SHRI MANOJ KUMAR GUPTA,JAIPUR vs. ITO, WARD 5(2), JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES ‘B’ JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 307/JP/2020 fu/kZkj.k o"kZ@Assessment Year :2012-13 cuke Sh. Manoj Kumar Gupta, ITO, Vs. Prop. Gupta Computers, B-23, Govind Ward-5(2), Marg, Adarsh Nagar, Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. ADFPG5504K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. M L. Borad (Adv.) & Sh. Dhiraj Borad (CA) jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhary (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 08/02/2021 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 04/05/2021 vkns'k@ ORDER

PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-2, Jaipur dated 26.07.2019 wherein the assessee has raised the following grounds of appeal: “1. That in the facts and circumstances of the case and under the law the impugned order passed by the Learned CIT(A) is not maintainable and liable to be cancelled. 2. That the learned CIT(A) failed to appreciate that in this case books of accounts were not rejected by the AO and the learned CIT(A) further failed to appreciate that without rejection of books of

2 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur accounts no disallowance of business expenses could have been sustained. 3. That the learned Commissioner (Appeals) erred in sustaining disallowance of Rs. 10,94,370/- with regard to Sikkim Manipal University (SMU) admission expenses (which inter alia include discount and referral bonus given to the students, waiver of late fees etc), which sustaining of disallowance of Rs. 10,94,370/- is most arbitrary, unjust, untenable in fact and in law and in the alternative excessive w.r.t facts and circumstances of the case. 4. That the learned Commissioner (Appeals) erred in confirming disallowance of Rs. 87,687/- being 50% of total disallowance of expenses of Rs. 1,75,374/- (out of computer installation expenses at Rs. 35,000/- plus out of cash payments of Rs. 3,61,500/- made to various persons in regard to expenses incurred on visiting faculties at Rs. 90,375/- plus out of vehicle running & maintenance and depreciation at Rs. 30,000/- plus out of telephone/mobile expenses at Rs. 20,000/-) made by the AO, which confirmation of disallowance of Rs. 87,687/- is most arbitrary, unjust and in the alternative excessive w.r.t facts and circumstances of the case.”

3 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur examination of the assessee’s appeal documentation found that appeal for the impugned assessment year has not been filed, a fact which has been confirmed by the earlier Counsel. It was submitted that there is no denying the fact that there has been a delay in filing the present appeal, however, such a delay has happened on account of mistake on part of the earlier Counsel in taking necessary action and the assessee cannot be penalized for fault on part of the Counsel. It was accordingly submitted that the delay may be condoned and the appeal may be admitted for necessary adjudication on merits.

4 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur 1. That the learned CIT(A) ought to have held that the relavant assessment order passed by the A.O. was vitiated and bad and not maintainable in fact and in law because it was passed by the AO without making any inquiries. 2. That the learned CIT(A) failed to take into considerations the fact that the assessee duly discharged its burden of proof by providing basic details before the A.O. which he asked the assessee to produce in the course of assessment proceedings. Ground of Appeal No. 2

Grounds of Appeal No. 3,4&5

5 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur 1. All these three grounds of appeal are in regard to full or part disallowance out of various expenses, namely SMU admission expenses (Ground of Appeal No. 3), computer installation exp., visiting faculties exp., vehicle running, maintenance and depreciation, telephone/mobile exp. (Ground of Appeal No. 4), staff members birthday celebration (Ground of Appeal No. 5). 2. That in above regard it is respectfully submitted that any expenditure not specifically covered by sections 30 to 36 is deductable u/s. 37. An analysis of section 37(1) shows that any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head “profits and gains of business or profession”. Relevant case laws of Hon’ble Apex court in regard to above submissions form part of list of judicial pronouncements annexed herewith. 3. On analyzing the issue of part or full disallowance out of various expenses in the facts of the present case the hon’ble Tribunal will very kindly see that none of the above conditions is breached in this case. A very brief description/explanation in regard to above mentioned 3 grounds of appeal bearing No.3,4, & 5 are as under:-

SMU Admission Expenses (Ground of Appeal No. 3) A. a. During the year under consideration the appellant was running a distance education program centre of SMU (Full name- Sikkim Manipal University) wherein the appellant was providing distance programs in IT and Management. b. The appellant declared receipts from this distance education program centre at Rs. 65,53,723/- in its audited P&L account and claimed

6 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur Rs. 11,47,370/- against the above said receipt as admission expenses (which includes discount, referral bonus, waiver of late fees etc. given to the students. c. Here the assessee very humbly submits that there is a very competitive market in the field of distance education program and for getting maximum number of students, the assessee had to take all possible business decisions which not only included giving advertisements and online marketing but also have to offer discount to students and also to give incentive to existing students for bringing their friends for new admissions. As regards AO’s observation in the course of assessment proceedings that why the amount was mostly paid in cash and not by cheque in this regard it is submitted that SMU (Sikkim Manipal University) doesn’t accept fees in cash. In such a situation where most of the students bring a demand draft prepared in the name of SMU from their parents for payment of fees and then they go to different centres bargaining for more discounts. Since DD for the fees stands already made the assessee is forced to return the amount of discount to the student in cash. As most of the students don’t have bank account and many of them also don’t like to give the amount of discount back to their parents who arranged fees for their education the assessee is compelled to pay the students the amount of discount in cash and such amount of discount is debited by assessee in his books of accounts under the head SMU admissions expenses. As the amount paid to each student varied between 1000 to 5000, no infringement of provisions of section 40A(3) was made by the assessee because the payment was below the then. d. The assessee would also like to submit that during F.Y. 2009-10 (relevant to A.Y. 2010-11) the total fees collection under the head distance education program was of Rs. 6,63,174/-. In F.Y. 2010-11 (relevant to A.Y. 2011-12) the fee collection for distance education

7 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur program was Rs. 17,74,171/-. During these two years the assessee was not offering aggressive discount and incentives to students. After two years of low business, the assessee made extensive inquiries for its low collection as compared to similar SMU centres in Jaipur. After extensive research and feedback of other SMU centres, he came to know that most of the business is being done by other centres by involving the existing students by offering incentives for bringing new students and by offering discounts to new admissions at the time of their admission. In F.Y 2011-12 i.e. year under appeal the assessee made the same approach as followed by most of the other centres and as a result his collection of fees of distance education program from SMU in the previous year relevant to A.Y. 2012-13 i.e. year under appeal shot up to Rs. 65,53,723/- from Rs. 17,74,171/- in F.Y. 2010-11. Such an increase in SMU income at Rs. 47,79,552/- (SMU income in F.Y. 2011-12 Rs. 65,53,723/- minus SMU income in F.Y. 2010-11 at Rs. 17,74,171/-) in the year under appeal as compared to the immediately preceding assessment year could not have been achieved without incurring business related expenses like SMU admission expenses of Rs. 11,47,370/-. Moreover the SMU admission expenses of Rs. 11,47,370/- are even below 20% of total SMU income of Rs. 65,53,723/- under this head of income. e. In the year under appeal the appellant was receiving a fixed percentage of income from Sikkim Manipal University for every student registration and the appellant assessee was distributing a part of that income to register more and more students by offering discount and referral schemes etc. Here it may be submitted that this is a general business technique to enhance the business and is adopted by every type of business like insurance commission. f. The above modus operandi may also be termed as an advance version of advertisement wherein direct benefit is given to the client by

8 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur avoiding heavy expenditure on advertisement through print media and/or other means of mass communication like TV, radio etc. This direct benefit is given to the clients by giving them discounts, referral schemes, cash backs, reward points and waiver of late fees etc. In other words this is simply an advertisement through mouth publicity. g. The discount and referral amount was given between the ranges of Rs. 1000/- to Rs. 5000/- depending upon the payment of fees recovered from the students. Sometimes students deposited lower amount towards there admission fees by deducting the discount amount suo-moto and in such cases appellant had to deposit the full amount of fees to the Sikkim Manipal University. Sometimes the appellant had to return the discount and/or referral amount to the discount claimers after receiving the income from the Sikkim Manipal University. h. It will not be out of place to mention that while disallowing the SMU admission expenses reliance has been placed by lower authorities on following judgments of Hon’ble Supreme court. It is respectfully submitted that in view of under mentioned reasons all these three cases are not at all applicable in the facts and circumstances of the appellant assessee’s case:- S.no Case Name Reasons of non applicability of these S.C.cases 1. SumatiDayal vs. CIT This case is under section 68 214 ITR 801 of the IT Act. 2. C. Vasantal& Co. 45 This case is related to ITR 206 (SC) applicability of evidence Act in relation to proceedings under the IT Act 3. ChaturbhujPanauj This case is related to land AIR 1969 255 (SC) acquisition Act passed on 23/07/1968

9 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur i. That during the course of assessment proceedings, the appellant submitted the list of all the students and persons to whom discounts and referral amount etc. was paid. It forms part of the paper book at pages 24 to 40.

B. Expenses under the head Computer installation, visiting faculties, vehicle running and maintenance and depreciation, telephone/mobile (Ground of Appeal No. 4)

Nature of expenditure Total amount Disallowance Disallowance of expenditure made by the sustained by A.O. the CIT(A) 3,86,352/- 35,000/- 17,500/- Computer installation expenses 3,61,500/- 90,375/- 45,187/- Expenses paid in cash out of total expenses of Rs. 4,00,100/- incurred on visiting faculties 4,22,780/- 30,000/- 15,000/- Vehicle running and maintenance and depreciation expenses of Rs. 4,22,780/- (diesel expenses Rs. 1,19,248/- plus Insurance Rs. 22,803/- plus Vehicle maintenance expenses Rs. 74,872/- plus interest on car loan Rs. 53,539/- plus Depreciation on vehicles

10 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur Rs. 1,52,318/-). 1,92,015/- 20,000/- 10,000/- Telephone/mobile expenses

The humble appellant craves leave to submit a very brief explanation in regard to abovementioned expenses as under:- i. Disallowance out of Computer installation expenses: a. These expenses of Rs.3,86,352 were incurred by the assessee on account of AMC (Annual Maintenance charge ) of computers installed in the business premises of assessee. b. Total expenditure of AMC & IMC is Rs.5,20,865 (AMC Rs. 3,86,352 + IMC Rs.1,34,513). As against this the receipts under this head of AMC/IMC are of Rs.14,09,067. ii. Disallowance out of Visiting faculty expenses a. That the appellant assessee is running a distance education centre of Sikkim Manipal university (SMU). During the year under consideration appellant incurred an expenditure of Rs. 4,00,100/- in relation to payment to various persons (i.e. visiting faculties) for teaching to students of the appellant assessee and also resolving the queries and subject related problems of such students. b. In the course of assessment proceedings the assessee furnished a detailed list of the visiting faculties(i.e. experts of a particular subject) containing the particulars like date of their visit, name and complete postal address of the visiting faculty and the amount paid to each of them aggregating to Rs. 4,00,100/-. c. In the year under appeal the appellant assessee called as many as 26 visiting faculties and total payment of Rs.4,00,100 was made to them. By no canon of law such a small payment to 26 visiting faculties against an income of SMU at Rs.65,53,723 can be termed as unjustified

11 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur iii. Disallowance out of Vehicle running and maintenance and depreciation expenses of Rs. 4,22,780/- a. The A.O. made disallowance of Rs. 30,000/- on adhoc basis out of above mentioned expenses mainly for the reason that personal use of vehicles by the assessee and his family members cannot be denied and the assessee has not maintained log book. b. In above regard it is respectfully submitted that the Hon’ble Apex Court has in very many cases held that there must be something more than the bare suspicion to support an assessment. But in assessee’s case there is not an iota of evidence of disallowable nature of expenditure nor is there any expenditure which is of disallowable nature i.e. in the nature of personal expenditure or capital expenditure as mentioned in section 37. c. More over depreciation is a statutory allowance and there cannot be any disallowance out of such a statutory allowance/deduction iv. Disallowance out of telephone expenses a. These expenses include mobile expenses of the assessee and his wife, who is also working as business manager of the assessee’s sole proprietory concern, namely, Gupta Computers. The expenses on mobile are primarily related to the business. b. The balance expenses under the head telephone expenses are related to phones and mobiles used in the office premises by the staff for following of enquires, dealing with customers and service calls etc.

C. Expenses incurred on Birthday celebration of staff members (GOA No. 5) 1. The human resource is very important in every business. It is also an undisputed fact that happiness and efficiency of employees of an establishment is a key to good health of the business. Keeping in view this

12 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur universal truth businessmen always try to keep his employees happy and efficient. 2. Keeping in view the above proposition the appellant assessee incurred an expenditure of Rs. 36,270/- in the whole year towards birthday celebration of his staff members and debited it in P&L account under the head, ‘birthday celebration expenses’. These expenses are nothing but staff welfare expenses and it is prayed that this disallowance should be deleted. 3. It is further submitted that the A.O. as well as the learned CIT(A) failed to note that all these expenses are incidental to and directly related to the business and as such are allowable expenditure. In this regard the assessee’s respectful submissions are as under:

i. All the above referred expenses have been incurred in the course of carrying on of regular business activities. It is not the case of the learned A.O. that these expenses are not related to the carrying on of regular business activities. ii. That all supporting evidence in the form of invoices and vouchers were produced before the A.O. in the course of assessment proceedings iii. That the learned A.O. has not pin pointed any specific defects in the books of accounts including bills and vouchers. So much so the trading receipts declared by the assessee have been accepted as it is by the A.O. himself. iv. That the learned A.O. has also not found any flaw in the nature of expenses nor in supporting evidence produced by the assessee. v. That disallowance of expenses have been made on adhoc basis without pointing out any specific instance of non-maintenance of voucher by the assessee or disallowable nature of expenditure .

13 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur vi. That the A.O. has categorically mentioned the fact of examination of books of accounts including bills and vouchers maintained by the assessee in the last para of page. 1 and starting lines in page 2 of the relevant assessment order and no adverse observation has been made by him in respect of the books of accounts maintained by the assessee. vii. It is respectfully submitted that it is well settled law that no disallowance of expenses can be made on adhoc basis without pointing out any specific defect or instance of non-maintenance of vouchers. Further, the disallowance also can’t be made merely on the ground that payment has been made in cash unless the parties to whom payment is made are not genuine. The Hon’ble bench will very kindly find that no doubt regarding genuinenity of the parties has been raised by the lower authorities. viii. That there is a consensus of judicial opinion that an expenditure necessary for earning an income is an allowable expenditure. ix. That the assessee has furnished full details of the expenses. x. That it is very respectfully submitted that every expenditure incurred by the assessee is backed by supporting evidence in the nature of bill and voucher. The A.O. has not pointed out a single item of inadmissible nature nor has he pointed out that it is not backed by supporting evidence nor has he pointed out that such and such expenditure is not incurred in the course of regular business activity nor has he pin pointed that such and such expenditure is of capital nature or of personal nature nor has he pointed out that such and such expenditure is not incidental to business. At the same time the assessee has furnished day to day details of all the expenses. 5. That, in the case of appellant assessee himself in assessment year 2005-06 the Hon’ble ITAT, JAIPUR BENCH, Jaipur in ITA No. 133/JP/2020 for A.Y. 2005-06 in the case of Manoj Kumar Gupta vs. The ITO, Ward

14 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur 5(2), Jaipur vide order dated 23/11/2020 held that the action of the Ld. CIT(A) in sustaining 50% of the disallowances made by the Assessing Officer that too on adhoc basis is not justified and accordingly, deleted the same( relevant observation made in para 14 at page-9). 6. That it is submitted that in view of above facts and legal position the disallowances sustained by the learned CIT[A] may be cancelled and in the alternative it is respectfully submitted that the same may be substantially reduced.”

“1. Disallowance out of SMU admission expenses:

The assessee runs a distance education centre of Sikkim Manipal University (called as SMU) wherein the assessee provides distance programs in IT and management.

In the P&L a/c, the assessee has shown income from SMU amounting to Rs. 65,53,723/-. Against the above expenses, the assessee has claimed SMU admission expenses of Rs. 11,47,370/-. These expenses were claimed on account of discount & referral amount paid to various students during the year under consideration.

During the assessment proceedings, vide note sheet dated 31.12.2014, the assessee was asked to produce students to whom discount & referral amount paid on account of admission in SMU.

15 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur In compliance, the assessee did not produce the students for examination. He had submitted only affidavit in total four cases without their production.

Later on, vide this office letter dated 16.02.2015, the assessee was asked to show cause as to why claim of SMU admission expenses of Rs.11,47,370/- should not be disallowed u/s 37 of the Income-tax Act, 1961. In reply, vide his letter dated 23.02.2015, the assessee submitted that in the SMU admission expenses of Rs. 11,47,370/- , Rs. 10,08,185/- has been shown as paid cash towards discounts and incentives. Out of this Rs. 40,000/- is towards purchase of material for marketing, Rs. 9,33,185/- has been booked as discounts and Rs. 35,000/- has been booked as incentives. He further submitted that distance education is a very competitive market and for getting business all possible business decision which not only include giving advertisements and online marketing but also have to offer discounts to students as well as incentives to existing students for bringing their friends for new admission.

The reply of the assessee is not acceptable due to the following reasons:-

i) During the assessment proceedings, the assessee was asked to produce students for examination vide note sheet entry dated 31.12.2014 but assessee did not produce the students to whom discount & referral amount paid. ii) The assessee paid discount & referral amount in cash. iii) Discount and referral amount paid to student is unusual practice in the business.

16 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur iv) The assessee did not produce sufficient evidence to verifying the above expenses. v) It is a well settled law that strict rules of evidence do not apply to I.T. Acts and the real test with regard to genuineness of transactions is "Preponderance of probabilities" and not "Beyond reasonable doubt". Reliance is placed on, Chaturbhuj Panauj AIR 1969 (SC) 255, Sumati Dayal V/s CIT, 214 ITR 801 (SC), C. Vasant Lal & Co, 45 ITR 206 (SC). In view of the above facts and circumstances of the case, I disallow a sum of Rs. 11,07,370/- (Rs. 11,47,370 — Rs. 40,000) which are claimed on a/c of discount and referral amount paid to student treating ingenuine u/s 37 of the Income-tax Act, 1961 in view of decision of decision of Hon’ble Supreme Court in cases of Chaturbhuj Panauj AIR 1969 (SC) 255, Sumati Dayal V/s CIT, 214 ITR 801 (SC), C. Vasant Lal & Co., 45 ITR 206 (SC).”

“2.3 Ground No. 01 to 08 are being taken up together which are interrelated. I have perused the facts of the case, the assessment order and the submissions of the appellant. It is seen that appellant claimed Sikkim Manipal University (SMU) admission expenses of Rs. 11,47,340/-out of which the Assessing Officer disallowed Rs. 11,07,370/- as payment was made in cash and none of the recipient

17 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur of payment of referral fee/discount claimed were produced for verification. On perusal of overall facts, I find that entire payment of discount/referral for is made in cash to the student. Appellant has not filed supporting evidence to prove the same except four affidavits. The absence of verification of payment, the genuineness of expenses cannot be accepted. Therefore, action of Assessing Officer in making disallowance out of Sikkim Manipal University (SMU) discount is upheld. However, credit for the person whose affidavits were filed could be allowed which comes to Rs. 13,000/- and balance is upheld. This ground of appeal is partly allowed.

2.3.1 So far as disallowance out of computer installation visiting faculty, vehicle running, phone expenses are concerned, the same is excessive, therefore the same is restricted to 50% of the disallowance made which works out to Rs. 87,687/-. Regarding disallowance of Rs.36,270/- out of birthday expenses, this is a personal expense and therefore Assessing Officer correctly disallowed the same. This ground of appeal is partly allowed.”

18 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur discounts to students as well as incentives to existing students for bringing their friends for new admissions. Further, the AO asked the assessee to produce the students for examination and in response, none of the students were produced for examination and affidavits of four students were submitted. The AO has recorded a finding that offering discount and referral bonus is an unusual practice in the line of distant education centre being run by the assessee, all these expenses have been paid in cash, none of the students were produced for verification and he has raised a question mark on genuineness of these expenses so claimed by the assessee.

19 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur affidavit of four students which to our mind is not sufficient enough in support of the claim of the expenses. As we have noted above, there are matters which needs to be examined in detail and relevant facts brought on record. Therefore, we are of the considered view that it would be just and appropriate that the matter is set-aside to the file of the AO to examine the same a fresh after providing reasonable opportunity to the assessee. In the result, the ground of appeal no. 3 is allowed for statistical purposes.

20 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur sum of Rs 4,00,100/- to them as against revenues of Rs 65,53,723/- offered to tax. It has been further submitted that during the assessment proceedings, complete details in terms of name, address of the visiting faculty members, date of their visit and amount paid to respective faculty members have been submitted by the assessee and where the AO has failed to take any further action, the assessee cannot be burdened with disallowance of expenses so claimed. We also note that during the appellate proceedings before the ld CIT(A), the assessee has submitted that he is running the distance education centre of Sikkim Manipal University and has received certain amount for faculty arrangement and during the year under consideration, has incurred an amount of Rs 4,00,100/- on account of arrangement of 26 faculty members for resolving the doubts of the students which is not a huge amount as compared to amount received from the University. The case of the Revenue however is that during the assessment proceedings, the assessee was asked to produce visiting faculty members for verification, however, the assessee has produced only one faculty member and has failed to produce any of other persons for verification. Further, out of total claim of Rs 4,00,100/- towards visiting faculty expenses, an amount of Rs 3,61,500/- has been paid in cash. In such circumstances, the AO has rightly disallowed 25% of cash expenses amounting to Rs 90,375/- in absence of proper verification which on appeal has already been restricted to Rs 45,187/- by the ld CIT(A) and no further relief is warranted.

21 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur allowability of the expenditure so claimed. In our view, what is more relevant for the assessee to substantiate and for the AO to examine is whether as many as 26 faculty members were actually been employed as so claimed during the year under consideration, the courses/subject matter in respect of which they were employed, how much amount was received from the University towards such faculty arrangement and whether the amount paid to them is commensurate with time and assistance provided by them to the students. However, there is nothing on record which has been submitted by the assessee to substantiate his claim and consequently, no finding of the AO in this regard.

22 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur arises, to call for other members. At the same time, a faculty member couldn’t be representative of 26 faculty members and the assessee could have ensured presence of few more faculty members to give credence to his claim and the AO could have been requested to examine them and only in a situation, where the AO is not fully satisfied, other faculty members could have been asked for appear or in the alternative, any other credible verifiable documentation in terms of their engagement with the assessee as part of his distant learning centre could have been submitted to the satisfaction of the AO, however, we find that there is nothing on record. In such facts and circumstances of the case, where the AO has only disallowed a sum of Rs 90,375/- out of Rs 400,100/- and which has further been restricted to Rs 45,187/- by the ld CIT(A), we find that the authorities below have been more than reasonable in their approach and keeping the entirety of facts and circumstances, we are of the considered view that such findings are just and proper and we are not inclined to interfere with the said findings. The addition so made and confirmed by the ld CIT(A) amounting to Rs 45,187/- is accordingly confirmed.

23 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur allowance. It is no doubt true that mere suspicion cannot be a basis for disallowance, however, where the AO has asked the assessee to substantiate his claim by producing the vehicle logbook and where the assessee failed to produce the same or any other document, the findings of the AO cannot be termed as based on mere suspicion but are in form of definitive finding that the vehicles have not been used exclusively for business purposes in absence of necessary substantiation by the assessee. Regarding claim of depreciation u/s 32(1), no doubt it is a statutory allowance and even in cases, where the assessee has not claimed, there is a statutory recognition that the AO should allow the same. At the same time, the provisions of section 32(1) are subject to provisions of section 38(2) wherein it has been provided that where the plant and machinery (which includes vehicles) are not used exclusively for the purposes of business, the AO is empowered to restrict the depreciation to a fair proportionate part thereof having regard to use of such plant and machinery for the purposes of business. Therefore, in the instant case, where the AO has recorded a finding that the vehicles have not been used exclusively for the purposes of business, a finding which remain unrebutted before us, and has determined and restricted the depreciation claim, we donot see any infirmity in the said findings of the AO. On appeal, we find that the ld CIT(A) has held the quantum of disallowance to be excessive and has already restricted the same to Rs 15,000/- and in the facts and circumstances of the present case, we therefore are not inclined to interfere with the said findings and the same are hereby confirmed.

24 ITA No. 307/JP/2020 Sh. Manoj Kumar Gupta, Jaipur Vs. ITO, Jaipur assessee, the same are in nature of staff welfare expenses and cannot be termed as personal expenses and are thus allowable expenses. The disallowance of Rs 36,270/- is thus directed to be deleted. In the result, the ground no. 5 of assessee’s appeal is allowed.

In the result, the appeal of the assessee is partly allowed for statistical purposes.

Order pronounced in the open Court on 04/05/2021.

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