WAS CLEAR EVIDENCE OF THE ASSESSEE HAVING SPE NT EXACTLY THE SAME AMOUNT AS THAT DEBITED IN THE PROFIT AND L OSS ACCOUNT; THAT DENIAL BY THE RECIPIENTS WAS NOT OF VALUE BECA USE OF THE NATURE OF THE PAYMENT AND ABSENCE OF EVIDENCE; THAT THE SEIZED RECORD ITSELF SHOWED THE GENUINENESS OF THE EXPENDI TURE; THAT THE A.O. RIGHTLY CONCLUDED THAT THE EXPENDITURE WAS OF GENUINE NATURE AND WAS INCURRED FOR PAYMENT OF 10 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 BUSINESS/SALES; THAT THE A.O. STATED THAT THE PAYME NT WAS NON- VERIFIABLE AND SO, IT COULD BE SAID FOR NON-BUSINES S PURPOSES; THAT SUCH EXPENSES ARE NORMALLY CASH EXPENDITURES A ND SO, THEY ARE NOT COMPLETELY VERIFIABLE; THAT FOR THE AS SESSMENT YEAR 2010-11, 10% HAD BEEN DISALLOWED BY THE A.O; A ND THAT THUS, FOR THE ASSESSMENT YEAR UNDER CONSIDERATION A LSO 10% DISALLOWANCE WOULD BE REASONABLE. 12. IT REMAINS UNDISPUTED THAT THE AMOUNT ACTUALLY EXPENDED BY THE ASSESSEE AND THAT DEBITED TO THE PR OFIT AND LOSS ACCOUNT ARE EXACTLY THE SAME. THE AO HAS NOWHE RE DOUBTED THIS FACT. THE ENTIRE EXPENDITURE INCURRED IS THAT CLAIMED BY THE ASSESSEE, AS BUSINESS PROMOTION EXPE NDITURE, BUT DUBBED BY THE DEPARTMENT AS SECRET COMMISSION. EVEN THE LEARNED DR URGES THAT IT IS A PERCENTAGE OF THE SEC RET COMMISSION WHICH HAS BEEN DISALLOWED BY THE AO. THI S GOES TO SHOW THAT THE FACTUM OF INCURRENCE OF THE EXPENDITURE HAS NOWHERE BEEN DOUBTED. NOW, IT IS TRUE THAT SUCH PAY MENTS AS THE ONES IN QUESTION, HOWEVER, UNDESIRABLE OR AGAIN ST PUBLIC POLICY AND GOOD MORALITY, HAVE TO BE FACED AS A FAC T OF LIFE. THIS HAS ALSO BEEN RECOGNIZED IN, INTER ALIA, G.G. JOSHI VS. 11 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 CIT, REPORTED IN 209 ITR 324 (GUJ.). THAT THE EXPEN SES INCURRED BY THE ASSESSEE WERE NECESSARY EXPENSES FO R THE SMOOTH RUNNING OF THE ASSESSEES BUSINESS, HAS BEEN ACCEPTED BY THE AO HIMSELF, WHEN EVEN AS PER LEARNED DR, A P ERCENTAGE THEREOF AND NOT THE ENTIRE EXPENSES HAVE BEEN DISAL LOWED BY THE AO. AS SUCH, THE PAYMENT MADE BY THE ASSESSEE T OWARDS ALMIRAHS AND FURNITURE, ETC., SO AS TO BOOST SALES/ GET ORDERS, CANNOT BE SAID TO BE THE PAYMENT OF SECRET COMMISSI ON. FURTHER, IT IS ALSO WELL SETTLED THAT IN TAXATION M ATTERS, EMPHASIS MUST BE PLACED ON THE BUSINESS ASPECT OF A TRANSACTION, RATHER THAN ON THE PURELY LEGAL AND TE CHNICAL SIDE. 13. IT WAS ONLY FOR THE LACK OF VOUCHERS SUPPORTING T HE CLAIM, THAT THE AO MADE THE DISALLOWANCE. IT HAS CO RRECTLY BEEN POINTED OUT BY THE ASSESSEE THAT THE INFORMATI ON REGARDING THE RECIPIENTS OF THE PAYMENTS MADE BY TH E ASSESSEE BECAME KNOWN TO THE AO ONLY FROM THE DIARY FOUND. T HAT THE RECIPIENTS DENIED RECEIPT OF SUCH PAYMENTS, IS NOT DETERMINATIVE OF THE ISSUE AT HAND. THIS IS DUE TO THE VERY NATURE OF THE PAYMENTS, WHICH HAS ALSO BEEN ADMITTE D BY THE ASSESSEE WHILE MAKING THE CLAIM ITSELF. SUCH ADMIS SION ALSO 12 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 CANNOT ACT ADVERSELY TO THE ASSESSE. OBVIOUSLY, THE VERY NATURE OF THE PAYMENTS WOULD RESULT IN THE ABSENCE OF EVID ENCE. HOWEVER, ABSENCE OF EVIDENCE DOES NOT INEVITABLY LE AD TO A CONCLUSION OF NON-EXISTENCE OF THE TRANSACTION. SIM ILAR IS THE CASE WITH THE DENIALS OF THE RECIPIENTS AND THEIR S TATUS. AS FOR THE ADMISSION OF THE ASSESSEE, IT DOES NOT LEAD T O AN INEXORABLE CONCLUSIONS OF THE ASSESSEES CULPABILIT Y IN ANY MANNER. THE ASSESSEE HAS MERELY STATED ITS BUSINESS PRACTICE IN REALITY AND ITS BUSINESS EXIGENCY, WHICH HAS NOW HERE BEEN CALLED INTO QUESTION BY THE AO. 14. THE ISSUE OF THE STATUS OF THE RECIPIENTS WAS NOW HERE RAISED BY THE ASSESSEE. BY RAISING THIS QUESTION, N OW, THE DEPARTMENT SEEKS TO QUESTION THE FINDING OF THE AO. THE AOS FINDING IS THAT OF PAYMENT OF SECRET COMMISSION. BY HIGHLIGHTING THE STATUS OF RECIPIENTS, NOW, THE DEP ARTMENT IS QUESTIONING THE VERY FACTUM OF PAYMENT, WHICH WAS N EVER THE CASE OF THE AO. BESIDES, AS OBSERVED ABOVE {AS ALSO RIGHTLY NOTED BY LEARNED CIT(A)}, THE DIARY FOUND IN THE SE ARCH ITSELF SHOWS THE PAYMENTS AS ACTUALLY HAVING BEEN MADE. 15. EXPLANATION TO SECTION 37(1) READS AS FOLLOWS: 13 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 EXPLANATION- FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT ANY EXPENDITURE INCURRED BY AN ASSESS EE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBI TED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR T HE PURPOSE OF BUSINESS OR PROFESSION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDIT URE. 16. WHAT IS MANDATED BY THIS EXPLANATION IS THAT ANY EXPENDITURE INCURRED FOR ANY PURPOSE WHICH IS AN O FFENCE OR IS PROHIBITED BY LAW, SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS OR PROFESSION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDITURE. IN THE PRESENT CASE, THE PURPOSE FOR I NCURRING THE EXPENDITURE IS, UNDISPUTEDLY, PROMOTION OF BUSINESS /SALES. THIS PURPOSE, ON THE VERY FACE OF IT, IS A BUSINESS PURPOSE AND IT IS NEITHER AN OFFENCE, NOR PROHIBITED BY LAW. TH US, THERE IS NO WARRANT TO APPLY THE EXPLANATION TO SECTION 37(1 ) OF THE ACT TO THE FACTS DOING THE ROUNDS HEREIN AND THE DE PARTMENTS CASE, IN THIS REGARD, IS NO CASE AT ALL. THE ARGUME NT IS REJECTED. 17. SO FAR AS REGARDS RELIANCE BY THE LEARNED CIT(A) ON OTHER YEARS, IT IS TRUE THAT EACH YEAR IS INDEPENDE NT AND THAT RES JUDICATA IS NOT APPLICABLE TO TAX PROCEEDINGS. HOWEVER, IT IS EQUALLY TRUE THAT WHERE FACTS HAVE CONSISTENTLY AND UNDISPUTEDLY REMAINED SAME ACROSS THE YEARS, A TANG ENTIALLY 14 I.T.A. NO. 705 (ASR)/2013 ASSESSMENT YEAR: 2009-10 OPPOSITE VIEW CANNOT BE TAKEN FOR A PARTICULAR YEAR , WHERE ALSO, THE SAME CONSISTENCY IN FACTS PERSISTS. 18. FOR THE ABOVE DISCUSSION, FINDING NO ERROR WHATS OEVER THEREIN, THE ORDER PASSED BY LEARNED CIT(A) IS HERE BY AFFIRMED. THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT BY WAY OF THE GROUNDS OF APPEAL IS REJECTED AS SHOR N OF MERIT. 19. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.07.201 4 SD/- SD/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14.07.2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S MALHOTRA BOOK DEPOT RAILWAY ROAD , JALANDHAR 2. THE ACIT, CENTRAL CIRCLE-II, JALANDHAR 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.