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TMI Blog2012 (7) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 16,89,771 Rs. 39,61,278 3. During the course of assessment proceedings the assessee was required to justify the above claims by furnishing documentary evidence in the shape of bills/vouchers. In the absence of proper corroborative documentary evidence adduced on behalf of the assessee, the A.O. disallowed 10% of such expenses. Such disallowance resulted into an addition of Rs. 3,96,128. Before the first appellate authority it was argued by the assessee : "that merely because certain expenses are not supported by third party vouchers, that does not establish that the claims are bogus". Apart from that it was also argued that the disallowance made was excessive and unreasonable. The learned CIT(A) reduced the addition to Rs. 2 lakh thereby granting relief of Rs. 1,96,128. The assessee is aggrieved against the sustenance of the remaining addition. Though the Revenue has filed an appeal but the relief allowed by the ld. CIT(A) on this score has not been challenged. 4. After considering the rival submissions and perusing the relevant material on record it is observed from page 30 of the Paper book that for the immediately preceding assessment year 2004-2005, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses are recorded in the ledger account of the principals and after receiving the reimbursements, the net amount is shown in the balance sheet. No debits or credits related to these expenses are taken to the profit and loss account". The assessee was required to produce sample bills/vouchers in order to verify these expenses. The assessee submitted the necessary bills/supports attached along with Debit notes issued by it. The A.O. observed that in many cases supports were provided by the principal companies themselves and signed by the assessee. It was also noticed that many of these expenses were incurred in cash. The A.O., therefore, disallowed 10% of total of such expenses which resulted into an addition of Rs. 53.64 lakh and added the same to the income of assessee u/s 69C by treating it as unexplained expenditure. The learned CIT(A) observed the details of total debit notes issued by the assessee segregated under following heads:- Nature of debit Amount (Rs.) Service charges and commission income 3,07,94,478 Octroi paid 27,82,004 Freight paid 49,48,722 Others 1,56,52,460 Total 5,36,45,166 6. From such detail it was observed that the assessee issued debit notes in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y addition u/s 69C is that there must have been some expenditure incurred by the assessee, the source of which is not disclosed. If however such expenditure is recorded in the books of account, there cannot be any reason to invoke the provisions of section 69C of the Act. In that view of the matter it is held that the provisions of section 69C were wrongly resorted to by the A.O. for making this addition. 8. Now coming to the second contention of the Revenue being the incurring of such expenses by the assessee in cash etc. calling for disallowance, we find that there is no force in making or sustaining any such disallowance in this regard. The essence of the matter is that the Assessing Officer started working out sum of Rs. 5.36 crore by considering the accounts of the principals in respect of which the assessee had issued Debit notes. It, therefore, transpires that by issuing Debit notes, the assessee credited the income account or the respective expenditure account to that extent. The ld. CIT(A) has deleted the addition in respect of Rs. .3.07 crore on the ground that it represented income credited by the assessee to its Profit and loss account and as such there is no warrant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance of Rs. 1,50,000 out of conveyance expenses, staff welfare expenses, sundry expenses and traveling expenses. The facts of these grounds are that the A.O. made disallowance at the rate of 10% of such expenditure on account of insufficient supporting vouchers, which resulted into the addition of Rs. 2.98 lakh. The learned CIT(A) reduced such addition to Rs. 1.50 lakh. Both the sides are in agreement that the facts and circumstances of these grounds are similar to those of ground nos. 1 and 2 of the other assessee i.e. M/s.Parekh Corporation, whose appeal has been disposed off above. Following the view taken hereinabove, we uphold the impugned order and dismiss these two grounds. 11. Ground nos.3 to 7 of the assessee's appeal and Ground nos.1 and 2 of the Revenue's appeal are towards reimbursement of expenses by the principals. Here again both the sides are in agreement that the facts and circumstances of these grounds are mutatis mutandis similar to those in the case of M/s. Parekh Corporation. Following the view taken hereinabove, we allow the grounds taken by the assessee and dismiss the grounds by the Revenue. 12. The only other ground which survives for our consideration i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer deputed Inspectors to inspect the guest house at Mahabaleshwar. They submitted their report after visiting the site by mentioning that the bungalow was managed by a gardener and her husband who was employee with Mahabaleshwar Municipal Corporation. Since the premises were locked and the keys were not available, the Inspector peeped through the window glass and observed that no renovation work was carried out. The Assessing Officer came to hold that the guest house was not used for business purposes nor any renovation work was carried out. He, therefore, made addition u/s 69C towards the expenses on renovation claimed by the assessee at Rs. 18.70 lakh. When the matter came up before the learned CIT(A), he held that no addition was called for u/s 69C because the amount was recorded by the assessee in its books of account. The learned CIT(A), however, reduced the claim of depreciation by 50% on account of the use of bungalow for personal purposes also. The Revenue is aggrieved against the deletion of addition of Rs. 18,70,649 which was made by the A.O. u/s 69C of the Act. There is no ground regarding deletion of partial depreciation or the non-business use of bungalow. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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