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TMI Blog2014 (11) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... re not accounted in the books of accounts of M/s Alchemist Group of companies and hence these expenses remained unexplained in the hands of the assessee. 3. The ld. CIT (A) erred in deleting the addition of Rs. 72,698/- made under the head Business Promotion, staff welfare and entertainment as the assessee could not produce any documentary evidence that the said expenses were wholly and exclusively incurred for the business of the assessee. 4. The Ld. CIT (A) erred in restricting the disallowance made by the A.O. to 50% of Rs. 1,25,255/- on account of personal use of telephone, vehicle maintenance and depreciation on car etc. in absence of any documentary evidence that the said expenses were wholly and exclusively incurred for the business of the assessee." 2. Apropos Ground Nos.1 and 2, the Assessing Officer observed that there were current liabilities of Rs. 1,27,97,418/- against the name of Alchemist, Chandigarh in the balance sheet with the assessee as on 31.03.2009. On query, the assessee filed details vide letter dated 08.12.2011, submitting the following confirmations of the Alchemist Group of Companies:- (i) Alchemist Hospital Rs. 29,50,000/- (ii) Alchemist Holdings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 2950000.00 22300000.00 2000000.00 Grand Total 27250000.00 As per Confirmations 2950000.00 22300000.00 2000000.00 Grand Total 27250000.00 Confirmations Balance as per Alchemist as on 31.3.2009 27250000 Less: Paid by Alchemist Hospitals Ltd. to DHR Holdings Ltd. for a machine, debited to Swaran Dental Clinic but not Accounted by Swaran Dental Clinic (Refer SDC Ledger a/c Books of Alchemist Holdings Ltd.) 400000 400000 26850000 Less: amount debited by SDC in various years but not Accounted by Alchemist Financial Year Annexure-A 58418.32 2006-07 Annexure-B 15,81,629.11 2007-08 Annexure-C 1,04,26,981.00 2008-09 Annexure-D 19,35,554.00 2006-07 Total for above three years 14002582 As per Books of a/c of SDC 12847418 Details of outstanding as per Balance of Swaran Dental Clinic as on 31.3.2009 (a) Alchemist Chandigarh a/c 1,27,97,418 (b) Payable to Alchemist (in a se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance sheet for the year under consideration, the assessee had shown a liability of Rs. 1,27,97,418/- to Alchemist under the head 'Current liabilities', the Assessing Officer had added an amount of Rs. 1,44,52,282/-, being the difference between the sum of Rs. 2,72,50,000/-, as confirmed by the Alchemist Group of Companies and the said amount of Rs. 1,27,97,418/-, shown as current liabilities by the assessee, as not reconciled; that as such, first of all, the addition could, in any case, not be beyond Rs. 1,27,97,418/-, the amount shown by the assessee as current liability payable to Alchemist; that the Alchemist Group of Companies had shown the total amount paid to the assessee as outstanding, to be recognized in their books of account on completion of the facility by the assessee; that this explained the amount of Rs. 1,27,97,418/- shown by the assessee as current liability payable to Alchemist; that Alchemist had given confirmation of the amount of Rs. 2,23,00,000/- given by them to the assessee and had also certified that an amount of Rs. 1,40,38,349/- had been incurred by the assessee towards creating dental facility on their behalf; that they had also confirmed that the faci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived by the assessee and shown by him as current liability; that it was not the case of the Assessing Officer, either that the assessee was showing a liability more than that shown by the Alchemist Group; that the Assessing Officer had himself issued notices u/s 133 (6) of the Act to the Alchemist Group, in response to which, the Alchemist Group had filed their confirmations; that if the Assessing Officer entertained any doubt, he could always have made further inquiry from the assessee, rather than making the unwarranted addition; that this, however, had not been done; that it was not a case where either the identity of the creditors had not been established, or their credit worthiness not proved, or where the transactions were not genuine; that the Assessing Officer had made the addition without appreciating and understanding the accounting entries made and without analyzing the complete details placed before him in explanation of the query raised; that the assessee had produced all related bills/vouchers and relevant ledger accounts along with complete books of account before the Assessing Officer, which fact stood confirmed by the Assessing Officer in the very first paragraph o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Assessing Officer had made the addition without appreciating the accounting entries made and without analyzing the complete details placed before him to explain as to why the assessee had shown the amount of current liability at Rs. 1,27,97,417.89 in respect of the Alchemist Group, as against the amount confirmed by them at Rs. 2,72,50,000/-; that all relevant bills, vouchers, and ledger accounts, with complete books of account had been produced before the Assessing Officer, which the Assessing Officer had himself confirmed in the assessment order; that none of the creditors had stated that the amount had not been given to them by the assessee; that in any case, it could be said that the transaction was in the nature of a loan only till the time the Alchemist Group did not recognize it in their books of account; that the assessee had not claimed any expense or depreciation on the funds utilized, which had been given to him by the Alchemist Group; that in any case, it was not the income of the assessee; that there was no evidence or material with the Assessing Officer to the contrary; and that as such, the Assessing Officer was not justified in presuming it to be the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer, the assessee filed all details and documentary evidence in the shape of bills/vouchers along with complete books of account. As per the assessment order itself, these were examined. The Assessing Officer issued notices u/s 133 (6) to the Alchemist Group of Companies, in response to which, they duly filed their confirmations. They confirmed the amount of Rs. 2,72,50,000/-, whereas the current liability shown by the assessee was of Rs. 1,27,97,417.89. The difference between the two, amounting to Rs. 1,44,52,282/-, was added by the Assessing Officer. At the outset, addition, if any, as rightly observed by the Ld. CIT (A), could have been only to the extent of the liability shown, i.e., of the amount of Rs. 1,27,97,417.89. Be that as it may, even the said current liability was duly explained. 12. APB 1-8 is a copy of the letter dated 02.08.2011 along with copy of return, computation of income, balance sheet with relevant schedules, Profit & Loss Account and Tax Audit Report filed by the assessee with the Assessing Officer. Para 12 of the letter states that the accounts were being produced for verification by the Assessing Officer, as required. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es incurred, showing the places where the telephones were installed/used, along with number-wise chart of telephone and the name of the person using the same. The telephone numbers have also been given. APB 62-73 is a chart of repair and maintenance expenses along with major bills of expenses, showing the expenses to have been incurred mostly for petrol, parking, toll tax, new battery and tube, etc., incidental to the carrying on of the business of the assessee. APB 74-80 is a copy of the assessee's bank account with HDFC Bank, debiting the payments received by the assessee from the Alchemist Group. APB 81-85 is a copy of ledger account of business promotion and entertainment expenses in the books of the assessee. APB 86 is a copy of confirmation from Alchemist Hospitals Ltd., certifying that Swaran Dental Clinic had a debit balance of Rs. 29,50,000/- in the books of Alchemist Hospitals, as on 31.03.2009. APB 87 is a copy of confirmation from Alchemist Ltd., certifying that Swaran Dental Clinic had a debit balance of Rs. 20 lac, as on 31.03.2007, in the books of Alchemist Ltd. APB 88 is a confirmation from Alchemist Holdings Ltd. certifying that Swaran Dental Clinic had a debit bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enial to this. 13. To reiterate, the Assessing Officer has himself stated in the assessment order that the details filed by the assessee were examined by her. All the three companies of the Alchemist Group duly furnished confirmations dated 26.12.2011 before the Assessing Officer on query u/s 133 (6) of the Act. However, the Assessing Officer observed that since the assessee had failed to furnish documentary evidence in support of his stand regarding the expenses made on behalf of the Alchemist group, such stand was not acceptable and that the accounts of all the three companies of the Alchemist Group for the relevant period remained unreconciled. These observations of the Assessing Officer, it is seen, are not sustainable either on facts, or in law and the Ld. CIT (A) has correctly decided this issue in favour of the assessee. 14. The assessee has incurred the following expenses for F.Y.s 2006-607 to 2008-09:- (in Rs.) F.Y. 2006-07 58,418/- F.Y. 2006-07 19,35,554/- F.Y. 2007-08 15,81,629/- F.Y. 2008-09 1,04,26,981/- Total 1,40,02,582/- Though these expenses were incurred and debited, for and on behalf of the Alchemist Group, by Swaran Dental Clinic, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up. Also, the Assessing Officer did not conclude that it was a case of nonestablishing the identity of the creditor. The credit worthiness of the Alchemist Group was never doubted. Even the transactions were not stated to be not genuine. The result arrived at by the Assessing Officer, as such, is a result of complete misreading and non-reading of the voluminous material documentary evidence brought on record by the assessee. 15. Such non-application of mind by the Assessing Officer is also evident from the following facts. Complete details and vouchers for F.Y.s 2006-07 to 2008-09 were produced before the Assessing Officer. Invoice No.DHR/KAVO/001 dated 06.03.2009 (APB-55) shows purchase of one piece G-Healzone 2130C 1.000.0100 equipment, for Rs. 4,50,000/- against buyer order No.KGI/2009/001 dated 22.01.2009, placed by Alchemist Hospitals Ltd., New Delhi on DHR Holding India Pvt. Ltd., New Delhi. In this invoice, Rs. 50,000/- has been shown paid by Swaran Dental Clinic and Rs. 4 lac has been shown as paid by Alchemist. Rs. 50,000/- has been shown as reimbursed for plant and machinery. The amount of Rs. 4 lac was paid by Alchemist Hospitals Ltd. vide cheque No.669152 (APB 56), dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer goes on to hold the explanation of the assessee to be untenable. 17. And last, but not the least, the assessee not having claimed any expenses, rightly contended, no disallowance is possible. 18. For the above reasons, we do not find any error in the impugned order on this issue and the same is hereby confirmed. Ground Nos.1 and 2 raised by the department are, therefore, rejected. 19. Apropos Ground No.3, the Assessing Officer made an ad hoc disallowance of Rs. 72,698/- on account of expenses out of expenses claimed as business promotion expenses (Rs 1,81,688/-), staff welfare expenses (Rs 75,844/-) and entertainment expenses of Rs. 1,78,653/- (as debited in the Profit & Loss Account). While doing so, the Assessing Officer observed that in the absence of proper bills and vouchers, it did not stand proved that the expenses had been incurred wholly and exclusively for the business activity of the assessee. The Ld. CIT (A) deleted this addition. 20. The Ld. DR has contended that the Ld. CIT (A) has erred in deleting the addition correctly made by the Assessing Officer in the absence of documentary evidence in the shape of proper bills and vouchers, for want of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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