TMI Blog2015 (3) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... or and the details of claims made from M/s. ITC Ltd. for reimbursement thereof were always available for verification, but the Assessing Officer primarily made the disallowance due to paucity of time, since the assessment was getting barred by limitation. As find from the impugned order, that the learned CIT (Appeals) has just upheld the adhoc disallowance made by the Assessing Officer without any examination or cross verification. In this factual matrix, we are of the view that the authorities below have failed to fully and thoroughly examine the assessee's claim of the incurring of expenditure on sales promotion on behalf of M/s. ITC Ltd. and its reimbursement, due to paucity of time. We also find that there has been a failure on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Unexplained cash addition from C. Sekhar. Rs.10,00,000 (iv) Unexplained Credit Notes Rs.1,04,96,706 2.2 Aggrieved by the order of assessment for Assessment Year 2008-09 dt.31.12.2010, the assessee preferred an appeal before the CIT (Appeals) (LTU), Bangalore. The learned CIT (Appeals) disposed off the assessee's appeal by order dt.29.5.2013 allowing the assessee partial relief. The learned CIT (Appeals) deleted the additions / disallowances made by the Assessing Officer listed out at (i) (ii) and (iii) at para 2.1 of this order (supra) and confirmed the addition of ₹ 1,09,96,706 on account of credit notes as unexplained cash credits. 3. Aggrieved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he size of the retailer. All such retailers are small kirana shop owners who would not possess any bank accounts for the payments to be made in cheques. The nature of the assessee business is such that all payments would be required to be made in cash. 2.3 The ld. A.O. and the learned CIT (Appeals) has wrongly alleged that complete details and evidences on the accounting of credit notes and its related amount spent were not furnished by the appellant to them, when in fact the entire list is available and ITC Ltd. issues credit notes against the claim of the assessee only after ensuring that entire details of the party and payments are provided. There can be no instances where ITC would issue a credit note without submission of proper sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents to be made by cheques. It is submitted that the said payments, made in cash by the assessee, are not in the nature of expenditure claimed in the profit and loss account, but are made by the assessee in the capacity of an agent of M/s. ITC Ltd., which are merely reimbursed to it by M/s. ITC Ltd. on actuals. 5.1.2 It is contended by the learned Authorised Representative that despite these expenses being petty and voluminous, they are fully supported by vouchers, photographs, etc and are verifiable and that undue hardship has been caused to the assessee by the action of the Assessing Officer in making an adhoc disallowance of 50% of the expenses incurred. The learned Authorised Representative contends that if the learned CIT (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of credit notes as unexplained. 5.3.1 We have heard both parties and perused and carefully considered the material on record. There is no dispute with respect to the fact that the assessee distributes products of M/s. ITC Ltd. like cigarettes and processed foods to retailers and shop keepers. According to the assessee, for the Assessment Year under consideration, it had received credit notes amounting to ₹ 2,19,93,412 from M/s. ITC Ltd. as reimbursement of expenses incurred for sales promotional activity of giving freebies, on-shop display rentals, etc. on behalf of ITC Ltd. to small kirana / pan shop owners. These payments were made in cash ranging from ₹ 100 to ₹ 4,000 since these petty shop keepers would not ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual matrix, we are of the view that the authorities below have failed to fully and thoroughly examine the assessee's claim of the incurring of expenditure on sales promotion on behalf of M/s. ITC Ltd. and its reimbursement, due to paucity of time. We also find that there has been a failure on the part of the authorities below to cross verify the claims of the assessee in this regard with M/s. ITC Ltd. and whether at all there was an element of income therein. 5.3.2 In the light of the facts and circumstances of the case as discussed above, we are of the considered view that in the interest of equity and justice, the issue of the assessee's claim of incurring of sales promotion expenditure of ₹ 2,19,93,412 on behalf of M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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