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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI SANJAY GARG & SHRI ASHWANI TANEJA
O R D E R
Per ASHWANI TANEJA, AM
This appeal has been filed by the revenue against the order of Commissioner of Income-tax (Appeals)-27, Mumbai [hereinafter called CIT(A)] dated 25-06-2014 passed against the assessment order u/s 143(3) dated 24-03-2013 for A.Y. 2010-11 on the following grounds: “'On the fact and the circumstances of the case and in 1. the law, the Ld.CIT(A) has erred in restricting the disallowance of Rs.33,47,382/- towards foreign travel expenses to Rs.28,575/- without appreciating the fact that the AO has clearly brought in the assessment order that the assessee had visited to places which were not related to his business." "On the fact and the circumstances of the case and in the 2.
Ld.CIT(A) has erred in restricting the disallowance of Rs.33473821- towards foreign travel expenses to Rs.28,575/- after relying on the decision of Ld, CIT(A) in the assessee's own case for 2009-10 vide order No.CIT(A)/ACITI6(1)/322/201 1-12 dtd.30.11.2012 without appreciating the fact the said decision has not been accepted by the Department and filed appeal before Hon'ble ITAT on 0702.2013 vide appeal No. ITA 1071 /Mum/201 3."
3. "Whether on the fact and the circumstances of the case and in the law, the Ld.CIT(A) is right in restricting the addition made u/s 69C of Rs.1,16,244/- to 12.5% of Rs.1,16,244/- i.e.Rs.14,530/on account of bogus purchase?" 4. "Whether on the fact and the circumstances of the case and in the law, the Ld.CIT(A) is right in estimating the earning at a very low rate particularly when alleged sellers of goods to the assessee being provider of accommodation entries has admitted before the Sales Tax Department that accommodation entries were provided to the assessee and also the field enquires resulted in confirmation of bogus purchases." 5. Whether on the fact and the circumstances of the case and in the law, the Ld.CIT(A) is right in not appreciating the findings of the AO in assessment order that the sellers were available at the address shown in the purchases bills." 2. Grounds 1 & 2 : These grounds are common and deal with issue of disallowance of travel expenses made by the Assessing Officer at the rate of 1/3rd but deleted by Ld.CIT(A).
The brief facts are that the Assessing Officer made adhoc disallowance of 1/3rd foreign travel expenses on the ground that the same was not relatable to the business, on the basis of disallowance made in earlier years. The Ld.CIT(A) deleted the disallowance relying upon his order of earlier years.
During the course of hearing, both the parties agreed that the issue involved is covered with the orders of earlier years. The Ld.Counsel placed
Tribunal dated 28-10-2015 for assessment years 2006-07, 2007-08, 2008-09 and 2009-10 and requested for applying the same in the year before us.
We have gone through the orders of lower authorities as well as the orders of the Tribunal for earlier years. It is noted that the assessee was engaged in the business of designing, manufacturing, trading and exporting of western ladies dresses. It has been observed by this Tribunal in its order for these years that the assessee was required to make travel to various countries for not only marketing its designs and dresses but also to find out latest trends and designs prevailing in various countries. It is noted that in A.Ys 2007-08, 2008-09 and 2009-10 the disallowance was restricted to 10% by the Tribunal on the ground that necessary details and other evidences were not made available by the assessee.
It is noted that in the year before us, the finding has been given by the Ld.CIT(A) that relevant details and documentary evidences have been furnished by the assessee. It was submitted that under these circumstances, the decision of A.Ys 2007-08, 2008-09 and 2009-10 should be made applicable in preference to decision for A.Y. 2006-07 and accordingly, disallowance cannot be sustained for more than 10%. Keeping in view the totality of facts and circumstances of the case brought before us, we respectfully follow the order of the Tribunal for A.Ys 2007- 08, 2008-09 & 2009-10 and sustain the disallowance to the extent of 10%. Order of the Ld.CIT(A) is modified accordingly.
Grounds 3,4 & 5: These grounds pertain to disallowance made by the Assessing Officer u/s 69C on account of purchases amounting to Rs.1,16,244/-.
The brief facts are that during the course of assessment proceedings, it was noted by the Assessing Officer that the assessee had made purchases of R.1,16,244 of sample items from Vijayalaxmi Trading Company and payment for the same was made by account payee cheque. But the Assessing Officer was of the view that as per the information received from the sales-tax department, aforesaid party was not genuine and consequently Assessing Officer treated these purchases as bogus and disallowed the same u/s 69C of the Act. Before Ld.CIT(A) assessee made detailed submissions and therefore, Ld. CIT(A) restricted the disallowance to 12.5% of the aforesaid purchases and deleted the balance amount of disallowance. Revenue is before us for the disallowance deleted by the Ld.CIT(A).
During the course of hearing before us, the Ld.DR supported the order of the Assessing Officer and also alternatively submitted that disallowance sustained by the Ld. CIT(A) was too low and should be further increased.
Per contra, the Ld. Counsel supported the order of the Ld.CIT(A).
We have gone through the orders of the lower authorities. During the course of hearing, both the parties fairly agreed that keeping in view the facts and circumstances of the case, disallowance @25% would be reasonable in this case. Under these circumstances, we direct the Assessing Officer to make disallowance @25%. The order of the Ld.CIT(A) is modified accordingly.
As a result, appeal of the revenue is partly allowed.
Order was pronounced in the open court at the conclusion of the hearing.