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TMI Blog2012 (9) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... ad admitted they had no record of the individual shops where such distributions were made. If that is so, no purpose would be served in remanding the case after a lapse of almost two decades for production of self-same evidence which the assessee expressed inability to produce during the assessment proceeding - the issue as to whether such expenses were necessary or not in terms of the commercial expediency under section 37 (1) would arise only after the assessee had discharged its initial onus to prima facie establish such claim. If the assessee had failed to discharge its primary onus to establish such claim as in the present case, the question as to its commercial expediency does not arise at all - against assessee. - I.T.A. No. 267 of 2003 - - - Dated:- 30-8-2012 - K J Sengupta And Joymalya Bagchi, JJ. For Appellant : Mr. J.P. Khaitan , Sr. Adv , Mr. Sourav Bagaria , Adv For Respondent : Mr. R. N. Bandhopadhyay, Sr. Adv, S. B. Sarof, Adv JUDGEMENT Per : Joymalya Bagchi : The instant appeal was admitted on the following substantial questions of law : (i) Whether the tribunal was justified in law in restoring the disallowance of business expenditure of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd assessee was called upon to furnish a confirmation in this regard from its principal, namely, ITC. The appellant assessee did not submit such confirmation whereupon the Assessing Officer wrote to ITC seeking clarification. A reply was received on 25.02.1997 wherein it was stated that wholesale dealers were free to undertake such expenditure at their own risk but was under no obligation to do so. In view of the substantial increase in the matter of expenses on account of sales promotion and advertisement which was claimed to have been voluntarily undertaken by the appellant assessee, the Assessing Officer decided to verify the items of expenditure claimed by the assessee. In course of such verification, the Assessing Officer called upon the assessee to submit details of advertisement, sales promotion and sampling and display expenditure. Subsequent to the submission of details the Inspector of Income Tax conducted enquires about the parties with whom the assessee claimed to have had transactions in that regard. Pursuant to the enquiries so conducted the Assessing Officer in the course of assessment pointed out to the material collected against the assessee and called upon him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture were made were undertaken behind back of the appellant assessee. Before the CIT (Appeals), it was admitted by the parties that the deduction claimed towards expenses for car hire through M/s. Grafic Circle ought to be Rs. 3,59,000/- instead of Rs. 5,69,000/- as claimed before the Assessing Officer. CIT (Appeals) in its order dated 13.04.1998 set aside the assessment order, inter alia, on the ground that the payments to M/s. M/s. Grafic Circle, M/s. Universal Printers, M/s. Ma Tara Enterprises were by account payee cheques and hence the deduction of such expenditure ought not to have been disallowed. The disallowance of expenditure on the ground of display and sampling was also set aside by CIT (Appeals) on the ground that the Assessing Officer erred in law in rejecting such expenditure as unnecessary. The revenue appealed against such order before the learned tribunal being I.T.A. No. 868 (Cal) of 1998. The learned Judicial Member of the tribunal in its order opined that the disallowance of expenditure by the Assessing Officer through M/s. Grafic Circle through M/s. Universal Printers and M/s. Ma Tara Enterprises required to be set aside and the matter required to be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for car hire : Rs. 3,59,000/- Payment to Universal Printers for printing work : Rs. 14,99,860/- II. Whether on the facts and in the circumstances of the case the tribunal should have restored the matter regarding disallowances of following expenditure, to the file of the Assessing Officer with a direction to decide the matter de novo or whether the tribunal should have restored the disallowances deleted by the CIT (A) : Payment to Ma Tara Enterprises : Rs. 5,93,000/- For supply of temporary workers Sampling and display expenses for Distribution of free cigarette sample : Rs. 27,68,607 The learned third member upheld the disallowance of expenses by the Assessing Officer, inter alia, on the ground that the appellant assessee was given adequate opportunity to rebut the materials collected against him and that it was the appellant assessee who failed to discharge his initial onus to establish such claims for deduction. Being aggrieved by such finding, the instant appeal has been filed on behalf of the appellant assessee. Mr. Khaitan, learned counsel appearing for the appellant assessee has focused his challenge to the impugned decision of the learned tribunal on the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other factors of a given case, can be exasperating. We can neither be financial nor fanatical but should be flexible yet firm in this jurisdiction. No man shall be hit below the belt that is the conscience of the matter. It is therefore to be seen as to whether in the factual backdrop of the instant case the claim of the appellant/assessee for the first time before the CIT (Appeals) that he was not given an adequate opportunity of hearing in respect of the materials collected against him is justified or not. To arrive at such conclusion let us examine the manner in which the Assessing Officer conducted the assessment proceeding. It appears from the assessment order that the appellant assessee was confronted with the contents of the inspection report by the Assessing Officer as would appear from the order dated 11.03.1997 recorded in course of such proceeding. Thereafter the Assessing Officer by a letter dated 12.03.1997 communicated to appellant assessee the contents of the inspector s report which mentioned in great details how enquiry was held and then called upon the assessee to respond to the same. In response to such letter the assessee sought for an adjournment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conduct of the appellant assessee clearly establishes that there was compliance of the principles of natural justice as far as the Assessing Officer is concerned and the assessee did not suffer any prejudice in the manner in which the assessment proceeding was conducted. Furthermore non-supply of the copy of the inspector s report did not cause any prejudice to the assessee inasmuch as the contents thereof were in fact substantially communicated to the assessee by the aforesaid letter of the Assessing Officer dated 12.07.1997 to which the assessee was given adequate opportunity to respond. If the assessee felt that cross-examining of any person was necessary for establishing its case it was incumbent upon the assessee to make such prayer before the Assessing officer during the assessment proceeding. If a party fails to avail of the opportunity to cross-examine a person at the appropriate stage in the proceeding, the said party would be precluded from raising such issue at a latter stage of the proceeding. Therefore the belated claim of the assessee at the appellate stage that it was denied the opportunity of cross-examining witnesses in the assessment proceeding is wholly untenab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that payments were made through account payee cheques would not be the sole criteria to accept the geniusness of such transaction. Reliance in this regard has been rightly made to the ratio of a decision of this Court reported in 208 ITR 465 wherein this Court did not accept transactions through account payee cheques when the identity of the creditors to whom such payments were made were doubtful. On the issue of the remand of the case to enable the appellant assessee to produce the list of shops where the assessee supplied cigarettes for display and sampling one may refer to the reply given the assessee to the letter dated 12.03.1997 on this score. In the said reply the assessee had admitted they had no record of the individual shops where such distributions were made. If that is so, no purpose would be served in remanding the case after a lapse of almost two decades for production of self-same evidence which the assessee expressed inability to produce during the assessment proceeding. It is settled law that the principles of natural justice is to achieve purpose of logical conclusion and in the facts of this case it is clear the remand of the case would not serve any purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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