IN INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A. No. 79(Asr)/2016 Assessment Year: 2009-10 M/s. Janki Sons, Vs. Dy. CIT G.T. Road, Range-II, Jalandhar. Jalandhar City. PAN:AAEFJ8527H (Appellant) (Respondent) Appellant by: Sh. Sandeep Vijh (CA) Respondent by: Sh. Rahul Dhawan (DR) Date of hearing: 29.09.2016 Date of pronouncement:18.10.2016 ORDER PER N. K. CHOUDHRY (JM): This is appeal filed by assessee against order of ld. CIT(A), Jalandhar, dated 16.11.2015 for Asst. Year:2009-10. 2. assessee has raised following grounds of appeal. (i) That ld. CIT(A) has erred in confirming disallowance of Rs.5,62,612/- from out of Forwarding & Delivery Expenses @ 20% of expenses. submissions made have not been properly appreciated. Without prejudice to above, disallowance sustained is estimated & highly excessive. (ii) That ld. CIT(A) has erred in confirming disallowance of Rs.66,985/- from out of Stacking and Storage Expenses, Demonstration Expenses, Entertainment Expenses and Miscellaneous Expenses at estimated rate of 10% of these expenses. submissions made have not been properly appreciated. 3. brief facts of case as noted in assessment order are that assessee firm is engaged in business of trading of electronic good. During year under consideration, assessee had shown sales to tune of Rs.32,28,47,289/- and G.P of Rs.2,81,23,067/- giving G.P rate of 8.71%, as compared to G.P at Rs.2,72,46,885/- on sales of 2 ITA No.79(Asr)/2016 Asst. Year: 2009-10 Rs.33,86,55,268/- i.e. G.P rate of 8.05% shown in immediately preceding year. assessee has filed its return of income on 30.09.2009, declaring total income of Rs.27,11,500/-. case was selected for scrutiny and statutory notice U/s 143(2) was issued on 23.08.2010 and served upon assessee on 31.08.2010. Subsequently, case was taken up for scrutiny by Add. CIT, Range-III, Jalandhar and fresh notices U/s. 143(2) and 142(1), were issued and served upon assessee on 24.06.2011. While completing assessment, A.O has made following additions to returned income of assessee firm. (i) Addition on account of disallowance out of expenses Claimed under head Forwarding & Delivery expenses Rs.5,62,612/- (ii) Addition on account of disallowance out of expenses Claimed under head Gift & Presents Rs.1,55,589/- (iii) Addition on account of disallowance out of other un-vouched expenses Rs.66,985/- 4. Feeling aggrieved by assessment order passed by Assessing Officer, assessee preferred appeal before ld. CIT(A) and ld. CIT(A) partly allowed appeal of assessee but confirmed addition of Rs.5,72,612/- on account of disallowances out of expenses claimed under head Forwarded and Delivery expenses and addition of Rs.66,985/- on account of disallowances out of other unvouched expenses. 5. Feeling aggrieved by order passed by ld. CIT(A), assessee filed instant appeal on grounds mentioned in para 2 of instant order. 3 ITA No.79(Asr)/2016 Asst. Year: 2009-10 6. Before us, it was argued by ld. AR of assessee that assessee is whole seller of electric goods and sells to distributors directly and in previous years, no disallowances have been made by Department. Even otherwise, ratio of Forwarding expenses as well as Storage & Stacking expenses are at lower side, if same compares with F.Y.2006-07. It was further submitted that assessee is maintaining /making regular bills and vouchers and through deliveries have been made, through part time labours, hence, no complete particulars are possible to be recorded. It was further submitted by assessee that it has been doing business for very long time and maintaining vouchers in similar fashion. Being distributor, goods are sent to dealers on almost daily basis. There is thus nothing wrong in these expenses being claimed on almost daily basis. Since large number of vouchers pertains to payment to rickshaw and autos and it is logical that there would be no regular bills. signature on some vouchers would also be illegible in view of fact that these are signed by uneducated class. important parameter would be level of expenses in preceding years. ratio of expenses also in line with preceding years when assessment was completed u/s 143(3) and this is not situation where expenses have been claimed but no goods have been dispatched. ld. AR also drawn our attention to order passed by Co-ordinate Bench in ITA No.74(Asr)/2009 wherein Co-ordinate Bench was pleased to reduce disallowances in interest of justice to tune of 5% only. 4 ITA No.79(Asr)/2016 Asst. Year: 2009-10 7. On contrary, it was argued by ld. DR that in vouchers etc. no complete addresses have been given. Even if same are self made then also it should contain complete details. Even otherwise 60% of vouchers are self made and are not reliable as observed by A.O as well as ld. CIT(A), therefore, instant appeal does not deserve to allowed. 8. We have gone through record as well as analyzed argument raised by parties and also to case laws relied upon by parties and orders placed before us of authorities below. We feel it appropriate to reproduce concluding part of order of ld. CIT(A). 5 . 2 I have considered observations of Assessing Officer as made by her in assessment order. I have also considered written submissions filed by assessee vide letter dated 07.11.2015. I have further considered various judicial pronouncements relied upon by assessee as well as other material placed by assessee on record. On careful consideration of rival contentions, it has been noticed that majority of expenses claimed by assessee under head 'forwarding and delivery expenses' are supported only by self prepared vouchers which are not independently verifiable. Although assessee tried to justify expenses claimed under head forwarding and delivery expenses by producing few bills but majority of expenses as pointed out by Assessing Officer still remains supported by self made vouchers which are not at all verifiable independently. Moreover, disallowance out of expenses claimed by assessee under head forwarding and delivery expenses is very reasonable and cannot be said to be excessive looking to quantum of expenses claimed under this head which are supported only through self made vouchers. In such circumstances, no further relief can be allowed to assessee under any circumstances as Assessing Officer made very fair and reasonable disallowance. 5.3 In view of above stated facts and in circumstances of case, I am of opinion that Assessing Officer is fully justified in making addition of Rs.5,62,612/- in this case on account of disallowance out of expenses claimed by assessee 5 ITA No.79(Asr)/2016 Asst. Year: 2009-10 under head forwarding and delivery expenses . addition of Rs.5,62,612/- made by Assessing Officer in this case is, therefore, upheld. In result ground No.1 of appeal taken by assessee is dismissed. It is clear from order passed by ld. CIT(A) that there are so many discrepancies found in bills, vouchers and no supporting material was produced in support of self made vouchers and Assessing Officer was unable to verify independently. Even otherwise, submissions of assessee is not tenable that assessee has been doing this business for very long time and has been maintaining vouchers in similar fashion and it is also not tenable that since large number of vouchers pertain to payments to rickshaw, autos, etc. therefore, it is logical that there would be no regular bills. We found force in argument of ld. DR that even otherwise if vouchers are self made but it should contain complete details. disallowances made by Assessing Officer and confirmed by ld. CIT(A) are reasonable and at lower side. However, considering facts and circumstances of case ends of justice, would meet if disallowances can be restricted to tune of 10% of expenses as fair and reasonable, considering fact that authorities below fit it to allow 80% of claim. 9. With regard to Ground No.2, it was argued by ld. AR on account of confirmation of disallowances of Rs.66,985/- quo Stacking & Storage Expenses etc., as they engaged part time labours and generally illiterate temporary labours does not issue bills and similarly demonstration expenses pertains to conveyance expenses 6 ITA No.79(Asr)/2016 Asst. Year: 2009-10 for sending goods to dealers to demonstrate goods to customers and to explain their features and food items were also being purchased from Dhabas and therefore, it would be difficult to get bills etc. Therefore, amount of disallowance can be deleted. 10. On contrary, it was argued by ld. DR that assessee has failed to produce complete details of labours and even otherwise maximum vouchers are self made and unsupported by any evidence and even otherwise are not verifiable, therefore, order passed by ld. CIT(A) is quite reasonable and logical and based on reasons. 11. We have gone through facts and circumstances of case and also to material available on record produced in context of Ground No.2. We feel it appropriate to reproduce concluding part of order passed by ld. CIT(A). 7.2 I have considered observations of Assessing Officer as made by her in assessment order. I have also considered written submissions filed by assessee vide letter dated 07.11.2015. I have further considered other material placed by assessee on record. On carefully consideration of rival contentions, it has been noticed that majority of expenses claimed under heads storage & stacking expenses , demonstration expenses, entertainment expenses, and miscellaneous expenses are supported only by self prepared vouchers which are not independently verifiable. Moreover, disallowance out of expenses claimed by assessee under heads storage & stacking expenses demonstration expenses , entertainment expenses and miscellaneous expenses is very reasonable and cannot be said to be excessive looking to quantum of un-vouched expenses claimed under these heads. In such circumstances, no further relief can be allowed to assessee under any circumstances in view of that disallowance made by Assessing Officer is very reasonable. 7.3 In view of above stated facts and in circumstances of case, I am of opinion that Assessing Officer is fully justified in making addition of Rs.66,985/- in this case on account 7 ITA No.79(Asr)/2016 Asst. Year: 2009-10 of disallowance out of expenses claimed by assessee under heads storage & stacking expenses , demonstration expenses , entertainment expenses and miscellaneous expenses ,. addition of Rs.66,985/- made by Assessing Officer in this case is, therefore, upheld. In result Ground No.3 of appeal taken by assessee is also dismissed. From order itself, it is quite clear that disallowances at rate of 10% of total expenses seems to be quite reasonable, logical and based on reasons mentioned in conclusion of order passed by ld. CIT(A). In our opinion, disallowance on this part does not require deletion or any consideration, hence, Ground No.2 of assessee stands dismissed. 12. In result, appeal filed by assessee is partly allowed. Order pronounced in open Court on18.10.2016. Sd/- Sd/- (T. S. KAPOOR) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:18.10.2016. /PK/ Ps. Copy of order forwarded to: (1) Assessee: (2) (3) CIT(A), (4) CIT, (5) SR DR, I.T.A.T., True copy By Order M/s. Janki Sons v. Dy. CIT, Range-II, Jalandhar City