The appeal was filed in response to an order issued by the learned CIT(A7) on September 13, 2019. The Assessee was dissatisfied with the learned CIT(A7decision )'s to deny the Assessee's application for business promotion expenses worth Rs. 4.04 crores. The Assessee's appeal, however, was limited by a 363-day time limit. The Assessee experienced this pause because it was not against the learned CIT's order at the time (A7). When the Assessee was informed that he would be subject to penalties under Section 271(1)(c) of the Income Tax Act 1961, he changed his mind. As a result, the Assessee appealed the decision.
The assessee's company specializes in using multi-level marketing to offer health-based wellness products. The Assessee is a Unicity Group Company based in the United States. The Assessee claimed Rs. 4.04 crores in company promotional expenses, according to the A.O's order dated September 13, 2019. In 2013-2014, the Assessee reported that business began to pick up. It had invested a significant amount of money on various promotional schemes, including the Dubai Reward Trip, Bangkok Reward Trip, and Goa Reward Trip. The Assessee did not have the requisite documentation to show that these expenditures were used to develop the company.
The Assessee cited the case of CIT vs. Prakash B. Nichani, in which the Assessee filed an appeal against an order 331 days late, i.e. after the Commissioner's revision order was passed under Section 263 of the Act, and the Tribunal excused the delay.
The learned D.R. was a staunch opponent of the Assessee's petition. The Assessee failed to give a legitimate explanation for the delay, according to the Learned D.R.
The Assessee had all the records and had submitted them to the A.O via email, but the A.O did not review them all until concluding the disallowance of expenses, according to the learned A.R. went on to say that business marketing expenditures that help boost revenues are not needed. As the Assessee will have to spend money on business promotion to boost sales. If the Assessee has no expectation, he would not be able to pay these expenses. The Assessee did not have all of the necessary records, according to the learned R.
The Court looked at the case of CIT vs. Prakash B. Nichani to see if the Assessee's arguments were rational. The Court also took note of the learned A.R.'s explanation of why the businessman would be willing to incur expenses to increase sales.
The Tribunal excused the Assessee's tardiness in filing the appeal. The Tribunal also agreed with learned A.R.'s rationale, stating that regardless of whether or not a business promotional expense is effective, it would always be considered an expense. As a result, the impugned order was overturned, and the case would be re-examined.