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TMI Blog2023 (9) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... oble and Hewitt (I) Pvt, Ltd [ 2007 (9) TMI 238 - DELHI HIGH COURT ] is squarely applicable to the facts and circumstances of the present case, and therefore direct the AO to delete disallowance made on this issue. Disallowance under Business Promotion Expenses - relevant bills and vouchers are not produced - HELD THAT:- CIT(A) has noted that the expenses disallowed are not petty expenses and one of such expense itself is to the tune and the other two expenses [i.e. balance expenses] were also disallowed, since assessee failed to produce any supporting evidence. Before this Tribunal also assessee failed to produce supporting evidence of the three expenses which has been disallowed - Therefore, AO/Ld. CIT(A) has rightly disallowed which action of the Ld. CIT(A) does not require any interference. And therefore, action of Ld CIT(A) stands confirmed. Disallowance incurred under Conveyance Expenses - HELD THAT:- CIT(A) while confirming the action of AO observed that these expenses cannot be termed as petty expenses and since the assessee failed to produce any evidence to substantiate the incurrence of such expenses he confirmed the action of the AO. Before this Tribunal, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) brought to my notice that the Ld. CIT(A) erred in following the order of the Cochin Bench of this Tribunal in the case of M/s. Kunnel Engineers Contractors (P) Ltd. (supra), because it has been set aside by the Hon ble Kerala High Court, and drew my attention to the order of the Hon ble Kerala High Court in the case of M/s. Kunnel Engineers and Contractors (P.) Ltd. Vs. ACIT, Corporate Circle-1(2), Kochi (ITA. No.62 of 2020) wherein the Hon ble High Court was pleased to set aside the order of the Tribunal and restore it back to the file of the Tribunal with certain observations. Therefore, according to the Ld. AR, the foundation on the basis of which the Ld. CIT(A) has confirmed the action of the AO has been removed. Therefore, according to him, the order of the Ld. CIT(A) on this issue is erroneous. Further, he drew my attention to a chart placed at page no. 22 of PB which is reproduced as under: - SN Particulars Opening Balance Service Tax Received Service Tax Deposited Closing Balance 1 Service Tax Rec/Dep.-12.36% Baddi 0. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowed the same u/s 43B of the Act, and for such preposition cited the decision of the Hon ble Delhi High Court in the case of CIT Vs. Noble And Hewitt (I) Pvt Ltd reported in 305 ITR 324 (Del) wherein the Hon ble Delhi High Court has held as under: - 1. The revenue is aggrieved by an order dated 17-11-2006 passed by the Income Tax Appellate Tribunal ('Tribunal'), Delhi Bench D , New Delhi in ITA No. 2910/Delhi/2004 relevant for the assessment year 1999-2000. 2. The assessed maintains a mercantile system of accounting. It had collected service tax during the previous year relevant to the assessment year in question. Out of the service tax so collected the assessed had deposited part of the amount but an amount of Rs. 14.40 lakhs was not deposited by the assessed with the concerned authorities. The assessed did not claim any deduction in this regard nor did it debit the amount as an expenditure in the Profit Loss Account. The assessing officer as well as the Commissioner (Appeals) ('Commissioner (Appeals)') nevertheless disallowed the amount and added it back to the income of the assessed. 3. The Commissioner (Appeals) was of the view that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not in the context of the applicability of Section 43B of the Act. 6. In our opinion since the assessed did not debit the amount to the Profit Loss Account as an expenditure nor did the assessed claim any deduction in respect of the amount and considering that the assessed is following the mercantile system of accounting, the question of disallowing the deduction not claimed would not arise. 7. Learned Counsel for the revenue submits that the assessed has sought to evade tax under the mercantile system of accounting. We are of the view that it is not for the revenue authorities to tell the assessed how to maintain its accounts. 8. We cannot find any fault in the view taken by the Tribunal and find no merit in this appeal 9. No substantial question of law arises. 10. The appeal is dismissed. 6. In the light of the aforesaid decision of the Hon ble Delhi High Court, the assessee pleads that disallowance made by the AO of Rs. 10,92,548/- be deleted. 7. Per contra, the Ld. DR submitted that the assessee did not properly explained before the AO the issue regarding Rs. 10,92,548/- shown in the balance-sheet and did not bring to the notice of the AO that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances of the present case, and therefore I direct the AO to delete disallowance made on this issue. 9. Coming to the next ground of appeal of the assessee which is regarding disallowance of Rs. 6,490/- for the purchase of mobile phone. This ground of appeal, during the hearing, the assessee does not press. So it is dismissed. 10. Coming to the next ground of appeal of the assessee which is regarding disallowance of Rs. 26,265/- incurred under Business Promotion Expenses . 11. On the issue the Ld. CIT(A) has held as under: - Ground of appeal no. 8 is related to disallowance of Rs. 26,265/- under business promotion expenses as relevant bills and vouchers are not produced. The appellant has submitted that these are petty expenses for which only handmade bills/vouchers are available and cash memo/bills/invoices are not available. The AO in his order has mentioned that no bills and vouchers of these expenses are produced by the appellant. The details of bills are mentioned in para 3 of assessment order. As per the order of AO even the handmade bills/vouchers are not produced. All the bills are not petty expenses, there is also one bill of Rs. 16,500/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed Rs. 42,223/- on account of nonproduction of supporting cash memos, bills and vouchers. Even though, the assessee claimed that these expenses were incurred by the site supervisors for which monthly reimbursements were made by the assessee, but, since assessee failed to provide any supporting documents like cash memo/bills/invoices, the AO disallowed specific three (3) expenses i.e. Rs. 14,976/-, Rs. 11,780/- and Rs. 15,467/-. The Ld. CIT(A) while confirming the action of AO observed that these expenses cannot be termed as petty expenses and since the assessee failed to produce any evidence to substantiate the incurrence of such expenses he confirmed the action of the AO. Before this Tribunal, the assessee failed to produce any material to support the expenses to the tune of Rs. 42,223/-, therefore, the action of the Ld. CIT(A) is confirmed. 18. Ground no. 7 of the assessee is against the action of the Ld. CIT(A) partly allowing the addition made under the Travelling Expenses . 19. The Ld. CIT(A) has partly allowed this issue by holding as under: - 9. Ground of appeal no. 10 is related to disallowance of 1,15,492/- under the head travelling and conveyance expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n similar action of the Tribunal deleting 5% of the disallowance regarding manufacturing expenses was examined by the Hon ble High Court and upheld 50% disallowance by holding as under: - 7. Having heard the learned counsel for the parties, we find that there is an express finding given by the Assessing Authority as well as by the Ist Appellate Authority with regard to nonproduction of bills and vouchers and for not maintaining the stock register. In the absence of non-production of bills and vouchers, the Assessing Officer was justified in disallowing certain expenditure by 10%, which was reduced by the Ist Appellate Authority to 5%. This aspect had not at all been considered by the Tribunal and the same had only been allowed on the ground that the turnover has increased by 5% and the expenditure has reduced. The Tribunal has lost sight of the fact that the expenditure claimed under the head manufacturing expenses, which forms part of the profit and loss account , showing expenses made by the assessee are required to be proved by production of bills and vouchers. In the absence of production of bills and vouchers, an inference can be drawn by the Assessing Authority that su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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