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TMI Blog2013 (10) TMI 1124X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the disallowance made by the AO in this respect was justified, however, he has deleted the 50% of the disallowance without giving any reasoning for the same - Deletion of the disallowance made by the ld. CIT(A) in this respect was not justified. Addition of Prior Period Expenses – Held that:- Disallowance made by the authorities below under this head, only on the ground that the expenses were relating to prior period, was not justified. The AO should have examined the evidences/documents to ascertain as to whether the liability was ascertained during the financial year in question and if so no disallowance was required to be made - Set aside the finding of the ld. CIT(A) on this issue and restore the matter to the file of the AO w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses from the assessee and noticed that the ledger account did not show that the credit in question belongs to any of the directors of the assessee company and even the details of the expenses had not been furnished. In the absence of details and further seeing no justification for the credit card expenses, the AO, in consideration of the overall facts, disallowed 25% of the said credit card expenses amounting to Rs.6,74,490/-. 3. In first appeal the ld. CIT(A) noticed that as per details furnished by the assessee company most of the expenses were incurred through credit card in connection with payments to deluxe hotels, restaurants, for purchase of wine and liquor etc. The ld. CIT(A) further observed that the assessee company had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oppers stop, hotel stay and air travel etc. A perusal of the said bills shows that these bills involve personal nature of expenses. 6. In our view, the AO has rightly disallowed the 25% of the total expenses incurred through credit card amounting to Rs.6,74,490/-. The ld. CIT(A) while further reducing 50% of the said disallowance made by the AO has not given any cogent and convincing reasoning in this respect. Though, in the discussion part of the order he has observed that the disallowance made by the AO in this respect was justified, however, he has deleted the 50% of the disallowance without giving any reasoning for the same. 7. After perusal of the facts and documents on the file we find that the deletion of the disallowance made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision it has offered income for tax. Hence the disallowance on account of reversal entries could not be made. However, he further observed that the assessee company had nowhere given any kind of justification for the purpose of payments made under the head "Business Promotion Expenses". The only contention of the assessee that the said expenses were incurred for launch of HSBC Advantage India Fund, did not find justification with him. He further noticed that substantial payments were made to some of the concerns exceeding Rs.5 lakhs without furnishing of any details as to nature and purpose of the payments. He further noticed that majority of the expenses were related to luxury hotel expenses. He also observed that the assessee company fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the income for the tax. The AO was required to record his findings as to whether the expenses were incurred for one purpose of business exigencies or not, but without doing so, he straightway made the disallowance of 25% of the total expenses claimed by the assessee. The ld. A.R. has submitted that assessee had filed voluminous documents before ld. CIT(A) justifying the expenditure. Before us also, paper books have been filed to explain the nature of expenditure with supporting documents. Authorities below seem to have not examined the records filed by the assessee. So we restore this issue to the file of AO with a direction to examine the issue afresh by giving due opportunity to the assessee to present its case. Accordingly, the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the liability was known and made ascertain only during the year relating to assessment year in question. Hence the same was accordingly entered into the accounts. On the other hand the ld. D.R. has relied upon the authorities below. 16. We have considered the submissions made by the ld. representatives of the parties. 17. In our view, the disallowance made by the authorities below under this head, only on the ground that the expenses were relating to prior period, was not justified. The AO should have examined the evidences/documents to ascertain as to whether the liability was ascertained during the financial year in question and if so no disallowance was required to be made. We accordingly set aside the finding of the ld. CIT(A) on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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