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TMI Blog2017 (6) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... ar under consideration, it had 18 centres all over the country. Similarly the justification on the above fact that traveling and conveyance expenses, staff welfare expenses and function etc. for honouring the successful candidates and celebrating the Sthapna Diwas etc. are all arguments unsupported by specific evidences and thus not coming out from the orders. Since the issue is of a recurring nature and both the tax payer as well as the tax authorities have treated claim of expenses in a perfunctory manner, it is deemed appropriate to set aside the same back to the file of the ld. CIT(A) with direction to decide the same by way of a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Appeal of the assessee is allowed for statistical purposes. - ITA No. 838/JP/2016 - - - Dated:- 29-5-2017 - SMT. DIVA SINGH, JUDICIAL MEMBER, AND SHRI VIKRAM SINGH YADAV,ACCOUNTANT MEMBER For The Assessee : Shri Mahendra Gargieya Shri F.Rehman For The Revenue : Shri O.P. Bhateja, Addl.CIT ORDER PER: DIVA SINGH. J.M. The present appeal has been filed by the assessee assailing the correctness of the order dated 26.07.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Conveyance Expenses : On perusal of profit and loss account of the assessee it has been seen that the assessee company has claimed a sum of ₹ 1,20,87,768/- on account travelling expenses. On perusal of the details filed by the company assessee, it is observed that said expenses have been incurred in cash on self made vouchers. In the absence of proper bills/vouchers, the expenditure claimed is not subject to verification. Hence, in view of the above to cover any possible leakage of revenue, a lump sum amount of ₹ 3,00,000/- is disallowed and added to the total income of the assessee. (Disallowance of ₹ 3,00,000/-) 2.2 Disallowance out of Staff Welfare Expenses The assessee company debited its profit and loss account by ₹ 77,50,758/- on account of staff welfare expenses. On perusal of the details filed by the company assessee, it is notice that said expenses have been incurred in cash on self made vouchers. In the absence of proper bills/vouchers, the expenditure claimed is not subject to verification. Hence, in view of the above to cover any possible leakage of revenue, a lump sum amount of ₹ 3,00,000/- is disallowed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total income of the assessee (Disallowance of ₹ 5,00,000) 2.6 Disallowance out of Function Expense The assessee debited a sum of ₹ 70,82,101/- in its profit and loss account under the head function expenses . The details furnished reveals that mostly of these expenses are incurred in cash and are supported with the self made vouchers only. In the absence of the proper bills; these expenses cannot be said to have been incurred wholly and exclusively for the purposes of the business. Hence, a sum @10% of 70,82,101/- i.e. ₹ 7,08,210/- is disallowed and added to the income of the assessee. (Disallowance of ₹ 7,08,210/-) 3. The assessee carried the issue in appeal before the First Appellate Authority. Qua each of the disallowance made, the assessee has repeatedly argued that the AO has not quoted any instance where expense is doubted for any other reason except cash payment on self made vouchers . It has been also submitted that the expenses were for the business needs of the assessee and in regular course of business. Considering the submissions, the CIT(A) taking note of the fact that the issue had been considered by him in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 6,04,906/-. This ground of appeal is partly allowed. Respectfully following the same line of decision since the facts are similar in this year as well and especially since the supporting documents were not satisfactory as brought out by the A.O. some disallowance is considered reasonable under each of the above heads clubbed together. Considering the facts of the case, a disallowance of ₹ 5,00,000/- is considered reasonable and confirmed in total under the above three heads of expense. The A.O is directed to delete balance addition of ₹ 9,60,507/- This part of Ground of appeal no. 4[(iii),(iv) (iv)] is partly allowed. 3.2. The remaining amount of disallowance on account of Function Expenses were sustained in part on account of the following reasoning : Disallowance out of Function expense The assesses debited a sum of ₹ 70,82,101/- in its profit and loss account under the head function expenses . The details furnished reveals that mostly of these expenses are incurred in cash and are supported with the self made vouchers only. In the absence of the proper bills; these expenses cannot be said to have been incurred wholly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promotional activities as the expenses for seminars and conferences are held through out the country. The pamphlets etc. are distributed. The function expenses pertain to celebration every year of its Sthapna Diwas i.e. on 11th April, the awards on the declaration of the results of the different examinations like of FITJEE, NIT etc. are given to the successful candidates and they are honored on which occasion, all the students, their parents and other celebrities from town/ outside the town are invited. 4.1 It was submitted that it is not the case of the department that these expenses have not been incurred for business purposes nor have they been found to be not genuine. It was submitted that the assessee came into existence in A.Y. 2008-09 and no disallowance was made in the past and only in the year A.Y. 2011-12 for the first time an identical disallowance was made. The order of the CIT(A) giving part relief was challenged by the assessee by filing a Cross Objection before the ITAT. However, since the departmental appeal was dismissed as not maintainable on the grounds of low tax effect, the CO was held to be not maintainable. Thus, in the circumstances, it was his submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral observations while making disallowance what is the basis for concluding that the expenditure claimed is not subject to verification qua the traveling and function expenses, staff welfare expenses, office expenses is not coming out from the order except qua vehicle running and maintenance expenses where no Log Book is found to have been maintained. Similarly qua the function expenses, business and office expenses, the mere fact that the vouchers are self made with the observation that proper bills and vouchers qua the expenditure is not maintained, cannot be said to be a sufficient reasoning as what was improper in the vouchers, has not been spelt out. It is noted that before the CIT(A), assessee has also merely relied upon the order of the CIT(A) in the immediately preceding assessment year and necessary facts have not been properly canvassed namely the fact that the assessee claims that in the year under consideration, it had 18 centres all over the country. Similarly the justification on the above fact that traveling and conveyance expenses, staff welfare expenses and function etc. for honouring the successful candidates and celebrating the Sthapna Diwas etc. are all argume ..... X X X X Extracts X X X X X X X X Extracts X X X X
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