DIWANSONS JEWELLERS PVT. LTD.,,KOLKATA vs. DCIT, CENTRAL CIRCLE 4(1),, KOLKATA

Brief facts of the case are that the assessee had filed the return of income showing total income of ₹26,93,171/-, which was selected for scrutiny through Computer Assisted Scrutiny Selection (in short 'CASS') and statutory notices were issued. The assessee had claimed an amount of ₹1,08,12,006/- as advertisement expenses which had been increased by 194% from the earlier year whereas the gross turnover had increased only by 4% in comparison with the previous year. The assessee was required to justify the excessive claim of advertisement expenditure and in reply the assessee stated that during the period it had opened a new showroom at City Centre-1, Salt Lake, Kolkata and had a plan to open another one at City Centre-2, Rajarhat, Kolkata and for this purpose the assessee had to undertake advertisement campaign to popularise its new showrooms in the same line of business and hence the advertisement expenses that increased. In support of this explanation, the assessee submitted a chart showing total payments made to seven different concerns or advertising concerns for the purpose of advertising. The submission of the assessee was also supported by copies of bills and ledger account. The Assessing Officer (hereinafter referred to as Ld. 'AO') noted that the assessee had paid total amount of ₹97,37,581/- for the purpose of advertising, which was allowed and the balance amount of ₹10,74,425/- claimed but not supported by any relevant document was disallowed and added to the total income of the assessee. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who issued several notices to the assessee and in response to which the assessee either made no compliance or filed written submission and subsequently after considering the grounds of appeal and the statement of facts as the assessee had failed to respond to most of the notices issued for hearing and since the assessee did not file any authenticated document at the appellate stage also, the provisions of section 35D of the Act were considered and the disallowance made was confirmed. It was stated that the amount attributable to the new unit yet to be opened at Rajarhat, Gopalpur, out of total advertisement expenses increased abruptly all of a sudden during the year comparing to growth in sales/turnover of business was supposed to be bifurcated in 10 equal instalments to be claimed in successive years for the same being treated as amortisation of certain preliminary expenses as per the provisions of section 35D of the Act and held that the assessee had a choice to accept either this or the Ld. AO may take necessary steps to do the needful to which the assessee did not agree and upheld the addition made by the Ld. AO on account of disallowance.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined. The Ld. AR submitted a chart before us and stated that out of the disallowance made, vouchers for a sum of ₹8,77,010/- were available while vouchers for the remaining amount of ₹1,97,415/- relating to expenditure incurred for sending flowers to the existing customers were not available. It was stated that no TDS was made since section 194Q of the Act was not applicable to the facts of the case. The Ld. AR requested that the addition made may be deleted and, in the ITA No(s). 3056/KOL/2025 Assessment Year(s) 2012-13 alternative, requested that the evidence filed may be allowed to be examined by the Ld. AO.

The Ld. DR on the other hand, vehemently argued that the order of the Ld. CIT(A) may be confirmed.

We have considered the facts of the case, the submissions made and the documents filed and the order of the Ld. CIT(A) but do not concur with the findings as the Ld. CIT(A) had not decided the appeal but as per para 10 had given options to the assessee to avail the provisions of section 35D of the Act and the findings in this regard are as under:

Thereafter, the provisions of section 35D of the Act have been reproduced and no other directions have been issued. Thus, no conclusive findings have been made by the Ld. CIT(A).

The decision of the Ld. CIT(A) is not as per the provisions of section 250(6) of the Act and since the assessee had expanded his business, the advertisement expenses were liable to be allowed as revenue expenditure and were not required to be amortised. Since the assessee does not have vouchers for the sum of ₹1,97,415/-, the same is liable to be disallowed in the absence of supporting vouchers. However, for the rest of the amount of ₹8,77,010/-, the issue is remanded to the Ld. AO for verification of the invoices/bills which were not filed before the Ld. AO and after verification of the bills, the sum of ₹8,77,010/- shall be deleted by the Ld. AO and only the unverified amount shall be further added besides the sum of ₹1,97,415/- as mentioned above. Hence, Ground No. 3 is allowed while Ground No. 2 is partly allowed subject to verification. Ground Nos. 1 and 4 are general in nature and do not require any separate adjudication.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 6th May, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 06.05.2026 Bidhan (Sr. P.S.)

CIT(A)-27, Kolkata.

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order