SH. SUBHASH CHANDRA SEHGAL,NEW DELHI vs. DCIT, NEW DELHI

With regard to the aforesaid disallowance in the quantum proceedings, these disallowances have been either confirmed or were not pressed.

The facts in brief are that assessee is an individual deriving income from salary from M/s. Ozone Pharmaceuticals Ltd. and is deriving income from his proprietary concern, M/s. Ozone Ayurvedic and M/s. 4th D, I- LSC. In so far as disallowance of travelling expenditure of Rs.1,25,213/- is concerned, the Assessing Officer in the penalty order has noted that the amount of these expenses have been debited in various units of the assessee under the head ‘travelling expenses’ and in absence of any maintenance of unit wise accounts, the same was disallowed by the Assessing Officer. Whereas the ld. CIT(A) in the impugned order has mentioned that assessee has not produced any supporting documents/bills to substantiate the expenses incurred for the travelling and further these payments have been made in cash and nature of expenses have not been verifiable. Since this disallowance confirmed by the ld. CIT (A) and was not pressed by the learned AR before the Tribunal, therefore, penalty has been levied on such disallowance. In so far as disallowance of sales tax penalty of Rs.6828/-, the same has been disallowed on the ground that it was penal in nature and the same has been confirmed by ld. CIT (A) and the Tribunal. Similarly with regard to the packing material expenses of Rs.2600/-, the same has been disallowed on the ground that supporting evidence has not been filed.

Ld. CIT (A) too has confirmed the penalty on the ground that, firstly, assessee could not substantiate the claim; and secondly, these additions have been confirmed from the stage of the Tribunal. Thus, it amounts to furnishing of inaccurate particulars of income.

After hearing both the parties and on perusal of the relevant material on record, we find that so far as travelling expenses are concerned, the only reason given is that there is no supporting bills and payments have been made in cash. One of the proprietary concern of the assessee, namely, M/s. Ozone Ayurvedic has various offices namely, head office at New Delhi, manufacturing unit at Baddi (HP) and another manufacturing unit at Guwahati (Assam). The activities carried out by the assessee was manufacturing and trading from these units. In so far as the manufacturing unit is concerned, assessee has claimed deduction u/s.80IB. Learned Assessing Officer in the assessment order held that assessee should have maintained proper books of account in each unit so as to establish the expenses incurred from each unit separately and further assessee has not produced any supporting document/bills to substantiate the expenses. Before us, the learned counsel for the assessee has submitted that these expenses were duly shown in the regular books of account which were duly supported by vouchers, since these were very petty sum of travelling expenses spread over entire year, therefore, they were incurred in cash and no third party

Similarly, as regard disallowance of sales tax penalty, simply because it has been disallowed in the quantum proceedings it does not mean penalty should be levied for furnishing of inaccurate particulars of income, because the sales tax penalty has been duly debited in the books of

Lastly, levy of penalty on account of packing charges of Rs.2600/- is again based on similar reason that expenditure has been incurred in cash. If such expenditure has been incurred and debited in the books of account duly supported by cash vouchers, then for a petty sum it cannot be held that assessee has furnished inaccurate particulars of income, simply because supporting bill from the third party has not been furnished. Accordingly, we delete the penalty on this disallowance also.

In the result, the appeal of the assessee is allowed on merits and other grounds raised are infructuous.