JAIVEER SINGH,GORAKHPUR vs. ACIT, RANGE - 1,, GORAKHPUR

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH, VARANASI

BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No. 61/Vns/2019 Assessment Year: 2014-15 Jaiveer Singh, Asstt. Commissioner of Prop. JVS Motors Income Tax, Range-1, v. H.No.514, RamdhariNiwas, AayakarBhawan, Mohaddipur, Civil Lines, Gorakhpur-273001, U.P. Gorakhpur-273001,U.P. PAN:AVAPS 3343R (Appellant) (Respondent)

Appellant by: ShriArun Kumar Yadav, Advocate Respondent by: Shri A.K. Singh, Sr. DR Date of hearing: 22.08.2022 Date of pronouncement: 22.08.2022

O R D E R PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by assessee, being ITA No.61/Vns/2019 for assessment year(ay) 2014-15, is directed against appellate order dated 21.12.2018passed bylearnedCommissioner of Income Tax(Appeals), Gorakhpur,U.P.(hereinafter called "the. CIT(A)"),for assessment year(ay):2014-15 inAppeal No. A. No. B-91/CIT(A)/GKP/2016-17, the 1

ITA No.61/Vns/2019 Assessment Year: 2014-15 Jaiveer Singh v. ACIT appellate proceedings have arisen before ld. CIT(A) against assessment order dated 16.12.2016 passed by ld. Assessing Officer(hereinafter called “ the AO” ) u/s 143(3)(ii) of the Income-tax Act, 1961(herein after called “ the Act”) . This appeal was heard in Open court proceedings through physical hearing mode. 2. The grounds of appeal raised by assesseein memo of appeal filed with Income Tax Appellate Tribunal, Varanasi (hereinafter called “ the tribunal”) , reads as under : “1. Because the ACIT Range -1 has Erred in Law on Facts in completing the Assessment u/s 143(3) of the I.T act 1961 at income of Rs. 62,87,730/-. 2. Because the Commissioner of Income Tax Appeal has Erred in Law of Facts in Confirming the Addition of Rs. 18,65,025/- as Unverifiable Advertisement Expenses u/s 40(a)(ia) of the LT Act 1961. 3. Because the Commissioner of Income Tax Appeal has Erred in Law of Facts in Confirming the Addition on account of gross profit @9.5 percent as against 8.34 percent declared by the assessee. 4. Because in view of factual and legal position no addition is called for and additionmade by the ACIT in erroneous. 5. Because the order against in contrary to Law Facts and principals of Natural Justice. 6. Assessee may amend, Alter or add any Grounds of Appeal before or at the time ofappeal.”

ITA No.61/Vns/2019 Assessment Year: 2014-15 Jaiveer Singh v. ACIT duly signed by him, in grounds of appeal , against Ground No.3 that the assessee does not want to press Ground No.3 and prayers were made by ld. Counsel for the assesseeShriArun Kumar Yadav, Advocate, to dismiss Ground no. 3 as not been pressed.The ld. Sr. DR has no objectionif Ground No.3 is dismissed as not being pressed.After hearing both the parties, we dismiss Ground No.3 raised by he assessee in memo of appeal filed with tribunal ,as not been pressed. We order accordingly. Ground Nos. 1,4,5 and 6 are general in nature and does not require separate adjudication , and are consequently dismissed. We order accordingly. Now , we are left with Ground No.2 raised by assessee in memo of appeal filed with tribunal which requires adjudication be us ,and which concerns itself with addition being made by Assessing Officer to the income of the assesseeby disallowing advertisement expenses to tune of Rs.18,65,025/- as unverifiable advertisement expenses and also by invoking provisions of Section 40(a)(ia) of the 1961 Act for non deduction of income- tax at source under the provisions of the 1961 Act. 4. The assessee filed its return of income on 20.11.2014, declaring total income of Rs. 11,54,390/- and agricultural income of Rs. 4,90,200/- . The case of the assessee was selected by Revenue for framing scrutiny assessment. From the tax audit report column 21(a) ,the Assessing Officer observed that the assessee has debited Rs.18,65,025/- as advertisement expenditure in Profit and Loss account. The assessee was asked by AO to file copy of bills/vouchers of these expenses along with supporting’s. The assessee was also asked by AO to file details of income-tax deducted at source under the provisions of the 1961 Act ,on advertisement expenditure and to file copy of challans of TDS, but the assessee failed to furnish names and addresses of the

ITA No.61/Vns/2019 Assessment Year: 2014-15 Jaiveer Singh v. ACIT persons to whom payment of Rs. 18,65,025/- were made towards these expenses claimed to be advertisement expenses . In absence of copy of accounts, bills/vouchers along with supporting evidences and non deduction of income-tax at source, the AO observed that these advertisement expenses are not verifiable and the same was disallowed by AO for want of verification as well by invoking provisions of Section 40(a)(ia) for non deduction of income-tax at source by the assessee. 5. The assessee being aggrieved by addition so made by AO as above, filed first appeal before ld. CIT(A) , who dismissed the appeal of the assessee, by holding as under: “7. Ground of appeal no. 4 During the course of assessment proceedingthe AO noted that the appellant had debited Rs. 1865025/- as advertisement expenses in the P&L account. The appellant was required to file copy of bills and vouchers and details of TDS made on the aforesaid expenditure. Since no details were furnished, the AO disallowed the expenditure u/s 40 (a)(ia) of the Act. During the course of appellate proceeding it was submitted that details were filed and the AO made the additions without any inquiry. A detail of advertisement expenses was filed in support of the contention. A perusal of the order shows that the addition u/s 40(a)(ia) of the Act was made, since the appellant could not submit any supporting evidence for verification. Even during the appellate proceeding only a list was submitted in which details pertaining to date and name of the entity to whom the payment was made was mentioned. The list submitted by the appellant did not contain any information regarding the TDS made on the said payments. Further the list had description of only Rs. 6,19,557/- out of the total expenditure of Rs. 1856025/-. Advertisement expenses are covered under the provisions of section 194C of the Act. The appellant could not submit any details regarding the expenditure made by him. In view of the above I do not find any infirmity in the order passed by the AO,

ITA No.61/Vns/2019 Assessment Year: 2014-15 Jaiveer Singh v. ACIT accordingly the addition made by the AO is upheld and the ground of appeal is rejected.” 6. Still aggrieved by appellate order passed by ld. CIT(A), theassessee has filed second appeal before the tribunal. At the outset, ld. Counsel for the assessee submitted detail of Advertisement expenses incurred by the assessee to the tune of Rs.18,65,025/- by way of ledger account , which is placed on record pg.13 to 37 , placed on record in file. It is claimed by ld. Counsel for the assesseethat these payments were made for expenses incurred for promotion of sales during various loan melas arranged by the assessee,for promoting the sale of TVS motorcycles, while expenses to the tune of Rs.3,56,500/- were incurred on behalf of TVS motors towards publicity support , as referred in email of TVS Motors . This list which isnow filed by assessee by way of ledger account as well email of TVS Motors(pg. 13 to 37/along with written submissions) needs verification after due enquiry by the AO. The ld. Sr. DR also submitted that the matter can be restored back to the file of Assessing Officer for makingnecessary enquiry and verifications, before accepting claim of the assessee. Thus ,after considering the entire material on record and considering submission made by both the parties and also considering that ledger account of advertisement expenses and details of publicity support is now filed by the assessee,which is placed in paper book from pgs. 13 to 37 ,we deem it fit , fair and appropriateand also in the interest of justice , to restore the matter back to the file of the AO for denovo adjudication of the allowability of advertisement expenses after due enquiry and verification of the genuineness of the claim of the assessee towards advertisement expenses, before allowing the same as business expenses. The AO shall also consider the applicability of provisions of Section 40(a)(ia) of the 1961 Act read with

ITA No.61/Vns/2019 Assessment Year: 2014-15 Jaiveer Singh v. ACIT provisions of Chapter XVII-B, on the claim of the assessee towards advertisement expenses, before allowing the same. The Assessing Officer will give proper and adequate opportunity of being heard to the assessee in set aside remand proceedings. Thus in nutshell, the ground no. 2 is allowed for statistical purposes, as we are restoring the matter back to the file of AO for fresh adjudication of Ground No.2 which concern itself with disallowance of advertisement expenses to the tune of Rs.18,65,025/- by AO which disallowance was later confirmed by ld. CIT(A), as per our directions as above. The evidences filed by assessee in set aside remand proceedings before the AO , will be admitted by the Assessing Officer , which will then be adjudicated by AO on merit in accordance with law. We order accordingly. 7. In the result, appeal filed by theassesseeis allowed for statistical purposes. Order pronounced in Open Court on 22/08/2022at Varanasi, U.P. , on conclusion of hearing in the presence of both the parties

Sd/- Sd/- [VIJAY PAL RAO] [RAMIT KOCHAR] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22/08/2022 Copy forwarded to: 1. Appellant –Jaiveer Singh, H.No.514, RamdhariNiwas, Mohaddipur, Gorakhpur-273001, U.P. 2. Respondent –Asstt. Commissioner of Income Tax, Range-1, Gorakhpur 3. CIT, Gorakhpur, U.P. 5. The CIT(A), Gorakhpur, U.P. 6. Sr. DR , ITAT, Varanasi, U.P. Sr. P.S. 6