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2021 (8) TMI 562 - AT - Income TaxEnhancement of assessment - disallowance of sales promotion expenditure - HELD THAT:- The implication of proposed action of CIT(Appeals) was brought to the notice of assessee at the time of proceedings before the CIT(A).Therefore, it is not correct to say that the CIT(Appeals) has not issued any show cause notice before making enhancement of disallowance. Since there is no statutory notice prescribed under the Act and the assessee has been allowed full opportunity of hearing before enhancing the addition, there is no illegality in the action of the CIT(Appeals). Law only requires the assessee must be made aware of the proposed action of the CIT(Appeals) in enhancing the addition and explanation to be obtained and considered. In our opinion, the assessee has not brought anything to show that the enhancement of addition as made unilaterally by the CIT(Appeals). Thus, it has to be inferred that the assessee was duly put to notice before making the enhancement of income. Accordingly, this plea of the assessee is rejected. Whether sales promotion expenditure was incurred wholly and exclusively for the purpose of business? - The assessee submitted list of 320 persons stating that they are employees of the assessee company and went to Sri Lanka to launch the product of the company. However, there is no documentary evidence to show that 320 persons are employed by the assessee as the assessee has not filed any appointment orders or any correspondence of these persons stated to be employees of assessee company. We failed to find out names of persons in this bill in the list of 320 persons submitted by the assessee. Further it is to be noted that the assessee has not been able to lead any evidence and explain what is the product launched by the assessee with reference to sales bill raised by the assessee in subsequent sales. There is no evidence about the enquiries received for the product during the course of launch or any product sold in that region subsequent to this launch. In such circumstances, it could not be presumed that the assessee has sold any product in this region where the alleged product launch took place. There is nothing on record to show that any sales increased during this alleged launch of product in Sri Lanka. There does not appear to be any trade practice undertaken by the assessee to launch the assessee’s product in Sri Lanka. Since the assessee failed to establish that expenditure was incurred wholly and exclusively for the purpose of business, the same could not be allowed as business expenditure. In the absence of any evidence and material on record, we are of the view that the assessee made attempts to claim some expenditure in Sri Lanka for some obvious purpose as sales promotion expenditure which cannot be allowed. - Decided against assessee.
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