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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 ..... ssee has not deposited the same in the relevant account of the Government before the filing of the Income Tax Return, disallowed the same u/s 43B of the Act. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who confirmed the action of the AO by referring to the decision of this Tribunal (Cochin Bench in the case of M/s. Kunnel Engineers & Contractors (P) Ltd. [ITA. No.653/Coch/2019 & ITA. No. 04/Coch/2020 vide order dated 19.05.2020]. Aggrieved by the aforesaid action of the Ld. CIT(A), the assessee is before this Tribunal. 4. At the outset, the Ld. AR assailing the action of the Ld. 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 observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 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 assessed had not followed the correct accounting procedure. If it had done so, the amount would have had to be debited to Profit & Loss Account and thereafter the assessed could claim a deduction thereon. The Commissioner relied upon decision of the Calcutta High Court in Chowringhee Sales Bureau (P) Ltd. v. CIT . 4. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counting, 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 this amount was pertaining to earlier years, and not that of current year. According to him, in such circumstances, the AO has made the disallowance which has been upheld by the Ld. CIT(A) and therefore, he does not want me to interfere with the impugned action of Ld CIT(A). However, the Ld DR could not controvert the fact that the ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 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/-. Accordingly, appellant does not get any relief on this issue and the ground of appeal is rejected." 12. Aggrieved by the aforesaid action of the Ld. CIT(A), the assessee is before this Tribunal. 13. I have heard both the parties and perused the records. It is noted that the assessee claimed as business promotion expenses an amount of Rs. 2,27,207/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 expenses. The appellant has submitted that appellant has admitted in the written reply dated 29.01.2016 that some of vouchers could not be produced for verification during the scrutiny assessment proceedings is incorrect and erroneous. The explanation offered by the assessee at point no. 3 of the reply dated 29.01.2016 does not appear to have been considered by the AO. The specific instances of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 such expenses shown under this head were inflated or were not supported by any bills, vouchers or any other documentary evidence, which would justify the Assessing Officer in disallowing certain portion of such expenses. 8. In the light of the aforesaid, we are of the opinion that the Tribunal committed an error in allowing the appeal of the assessee and by totally deleting the disallowance of 5%. We, accordi ..... 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