RADCLIFFE SCHOOLS EDUCATION LIMITED,DELHI vs. ACIT, DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI Before Sh. S. Rifaur Rahman, Accountant Member & Sh. Raj Kumar Chauhan, Judicial Member ITA No. 8060/Del/2025 :Asstt. Year: 2017-18 Radcliffe Schools Education Ltd. Vs ACIT, B-II, 58, MCIE Mohan Cooperative Circle-20(2), Industrial Estate, New Delhi-110044 New Delhi-110001 (APPELLANT) (RESPONDENT) PAN No. AAECR4307A Assessee by: Sh. Priyansh Jain, CA Revenue by: Ms. Harpreet Kaur Hansra, Sr. DR Date of Hearing: 15.04.2026 Date of Pronouncement: 08.07.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal of the assessee is directed against the order of ld. CIT(A)/NFAC, Delhi dated 17.11.2025 u/s 250 of the of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) wherein addition made to the tune of Rs.73,78,079/- disallowing promotion expenses of the assessee for the relevant year made by Assessing Officer in assessment order dated 28.11.2019 were confirmed.

2 ITA No.8060/Del/2025 Radcliffe Schools Education Ltd. schools. The case of the assessee was selected for scrutiny by issuing notice u/s 143(2) of the Act dated on 28.08.2019 and followed by notice u/s 142(1) of the Act with questionnaire. The assessee filed detailed reply to the questionnaire giving detail of promotion expenditure w.e.f. 20.04.2016 till 31.03.2017 as find recorded in para 3.1 of the assessment order. However, the Assessing Officer did not consider the said reply to be acceptable on the ground that assessee was making personal payments of its directors in the garb of business promotion expenses. Hence, the addition of Rs. 73,78,079/- was made by disallowing the promotion expenses claimed by the assessee in the relevant year.

3 ITA No.8060/Del/2025 Radcliffe Schools Education Ltd.

“1. That the impugned order dated 19/12/2019 passed u/s 143(3) by the Ld. AO is bad in law, without jurisdiction and ultra-vires the provisions of the Act. 2. That as per facts of the case, the Ld. A.O. has erred in issuing notice u/s 143(2) without complying to the CBDT Instruction f.No.225/157/2017/ITA-II dated 23.06.2017 (as there was no mention of the type of scrutiny under which the case of the assessee has been selected) and the notice issued u/s 143(2) is not valid as per provisions of Act. 3. That the Ld. AO has erred on fact and in law, in making addition of Rs.73,78,079/- on account of disallowance of business promotion expenses without giving a show cause or giving an opportunity to explain the expenses 4. That the Ld. AO has erred on fact and in law, in making addition of Rs.73,78,079/- on account of disallowance of business promotion expenses on arbitrary basis without taking the cognizance of facts and records produced during the course of assessment which is against the provisions of law. 5. That in any case and in any view of the matter, Ld. AO has erred in law and in facts in making addition of Rs.73,78,079/- in the hands of the assessee.” 5. We have heard the ld. AR and the ld. DR and examined the record. The question to be determined by us is whether the ld. lower authorities were justified in not following the principle of consistency in the case of the assessee and disallowance of promotion expenses despite being allowed in previous 3-4 years and the subsequent year has resulted into miscarriage of justice or not? The ld. AR at the very outset submitted that the assessee has been claiming business expenses which have been allowed in the Assessment Years 2013-14, 2014-15, 2015-16 and 2016-17. It is further submitted that the addition made for

4 ITA No.8060/Del/2025 Radcliffe Schools Education Ltd. assessment year 2018-19 has been deleted by the ld. CIT(A) by passing the order dated 22.03.2022 for A.Y. 18-19 placed at page 75-85 of the paper book. It is argued that the ld. Assessing Officer as well as the ld. CIT(A) misconceived the fact that the percentage of business promotion expenses vis-à- vis turnover were higher in this year and there was no justification for following the principle of consistency as each year is independently assessed in the given facts and circumstances. The ld. AR would submit that even the business promotion expenses for A.Y. 2018-19 were 53.74% of the total turnover and the same has been allowed by the ld. CIT(A). It is further submitted that in the previous assessment years 2013- 14 to 2016-17, the business promotion expenses has been allowed continuously in the assessment proceedings. It is further submitted that there was an explanation as to why the business promotion expenses were higher for the assessment year 2017-18 (year under consideration) and for the A.Y. 2018- 19 because the turnover was less for these two years as compared to earlier four assessment years and as a result the directors of the assessee were engaged in soliciting more business which has resulted into more business promotion expenses. It is further submitted that the ld. Assessing Officer has not doubted or rejected the books of accounts wherein the accounts has been duly audited containing the business

5 ITA No.8060/Del/2025 Radcliffe Schools Education Ltd. promotion expenses and the proof of the spending expenses for business promotion has also not been rejected by the ld. AO or by the ld. CIT(A). It is therefore argued that in these given facts and circumstances, the principle of consistency need to be followed and the business promotion expenses has been wrongly added by disallowance of the same. It is therefore prayed that the appeal be allowed in the larger interest of justice.

6 ITA No.8060/Del/2025 Radcliffe Schools Education Ltd. “3.1 Assessee submitted its reply in which assessee submitted ledger account of business promotion. On perusal of business promotion account, it is found that most of the bills were booked towards credit card of Amit Rai, card no. 74431490043002 & 4617970100188342 and 2 payments towards Meenakshi credit card. Following entries were booked against payments of business promotion, by other than company credit/debit card, details given by assessee reproduced as under: Date Particulars Amount (in Rs.) 20.04.2016 Being bill booked Towards Credit 31785 Care for Amit Rai No. AEBC374431490043002 20.04.2016 Being bill booked Towards Credit 372486 Care for Amit Rai No. AEBC374432854051003 05.05.2016 Being Citi Bank card bill due 105219 19.05.2016 Being bill booked Towards Credit 10689 Care for Amit Rai No. AEBC374431490043002 19.05.2016 Being bill booked Towards Credit 340171 Care for Amit Rai No. AEBC374432854051003 02.07.2016 Being bill booked Towards Credit 864217 Care for Amit Rai No. AEBC374432854051003 02.07.2016 Being Citi Bank card bill due 144982 15.07.2016 Being amount due towards Amit 39735 Rai’s Business Promotion expenses 19.08.2016 Being bill booked Towards Credit 580 Care for Amit Rai No. AEBC374431490043002 19.08.2016 Being bill booked Towards Credit 507165 Care for Amit Rai No. AEBC374432854051003 02.09.2016 Being Citi Bank card bill due 22107 19.09.2016 Being bill booked Towards Credit 307398 Care for Amit Rai No. AEBC374432854051003 05.10.2016 Being bill booked Towards Credit 2000 Care for Amit Rai No. AEBC374432854051003 18.10.2016 Being Entry due for the expense of 222005 business promotion against No. AEBC374432854051003 04.11.2016 Being Citi Bank card bill due no. 7972 4617970100188342 16.11.2016 Being Entry due for the expense of 336614 business promotion against No. AEBC374432854051003

7 ITA No.8060/Del/2025 Radcliffe Schools Education Ltd. 30.11.2016 Being bill book of Minakshi Credit 104300 Card 05.12.2016 Being Citi Bank card bill due no. 31343 4617970100188342 08.12.2016 Being bill book of Minakshi Credit 93420 Card 20.12.2016 Being bill booked Towards Credit 326851 Care for Amit Rai No. AEBC374432854051003 04.01.2017 Being Citi Bank card bill due no. 75963 4617970100188342 19.01.2017 Being bill booked Towards Credit 5411 Care for Amit Rai No. AEBC374431490043002 19.01.2017 Being bill booked Towards Credit 671873 Care for Amit Rai No. AEBC374431490043002 04.02.2017 Being Citi Bank card bill due no. 273478 4617970100188342 18.02.2017 Being bill booked Towards Credit 667469 Care for Amit Rai No. AEBC374431490043002 07.03.2017 Being Citi Bank card bill due no. 408503 4617970100188342 20.03.2017 Being bill booked Towards Credit 124227 Care for Amit Rai No. AEBC374432854051003 31.03.2017 Being Amit Rai Citi Bank Credit 222392 Card Bill due 31.03.2017 Being bill booked Towards Credit 977024 Care for Amit Rai No. AEBC374432854051003 31.03.2017 Being Citi Bank card bill due no. 80700 4617970100188342 Total 73,78,079/-

the identical disallowance on the same ground was made by ld. AO for A.Y. 2018-19 by passing order u/s 143(3) dated

11.03.2021 and the detail of the credit card are identical to those year under consideration placed at page 70-71 of the paper and a verbatim order was passed as in the subject year.

It is further submitted that the said disallowance was deleted by the ld. CIT(A) vide order dated 22.03.2022 placed at page

8 ITA No.8060/Del/2025 Radcliffe Schools Education Ltd. 75-78. It is further submitted that the documents placed at page 84 of the paper book would clearly show that on the same set of facts, documents and submissions reproduced at page 80-82 of the paper book, the ld. CIT(A) has deleted the addition in entirety. It is further submitted that the books of accounts has not been rejected while making the ad-hoc disallowance and the books of the assessee were duly audited u/s 44AB of the Act.

“After hearing the rival contentions and perusing the materials available on record, we find that the Id. AO has made the disallowance at 10% of the total expenses under various heads on the ground that there was huge increase of expenses during the year and the assessee has not furnished any details/ evidences qua these expenses. Whereas as a matter of fact the assessee requested the Id. AO vide letter dated 12.03.2024, to allow some time to reply to the said query. However, the Id. AO passed the assessment order on 18.03.2024. We note that these expenses incurred by the assessee are on account of insurance of Rs.10,93,252/-, legal and professional charges of Rs.57,11,025/-, Rent of Rs.62,39,101/-, selling expenses of Rs.2,53,45,188/-. We note that the Id. AO has made a disallowance on estimated basis by simply stating an ad-hoc disallowance is not sustainable in the eyes of law. Moreover, there has been no rejection of books of account by the Id. AO. We also note that the books of account were duly audited and no adverse inference was drawn by the Id. AO. In our opinion, no ad-hoc disallowance can be made without rejecting the books of account. The case of the assessee

9 ITA No.8060/Del/2025 Radcliffe Schools Education Ltd. find support from series of decisions namely; CIT vs. Anil Kumar & Co. 386 ITR 702 (Karnataka), PCIT Vs. Marg Ltd. 396 ITR 580 (Mad.). Accordingly, we set aside the order of Id. CIT (A) and direct the Id. AO to delete the addition. The ground no. 6 is allowed.” 10. We have noticed that the cases relied by the appellant are perfectly covering the case in hand because in this case also assessee’s books of accounts has not been rejected which were duly audited and the ad-hoc disallowance made by the ld. AO without rejecting the books of account is contrary to the settled legal principles and the taxation jurisprudence. We do not find force in the arguments of the ld. DR wherein he has argued that the Assessing Officer has rightly declined to follow the principle of consistency in this case as the principle of res- judicata is not applicable in taxation matters. In that regard, we are of the considered opinion that principle of consistency cannot be ignored in this case because there is no satisfactory justification for not following the principle of consistency merely on the ground that the percentage of business promotion expenses was comparatively higher than the previous 4-5 years. In that regard, the assessee has already given an explanation that since there was less turnover, the assessee/appellant lawfully incurred more expenses on business promotion. Further, the Assessing Officer has made the disallowance on the basis of surmises wherein it is observed that the assessee was involved in making the

10 ITA No.8060/Del/2025 Radcliffe Schools Education Ltd. payment of the personal expenses of the directors. The similar pattern of expenses has been continuously allowed by the Revenue to the assessee and the same pattern has been followed while the ld. CIT(A) for the year 2018-19 has allowed the appeal of the assessee wherein similar addition has been made by the AO. For these reasons, we are of the considered opinion that in the given facts and circumstances, the principle of consistency should have been followed by the revenue authority for this concerned year also. The grounds raised in the appeal are accordingly allowed. The addition made by the Assessing Officer is accordingly ordered to be deleted.