TaxTMI 
TaxTMI 
2016 (4) TMI 301
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....ing ledger of transportation, octroi and staff welfare expenses. 2.1. On the other hand, the ld. DR, Shri Aarsi Prasad, defended the disallowance by contending that necessary details of the claimed expenses were not furnished by the assessee. 2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is engaged in the business of trading in hardware, steel and commission agency in the name and style of M/s Shipyard Company. The assessee in his profit & loss account debited Rs. 63,101/- on account of staff welfare expenses, Rs. 1,12,752/- as Octroi charges and Rs. 1,70,791/- as transportation charges (total Rs. 3,46,644/-). During assessment proceedings, the assessee was asked to furnish supporting evidences. As per the ld. Assessing Officer, the assessee did not produce any bill or voucher. It has been observed in para 4.1 of the assessment order that no doubt, the assessee might have incurred these expenses but the quantum appears to be little higher, therefore, he made adhoc disallowance of Rs. 69,325/- at the rate of 20% and added to the income of the assessee. On appeal, the ld. Commissioner of Income....
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....C) On violation of principle of natural justice, reliance was placed upon the decision in Tin Box Company vs CIT (2001) 249 ITR 216 (SC). 3.1. On the other hand, the ld. DR defended the addition by inviting out attention to the finding contained in the assessment order as well as the impugned order. 3.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee claimed to have certain purchases from various parties. The assessee was asked to furnish the list from whom purchases were made. The ld. Assessing Officer was having information that Harsh Corporation (Rs.1,30,303/-), Shivam Trading Company (Rs.1,64,251) and M/s Swastik Enterprise (Rs.1,81,892/-) are on the suspicious list of parties, who are providing bogus bills, without supply of goods or material, on the basis of website of Sales Tax Department, government of Maharashtra (www.mahavat.govt.in). Notices issued u/s 133(6) of the Act by the ld. Assessing Officer was either returned back by the postal authorities with the remark "not known" or not responded too. The ld. Assessing Officer vide notice u/s 142(1) of the Act dated 18/03/2013 asked the ass....
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....e Revenue. We find that the assessee has not discharged his onus in spite of providing opportunity to the assessee and further issuance of notice to such parties by the Assessing Officer. The ratio laid down by Hon'ble Andhra Pradesh High Court in Transport Corporation of India Ltd. 269 ITR 701 (AP), decision from a jurisdictional High Court in Ramanand Sagar vs DCIT 256 ITR 134 (Bom.) and also Laxmit Narayan Madanlal 86 ITR 439 (SC) from Hon'ble Apex Court supports our view. Identical ratio was laid down in Dalmia Jain & company Ltd. 33 ITR 294 (Pat.), Liberty Cinema 52 ITR 153 (Cal.) and Udaipur Mineral Development Syndicate Pvt. Ltd. 269 ITR 263 (Raj.). 3.4. Section 28 of the Act deals with profit & gains of business or profession, whereas, section 37 of the Act deals with allowabiltiy of any expenditure (not being expenditure of the nature describe in section 30 to 36) and not being in the nature of capital expenditure or personal expenses of the assessee laid out or expanded wholly and exclusively for the purposes of business or profession. For ready reference, we are reproducing hereunder section 28 of the Act:- "Profits and gains of business or profession. 28. The foll....
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....pment and Regulation) Act, 1992 (22 of 1992) ; (iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession ; (v) any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from such firm : Provided that where any interest, salary, bonus, commission or remuneration, by whatever name called, or any part thereof has not been allowed to be deducted under clause (b) of section 40, the income under this clause shall be adjusted to the extent of the amount not so allowed to be deducted ; (va) any sum, whether received or receivable, in cash or kind, under an agreement for- (a) not carrying out any activity in relation to any business; or (b) not sharing any know-how, patent, copyright, trade-mark, licence, franchise or any other business or commercial right of similar nature or information or technique likely to assist in the manufacture or processing of goods or provision for services: Provided that sub-clause (a) shall not apply to- (i) any sum, whether received or receivable, in cash or kind, on account of transfer of t....
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....of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". [Explanation 1.]-For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure. [Explanation 2.-For the removal of doubts, it is hereby declared that for the purposes of sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013) shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession.] (2) [* * *] (2B) Notwithstanding anything contained in sub-section (1), no allowance shall be made in respect of expenditure incurred by an assessee on advertisement in any souvenir, brochure, ....