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TMI Blog2020 (12) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... f foreign tour expenses, the Assessing Officer observed that expenses have been incurred on travel of the assessee and his wife to Malaysia and thus not related to business activity of the assessee. On the contrary, the assessee submitted that his proprietary concern is a prominent dealer of M/s Zenith Computers Ltd., who organises annual meet every year at different places. During those annual meets technical presentation are given to dealers, their common problems are discussed, annual rewards to dealers are distributed and business policies for the ensuing year are also discussed. For attending the dealer meet, the assessee was required to make his own travel arrangement and rest of the expenses like lodging, boarding, local transport etc. were sponsored by M/s Zenith computers Ltd. The ld. AR argued that had this been a pleasure trip, the assessee would have taken his children also along with him, but in view of the business trip, he along with his wife who is business manager, only attended the meet. In view of the submissions, the Ld. CIT(A) has already allowed 50% of the expenses. Sustainance of the balance 50% expenses on ad hoc basis is not justified, when the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Diesel Exp. ₹ 4103/- d. Diwali Exp. ₹ 1500/- e. Office and office maintenance Exp. ₹ 5000/- F. Staff Welfare Exp. ₹ 2500/- g. Vehicle Exp. ₹ 2741/- Total ₹ 52785/- Hence the above addition of ₹ 52785/- is liable to be deleted. 3. That the learned Authorities below have grossly erred in law and facts in making addition of ₹ 3,00,000/- on account of undisclosed investment in house furniture U/s 69. Hence the addition of ₹ 3,00,000/- is liable to be deleted. 4. That the learned Authorities below have grossly erred in law and facts in making addition of ₹ 99,000/- on account of undisclosed income u/s 69. Hence, the addition of ₹ 99,000/- is liable to be deleted. 5. The appellant prays your honors indulgence to add, amend or alter all or any of the grounds of the appeal on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed in the profit and loss account. The trading results declared by the assessee have been accepted by the Assessing Officer inter alia in view of the observations that the assessee maintains dayto- day stock register, purchase and sales are fully vouched and better sales turnover and profit during the year under consideration. However, in respect of various expenses debited in profit and loss account viz.telephone, foreign tour expenses, vehicle related expenses (fuel, maintenance and depreciation), Diwali expenses, office maintenance expenses, staff welfare expenses etc, he made disallowances in percentage terms mainly on adhoc basis. On further appeal, the Ld. CIT(A) deleted the disallowance of depreciation on vehicles and balance disallowance was restricted to 50% of the disallowance made by the Assessing Officer. The disallowance made by the Assessing Officer and relief allowed by the Ld. CIT(A) in respect of the various expenses is summarised in table below:- S. No. Nature of expenses Total amount of expenditure Disallowance made by the A.O. Disallowance sustained by the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said expenses on mobile were primarily related to the business. The balance expenses under the head telephone expenses were related to phones and mobiles used in the office premises by the staff for following of enquiries, dealing with customers and service calls etc. 11. Regarding disallowance out of diesel expenses and vehicle expenses, the Assessing Officer was of the view that payments are made in cash and no logbook for earning of the vehicle was maintained and therefore expenses were not open to verification. Regarding Diwali expenses, the Assessing Officer observed that proper vouchers were not maintained and payments were made in cash and therefore, expenses are not complete and verifiable. According, to the assessee expenses were towards sweets and gifts given to customers and staff members and cost of Puja items for performing Lakshmi Puja and also payment to Pandit for performing Puja. Regarding offices, office maintenance and staff welfare expenses also the Assessing Officer made disallowance mainly on the ground that the assessee did not maintained proper vouchers and said expenses were not complete and correct, therefore not verifiable. The contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view of the submissions, the Ld. CIT(A) has already allowed 50% of the expenses. In our opinion, the sustainance of the balance 50% expenses on ad hoc basis is not justified, when the assessee has explained business purpose of the expenses. 14. In view of the facts and circumstances and the discussion above, we are of the opinion that action of the Ld. CIT(A) in sustaining 50% of the disallowances made by the Assessing Officer that too on adhoc basis is not justified, and accordingly, we delete the same. The ground No. 2 of the appeal is allowed. 15. The ground No. 3 relates to sustainance by ld. CIT(A) of addition of ₹ 3 lakh made by the Assessing Officer under section 69 of the Act for unexplained investment in furniture and fixture . 16. Briefly stated facts qua the issue in dispute are that during the year under consideration the assessee sold his residential house at Raja Park and made investment in construction of house at Vaishali Nagar . During the assessment proceeding, the assessee submitted a separate balance-sheet as on 31.03.2005 for personal state of t affairs. A copy of the said balance-sheet is placed on page 15 of the paper book. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction), and separately specified in the personal balance-sheet as on 31/03/2005, which was made for the first time. According, to him the lower authorities are not justified in making the addition under section 69 of the Act. 18. The Ld. DR on the other hand relied on the order of the lower authorities. In support , she also relied on the decision of the Hon ble Punjab and Haryana High Court in the case of Ishwar Chand Bansal versus CIT reported in 294 ITR 95 and decision of Hon ble Patna High Court in the case of Chandmul Rajgarhia Vs CIT reported in 164 ITR 486. 19. We have heard rival submission of the parties on the issue in dispute and perused the relevant metal on record. We find that the assessee has sold his house at Raja park for a sale consideration of ₹ 15 lakh in previous year ended on 31/03/2005. This house was valued at ₹ 17,82,117/- in the combined balance-sheet as on 31/03/2004 of the proprietary concern and personal affairs. This house was purchased for ₹ 8 lakh and thereafter addition of ₹ 2,65,000/- has been made in the financial year 1999-2000, ₹ 5,69,817/- ₹ 1,47,300/- have been made in financial year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.Sofa Set (8 seater) ₹ 48,000/- 16. Dining Table (with 6 seats) ₹ 17,000/- 17. Centre Table ₹ 45,00/- 18. Beds (3 Nos.) ₹ 48,000/- 19. Mattress (3Nos.) ₹ 27,000/- 20. Godrez Almira ₹ 4,800/- Grand Total ₹ 3,00,050/- 19.1 The assessee has attempted to explain that no new investment in house furniture has been made while constructing the new house and only old furniture and house hold appliances have been shifted from old house, which have been shown in the balance sheet on31.03.2005 for personal affairs. 19.2 In our opinion the assessee was required to explain source of investment of these items of ₹ 3,00,500/- either i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of furniture. Authorized Representative argued that this is sale proceeds of old furniture of father and represents sale of personal asset, therefore not taxable. I find that even if the contention of the Authorized Representative that this represent sale of personal assets of father is accepted, even then same is taxable as assessee has not shown any cost incurred on the same. Therefore, addition of ₹ 99,000/- made by the Assessing Officer on account of capital addition during the year is upheld. This ground of appeal is dismissed. 22. The ld. CIT(A) has though agreed with the possibility of amount being sale proceeds of the old furniture of father and representative sale of the personal asset therefore, it was not taxable, however, he has observed that assessee has not shown any cost incurred on the same and therefore, addition was sustained. In our opinion, the onus was on the assessee to explain that ₹ 99,000/- received was against sale of old furniture and electronic appliances. The assessee has neither produced any agreement with buyer for sale of furniture and electronics appliances nor produced any confirmation from buyer of the house that he has paid ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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