Rajiv Shakdher, J.:— These are the appeals preferred by the assessee under section 260A of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), against a common judgment dated December 22, 2006, passed by the Income-tax Appellate Tribunal (hereinafter referred to as “the Tribunal”) in I.T.A No. 3655.Del/2000, I.T.A No. 3657.Del/2000 and I.T.A No. 3656.Del/2000 in respect of the assessment years 1993–94, 1995–96 and 1994–95, respectively.

2. In an earlier round, the assessee had filed an appeal under section 260A of the Act against a common judgment of the Tribunal dated January 31, 2005. A Division Bench of this court by an order dated January 19, 2006, had set aside the judgment of the Tribunal dated January 31, 2005, based on a concession that the Tribunal had disposed of the appeal without affording a fair and reasonable opportunity of being heard. In the present appeal, the assessee is principally aggrieved on account of the fact that the Tribunal has once again failed to apply its mind to the issues raised and the submissions made before it. The principal submission of the assessee before the Tribunal was that the Assessing Officer had made certain additions and disallowances mechanically while computing the income without issuing a show-cause notice or providing an opportunity of hearing to the assessee in respect of the said additions and disallowances. It is noticed that the Commissioner of Income-tax (Appeals) (hereinafter referred to as “the CIT(A)”) by an order dated May 1, 2000, had reversed the said additions and disallowances primarily on the ground that the Assessing Officer had not discussed the additions or supplied any reasons thereto. The Tribunal in appeal found that in most of the issues the Commissioner of Income-tax (Appeals) had committed the same error while reversing the order of the Assessing Officer. In our view, in the first instance, the Tribunal ought to have examined as to whether the Assessing Officer could have made the additions or disallowed expenses claimed without affording an adequate opportunity. Upon a perusal of the impugned judgment, we find that the Tribunal has not applied its mind to this aspect of the matter. On the contrary, we are constrained to note that the impugned judgment of the Tribunal dated December 22, 2006, in the second round is, but for the change in the composition of the Bench and a cosmetic change in the language, almost similar to the judgment dated January 31, 2005, passed by the Tribunal in the first round.

3. The assessee in the present appeal is aggrieved by the disallowances of the following amounts claimed as allowances/expenses:

(i) expenses on gifts or expenses on articles gifted which are stated to be in excess of the prescribed limit under rule 6B of the Income-tax Rules, 1962 (hereinafter referred to as “the Rules”);

(ii) travelling expenses in excess of the limits prescribed under rule 6D;

(iii) payment made towards corporate membership as well as towards annual membership fee to New Friends Colony Club;

(iv) disallowance of 50 per cent. total entertainment expenditure under section 37(2) of the Act;

(v) expenses pertaining to previous year;

(vi) disallowance of amounts claimed on account of statutory liability pertaining to provident fund by invoking the provisions of section 43B of the Act.

4. The assessee being aggrieved had preferred an appeal to the Commissioner of Income-tax (Appeals). As noticed above, the Commissioner of Income-tax (Appeals) by an order dated May 1/2000, had reversed the order of the Assessing Officer in respect of each of the said disallowances/additions by observing as follows:

“3. Ground No. 2.—The Assessing Officer has made an addition of Rs. 57,911 under rule 6B of the Income-tax Rules. The appellant had presented some articles to its clients and the Assessing Officer took this figure to be disallowable. The order is silent [as] to how the Assessing Officer has arrived at these figures. The authorised representative has objected to this addition without any reasons being adduced in support of.

3.1 I have seen the order of the Assessing Officer and it does not contain any discussion which would justify the addition under rule 6B. It has not been shown as to how the limits prescribed have been transgressed. Hence, the addition being without application of mind is deleted.

4. Ground No. 2.—This appertains to an addition of Rs. 74,724 allegedly made under rule 6D of the Income-tax Rules. As in the earlier ground, here also the addition has been made without any application of mind. Likewise, this addition too is deleted.

5. Ground No. 3.—This pertains to a disallowance of Rs. 1,15,073 in respect of payment made by the appellant to clubs. Out of this amount, Rs. 1 lakh relate to fee for admission as a corporate members in Friends Club, New Delhi, and Rs. 12,000 is the annual membership. The addition has been made by the Assessing Officer in the computation of income without any discussion at all.

5.1 Before me the authorised representative has stated that the membership of such clubs helps them to cultivate business relationships for latter operations. [The judgment of Deputy CIT v. Hindustan Dorr Oliver Ltd., [1994] 48 TTJ 552 (Bom); Reliable Cigarette and Tobacco Industries P. Ltd. v. Deputy CIT, [1995] 51 TTJ 103 (Ind), Otis Elevator Co. (India) Ltd. v. Commissioner Of Income-Tax., [1992] 195 ITR 682 (Bom), have been cited in support of his contentions].

5.2 On a consideration of the facts and the judicial pronouncements there is price in the arguments of the authorised representative. The addition has been made without appreciating that the expenditure has been incurred wholly and exclusively for the business needs of the company. Hence, the addition of Rs. 1,15,073 is deleted.

7. Ground No. 5.—The ground pertains to a disallowance of Rs. 2,08,108 being alleged entertainment expenditure disallpwable under section 37(2). Once again the addition has been made without any discrepancies or reasoning behind this addition. My attention was drawn to the decision of the Delhi High Court in the case of Commissioner Of Income-Tax v. Expo Machinery Ltd., [1991] 190 ITR 576, where it has been held that expenditure towards food, etc., of the company's guests and employees incurred by a company should not be disallowed in full and the expenditure attributable to the employees must be allowed as not being in the nature of entertainment. In view of this, the appellant gets the 50 per cent. relief of the disallowance made by the Assessing Officer.

11. Ground No. 9.—This ground relates to the disallowance of Rs. 1,17,616 in respect of provident fund and ESI contributions for March, 1993. The authorised representative has argued that these have been paid before April 15, 1993, by cheque into the bank and the cheque after realisation had been duly credited to the account of the payee and the bank had issued the challan/receipt evidencing payment on April 22, 1993. He argued that the evidence had been produced before the Assessing Officer.

11.1 It appears that the Assessing Officer ignored the proviso to section 43B and also ignored the date of actual payment and was misguided by the date shown on the challan. To my mind there is no reason for any disallowance as the payment has been made within the time statutorily allowed.

12. Ground No. 10.—This pertains to the disallowance of Rs. 1,11,893 made on the alleged ground that the statutory liability had been paid beyond the due date. The order is silent about the details.

12. Before me the authorised representative has indicated that this ostensibly refers to payment made after the end of the previous year but before filing of the return and the proviso to section 43B clearly entitles the appellant to claim this deduction.

12.1 In view of this situation, I have to delete the addition up to 50 per cent. as not being based on any cogent reasoning or material.”

5. Against the aforesaid order of the Commissioner of Income-tax (Appeals), the Revenue, being aggrieved, preferred an appeal to the Tribunal. The Tribunal in the first round by an order dated January 31, 2005, had upheld the order of the Commissioner of Income-tax (Appeals) dated May 1, 2000, with respect to the following:

(i) the disallowance pertaining to expenses amounting to Rs. 23,94,030 which according to the Assessing Officer were relatable to an earlier year;

(ii) the disallowance by the Assessing Officer on account of loss of sale of assets;

(iii) the disallowance on account of expenses incurred for meeting statutory liability.

6. As noted above, a Division Bench of this court by an order dated January 19, 2006, had set aside the order of the Tribunal dated January 31, 2005.

7. Accordingly, the Tribunal by the impugned judgment ostensibly set out to correct the wrong committed in the first round.

8. It is, important at this stage to note that the Revenue before the Tribunal had preferred eight grounds of appeal which read as follows:

“On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) held:

(1) in deleting an addition of Rs. 57,911 made under rule 6B despite the fact that this addition was made by the assessee itself in the original and revised return of income.

(2) in deleting the addition of Rs. 74,724 under rule 6D despite the fact that the addition was made by the assessee itself in the original and revised return of income.

(3) in deleting disallowance of Rs. 1,15,073 on account of payments to club despite the fact that this disallowance was made by the assessee itself in the original and revised return of income.

(4) in deleting disallowance of Rs. 2,08,108 under section 37(2) despite the fact that this disallowance was made by the assessee itself in the original and revised return of income.

(5) in deleting disallowance of Rs. 23,94,030 pertaining to previous year's expenses despite the fact that this disallowance was made by the assessee itself in the original and revised return of income.

(6) in deleting addition of Rs. 5,25,703 on account of loss on sale of asset.

(7) in allowing 50 per cent. of statutory liability of Rs. 1,11,893 without assigning any reason.

(8) in allowing depreciation of Rs. 91,35,433 on account of exchange rate fluctuation.”

9. A perusal would show that the basic ground for preferring an appeal by the Revenue against the order of the Commissioner of Income-tax (Appeals) was that all such additions or disallowances had been made by the Assessing Officer in view of the fact that the assessee had itself made such disallowances in its original and revised return of income. The Tribunal by the impugned order dated January 22, 2006, had reversed the order of the Commissioner of Income-tax (Appeals) and restored the order of the Assessing Officer primarily on the ground that the assessee both in its original, as well as, in its revised return had made admissions which formed the basis of the additions/disallowances made by the Assessing Officer. According to us, the Tribunal ought to have examined the issue as to whether the fact that the assessee had made an admission with respect to an addition/disallowance in its original return or in the revised return would ipso facto bar the assessee from claiming an expense or disputing an addition if it is otherwise permissible under law. This is so especially in view of the circumstances, that the Assessing Officer while making the additions/disallowances did not call upon the assessee to furnish any explanation. The upshot of the submission made by learned counsel for the assessee is that had the assessee been given an opportunity by the Assessing Officer it could have demonstrated that no additions or disallowances were called for, in view of the binding precedents of the courts and/or the Tribunal in respect of each of the addition/disallowance. The observations made in the tax audit report could not have formed the basis of additions/disallowances by the Assessing Officer. On this aspect of the matter, the observations in the judgment of the Supreme Court in the case of Pullangode Rubber Produce Co Ltd. v. State of Kerala, [1973] 91 ITR 18 at page 20 being apposite are extracted hereinbelow:

“It is no doubt true that entries in the account books of the assessee amount to an admission that the amount in question was laid out or expended for the cultivation, upkeep or maintenance of immature plants from which no agricultural income was derived during the previous year. An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect.”

10. We find that the Tribunal instead of examining the matter from this angle has repeated the order passed in the first round without due application of mind to the issues which called for adjudication.

11. In these circumstances, we set aside the impugned judgment of the Tribunal. The Tribunal will rehear the parties, and if, the Tribunal is of the view that the matter requires to be remanded to the Assessing Officer for passing a fresh order of assessment, it will do so giving an opportunity to the assessee to appear before the Assessing Officer so as to enable him to make his representation before him with regard to the facts as well on law on each of the issues. These appeals are disposed of with the aforesaid directions.