COMMISSIONER OF INCOME TAX Vs. SHREE KRISHNA ENTERPRISES

JUDGEMENT

(1.) Application is allowed as prayed for.

(2.) The Revenue as well as Assessee filed separate appeals aggrieved against the order passed by the Commissioner of Income Tax (Appeals). The Tribunal accepted the Assessee's appeal while dismissing the appeal of the Revenue. The Tribunal returned the following finding:-

(3.) The revenue has, thus, filed two appeals against the orders passed by the Tribunal. Learned counsel for the appellant has vehemently argued that the assessee has failed to produce any documents to justify the distribution expenses, therefore, such expenses could not be allowed by the Tribunal on arbitrary basis. We do not find any merit in such argument. The Commissioner of Income Tax (Appeals), Ludhiana, recorded a finding that the Assessing Officer has reported that the voluminous nature of entries cannot be verified. Once the Assessing Officer himself has failed to verify the entries, there is no reason to disallow the distribution expenses. It is a rule of thumb which was applied by the Commissioner of Income Tax (Appeals), Ludhiana to allow expenses to the tune of 40%, which has been found to be unjustified by the Tribunal. The Tribunal has allowed the expenses to the extent of 60%. The Assessing Officer himself has not verified the entries though, it recorded finding that the distribution expenses to the extent of Rs. 75,43,120/- as genuine. There was no reason, without verification of the record to decline the remaining amount as well. Therefore, the distribution expenses have rightly been allowed by the Tribunal. Such finding does not give rise to any question of law. It is finding of fact as to whether the assessee is entitled to the entire claimed amount as distribution expenses or not.