Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the Revenue against the order dated 26.10.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2012-13.
The grounds raised by the Revenue are reproduced as under:
"1. Whether on the facts and in the circumstance of the case and in Law, the CIT(A) was right in deleting the disallowance of sales promotion expenses of Rs.51,90,094/- on the grounds that the requisite details in respect of the expenses were submitted before the AO without verifying whether such details were produced before the AO or merely filed in TAPAL since the date of submission of such details is mentioned as 28.1.2015 i.e., the date on which assessment order has been passed? 2. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) was right in deleting the addition made by the AO, under the head
2 M/s. Mafatlal Fabrics Pvt. Ltd., 'Commission on sales', amounting to Rs.2,1 7,09,822/-, which formed part of 'Sales Expenses' of Rs.2,99,92,664/-, without appreciating the fact that particularly relevant details were not filed by the assessee, and without considering the fact that an amount of Rs. 39,86,359/-, being 'Commission Provision' also formed part of such 'Commission on sales'."
The Revenue has challenged in the first ground of appeal the deletion of disallowance of sales promotion expenses to the tune of Rs.51,90,094/- by Ld. CIT(A) as made by the AO on the ground that the assessee could not file any evidences or proofs to verify the said expenses as the assessee filed the details vide letter dated 28.01.2015 on which the order was passed by the AO and thus AO has no occasion to examine them.
4. The issue raised in ground No.2 of appeal is against the deletion of addition as made by the AO under the head Commission on sales amounting to Rs.2,17,09,822/-, which were part of the sales expenses of Rs.2,99,92,664/-, without appreciating the fact that assessee did not file any details during the assessment proceedings and also without considering the fact that Rs.39,86,359/- being commission provision also forms part of such commission on sales.
5. At the outset, the Ld. D.R. took through the para No.6 of the assessment order wherein the AO has recorded his finding that assessee has completely failed to explain the services rendered and identity of the recipients to whom the payments were made and thus the commercial expediency of the said expenses and business relevancy were not proved. The Ld. D.R. also brought to our notice that the assessee has stated in his reply before the Ld. CIT(A) that requisite details
3 M/s. Mafatlal Fabrics Pvt. Ltd., qua the said business promotion expenses of Rs.51,90,094/- were submitted vide submission dated 28.01.2015 whereas the assessment order was also passed on the same date and thus the AO did not get an opportunity to verify the said expenses. Thus the filing of the evidences before the Ld. CIT(A) which were not produced before the AO amounted to additional evidences and therefore the issue should be set aside to the file of the AO. Similarly, as regards the sale promotion expenses of Rs.2,99,92,663/- the Ld. D.R. submitted that the assessee has not filed any evidences before the AO whereas the evidences were produced before the Ld. CIT(A). The Ld. CIT(A) instead of calling remand report from the AO proceeded to decide the issue in favour of the assessee thereby depriving the AO of examining these evidences. Thus the Ld. D.R. also requested that this issue may also be restored to the file of the AO to decide the same in the light of the evidences which the assessee filed before the AO in the set aside proceedings.
The Ld. A.R., on the other hand, submitted that no such disallowance was made in respect of business promotion expenses in the preceding year by referring to the assessment orders for assessment year 2011-12 and 2013-14. The Ld. A.R. also brought to the notice of the Bench the upward increase in the GP during the financial year as compared to the preceding assessment year which is filed on page No.5 of the paper book. Similarly, as regards the commission paid to various persons, the Ld. A.R. submitted that the commissions were paid to various parties after deduction of TDS at source
4 M/s. Mafatlal Fabrics Pvt. Ltd., the details whereof are filed at page No.50 & 51 of the paper book. The Ld. A.R. further submitted that the said details comprised of the provision for expenses to the tune of Rs.39,86,359/-. Finally, the Ld. A.R. left the issue to the discretion of the Bench whether to restore or decide the issue on the basis of records before the Bench.
We have heard the rival submissions of both the parties and perused the material on record. We find that in this case the bills and vouchers of expenses incurred by the assessee on business promotion and sale expenses were not produced before the AO but assessee duly filed all the evidences before the Ld. CIT(A) who deleted the addition on the basis of said evidences without calling for the remand report, thus depriving the AO to examine the issue in the light of the evidences. Under these circumstances, we deem it proper to give an opportunity to the AO to examine the evidences and decide the issue of allowability of expenses in the light of said evidences. Accordingly, we restore the issue to the file of the AO with the direction to decide the same denovo after appreciation of evidences which the assessee may file during the set aside proceedings.
In the result, the appeal of the Revenue is allowed.
Order pronounced in the open court on 17.07.2018.