9911796707
TMI Blog2024 (7) TMI 1472X X X X Extracts X X X X X X X X Extracts X X X X ..... THAT:- We have, at this stage, two options, i.e., to restore the matter back to the AO for examining the deductibility of the expenditure from the standpoint of Explanation to sec.37(1), qua which there is no finding; there being no estopple against law. The second, which we would prefer, is to examine the expenditure from the limited standpoint of the reasonability of the disallowance. The Tribunal is to decide matters based on the material on record. While nothing has been produced before us, it is an admitted fact that the only material furnished is an unverifiable list of about 400 persons, stated to be influential persons of the locality, without as much as a proof of their identity. Why, for all one knows, these persons may not exist. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowing the sum estimated as incurred in excess (Swadeshi Cotton Mills Co. Ltd. [ 1966 (9) TMI 30 - SUPREME COURT] ; Lakshmiratan Cotton Mills Co. Ltd [ 1968 (9) TMI 13 - SUPREME COURT] ; Lachminarayan Madan Lal [ 1972 (9) TMI 4 - SUPREME COURT] . Reference in this context may also be made to CIT v. Eastern Condiments P. Ltd. [ 2009 (10) TMI 452 - KERALA HIGH COURT] ; Pr. CIT v. Rimjhim Ispat Ltd. [ 2016 (1) TMI 374 - ALLAHABAD HIGH COURT] . The AO has, in the absence of any material, viz. property-wise details; basis for payment, itself unevidenced, estimated the expenditure liable for disallowance at 50%, which we find as reasonable. Appeal filed by the assessee is dismissed. - Shri Sanjay Arora, AM And Ms. Kavitha Rajagopal, JM For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equently, disallowance provisions. The expenditure was under the circumstances wholly unverifiable. He, accordingly, effected a disallowance at 50% of the claimed sum, i.e., at Rs. 18,71,465. In appeal, it was further explained that the assessee s primary duty was to identify and repossess the assets, only whereupon could be claim could be settled. It engaged influential people of the region, i.e., who are able to handle the matter, using force in case the situation so warrants. However, being persons, who did not have a good social background, were reluctant to provide receipts or disclose their complete address. And which explains the booking of the expenditure per self-made cash vouchers, which are though not verifiable. The ld. CIT(A) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial institutions for repossessing assets pledged with them by the defaulting borrowers, enabling, either by way of disposal of those assets or otherwise, settlement of their dues. The assessee states of engaging influential people of the locality, without good social background though, to identify and repossess assets, using force where necessary. The same, understandably, would be with reference to and in pursuance of a contract. The same is not on record, and neither is there anything to suggest of it being furnished before the Revenue Authorities. This assumes relevance as it is only the Agreement that would provide for and exhibit if expenditure of this nature could be incurred by the assessee for identifying and repossessing asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suffered on account of confiscation of silver by the Custom Authorities. It stands abundantly clarified that expenditure specified therein is not deductible under Explanation to s. 37(1). One could, invoking real income theory, argue of it being necessitated for business reasons. True, but, then, it is the real income, subject to the provisions of the Act, that is taxable (Poona Electric Supply Co. Ltd. v. CIT [1965] 57 ITR 521(SC); Southern Technologies Ltd. v. Jt. CIT [2010] 320 ITR 577 (SC)). The said theory is thus is to be applied consistent with the provisions of the Act and, two, the common law. 4.3 We have, at this stage, two options, i.e., to restore the matter back to the AO for examining the deductibility of the expenditure from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erifiable which in the instant case extends to the entire sum claimed, that that estimated as reasonable is saved, disallowing the balance. As explained in CIT v. Durga Prasad More [1971] 82 ITR 540 (SC), science has yet not invented any instrument to measure the reliability of evidence, while here we find it to be not even qualifying as one. Estimation is integral to assessment, of which disallowance of expenditure is a part. Why, we see it all the time, as for personal purposes; again, in the absence of proper record. It is well-settled that it is permissible for the tax authorities to consider disallowing the sum estimated as incurred in excess (Swadeshi Cotton Mills Co. Ltd. v. CIT [1967] 63 ITR 57 (SC); Lakshmiratan Cotton Mills Co. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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