VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 16/03/2018 of ld. CIT(A), Kota for the A.Y. 2013-14. The assessee has raised following grounds of appeal:

1. That under the facts and circumstances of the case, the ld. CIT(A) has erred in confirming of Rs. 49,27,778/- on account of Rail Fair Expenses supported by the respective tickets and receipts and most of the payments were made through cross account payee cheques. ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 2

2. That under the facts and circumstances of the case, the ld CIT(A) has erred in confirming the following addition made by the Assessing Officer by disallowing following expenses:- Particulars Amount Advertisement expenses 125383 Bus hire charges 664044 Food and refreshment expenses 799548 Tour manager and staff salary 329600 Sundry expenses 306012 Postage and courier expenses 179996 Printing and stationery 758909 Total 3163492

3. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing.

2. Ground No. 1 of the appeal is regarding disallowance of rail fair expenses. The assessee is an individual and proprietor of M/s Jai Shiv Shankar Tirtha Yatra Company. The assessee is engaged in the business of Travelling agency business organizing the tirth yatra (religious trips) specially for old age people and saints. The assessee filed his return of income on 30/09/2013 declaring total income of Rs. 8,22,480/-. During the year under consideration, the assessee has claimed train ticket expenses of Rs. 2,84,27,813/-. The Assessing Officer asked the assessee to produce the supporting evident in respect of claim of rail fair expenditure. The Assessing Officer noted that the assessee has produced the evidence to the extent of Rs. 2,35,000,35/- and consequently the Assessing Officer has disallowed the balance amount of Rs. 49,27,778/- for want of supporting evidence. ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 3

3. The assessee challenged the action of the Assessing Officer before the ld. CIT(A) and submitted written submissions. The ld. CIT(A) has confirmed the action of the Assessing Officer on the ground that the Assessing Officer has fairly allowed more than 80% of the claim for which proper evidences were filed.

4. Before us, the ld AR of the assessee has submitted that the books of account of the assessee are audited U/s 44AB of the Income Tax Act, 1961 (in short the) where the assessee has shown the total receipt of Rs. 7,10,86,203/- on which net profit of Rs. 10.6 lacs were declared, which is more in comparison to the last years. He has further submitted that the turnover of the assessee has increased during the year from Rs.

4.61 crores to Rs. 7.10 crores. The net profit rate for the earlier year was 1.10% whereas the net profit for the year under consideration is 1.50%, therefore, the assessee has declared better results for the year under consideration on substantially higher turnover and hence there is no reason for doubting the claim of expenditure. The ld AR has further contended that the expenditure claimed by the assessee on account of rail fair is only the rail fair and food expenses during the trips of pilgrims which are more than 80% of the total expenditure. He has referred the copy of ledger account of rail fair expenditure at page Nos. 31 to 42 of ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 4 the paper book and submitted that all the payments were made to the railways which can be verified independently from the railways. The most of the payments were made through cross account payee cheques duly reflected in the bank account of the assessee as well as recorded in the books of account of the assessee. The cash payment was made only where it was urgently needed for booking the reservation on urgent basis. The railway has issued the cash receipts in such cases which were duly produced before the Assessing Officer. The ld AR has referred to the receipts issued by the railways at page Nos. 31 to 154 of the paper book and submitted that all these documents were produced before the Assessing Officer. However, the Assessing Officer has disallowed the claim without verification of the receipts issued by the railways. The Assessing Officer during the assessment proceedings, conducted a test check of account with all receipts and vouchers produced by the assessee, however, in the assessment order, the Assessing Officer has made the disallowance of Rs. 49,27,778/- for want of supporting evidence and details which is contrary to the evidence produced by the assessee. The ld. AR has contended that the assessee produced all the details in support of the claim and therefore, there is no scope of not production of any part of the bills of details. The assessee produced complete books of account alongwith the ledgers as well as the bills and ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 5 receipts issued by the railways. Though the complete record was available on the assessment record, the ld. CIT(A) has confirmed the disallowance without considering the submissions or giving opportunity to the assessee to make proper representation. Hence, the ld AR has submitted that the Assessing Officer asked the assessee to produce the books of account and relevant details and records which were produced by the assessee and thereafter no show cause notice was given by the Assessing Officer to make the disallowance of Rs. 49,27,778/-.

5. On the other hand, the ld DR has submitted that the assessee has not produced any new material or record in support of the claim despite sufficient opportunities were given by the Assessing Officer as well as the ld. CIT(A). Only at the fag-end of the assessment, the assessee filed the details sought by the Assessing Officer and therefore, the Assessing Officer has passed the assessment order which was time barring. The Assessing Officer has given the reasons for disallowance as the supporting evidence and details were not furnished by the assessee. He has relied upon the orders of the authorities below.

6. We have considered the rival submissions as well as the relevant material on record. There is no dispute that the assessee is undertaking tour trips of the pilgrims at various placed through Indian Railways as ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 6 well as road transports. The business activity of the assessee involved the expenditure during the journey apart from railway fair, bus fair and other sundry expenditure. The assessee claimed train ticket expenditure of Rs. 2,84,27,813/- against the turnover of Rs. 7,10,86,203/-. There is no dispute that that the turnover of the assessee is significantly higher in comparison to the preceding year of Rs. 4.61 crores. Despite the substantial increase in the turnover, the assessees G.P. and N.P. rte declared for the year under consideration is much better than the preceding years. The Assessing Officer has made disallowance of Rs. 49,27,778/- out of the total claim of Rs. 2,84,27,813/- on the ground that the assessee has not filed the relevant details and supporting evidence. It is pertinent to note that the train ticket expenditure claimed by the assessee can be verified from the details of the tickets and journey undertaken by the assessee and number of pilgrims taken to the trips. The train ticket expenditure has a direct nexus with the correspondence receipt as it can be compared from number of passengers undertaken the journey for pilgrims trips. The Assessing Officer has not pointed out or made any allegation about the inflated expenditure or excess expenditure claimed by the assessee in comparison to the preceding year in terms of the percentage of the number of the pilgrims or the total turnover. The assessee has filed ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 7 complete details of expenditure alongwith supporting evidence which is nothing but the receipts issued by the railways. Further the assessee has also filed the receipt issued by the Indian Railway Catering (IRCTC) giving all details of payments through cheques or in some cases though cash. Even otherwise the Assessing Officer has not doubted 80% of the claim of railway ticket expenditure. Once the assessee produced the entire details alongwith ledger account or audited books of account giving the details of the total number of passengers taken to the tips then the corresponding ticket expenditure cannot be disallowed. The ticket expenditure has a direct nexus with the corresponding receipts and therefore, once the assessee has shown the receipt for all he trips undertaken through railways then the ticket expenditure is essential expenditure which can be verified from the record. We note that the assessee has produced about more than 120 pages of documents comprising of receipts issued by the railways and each receipt is in most of the cases is for the entire lot of passengers travelling in a trip. Therefore, when the assessee has filed the supporting evidence and the Assessing Officer has not given any specific show cause notice for making the disallowance of Rs. 49,27,778/- out of the total claim then said disallowance at the back of the assessee and further the entire record was available with the A.O., is not justified. Accordingly, we ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 8 delete the disallowance made by the Assessing Officer which is made in a summary manner without proper verification of the record.

7. Ground No. 2 of the appeal is regarding the ad hoc disallowance of various expenditure. The Assessing Officer has made disallowance of 5% to 50% of the various expenditure for want of supporting bills and vouchers. The Assessing Officer has given the reasons that since the assessee has not produced the complete bills and vouchers and some of the vouchers are self made, therefore, 5% to 50% respectively of these expenditure were disallowed by the Assessing Officer.

8. The assessee challenged the action of the Assessing Officer before the ld. CIT(A) but could not succeed.

9. Before us, the ld AR of the assessee has submitted that the assessee produced books of account, ledger accounts as well as all supporting bills and vouchers in respect of the various expenditure, however, the Assessing Officer has made ad hoc disallowances without proper examination of the record produced by the assessee. He has referred the details of the expenditure and submitted that the payment of expenditure was made after deduction of TDS. Further all the expenditures were duly recorded in the books of account as well as in the ledger account and also supported by the bills and vouchers, ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 9 therefore, an ad hoc disallowance is not permissible. In support of his contention, he has relied upon the decision of Kolkata Benches of the Tribunal in the case of DCIT Vs. M/s Lexicon Auto Ltd. in ITA No. 1354/Kol/2016 order dated 19/02/2018 and submitted that the Tribunal has held that the disallowance on account of ad hoc basis is not permissible under the provisions of the. If the Assessing Officer is not satisfied with the claim and explanation of the assessee then he has to make the disallowance after making specific reference of such documents/vouchers and particular expenditure. The Assessing Officer cannot just make the disallowance on ad hoc basis without pointing out any defect or error in the explanation and record submitted by the assessee. The ld AR has then relied upon the decision of Honble Gujarat High Court in the case of CIT Vs. Vallabh Glas Works Ltd. (2014) 220 Taxman 129 (Guj). Hence, he has contended that when the majority of the payment was made through cheque and only a friction of the amount was paid in cash due to the necessity of the circumstances during the journey, the same cannot be disallowed on ad hoc basis.

10. On the other hand, the ld. DR has submitted that the Assessing Officer has given the reasons for disallowance being the complete details as well as the supporting evidence was not filed by the assessee ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 10 and even some of the vouchers were self made vouchers which were not verifiable. He has relied upon the orders of the authorities below.

11. We have considered the rival submissions as well as relevant material on record. The assessee has claimed various expenses as under: Particulars Amount Advertisement expenses 25,07,666/- Bus hire charges 1,32,80,883/- Food and refreshment expenses 1,59,90,959/- Tour manager and staff salary expenses 32,96,000/- Sundry expenses 30,60,222/- Postage and courier expenses 8,99,990/- Printing and stationery expenses 15,17,818/- The Assessing Officer made the disallowance equivalent to 5% to 50% of these expenditure, total amounting to Rs. 31,63,492/-. The details of the disallowances made by the Assessing Officer are as under: Particulars Amount Advertisement expenses 125383 Bus hire charges 664044 Food and refreshment expenses 799548 Tour manager and staff salary 329600 Sundry expenses 306012 Postage and courier expenses 179996 Printing and stationery 758909 Total 3163492

11.1 As regards the disallowance of advertising expenses of Rs. 1,25,383/-, the Assessing Officer has made the disallowance of 5% of the total expenditure of Rs. 25,07,666/-. It is pertinent to note that theA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 11 total advertising expenses are 3.5% of the total receipts which were paid to the news paper and advertisement agencies. The entire payment has been made through account payee cheques except Rs.6,778/-. Thus once the payment was made to the news paper and advertisement agencies through cheques and after deduction of TDS then the claim of the assessee cannot be doubted. Even if the Assessing Officer was not satisfied with the claim then the same could have been verified from the recipients but no such exercise has been done by the Assessing Officer and the Assessing Officer has made ad hoc disallowance of 5% of the total expenses. We further note that the Assessing Officer has not doubted the genuineness of the expenditure as it was not found to be excessive and further when almost the entire payment was made through banking channels and full details as per the ledge accounts were produced by the assessee with supporting bills number and name of the recipient in the ledger account then the said ad hoc disallowance is uncalled for. Accordingly in the facts and circumstances of the case when the assessee has paid the entire amount except a negligible amount of Rs. 6,778/- through cheque and after deduction of TDS and particulars of the parties alongwith bill number and dates were also given in the ledger account then the ad hoc disallowance is not permissible. Hence, the same is deleted. ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 12

11.2 Disallowance of bus hire charges:- Out of the total expenditure of Rs. 1,32,80,883/-, the Assessing Officer has made the ad hoc disallowance of 5% amounting to Rs. 6,64,044/-. The sole ground of the Assessing Officer is that the complete bills and vouchers were not produced by the assessee. We note that the assessee has filed the vouchers details and supporting documents which are placed at page No. 164 to 213 of the paper book. Further when the payments are made to the bus operators and details of the bus operators are given and further when these expenditures are also explained trip wise then in absence of any allegation about the excess claim or inflated claim of expenditure, ad hoc disallowance made by the Assessing Officer is not permissible. The assessee produced audited accounts with regard to the expenditure and also given the complete details of expenditure which is supported by the bills and vouchers then even if some vouchers are handmade, the same cannot be a reason when the particulars in the vouchers are proper and complete. We further note that the assessee has declared net profit of 1.5% which is highest in comparison to the preceding 2 years for the A.Y. 2012-13 and 2011-12 at 1.1% and .85%. Considering all these details particularly in view of the fact that the turnover of the assessee has increased substantially from 4.61 crores to

7.10 crores, the claim of expenditure cannot be doubted as it ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 13 commensurates with the corresponding receipts. Hence, the ad hoc disallowance made by the Assessing Officer is deleted.

11.3 Disallowance of Food and Refreshment expenses:- The Assessing Officer has made disallowance of 5% on the ground that the bills and vouchers produced by the assessee were handmade and were rejected by the Assessing Officer. It is not disputed by the Assessing Officer that the expenditure claimed by the assessee was incurred in connection with the business activity of the assessee as food and refreshment are inseparable part of the tour trips undertaken by the assessee. Therefore, once no allegation of excess claim or bogus claim, having considering the number of pilgrims taken to the tour during the year under consideration and number of days of journey, the ad hoc disallowance is not justified. The Assessing Officer even otherwise not doubted the allowability of claim of expenditure lend out wholly and exclusively for the business purpose then if the claim of the assessee is not excessive and has a direct nexus with the number of passengers and duration of the tour trips then an ad hoc disallowance is uncalled for and the same is deleted.

11.4 Disallowance of Tour management and staff salary @ 10%:- The sole ground of ad hoc disallowance on the ground that theA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 14 some of the bills and vouchers were self made and no confirmation were produced by the assessee. It is pertinent to note that the assessee has claimed payment of the salary to the staff which is necessary for the activity of Tour & Travels having a turnover of more than Rs. 7.00 crores. Therefore having peculiar nature of the business activity of the assessee where without the service of the management and other staff, the same is not possible then in absence of a bogus or excessive claim, an ad hoc disallowance made by the Assessing Officer is not justified and the same is deleted. Even otherwise in the case, the Assessing Officer had doubted any particular payment of salary then he could have undertaken a test check examination of the claim instead of resorting to the ad hoc disallowance.

11.5 Disallowance of sundry expenses:- The Assessing Officer has made disallowance of 10% of the sundry expenses on the ground that the bills and vouchers produced by the assessee were self made. The ld AR has pointed out that the expenditure claimed by the assessee is regarding wages for cooking staff, accommodation expenses, helper and attendant expenses, video and photograph expenses are incurred at the spot and in connection with business activity of the assessee of taking the pilgrims on tour. Therefore, the expenditure incurred at the spot of ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 15 the tour and in between is incurred in cash as the situation and nature of the expenditure demands so. These expenditures are duly recorded in the books and also supported by bills and vouchers though some of the bills and vouchers are self made in respect of the wages paid to the cooking staff. We find that once the expenditure is not excessive in comparison to the earlier years to the total receipt of the year under consideration then an ad hoc disallowance is not permissible. There is no dispute that the expenditure claimed by the assessee is of such a nature that these expenditures cannot be made other than cash at the distant and remote places where these expenditures were incurred. Accordingly having regard to the facts and circumstances of the case when there is no allegation about the excessive or non-genuineness of the expenditure, the ad hoc disallowance of 10% is deleted.

11.6 Disallowance of postage and courier expenses:- The assessee has claimed postage and courier expenditure of Rs. 8,99,990/-. The Assessing Officer disallowed 20% of the said expenditure on the ground that all bills and vouchers produced were self made. We find that the assessee has produced only details of the expenditure which is mostly on account of postage stamp purchased by the assessee and speed post and courier expenses. As far as the purchase of postage ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 16 stamp is concerned, since there is no receipt issued by the post office, therefore, except self made vouchers no other supporting evidence can be produced. However, as regards the registry/speed post as well as courier expenses, there are proper receipts and bills issued by the postal authorities as well as courier agencies. The assessee has not produced those receipts, therefore, we find that the assessee has failed to discharge his onus to prove that the entire expenditure has been incurred wholly and exclusively for the purpose of business to the extent of registry and speed post as well as courier expenditure. Hence, the disallowance made by the Assessing Officer at 20% of the total expenditure is found to be excessive which is restricted to 10% of the total claim.

11.7 Disallowance of printing and stationary expenses:- The Assessing Officer has made a disallowance of 50% of the expenditure claimed by the assessee on the ground that all the bills and vouchers were self made. We find that in support of the claim of the printing and stationery expenditure of Rs. 15,17,818/-, the assessee has given only details of the persons and bill numbers. Though, the assessee given details of the persons and bill numbers, however, the bills were not produced by the assessee in support of his claim. Therefore, the details ITA 770/JP/2018_ Ramesh Chand Chaturvedi Vs ITO 17 given by the assessee remained unverified for want of the relevant bills. The assessee though claimed to have produced bills and vouchers however, what is produced on the record is only details and not the bills and vouchers. Accordingly, in view of the facts and circumstances of the case, we find that 50% of the disallowance made by the Assessing Officer is excessive and therefore, the same is restricted to 20% of the total expenses.

12. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 10 th December, 2018. Sd/- Sd/- foe flag ;kno fot; iky jko (VIKRAM SINGH YADAV) (VIJAY PAL RAO) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 10 th December, 2018 *Ranjan vknsk dh izfrfyfi vxzsfkr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- Shri Ramesh Chand Chaturvedi, Karauli.

2. izR;FkhZ@ The Respondent- The ITO, Ward- Karauli.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDrvihy@The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 770/JP/2018) vknskkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar