AARYA24KT (INDIA) PVT LTD,MUMBAI vs. DCIT- 9(1)(1), MUMBAI

The Appellant avers that the learned CIT(A) erroneously failed to recognise the verifiable and genuine nature of the bifurcation of expenses as furnished by the Appellant, which further substantiates the claim that the expenses were incurred wholly and exclusively for the company's business operations.

Briefly stated facts necessary for consideration and adjudication of the issues at hand are : the assessee company is into the business of trading and manufacturing of jewellery. The return of income filed by the assessee declaring total income of Rs.34,78,555/- was subjected to scrutiny. The Assessing Officer (AO) noticed from the financial statement that the assessee has debited to the P&L account an amount of Rs.32,60,296/- on account of travelling expenses and Rs.72,28,135/- on account of selling and distribution expenses. On failure of the assessee to file evidence that the expenses were incurred wholly and exclusively 3 M/s. Aarya 24-Kt (India) Pvt. Ltd.

Notice through Registered Post with Acknowledgment Due (RPAD) was issued to the assessee company which was received undelivered with the report that the assessee has left the place of its last address. Registry has issued the notice on the address given by the appellant in form No.36. This fact shows that the assessee has left the place of last address and has intentionally given the wrong address being not interested in prosecuting the present appeal. So the Bench has decided to dispose of this appeal on the basis of document available on record and with the assistance of the Ld. D.R. for the Revenue.

I have heard the Ld. D.R. for the Revenue, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and case law relied upon. 4 M/s. Aarya 24-Kt (India) Pvt. Ltd.

I have perused the order passed by the Ld. CIT(A) confirming the addition made by the AO @30% of the expenses claimed to be incurred by the assessee for business purposes by returning following findings: “6.1 I have gone through the order of the learned Assessing Officer and submission made by the appellant, the grounds of appeal have been disposed collectively here under- 6.2 The learned Assessing Officer observed that the company has booked hotel rooms in names of directors and other persons. The appellant had also incurred certain gift related expenses which were made from credit cards in name of company. The learned Assessing Officer has made additions on credit card expenses issued in the name of director of the company at the rate of 30%. 6.3 The learned Assessing Officer has made the contention that there was no evidence to prove that the expenses were expended exclusively for the purpose of business and hence made an ad hoc addition at the rate 30% of the expenses to the extent of Rs.6,31,828/-. 6.4 The appellant in his written submission has claimed that credit cards are issued to the company in the name of the directors and the same has used for the expenses of the company which is the common practice of banks. 6.5 The appellant has claimed that the expenses are legitimate expenses of the company and payment of the credit card bills are made from the company bank account. 6.6 The appellant has also produced bifurcation of expenses and copy of the vouchers. However, the appellant has failed to produce any supporting evidences like tickets, employee register and designation, invoices of purchase of gifts etc with respect to the bifurcation of expenses provided by them. 6.7 In the view of the above, I am of the considerate opinion that the bifurcation provided by the appellant is not verifiable as genuine in absence of supporting documents. Therefore, the addition made by the learned Assessing Officer is upheld.”