J.P TOBACO PRODUCTA PVT. LTD. vs. ASST. COMMISSIONER OF INCOME TAX CIRCLE - SAGAR,

Vide Ground No.1, as finally argued before us, the assessee claims non- adjudication of its’ claim qua deduction u/s. 80IA, disallowed in assessment, by the ld. CIT(A), which was agitated before him. The same was confirmed as a fact upon pursuing the impugned order, and neither does the same record non-pressing thereof by the assessee during hearing before him. The issue therefore is restored back to the file of the ld. CIT(A) for adjudication of the assessee’s Gds. 1& 2 before him after allowing it a reasonable opportunity of being heard in the matter, per a speaking order, in a time bound manner. He would, however, in doing so, be bound and governed by the directions and the terms of the set aside to him by the Tribunal. As it appears, though, the said issue arises out of the assessment u/s. 143(3) r/w s. 263, which was not carried by the assesse beyond the first appellate authority (refer pages 5-6 of the impugned order). The parties unfortunately did not throw any light on this aspect/s of the matter, with the assesse, rather, raising the issue before us on merits, even as, on being pointed out during hearing, admitted to there being no adjudication on merits per the impugned order. We decide accordingly.

The assessee’s second Ground is in respect of expenses, detailed therein, aggregating to Rs.7 lacs. The same were disallowed by the Assessing Officer (AO) in assessment in view of the non-substantiation of its’ claims Assessment year:2003-04 3 before him by the assessee-company. The disallowance was confirmed in first appeal for the same reason; the assessee even failing to furnish the details of the customers to whom the consumer durables purchased – which comprises the bulk of the impugned expenditure, and claimed to have been gifted thereto for business consideration/s, even in the appellate proceedings. Aggrieved, the assessee is in second appeal.

Before us, the assessee reiterated its’ stand, stating that there was no question of the goods purchased having been for other than business purposes, viz. for the personal purposes of the Directors of the assessee-company. The same were given to the customers in pursuance of the various sales promotion schemes launched by it. The ld. Sr. DR, would, on the other hand, place reliance on the orders by the authorities below. 6.1 We have heard the parties, and perused the material on record. The impugned disallowance comprises in the main, i.e., Rs.6.84 lacs, expenditure on consumer durables, stated to be given to the customers in sales promotion. A copy of the various bills and vouchers toward their purchase stand compiled in the paper-book (PB pgs. 1 to 32). This is the second round before the Tribunal; it directing reconsideration of the material on record by the Revenue after hearing the assessee. The relevant part of the order is extracted at pages 2 to 5 of the impugned order. The first thing, therefore, that the assessee ought to have done was to place on record the material on record, consideration of which was sought, and directed by the Tribunal, followed by showing that the same proved its’ claim/s. It has, however, done neither. The relevant part of the impugned order is as under: “Coming to the aspect of purchase of VCD/TV/AC and fridge amounting to Rs. 5.73 lakhs and cooler as well as mixer grinder amounting to Rs. 1.10 lakhs and also as referred to the reply dated 18.01.2006, in which it has been mentioned that these are given to customers, floated merchants for increase Assessment year:2003-04 4 in sales. However, the evidence thereof should have been at least been furnished as to who are the customers to whom these incentives have been provided with verification there of. It has been referred by Hon'ble ITAT in its set aside direction that there is evidence filed from page 17 to 38 of the paper book filed before it, but whether it was in the notice of lower authorities or not is not clear. It has been further stated by the Hon'ble ITAT that since the customers have not been duly examined by the lower authorities, the evidence to be filed by the assessee is to be duly considered. Since the matter on record is extremely old, two opportunities have been separately provided, as is clear from order-sheet N-l and N-2. However, it was clearly mentioned and conceded by AR in the order-sheet, noting of which was made on 08.03.2016, that no other evidence is available, matter being very old. Accordingly, in view of the complete inability of the AR to furnish the requisite information to substantiate the claim, I am unable to interfere in the additions made. It is further held that these expenses are prima-facie capital in nature. Hence the two further additions are also confirmed.” 6.2 The basis of the disallowance, as well as its confirmation in first appeal, is, as apparent, the failure of the assessee to substantiate it’s case of the relevant goods having been given to it’s customers, even the names of whom have not been furnished at any stage (refer para 4). No improvement in its’ case has been effected by the assessee even in the second round; it rather admitting therein to its’ inability to produce the relevant evidence/s. It is nobody’s case that the relevant goods were not purchased, toward which several bills and receipts have been placed on record. The issue, which continues to be unaddressed, is establishing the business purpose of the said purchase/s. The various vouchers placed on record, rather, exhibit proper maintenance of the record by the assessee and, thereby, the untenability of its’ plea of being not able to provide the requisite details as the matter is very old. The same is therefore to be discounted even as the plea is even otherwise not maintainable as the primary burden to prove its’ return, and the claims preferred thereby, is only on the assessee [see, inter alia, CIT vs. Calcutta Agency Ltd. [1951] 19 ITR 191 (SC); CIT vs. R. Venktaswamy Naidu [1956] 29 ITR 529 (SC)]. Why, the assessee itself is responsible for the delay, having Assessment year:2003-04 5 been caused on account of the non-evidencing of its’ claim/s by it. Further on, what was the relevant scheme/s? There is nothing to exhibit the same. Are they a regular part of the assessee’s business, or were unique to the current year only? What, where so, was the expenditure incurred, similarly, on such schemes during the other previous years? Why are details in its respect, which should normally be borne out by its’ record, not being able to be produced? These and like questions arise in the matter, and which have not been addressed at all, much less met. The Tribunal or any appellate authority could decide only on the basis of findings of fact issued on the basis of evidence or the material on record. The assessee has singularly failed to discharge the burden of proof on it. The balance amount of Rs.16,514/- is, even as stated by the Revenue, again a bald claim, and toward which there is neither any material on record nor, in fact, any submission made during hearing. The penalty amount of Rs.14,800/- has been wrongly included (in the detail stated in the relevant Ground) in-as-much as the impugned disallowance of Rs.7,00,229/- is exclusive of the said amount. The ld. CIT(A) has in fact clarified the penalty amounts to be not part of the set aside by the Tribunal. We are accordingly not moved to interfere with the impugned disallowance. We decide accordingly.

The last and the third ground raises the issue of levy of interest u/s. 234B, direction for which has been issued by the AO in the assessment order. In fact, inasmuch as the same was not a part of the remand by the Tribunal, the same could not be raised in the second round. The said levy is even otherwise mandatory and consequential in nature. Its’ assailing by the assessee is accordingly without merit. We decide accordingly.