SH. AMRINDER SINGH DHIMAN,NAKODAR vs. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE PHAGWARA, PHAGWARA

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER

I.T.A. No. 584/Asr/2017 Assessment Year: 2010-11

Sh. Amrinder Singh Dhiman Vs. Additional Commissioner of Prop. M/s Dhiman Industries, Income Tax, Range Phagwara Dekhni Gate, Nakodar [PAN: ABNPS 2303J] (Appellant) (Respondent)

Appellant by : None Respondent by: Sh. Trilochan Singh PS Khalsa, Sr DR Date of Hearing: 15.02.2022 Date of Pronouncement: 25.02.2022

ORDER Per Anikesh Banerjee, JM:

The appeal was filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-2, Jalandhar dated 02.06.2017 in respect of Assessment Year 2010-11.

“1. The order of ClT (A) is against facts on record & provision of law. 2. The LD CIT (A) has erred in not considering and adjudicating on evidence filed before him along with application u/r 46A of IT Rules. 3. The LD CIT (A) has gravely erred in contending that appellant assessee did not file evidence during appellant proceedings before him.

2 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT 4. The LD CIT (A) has erred in upholding disallowance of Rs.65000/- out of foreign travelling expenses in this case when it is admitted on record that appellant is an exporter and travelling expenses were incurred within limits and stipulations of R.B.I 5. The Ltd. CIT (A) has erred in upholding addition of Rs. 1352000/- on account of bank credits. He has gravely erred in contending that appellant failed to furnish evidence to support source of credit when copies of sale deeds and bank certificates were furnished along-with application filed u/r 46Aof IT Rules. He has erred in contending that assessee had only given a generic explanation when copies of sale deeds were placed on record before him. 6. LD CIT (A) has erred in upholding disallowance of Rs.233432/- u/s 40(a) (i) of IT Act when TDS was duly deducted from payment made to M/S Orient Marine lines Pvt. Ltd and evidence was produced. 7. LD CIT (A) has erred in not appreciating correct facts in this case & creating misunderstanding about facts of 2 firms relating to TDS & disallowance of actual expenses. 8. LD CIT(A) has erred in upholding disallowance of Rs.63392/- out of actual expenses of Rs.633925/- spent for business purposes. He has erred in not appreciating circumstances of appellant assessee, provisions of labour laws and business necessities as well as practice in business. 9. LD CIT (A) has erred in upholding disallowance of Rs. 164601/- out of vehicle expenses. He has erred in not appreciating that every expense was vouched & for business purposes. The AO had not pointed out any expense which was not made for business purposes. The authorities below have erred in not appreciating the facts of appellant that he was proprietor and engaged in export of heavy machinery; remained out of country and expenses were made by employees on whom he depended for business.

3 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT 4. Ground No. 1 is general in nature. 5. Ground no. 2 to 4, the petitioner was assessed for the assessment year 2010- 11 during the proceedings the assessee’s foreign travel was duly disallowed by the ld Assessing Officer (in brevity the AO) at the rate of 20% on total amount of Rs 649,648/- (Rs.451150/- + Rs.198,498/-) and the observation of the ld AO is as follows:

“5.4 Thus, besides being unverifiable, the assessee has not been able to provide conclusive evidence that these expenses were made "wholly & exclusively" for the purpose of business. Further, foreign currency expenses, as discussed above, are disproportionately high and also totally unverifiable. The jurisdictional ITAT, in the case of ACIT Vs. Archie International, Asst. Year 2001- 02, ITA No. 458(ASR)/2004, has held up to 40% of the expenses on foreign travel with no vouchers/bills, to be not allowable. Looking to the entirety of the circumstances of this case, including the extent of exports, reasonableness, supporting evidences produced etc, 20% of foreign currency and boarding / lodging expenses under the head 'Foreign Travelling1, being un-vouched (without supporting bills) and also being for non-business purpose are disallowed, which works out to Rs.1,29,930/- (20% of Rs.451150 + Rs.198498). The said amount is hereby added to the returned income.”

Against the order of the ld. AO, the assessee filed appeal before the ld. Commissioner of Income-tax (Appeals) {in brevity CIT(A)}. The AR of the assessee produced additional evidence under Rule 46A of the Income-tax Rule, 1962 (in brevity Rule) before the ld CIT(A). The ld CIT(A) asked for the remand report & the ld AO submitted the report accordingly. After receiving the remand report the observation of CIT(A) is as follows:

“5.3. A remand report received from the AO is as under:- B. COMMENTS ON PARA 2

During the course of assessment proceedings, no details or supporting evidences at all regarding the expenses of Rs.4,51,150/- made out of foreign currency were furnished. Similarly, expenses of Rs. 1,98,498/-, claimed to have been incurred on

4 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT boarding and lodging, were all credit card expenses. It was seen at the time of assessment that the expenses incurred in foreign currency, in cash, by the proprietor, were highly disproportionate, and undoubtedly an element of personal expenditure involved in these expenses. Further, perusal of the credit card statement shows innumerable expenses made for purchase of different products from Apple Store, Walmart etc. and to various Resorts, which are obviously not for business purposes. Expenses have been incurred on foreign tours to countries like Somalia and China, to which the assessee firm does not make any exports and it was held at the time of assessment that an element of personal 'expenditure involved in these tours. Further, the jurisdictional ITAT, in the case of ACIT Vs. Archie International, Asstt. Year 2001-02, ITA No. 458(ASR)/2004, has held up to 40% of the expenses on foreign travel with no vouchers/bills, to be not allowable. Hence, the AO had rightly made the addition of 20% of foreign currency and boarding / lodging expenses under the head ‘Foreign Travelling1, being un-vouched (without supporting bills) and also being for non-business purpose.

Keeping in view the above, the addition of Rs. 1,29,230/ made by the AO, is in order and needs to be upheld.

5.4 A copy of the remand report was forwarded to the appellant for counter comments.

5 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT

5.5. I have gone through the assessment order passed by the AO and submissions made by the AR of the appellant in this regard and find that a disallowance of Rs. 1,29,930 at the rate of 20% of the foreign travelling expenses has been made by the AO. The disallowance was made by the AO primarily for the reason that supporting bills and vouchers for the expenses claimed on a/c of foreign visits could not be produced before the AO. The appellant has justified the claim of expenses on the ground that all these payments have been made through the credit card. It is stated that considering the volume of exports made by the appellant travelling is necessary and complete details of expenses were filed before the AO.

5.6. Considering the submissions filed, I find that most of the payments have been made through the credit card but still it can not substantiate the purpose for which these payments have been made.. However, no supporting vouchers could be produced even in the course of present proceedings to substantiate its claim. Therefore, I hold that it would be appropriate to restrict the disallowance to Rs.65,000 out of the total disallowance of Rs. 1,29,930 made by the AO under this head.”

The assessee filed a written submission and supplied sample Air tickets and bills. The payment was made by through banking channels, i.e., through credit card of assessee. The ld. CIT(A) reduced the addition & fixed it amount to Rs.65,000/- instead of Rs. 1,29,930/-. Both the ld. CIT(A) and the ld. AO did not find any specific lacunae against the expenses paid for foreign travel. So, the addition of Rs. 65,000/- modified by the ld CIT(A) is deleted. In this point ground no. 4 of the assessee is allowed. 6. Ground No. 5 During the assessment proceedings the ld AO found some amount in assessee’s bank account which is total amount to Rs.13,52,000/-. The observation of the ld AO is as follows:

“6.3 During the course of subsequent hearings, the assessee filed evidence in respect of credits of Rs.71,806/-, in ICICI Bank, Rs.30,000/- and Rs.20,000/- in BOI, and Rs.3,00,000/- and Rs.80,000/- in HDFC Bank. However evidences in respect of balance entries were not filed despite the fact that repeated opportunities for the same were allowed to the assessee. This fact was duly

6 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT confronted to the assessee's A.R. vide order sheet entry dated 14.12.2012, which is reproduced as under:-

"Inspite of repeated and numerous opportunities, no explanation / evidence whatsoever has been furnished regarding the following credit entries in the bank accounts of the assessee:

ICICI Bank 26.08.2009 300000

BOI 03.08.2009 5500

HDFC 18.06.2009 237300 21.08.2009 115000 22.08.2009 200000

14.10.2009 250000 14.10.2009 250000”

6.4 It is, therefore, seen that the assessee has not furnished any explanation regarding the sources of the above - mentioned credits in his saving bank accounts mentioned above. The onus to explain the sources of credits in the bank accounts lies on assessee. The assessee has not furnished any explanation whatsoever which shows that even the basic onus to explain these credits has not been discharged. Reliance is placed on the decision of Hon'ble Supreme Court in the case of Sumati Dayal VS CIT 214 ITR 801 (SC).

In the absence of any explanation of the assessee, despite having being given a number of opportunities, as narrated above, these credits, amounting to Rs.13,52,000/- are treated as his income from undisclosed sources and added to his returned income.”

Against the order of the ld. AO the petitioner filed appeal before the ld. CIT(A). The AR of the assessee produced additional evidence under Rule 46A of the Income-tax Rule, 1962 before the ld CIT(A). The ld CIT(A) asked for the remand report & the ld AO submitted the report accordingly. After receiving the remand report the observation of CIT(A) is as follows:

7 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT “6.4 A copy of the remand report was forwarded to the appellant for counter comments

AO in Para C of his comments admits that evidence in some cases for credits in banks were filed during assessment proceedings satisfactorily. But in other cases where copies of sale deeds for advances received or consideration received from sale of agriculture land could not be produced because 1 was out of India and I personally could not contact purchasers to get evidence. This being sufficient cause for non-production of evidence during assessment proceeding but it is necessary to adjudicate impugned addition , it is prayed that additional evidence placed before your good self U/R 46A may kindly be admitted and considered accordingly.

6.5 I have gone through the assessment order passed by the AO and submissions made by the AR of the appellant in this regard and find that an addition of Rs. 13,52,000 has been made by the AO on account of unexplained credits in the bank accounts- in ICICI Bank, BOI and HDFC Bank. The appellant has failed to furnish satisfactory evidence before the AO to substantiate sources of deposits/credits in the bank account. AO has in the course of assessment proceedings sought information about various credits in the bank account and after considering the explanation furnished by the appellant only credits of Rs. 13,52,000 were treated as unexplained. 6.6 The appellant has reiterated the submissions made before the AO. However, considering the fact that appellant has failed to furnish any evidence to support the sources of credits in the bank account. The appellant has given a generic explanation that these amounts were received on account of sale of land but failed to furnish any evidence to substantiate the same. Therefore, in the absence of any evidence to the contrary being brought on record by the appellant, I confirm the addition of Rs. 13,52,000 made by the AO under this head.”

The assessee filed a written submission before the bench. The ld. AO without any proper verification disallowed the total amount of Rs.13,52,000/-. Form the end of investigation on part of revenue it was not clarified how the credited amounts were utilized in the books of account of the assessee. In the accounting system there are always double entries. The ld AO only mentioned the entries in bank account. Mere entry in the bank account is not liable for addition. So, the addition amount to Rs.

8 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT 13,52,000/- with the total income is deleted and the ground no-5 of the assessee is allowed.

“7. Disallowance u/s 40(a)(ia):

7.1 The assessee has made payment of Rs.28,565/- and Rs.2,04,867 under the head "clearing & forwarding charges" to M/s Orient Marine Lines Pvt Ltd. As per provisions of section 194C, tax was required to be deducted on said payment. Accordingly, assessee was raised a query in this regard, vide order sheet noting dated 19.10.2012, which is reproduced as under:-

"No TDS seems to have been deducted on clearing & forwarding charges paid to the following parties Velaji Dosabhai & Sons P Ltd. Orient Marine Lines P Ltd Show cause why these payments should not be disallowed u/s 40a(ia)."

Assessee filed written reply dated 06.11.2012, which is reproduced as under:-

"These parties had reported that they had got exemption certificate for TDS and thus, TDS was not deducted".

However, no TDS exemption certificate in respect of M/s Orient Marine Lines Pvt Ltd was produced. Therefore, assessee's A.R. was again given an opportunity to furnish his explanation, vide order sheet noting dated 06.11.2012, which is reproduced as under:-

"Why no TDS deducted on payment to Orient Marines Lines Pvt Ltd"

Assessee filed written submissions dated 20.11.2012, which is reproduced as under:- "That as regards exemption certificate of Orient Marines Lines the party is not sending the same for the reasons best known to them"

9 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT

7.2 The reply of the assessee has been considered. It is noticed that:-

a. As per the provisions of section 194C, tax was required to be deducted on payment of clearing & forwarding charges.

b. The assessee in his reply dated 06.11.2012 stated that the said party had got exemption certificate for non deduction of TDS and again vide reply dated 20.11.2012, stated that the said exemption certificate was not being sent. In the absence of the said exemption certificate, the assessee was duty bound to deduct tax at the time of payment.

c. Section 40a(ia) states that any amount on which tax is deductible at source and such tax has not been deducted or after deduction has not been paid then such sum shall not be deducted in computing the income chargeable under the head 'profits of business or profession'. d. In the present case, TDS was to be deducted on the said payment of Rs.28565 +Rs.204867 = Rs.233432, being clearing & forwarding charges, but TDS has not been deducted, therefore, this payment is not allowable as deduction while computing the income chargeable under the head "profits of business or profession". e. In view of these facts, the said amount of Rs.2,33,432/- is hereby disallowed u/s 40(aj(ia) and added back to total income of the assessee.

Penalty proceedings u/s 271(l)(c) for furnishing inaccurate particulars of income in this regard are separately initiated.”

Against the order of ld. AO, the assessee filed appeal before the ld. CIT(A). The AR of the assessee produced additional evidence under Rule 46A of the Income-tax Rule, 1962 before the ld CIT(A). The ld CIT(A) asked for the remand report & the ld AO submitted the report accordingly. 7.a. The fact is that the ld. AO disallowed the expenses of the assessee U/s 40(a)(ia) of the Act for non deduction of TDS U/s 194C of the Act. Out of two parties, the

10 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT expenses made to one party M/s Velji Dosabhai & Son Pvt. Ltd. was allowed by the ld. CIT(A) after filing of the exemption certificate.

7.b. The payment was made to other parties, M/s Orient Marine Lines Pvt Ltd amount to Rs.2,33,432/- was disallowed by the ld CIT(A). In the paper book, the assessee filed Form-16 which is the proof of deduction of tax from the party as per the Act. The assessee filed the Form-16 in his paper book in page no. 87 which is as under:

11 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT

12 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT The assessee is claiming that he deducted tax as per the Act. As per paper book of assessee the amount to Rs.2,33,432/- should not be disallowed u/s 40(a)(ia) of the Act. This issue is sending back to the ld. AO for further verification and this ground of appeal is set aside to ld. AO for further verification.

“8. Further, the assessee has debited the following expenses to the profit & loss account:

Labour & staff welfare Rs.239759 Misc Rs. 18063 Diwali Rs. 40895 Machinery repair Rs. 54203 Building repair Rs. 62802 Customer Entt Rs.457962 TOTAL Rs.6,33.925/-

During the course of examination of books of accounts and- verification of bills/ vouchers, it was noted vide order sheet entry dated 27.11.2012 that these expenses are incurred entirely in cash, and are supported only by self made vouchers which are self serving and not entirely verifiable.

The assessee was asked to justify these expenses as per order sheet noting dated 27.11.2012, which is reproduced as under: -

"(iv) In customer Entertainment A/c mostly payments have been made through credit card of proprietor. Justify its nature and the purpose vis-a-vis business. (v) The following expenses have been claimed on the strength of cash vouchers only:- Labour & staff welfare Misc Diwali Machinery repair / building repair"

13 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT

The assessee furnished his reply on 05.12.2012, which is reproduced as under:- "1 enclose details of customer entertainment for which amounts were spent through my credit card accounts and produce statement for the perusal. It is apparent that these expenses were genuinely met to entertain customers and keeping in view my volume of work, I hope it will be appreciated as genuine and for the purpose of business It is correct that these expenses have been made by supporting cash vouchers because these are petty expenses and I hope your goodself will appreciate that in running manufacturing business these expenses are normal in cash. Copies of vouchers are produced for your reference and perusal. Detail of these expenses are enclosed."

After thoughtfully considering the written submission furnished by the assessee's AR in this regard, as reproduced above, and after examining the vouchers etc. furnished, it is seen that all the above expenses are supported only by self-made cash vouchers which are not subject to third party verification and therefore, genuineness of the quantum of expenses debited under these heads cannot be verified. Accordingly a disallowance of 10% of these expenses at Rs.63,392/- is being made out of the expenses claimed under these heads, being expenses not incidental to business of the assessee, and not properly vouched for.”

8.a. The assessee filed an appeal before the ld. CIT(A) against the assessment order. The AR of the assessee produced additional evidence under Rule 46A of the Income-tax Rule, 1962 before the ld CIT(A). The ld. CIT(A) asked for the remand report & the ld AO submitted the report accordingly which is as follows:

“8.3 A remand report received from the AO is as under:- During the course of assessment proceedings it was noted while examining the books ot accounts and verification of bills/vouchers that following expenses were incurred entirely in cash and supported only by self made vouchers:

Labour& Staff welfare Rs.239759/- Misc. Rs. 18063/- Diwali Rs. 40895/- Machinery Repair Rs.54203/- Building repair Rs.62802/-

14 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT Customer Entt. Rs.457962/- Total Rs.633925/-

Regarding incurred on customer entertainment, assessee had stated that amounts were- spent through credit card, however it was not established on the perusal of statement of credit card that expenditure of Rs.4,57,692/- was actually incurred for customer’s entertainment and no evidence which proves that the said expenditure was incurred for customer’s entrainment was filed at the time of assessment. As the assessee had supported his claim by producing only self-made cash vouchers which were not subject to third party verification and the genuineness of the quantum of expenses could not be verified. Hence, the AO had rightly disallowed the 10% of these expenses being not incidental to business of the assessee and not properly vouched for and which were supported by self made cash vouchers and not verifiable. This ground of appeal needs to be rejected.

8.4. I have gone through the assessment order passed by the AO, remand report of the AO and submissions made by the appellant and find that disallowance of Rs. 63,392 has been made by the AO at the rate of 10% of the total expenses claimed under the heads Labour & Staff welfare, Misc. Expenses, Diwali, Machinery Repair, Building repair, Customer Entertainment expenses. The disallowance has been made by the AO on the ground that these expenses have been incurred entirely in cash and are found to be not verifiable since only self made vouchers were produced in support of them.

8.5 The appellant could not furnish any evidence to contradict the findings given by the AO with regard to the non-verifiability of these expenses. The appellant has only stated that these expenses were paid to vendors who did not issue proper bills. Therefore, considering these facts, I hold that AO was justified in making disallowance of 10% of the total expenses claimed on this account. Accordingly, I confirm the disallowance of Rs.63,392/- made by the AO under this head.”

8.b. Disallowance amount to Rs.63,392/- had no such any specific lacunae. The only allegation is that the expenses are not verifiable expenses. But, these are the expenses related to running as business. The assessee filed details of expenditure in his paper book which are kept in record. We are declining the order of the ld CIT(A) in this issue. This ground of the assessee is allowed. 9. Ground No. 9. During the assessment proceedings, the ld. AO disallowed expenses on ad-hoc basis at the rate of 20% of the amount of payment made by the

15 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT assessee. The total amount was disallowed to Rs.3,29,202/-. The observation of the ld. AO reads as follows:

“9. Personal Expenses- A perusal of col. 17(b) of Audit Report regarding expenses of personal nature shows that the Chartered Accountant has remarked as under:-

"Telephone, conveyance and foreign travelling of self & family for which detail not ascertainable"

However, in his return of income, the assessee has not made any disallowances for expenses of personal nature in this regard.

9.1. In his profit & loss account, the assessee has claimed following expenses on vehicles and telephone.

Car Insurance- Rs.106803 Vehicle; running- Rs.591690 Vehicle repair & maintenance- Rs. 180922 Telephone expenses- Rs.766596 TOTAL Rs.1646011

Query in this regard was raised vide order sheet noting dated 27.11.2012, as under:- "Detail of car insurance paid". "Personal use of car and telephone expenses cannot be ruled out as there is no log book."

The assessee furnished his reply on 05.12.2012 stating that expenses are for business purposes and admitted that log book was not maintained.

9.2. Again, vide order sheet dated 07.12.2012, the assessee's A.R. was given an opportunity to explain his position, as under:

“With reference to the comments regarding personal expenses made by Auditor in Col. No. 17(b), explain whether any separate log book / 'account has been maintained?"

The reply filed by the assessee's A.R. was again irrelevant and illogical.

16 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT The reply of the assessee has been considered and it is noticed that in the absence of log book it cannot be denied that there is some personal element in the expenses claimed under these heads. Accordingly, a disallowance of Rs.3,29,202/- out of total expenses claimed under these heads is being made, which is 20% of the total expenses claimed under these heads.”

Against this order, the assessee filed an appeal before the ld. CIT(A). The AR of the assessee produced additional evidence under Rule 46A of the Income-tax Rule, 1962 before the ld CIT(A). The ld CIT(A) asked for the remand report & the ld AO submitted the report accordingly. The order of the ld. CIT(A) reads as under:

“9.3 The AO in the Remand Report has stated as under: -

During the course of assessment proceedings it was noticed from the col. 17(b) of Audit Report regarding expenses of personal nature that the Chartered Accountant has remarked as under:-

“Telephone, conveyance and foreign travelling of self & family for which detail not ascertainable”

However, in his return of income, the assessee has not made any disallowances for expenses of personal nature in this regard.

In his profit & loss account, the assessee has claimed following expenses on vehicles and telephone.

Car Insurance- Rs. 106803 Vehicle running- Rs. 591690 Vehicle repair & maintenance- Rs. 180922 Telephone expenses- Rs. 766596 TOTAL Rs.1646011

The assessee was asked with reference to the comments regarding personal expenses made by Auditor in Co. No. 17(b) and to produce the log book and vide reply dated 05.12.2012 and 07-12-2012, assessee stated these expenses are for business purpose and no log book was maintained.

17 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT The AO had rightly disallowed the 20% of these expenses and made the addition of Rs.3,29,202/-, as in the absence of log book it could not be denied that there is some personal element in the expenses claimed under these heads.

9.4. A copy of the remand report was forwarded to the appellant for counter comments, which are as under:-

In view of above facts and that I most of the time remained out of India and expenses were incurred by the employees for business purposes may kindly be considered in view of my circumstance. Further, because assessment proceedings were completed through my employees and evidence could not be brought completely on record on account of my absence and record having been received after completion of assessment but being necessary for giving justice to me may kindly be admitted u/r 46A of IT Rules and be considered accordingly.

9.5. I have gone through the assessment order passed by the AO and submissions made by the AR of the appellant in this regard and find that a disallowance of Rs.3,29,202 has been made on account of personal expenses. During the course of assessment proceedings, it was noted by the AO that auditor has mentioned in the audit report that Telephone, vehicle running and foreign travelling of self and family for which details are not ascertainable. Further, after considering the submissions made by the appellant it was found by the AO that no log book for the vehicles and call register for telephone expenses

18 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT has been maintained and on account of these factors a disallowance at the rate of 20% of the total expenses of Rs. 16,46,011 claimed in the books was made on account of personal usage.

9.6 The appellant has stated that these expenses have been incurred for the purposes of business and no adverse material has been brought on record to justify disallowance made by the AO. It is stated that appellant was out of India and is a director in other companies and vehicles are used by other persons in the business as well.

9.7. Having considered the submissions made in this regard and the fact that pellant also failed to controvert the findings given by the AO based on the observations of the auditor, I hold that it would be just and fair to restrict the disallowance on a/c of personal usage out of these expenses to 10% of the amount claimed in the books of accounts. The disallowance was confirmed by the undersigned at this rate in the case of the appellant while deciding the appeal for AY 2011-12. Accordingly, I confirm the disallowance of Rs. 1,64,601 out of the total disallowance of Rs.3,29,202 made by the AO under this head.”

9.a. The ld. CIT(A) in his order reduced the percentage of disallowance from 20% to 10% and the disallowance amount is stand amount to Rs. 1,64,601/- instead of Rs. 3,29,202/-. The personal uses of these expenses are not ascertainable by the assessee himself. In the audited report of the Chartered Accountant of assessee, in column no. 1(b) of the audited report mentioned that ‘Telephone, vehicle running and foreign travelling of self and family for which details are not ascertainable.” The ld. CIT(A) took the correct stand and disallowed the expenses at the rate of 10% which is to amount of Rs.1,64,601/-. We are entertaining the order of the ld. CIT(A). Here in the ground of the appeal of assessee is dismissed. This particular ground no. 9 is dismissed.

19 ITA No. 584/Asr/2017 Amrinder Singh Dhiman v. Addl. CIT Order pronounced in the open court on 25.02.2022

Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member

Date: 25.02.2022 *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File