CREDO BRANDS MARKETING PVT LTD,MUMBAI vs. ASSL CIT 9 (1_, MUMBAI

On appreciation of the facts and circumstances of the case, the ld. Commissioner of Income Tax(A) has further erred in upholding the entire addition made by the learned Assessing Officer of Rs.2,16,543/- on account of an eligible claim of hotel/air ticket expenses, which ought on facts alone, ought to have been allowed.

On the basis of information received from the Investigation Wing of the Department about the parties indulged in providing bogus bills of purchases, during the course of assessment the A.O observed that assessee has made purchase of material from the following three parties:

During the course of assessment proceedings the A.O also noticed that assessee has incurred Travelling Expenditure/sale promotion expenses of Rs.77,26,291/-. On perusal of the detailed filed in support of the said claim the A.O noticed that assessee has also claimed hotel booking/air ticket cancellation charges for Hongkong trip to the amount of Rs.2,16,543/-. The assessee was asked to justify its claim of expenses to the extent of Rs.2,16,543/-. The assessee explained that the said expenses were incurred for the purpose of business and amount of Rs.2,16,543/- was pertained to the cancellation charges of air ticket and hotel booking of dealers who could not attend the dealers conference held in Hongkong. However, A.O has not accepted the claim of the assessee and held that expenses of Rs.2,16,543/- was not incurred for the purpose of business. Therefore, same was disallowed and added to the total income of the assessee.

Aggrieved, the assessee filed the appeal before the ld. CIT(A). In respect to addition of Rs.22,08,434/- on account of bogus purchases the ld. CIT(A) after reiterating the facts reported by the A.O confirmed the disallowance.

Heard both the sides and perused the material on record. During the course of assessment to substantiate its claim of purchase of accessories of Rs.22,08,434/- in garment manufacturing the assessee has submitted copies of bills evidencing the purchases, copies of ledger account detail of payment made through banking channels and detail of goods sent to the garments vendors for using as accessory in the garments manufactured by the assessee etc. Regarding claim of cancellation charges, hotel booking, air fare etc, the assessee has furnished the corresponding detail and evidences. However, it is observed that A.O has not controverted the relevant supporting material/evidences produced by the assessee during the course of assessment proceedings. The ld. CIT(A) has neither called any remand report from the A.O to disprove the supporting material/evidences furnished by the assessee nor recorded any reason in support of his conclusion. Therefore we restore both the issues to the file of the ld.CIT(A) for deciding de novo on merit after verification/examination of relevant supporting material to be furnished by the assessee after affording adequate opportunity to the assessee. The assessee is directed to make compliance without any failure before the ld. CIT(A) during the course of set aside appellate proceedings. It is needless to say that observation made by us will not injure or impair the case of the A.O and will not cause any prejudice to the defence explanation of the assessee. Accordingly, both the grounds of appeal of the assessee are allowed for statistical purposes.

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