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6. In the appeal for assessment year 2005-06, the solitary grievance of the assessee is that Learned CIT(Appeals) has erred in upholding the disallowance of Rs.1,14,51,811.

7. The brief facts of the case are that assessee has filed its return of income on 31.10.2005 declaring an income of Rs.54,82,249. The case of the assessee was selected for scrutiny assessment and a notice under sec. 143(2) dated 12.6.2006 was issued and served upon the assessee. In response to the notice of hearing, Shri JS Sahni, CA appeared before the Assessing Officer from time to time and submitted the details. On scrutiny of the accounts, Assessing Officer found that there is a fall in the net profit ratio during the year as compared to the net profit in the earlier years. He found that in assessment year 2004-05, assessee has shown net profit at Rs.66.85% whereas in the present year, net profit has been reported at 10.87%. On an analysis of the record, learned Assessing Officer found that though turnover is decreased in comparison to last year but expenses on account of salary and wages, telephone, bonus and customers seminars have increased significantly as compared to previous year figure. He confronted the assessee to explain why there is no reduction in the expenditure. Before adverting to the explanation of the assessee, we deem it appropriate to take note of the revenue recognized by the assessee in assessment years 2004-05, 2005-06 and the various expenses debited in the P & L account as well as the amounts disallowed by the Assessing Officer. Such details have been placed before us in a tabular form by the learned counsel for the assessee. They read as under: