Omega Remedies P.Ltd, Karnal V. ACIT, Circle, Karnal

ITA 7604/DEL/2019

AI Insights

The case involves Omega Remedies Pvt. Ltd., the appellant, contesting an ad-hoc disallowance of Rs.9,30,480 made by the Assessing Officer (AO) on sales promotion expenses. The disallowance was confirmed by the CIT(A), Karnal, which led to the filing of an appeal with the Income Tax Appellate Tribunal. The main contention was the arbitrary nature of the disallowance and the excessive levy of interest under sections 234B and 234C of the Income Tax Act. The tribunal, after reviewing the submissions and the breakdown of expenses, concluded that the disallowance was not substantiated as there was no specific identification or quantification of the disallowed amount.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 131815 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-12-2022
• Assessment Year: misc
• Appeal Filed On: 15-07-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 234B

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘E’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member Sh. Yogesh Kumar US, Judicial Member ITA No. 7604/Del/2019 : Asstt. Year : 2016-17 Omega Remedies Pvt. Ltd., Near MITC, Meerut Road, Karnla, Haryana-132001 Vs ACIT, Circle, Karnal Haryana-132001 (APPELLANT) (RESPONDENT) PAN No. AAACO2192A Assessee by : None Revenue by : Sh. Ajay Kumar, Sr. DR Date of Hearing: 07.12.2022 Date of Pronouncement: 14.12.2022 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against the order of ld. CIT(A), Karnal dated 24.07.2019. 2. Following grounds have been raised by the assessee: “1. That ad-hoc disallowance of Rs.9,30,480/- made on account of sales promotion expenses is arbitrary, unjust and illegal. 2. That the levy of interest u/s 234B at Rs.1,82,639/- and us/ 234C at Rs.70,348/- is arbitrary, unjust and illegal and at any rate very excessive.” 3. None appeared. Adjournment filed by the assessee being rejected. ITA No. 7604/Del/2019 Omega Remedies Pvt. Ltd. 2 4. The AO made addition of Rs.9,30,480/- owing to non- submission of copies of bills & vouchers in respect of sales promotion expenses of Rs.93,04,800/-. 5. The ld. CIT(A) gone through the breakup of the amounts which is as under: Particulars Amount Market Development Team Expense - Expense of Staff conveyance - Expense (Staff Managers) - Expense Staff Managers (Cosmetic) - Performance Expense of Staff - Field Expense of Staff - Field Expenses of Staff (Cosmetic) 52,18,207 1,48,500 10,08,600 2,12,107 2,20,000 35,36,407 92,603 Sales Promotion Expense - Advertisement Exp - Sales Promotion - Sale Promotion Direct 86,033 2,175 79,050 4,808 Incentives - Incentive (Field Staff) - Incentive (Managers Staff) - Incentive Field Staff (Cosmetic) 19,79,115 19,12,670 58,050 8,395 Meeting Expenses 1,28,681 Rebate and Discount - Discount - Special Discount 18,42,756.27 3,32,835 15,09,921.27 Total 93,04,802.27 ITA No. 7604/Del/2019 Omega Remedies Pvt. Ltd. 3 6. The ld. CIT(A) confirmed the addition on the grounds that even before the AO, the assessee has submitted copies of ledger account however no bills & vouchers were produced. 7. On going through the expenses, we find that the market development expenses were to the tune of Rs.45,46,000/- incentives to staff were to the tune of Rs.19,12,670/- and the discounts of Rs.18,42,756/-. We have also find that there is no single head under which a lump sum amount of Rs.9,30,480/- could be disallowed nor identified and quantified by the Assessing Officer. Hence, we find no reason to sustain the addition made on ad-hoc basis on the peculiar facts of the instant case. 8. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 14/12/2022. Sd/- Sd/- (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 14/12/2022 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR