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25-11-2019, Bansal Classes, Section 41(1), 28, Tribunal Jaipur

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1 week 5 days ago #11614 by amit
Section - 41(1), 28
Order Date - 25-11-2019
Favouring - Assessee
Court - Tribunal Jaipur
Appellant - Bansal Classes Pvt. Ltd.
Respondent - ACIT
Justice - VIJAY PAL RAO, JM & VIKRAM SINGH YADAV, AM
Citation - 1219Taxpundit3
Appeal No. - ITA No. 578/JP/2019
Asstt. Year - 2014-15

Order

PER : VIKRAM SINGH YADAV

This is an appeal filed by the assessee against the order of ld. CIT(A), Kota dated 07.02.2019 wherein the assessee has taken the following grounds of appeal:-

“1. That the ld. AO grossly erred on law & facts by disallowing out of expenses stating to be unverifiable expenses the ld. CIT(A) also erred in sustaining out of said addition Rs. 7,50,000/-.

2. That the ld. AO grossly erred on law & facts in making addition on account of Caution Money, stating to be paid in Cash. The ld. CIT(A) also erred in sustaining the addition of Rs. 1,000,00/- out of that.

3. That the ld. AO grossly erred on law & facts in making addition on account of Pending Caution Money, The ld. CIT(A) also erred in sustaining the addition of Rs. 1,00,000/-.”

2. Regarding Ground No. 1, briefly stated, the facts of the case are that during the course of assessment proceedings, the AO observed that the assessee has debited expenses in the nature student promotion expenses and miscellaneous expenses in its profit and loss account. A show cause was issued to the assessee to justify the claim of the said expenses. In response, the assessee submitted its reply however, the same was not found acceptable and as per the Assessing Officer, the expenses are not fully vouched or self vouched and are paid in cash and not subject to verification. Therefore, out of the total expenses of Rs. 1,70,30,336/-, 15% of expenditure was disallowed, which comes to Rs. 25,54,550/- and added to assessee’s total income.

3. Being aggrieved, the assessee carried the matter in appeal before ld. CIT(A) and the ld. CIT(A) allowed partly relief to the assessee and disallowance was restricted to Rs. 7.5 lacs and the relevant findings of the ld. CIT(A) reads as under:-

“The student promotion expenses appear to be in the nature of advertising and sales promotion in loose connotation. The coaching Institutes being run commercially do have to go after eligible student population to maximize their feasibility. It is apparent that if these expenses were not incurred or aggressive marketing not done the revenues could have fallen further. However, proper evidences in respect of the same were necessary to justify the claim made to the fullest extent possible.

As regards travelling and miscellaneous expenses, looking to the factsinvolved that there were not sufficient independent evidences in support of the claim of these expenses, it is also justifiable on the part of the AO to make a reasonable disallowance out of these expenses is justified.

The disallowance @ flat 15% out of the total claim cannot be made unless the A.O highlights certain specific defects in individual claim of expenses and/or proves certain expenses were bogus or inflated. However to be fair to him as well when there were no evidences in support in several of the claims, all he could do is make as estimation forthe non business element possible.

In fairness therefore, the disallowance is being restricted to Rs. 7,50,000/- as being reasonable disallowance on account of the discrepancies involved.

The balance disallowance of Rs. 18,04,550/ is directed to be deleted. This ground of appeal is partly allowed.”

4. During the course of hearing, the ld. AR submitted that the learned A.O. has made disallowance stating to be the unverifiable expenses. It is very surprising that the expenditure incurred by the assessee from years together, that is called Student Promotion, Travelling and Miscellaneous Expenses which include so many other expenditure, how the learned A.O. can term these expenses as unverifiable expenses. In support, to justify our contention, we have submitted expenditure wise details and the legal position including decision of Udaipur Distillery (SC), Oswal Agro, Adidas India Marketing Pvt. Ltd. and requested to the learned A.O. that there is nothing to disallow unless there is any specific mistake in the expenses, but the learned A.O. has disallowed the same by stating simple words that the expenses are not fully vouched or self-vouched and are in cash. This is totally vague, it is a general remark based on surmises & conjectures even the learned A.O. has not verified the details of expenses submitted in course of assessment. All these are legitimate expenditure, have either been not disallowed in earlier years or

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