MITA MOHANTY,BHUBANESWAR vs. DCIT 2(1),BHUBANESWAR, BHUBANESWAR
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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
Before: RAJESH KUMAR
Per Bench
This is an appeal filed by the assessee aga This is an appeal filed by the assessee against the order of the ld inst the order of the ld CIT(A), NFAC, Delhi CIT(A), NFAC, Delhi dated 20.7.2023 in Appeal No. in Appeal No. NFAC/2017- 18/1003952 for the assessment year 2018-19.
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Shri M.R.Sahu, ld AR appeared for the assessee and Shri Charan Dass, ld Sr DR appeared for the revenue.
It was submitted by ld AR that the assessee is in the business of dealing in products of M/s. Amway India Enterprises Pvt Ltd. It was the submission of that in the course of assessment, the Assessing Officer has disallowed Rs.24,77,592/- representing 75% of Rs.33,23,462.90 being business promotion expenses. It was the submission that the Assessing Officer has disallowed the same by holding that the assessee had not produced the evidences in support of the business promotion expenses. Ld AR drew our attention to page 2 of paper book, which was the profit and loss account of the assessee for the impugned assessment year, which showed the business promotion expenses of Rs.33,23,462.90. He further drew our attention to the break-up of the said expenses at pages 21 to 23 of PB. Ld AR further drew our attention to pages 24 to 61 of PB, which were the copies of invoices of bills and vouchers in respect of the said expenses. It was the submission that all the documents were produced before the Assessing Officer. However, the Assessing Officer mentions that the assessee has not shown any evidences. It was the further submission that the Assessing Officer further goes on to hold that out of the total vouchers produced, 1/5th of the expenses was cash vouchers and found to be disallowable. It was the further submission that even after giving such findings, the Assessing Officer proceeded to make disallowance of
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Rs.24,77,592/-. It was the submission that on appeal, evidences which were produced before the Assessing Officer were produced before the ld CIT(A) and the ld CIT(A) without considering the same, held that the assessee has attempted to produce the evidences as fresh evidences. It was the submission that these were not fresh evidences. It was the further submission that the ld CIT(A) on the ground that Enforcement Directorate has accused Amway India of running a pyramid fraud in the guise of a direct selling multi-land marketing (MLM) network, held that the expenses incurred by the assessee was not allowable. It was the submission that there is no allegation that the assessee has done any fraud. It was the submission that the disallowance as made by the AO and as confirmed by the ld CIT(A) is liable to be deleted.
In reply, ld Sr DR submitted that the Assessing Officer has specifically mentioned that 1/5th of the expenses were self made vouchers and the expenses were disallowable. It was the submission that no satisfactory reason for the business promotion expenses has also been given by the assessee. It was the submission that the order of the AO and that of the ld CIT(A) is liable to be upheld.
We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the assessee has produced all the bills and vouchers before the Assessing Officer. This is because the Assessing Officer in his own order mentions that the vouchers were verified and the P a g e 3 | 5
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vouchers were found available and 1/5th of the vouchers of the expenses were self made vouchers. A perusal of the paper book shows that the expenses have been incurred for various activities related to the business of the assessee and they are substantially supported by specific bills raised by various organizations. This being so, as it is noticed that the Assessing officer has also admitted that the expenses in relation to 1/5th of the expenses of business promotion is self made cash vouchers and this has also been accepted by the ld CIT(A), the disallowance of expenses under the head ‘business promotion expenses’ is directed to be restricted to 1/5th of the claim as made. Hence, the Assessing Officer is directed to restrict the disallowance under business promotion expenses to 1/5th of the claim of Rs.33,23,462.90 claimed under the head ‘ business promotion expenses’ in the profit and loss account.
In the result, appeal of the assessee stands partly allowed.
Order dictated and pronounced in the open court on 01/12/2023.
Sd/- sd/- (Rajesh Kumar) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 01/12/2023 B.K.Parida, SPS (OS)
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Copy of the Order forwarded to : 1. The Appellant : Mita Mohanty, HIG -90, K- 5, Kalinga Vihar, Nr Arnold School, Kalinga Vihar, Bhubaneswar 2. The Respondent: DCIT, Circle-2(1), Bhubaneswar 3. The CIT(A)-NFAC, Delhi. 4. Pr.CIT-, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// By order
Sr.Pvt.secretary ITAT, Cuttack
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