Ambica Agarbathies Aroma & Industries Limited, CHENNAI V. DCIT, CHENNAI

CO 43/CHNY/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2063 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 20-01-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 21-04-2014
• Court: TRIBUNAL
• Department Lawyers: JHARNA B HARILAL
• Assessee Lawyers: R DURAIPANDIANJ
• Keywords: Reopening of assessment; Business income; Depreciation; Business expenditure; Period of limitation; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 148; 6; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! . ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.489 /MDS./2014 ( / ASSESSMENT YEAR :2003-04) & C.O. NO.43/MDS./2014 DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-1(1), CHENNAI 600 034. VS. M/S.AMBICA AGARBATHI & AROMO INDUSTRIES LTD ., AMBICA EMPIRE, 17, 100 FEET ROAD, VADAPALANI, CHENNAI 600 026. PAN AAACA 7483 L ( %& / APPELLANT ) ( '(%& / RESPONDENT ) / CROSS OBJECTOR / APPELLANT BY : MR.R.DURAIPANDIAN,JCIT,DR / RESPONDENT BY : MS.JHARNAB.HARILAL, FCA ! / DATE OF HEARING : 20.01.2016 '# ! /DATE OF PRONOUNCEMENT : 29.02.2016 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE IS DIRECTED AGA INST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-I, CHE NNAI DATED ITA NO489./MDS/2014 CO NO.43/MDS./2014 2 22.11.2013 PERTAINING TO THE ASSESSMENT YEAR 2003- 04. THE CROSS OBJECTIONS BY THE ASSESSEE IS IN SUPPORT OF THE ORD ER OF LD. CIT(A). 2. THERE WAS A DELAY OF 16 DAYS IN FILING THE CROS S OBJECTIONS BY THE ASSESSEE. THE ASSESSEE FILED AN AFFIDAVIT FOR C ONDONATION OF DELAY STATING THAT DURING THE PERIOD 07.03.2014 TO 20.04. 2014, THE MANAGING DIRECTOR, WHO HAS TO SIGN THE MEMORANDUM O F CROSS OBJECTIONS, WAS NOT AVAILABLE AND HE WAS OUT OF STA TION. ADMITTEDLY IN THIS CASE, NOTICE WITH REGARD TO THE APPEAL PREF ERRED BY DCIT,CHENNAI WAS RECEIVED BY THE ASSESSEE ON 07.03. 2014. THE TIME LIMIT FOR FILING CROSS OBJECTIONS BEFORE THIS TRIBUNAL WAS TO EXPIRE ON 06.04.2014. HOWEVER, THE ASSESSEE FILED CROSS O BJECTIONS ONLY ON 21.02.2014. THUS, THERE WAS 16 DAYS DELAY IN FI LLING THE CROSS OBJECTIONS BEFORE US. IN OUR OPINION, NON-AVAILABI LITY MANAGING DIRECTOR IS THE REASON FOR BELATEDLY FILING THE CRO SS OBJECTIONS. THIS IS A GOOD AND SUFFICIENT REASON TO CONDONE THE DELAY. ACCORDINGLY, THE DELAY IN FILING THE CROSS OBJECTIONS IS CONDONED AN D CROSS OBJECTIONS IS ADMITTED FOR ADJUDICATION. ITA NO489./MDS/2014 CO NO.43/MDS./2014 3 3.1 THE REVENUE HAS RAISED THE GROUNDS IN ITS APPE AL REGARDING DELETION OF ADDITION MADE BY THE AO TOWARDS TRADE D ISCOUNT OF ` 1/- CRORE. 3.2 THE ASSESSEE FILED CROSS OBJECTIONS SUPPORTING THE DELETION OF ADDITION MADE BY THE CIT(A). 3.3. THE ASSESSEE ALSO FILED ADDITIONAL GROUND IN ITS CROSS OBJECTIONS AS FOLLOWS: ADDITIONAL GROUNDS TO CROSS OBJECTION: 1. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT THE TRADE DISCOUNT HAS BEEN CLAIMED ON THE FACE OF STATEMENT OF TOTAL INCOME COMPUTATION ITSELF WHICH WAS SUBMITTED ALONG WITH THE RETURN OF INCOME AND THERE IS NO FAILURE ON THE PAR T OF THE RESPONDENT TO DISCLOSE FULLY AND TRULY ALL THE MATE RIAL FACTS WHICH IS CONTRARY TO THE CIRCUMSTANCE UNDER WHICH NOTICE CAN BE ISSUE U/S.148. 2. THE LEARNED CIT(A) ERRED TO CONSIDER THE FACT TH AT THE NOTICE ISSUED UNDER SECTION 148 IS NOT VALID IN LAW AS THE FIRST RE-OPENED ASSESSMENT PROCEEDINGS WERE PENDING AS ON THE DATE OF ISSUE OF ITA NO489./MDS/2014 CO NO.43/MDS./2014 4 NOTICE AS HELD IN THE CASE OF COMUNIDADO OF CHICALI M VS ITO (2001) 247 ITR 271 (SC). 4. SINCE THE ADDITIONAL GROUNDS GO THE ROOT OF THE MATTER IN DISPUTE, FIRST WE TAKE UP THE ADDITIONAL GROUND. 5.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF AGARBATHIES, POWER GENERATION THROUGH WIND MILL AND HOSPITALITY INDUSTRY. THE ASSESSEE FILED ITS RETURN OF INCOME ON 1.12.2003 DI SCLOSING TOTAL INCOME OF ` 63,82,150/- AFTER AVAILING EXEMPTION U/S.801A. THE SAME WAS PROCESSED U/S.143(1) ON 31.3.2005 ACCEPTING THE INCOME RETURNED. THE ASSESSEE COMPANY HAS CLAIMED DEDUCTIO N U/S.801A OF ` 12,24,091 IN RESPECT OF INCOME DERIVED FROM THE SAL E OF POWER GENERATED FROM WIND MILLS. A NOTICE ULS.148 DATED 2 7.7.2007 WAS ISSUED TO THE ASSESSEE FOR HAVING NOT DISCLOSED THE MATERIAL FACTS WITH REGARD TO WIND MILL IN ITS RETURN OF INCOME. O RDER U/S.143(3) R.W.S.147 WAS PASSED ON 28.11.08 ASSESSING AN INCOM E OF ` 76,06,241/-. SUBSEQUENTLY, THE ASSESSMENT WAS REOPE NED AGAIN U/S ITA NO489./MDS/2014 CO NO.43/MDS./2014 5 147 ON 29 3 2010 AND ORDER U/S 143(3) R W S 147 WAS PASSED DISALLOWING A SUM OF ` I/- CRORE CLAIMED AS DEDUCTION UNDER THE HEAD TRADE DISCOUNT ON PURCHASE OF DURBAR BHATIS. 5.2 IN THIS CASE, THE ISSUES INVOLVED PERTAINING T O VALIDITY OF REOPENING OF ASSESSMENT U/S.147 OF THE ACT. THE LD. ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD REDUCED AN AMOU NT OF ` 1 CRORE UNDER THE HEAD TRADE DISCOUNT ON PURCHASE OF DURBA R BHATIS. FURTHER, THE AO NOTICED THAT THE ASSESSEE HAS NOT C LAIMED THE SUM OF ` 1 CRORE AS AN EXPENDITURE IN THE BOOKS OF ACCOUNTS DURING THE YEAR UNDER QUESTION OR IN ANY OF THE SUBSEQUENT YEARS. T HE AO OPINED THAT SINCE THE INFORMATION COULD BE GATHERED ONLY F ROM THE RETURN OF INCOME FILED FOR THE SUBSEQUENT YEAR, IT WAS THE FA ILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL INFORMATION. HEN CE A NOTICE U/S. 148 WAS ISSUED ON 29.3.2010. IN RESPONSE, THE ASSES SEE FILED A LETTER STATING THAT THE RETURN FILED BY IT ON 1.12.2003 MA Y BE TAKEN AS THE RETURN FILED IN RESPONSE TO THIS NOTICE. A NOTICE U/S.143(2) WAS ISSUED ON 5.5.2010 AND SERVED ON THE ASSESSEE. THE ASSESS EE IN ITS LETTER DATED 5.5.2010 OBJECTED THE REOPENING ON THE GROUND THAT THE NOTICE ITA NO489./MDS/2014 CO NO.43/MDS./2014 6 U/S.148 WAS RECEIVED ON 5.4.10 WHICH WAS BEYOND THE PERIOD OF LIMITATION. THE AO PASSED SPEAKING ORDER DATED 6.10 .2010 REPRODUCING SEC.149(1) AND CONCLUDED THAT THE WORD USED IN SEC.149(1) IS ISSUED AND NOT SERVED. HENCE, THE NOT ICE WAS ISSUED, ON 29.3.2010, AFTER FOLLOWING THE DUE PROCEDURE AS LAID DOWN IN SEC.147. ON APPEAL, THE LD. CIT(A) OBSERVED THAT FR OM THE FACTS OF THE CASE, THE TIME LIMIT OF SIX YEARS FROM THE END OF THE ASSESSMENT YEAR 2003-04 ENDS ON 31.03.2010 AND THE NOTICE U/S. 148 OF THE ACT WAS SERVED ON THE ASSESSEE ON 05.04.2010 I.E. THE D ATE BEYOND 31.03.2010. FURTHER, LD. CIT(A) THOUGH IGNORING THE OBJECTIONS RAISED BY THE LD.A.R I.E. REOPENING BEYOND SIX YEARS, HOL D THAT THE AO IS RIGHT IN HOLDING THAT THE PROVISIONS OF THE SECTION 149(1) WHICH PRESCRIBES THE TIME LIMIT FOR ISSUING NOTICE U/S.14 8, IT IS RELATING TO ISSUE OF NOTICE ONLY BUT NOT TO SERVICE OF NOTICE. THE LD. CIT(A) DID NOT ACCEPT ITS CONTENTION OF THE ASSESSEE ON THE GR OUND THAT THE ASSESSMENT WAS REOPENED TO MAKE ADDITION OF ` 1 CRORE CLAIMED AS TRADE DISCOUNT ON PURCHASE OF DURBAR BHATIS AS IT W AS REDUCED FROM THE BUSINESS INCOME UNILATERALLY BY THE COMPANY BU T NOT ACCEPTED BY ITA NO489./MDS/2014 CO NO.43/MDS./2014 7 THE SUPPLIER. THEREFORE, CIT(A) CONFIRMED THE REO PENING OF THE ASSESSMENT AS VALID AS PER LAW. 6. BEFORE US, THE LD.A.R SUBMITTED THAT THE ASSESS EE RECEIVED A NOTICE U/S.148 ON 27.07.2007 AND THE ASSESSEE REPLI ED IN ITS LETTER DATED 27.08.2007 STATING THAT THE RETURN ORIGINALLY FILED BE TREATED A THE RETURN FILED TO THE SAID NOTICE. THE ASSESSMENT ORDER U/S.143(3) R.W.S 147 WAS PASSED ON 28.11.2008. APPEAL U/S.246A WAS INSTITUTED BEFORE THE LD. CIT(A) ON 20.01.2009 AND THE CIT(A) PASSED THE ORDER ON 17.12.2009. THIS ISSUE FURTHER APPEALED BEFORE T HE TRIBUNAL AND THE ORDER WAS PRONOUNCED IN FAVOUR OF THE ASSESSEE ON 23.07.2010. MEANWHILE, THE ASSESSMENT WAS AGAIN REOPENED U/S.14 8 ON 29.03.2010 AND NOTICE WAS SERVED ON THE ASSESSEE ON 05.04.2010 DISALLOWING A SUM OF RS. 1.00 CRORE CLAIMED AS DEDU CTION UNDER THE HEAD TRADE DISCOUNT ON PURCHASE OF DURBAR BATHIS. THE LD.A.R DREW OUR ATTENTION THAT THE APPEAL PROCEEDING FOR FIRST RE-ASSESSMENT FOR SAME ASSESSMENT YEAR IN THE CASE OF SAME ASSESS EE WERE STILL PENDING BEFORE THE INCOME TAX APPELLATE TRIBUNAL ON THE DATE OF ISSUE OF NOTICE U/S.148 FOR SECOND RE-ASSESSMENT. ITA NO489./MDS/2014 CO NO.43/MDS./2014 8 6.1 IT IS SUBMITTED BY THE LD.A.R THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER FOR SECOND RE-ASSESSMENT DATED 29 .03.2010 WAS PLACED ON RECORD I.E., BEFORE THIS TRIBUNAL AND AL SO TRIBUNALS ORDER FOR THE FIRST RE-ASSESSMENT PROCEEDINGS DATED 23.0 7.2010[I.E DATE OF ORDER OF TRIBUNAL]. WHERE A RETURN HAS BEEN SUBMITT ED IN PURSUANCE OF NOTICE UNDER SECTION148 AND THE SAME HAS YET NOT BEEN DISPOSED OF, SECOND NOTICE TO OPEN ASSESSMENT IS NOT JUSTIFI ED. AGAIN, THE LD.A.R EMPHASIZED THAT THE NOTICE SERVED ON IT ON 0 5.04.2010 FOR THE SECOND RE-ASSESSMENT IS NOT VALID, AS THE RETURN PU RSUANT TO NOTICE U/S.148 FOR THE FIRST RE-ASSESSMENT WAS DISPOSED O F ONLY ON 23.07.2010.FURTHER, LD.A.R RELIANCE ON THE FOLLOWI NG JUDICIAL PRONOUNCEMENTS TO SUBSTANTIATE THE SAME: I. COMUNIDADO OF CHICALIM VS. INCOME TAX OFFICER & ORS. (2001) 247 ITR 271 (SC) WHERE IN IT WAS HELD THAT S ECOND ASSESSMENT PROCEEDINGS CANNOT BE STARTED WHILE THE FIRST ARE PENDING. II. CIT V P.KRISHNANKUTTY MENON [1990] 181 ITR 23 7 (KER.) WHEREIN HELD THAT THE ASSESSING OFFICER CANNOT INIT IATE REASSESSMENT PROCEEDINGS WITHOUT COMPLETING ASSESSMENT PROCEEDINGS ALREADY INITIATED. ITA NO489./MDS/2014 CO NO.43/MDS./2014 9 THE LD.A.R CONTENDS THAT THERE IS NO FAILURE TO DI SCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ASSESSMENT BEC AUSE THE TRADE DISCOUNT WHICH WAS LATER DENIED BY THE SUPPLIER WAS CLAIMED ON THE FACE OF THE COMPUTATION OF TOTAL INCOME ITSELF WHIC H WAS SUBMITTED ALONG WITH THE RETURN OF INCOME. THEREFORE, RE-OPEN ING THE CASE FOR RE-ASSESSMENT BEYOND 4 YEARS IS NOT AS PER THE PROV ISIONS OF THE ACT AND HENCE NOT VALID IN THE RESPONDENTS CASE. IN AD DITION TO THAT, LD.A.R SUBMITTED THAT THE FIRST PROVISO TO SECTION 147 PROVIDES THAT IF THE ASSESSMENT HAS BEEN COMPLETED U/S. 143(3) NO AC TION CAN BE TAKEN U/S. 147 AFTER THE EXPIRY OF 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF: REASONS FOR INITIATING ASSESSMENT U/S. 147 NON-APPLICABILITY IN THE RESPONDENTS CASE 1 FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139; OR THE ASSESSEE HAS FILED ITS RETURN OF INCOME U/S. 139 ON 31.12.2003 2 FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN IN RESPONSE TO A NOTICE ISSUED U/S. 142(1) OR U/S. 148; OR IN RESPONSE TO THE NOTICE ISSUED U/S. 148 DATED 27.07.2007, THE ASSESSEE HAD SUBMITTED ITS REPLY DATED 27.08.2007 REQUESTING THE RETURN ORIGINALLY FILED TO BE TREATED AS RETURN FILED IN RESPONSE TO THE ITA NO489./MDS/2014 CO NO.43/MDS./2014 10 SAID NOTICE. 3 FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. THE ASSESSEE HAS DISCLOSED THE FACT OF REJECTION OF TRADE DISCOUNT BY THE SUPPLIER ON THE FACE OF COMPUTATION OF TOTAL INCOME ITSELF FOR THE YEAR UNDER CONSIDERATION WHICH WAS FILED ALONG WITH THE RETURN OF INCOME FOR THE AX. 2003- 04. SHE DREW OUR ATTENTION TO ABOVE TABLE AND STATED TH AT THE RETURN UNDER SECTION 148 WAS FURNISHED AND ALL MATERIAL FA CTS RELATING TO THE ASSESSMENT FOR THAT PREVIOUS YEAR HAVE BEEN DISCLOS ED FULLY AND TRULY. HENCE, CONSIDERING THE FACTS OF THE CASE, NOTICE SE RVED AFTER THE EXPIRY OF 4 YEARS IN THE RESPONDENTS CASE IS INVAL ID. IN THIS REGARD, THE LD.A.R PLACED RELIANCE ON THE FOLLOWING JUDIC IAL PRONOUNCEMENTS: I. FLUORESCENT FIXTURES (P) LTD. V. ITO (2009) 34 SOT 48 (MUM) WHEREIN HELD THAT REASSESSMENT WITHOUT ANY ADDITIO NAL INFORMATION AMOUNTS TO CHANGE OF OPINION. II. FENNER (INDIA) LTD V. DCIT (2000) 241 ITR 672 (MAD) WHEREIN HELD THAT WHERE THE INITIATION OF PROCEEDINGS IS BE YOND THE ITA NO489./MDS/2014 CO NO.43/MDS./2014 11 PERIOD OF 4 YEARS FROM THE END OF ASSESSMENT YEAR, THE ASSESSING OFFICER MUST NECESSARILY RECORD NOT ONLY HIS REASONABLE BELIEF THAT INCOME HAS ESCAPED ASSESSMEN T BUT ALSO THE DEFAULT OR FAILURE COMMITTED BY THE ASSESS EE. FAILURE TO DO SO WOULD VITIATE NOTICE AND THE ENTIRE PROCEE DINGS. MERE ESCAPE OF INCOME IS INSUFFICIENT TO JUSTIFY THE INI TIATION OF ACTION AFTER THE EXPIRY OF FOUR YEARS. SUCH ESCAPEMENT MUS T BE BY REASON OF THE FAILURE ON THE PART..OF THE ASSESSEE EITHER TO FILE A RETURN REFERRED TO IN THE PROVISO OR TO TRULY AND F ULLY DISCLOSE THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. III. 31 INFOTECH LTD V. ACIT (2010) 41 DTR 377/19 2 TAXRNAN 137 (BOM) WHEREIN HELD THAT REVENUE HAS FAILED TO ESTAB LISH THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DI SCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY DURING T HE COURSE OF RELEVANT ASSESSMENT, STATUTORY CONDITION PRECEDENT TO VALIDLY EXERCISE THE POWER TO REOPEN AN ASSESSMENT BEYOND T HE STIPULATED 4 YEARS PERIOD WAS NOT SATISFIED, THE NO TICE OF REASSESSMENT WAS LIABLE TO BE QUASHED. ITA NO489./MDS/2014 CO NO.43/MDS./2014 12 IV. CIT & ANR. VS. FORAMER FRANCE (2003) 264 ITR 5 66(SC) WHEREIN HELD THAT IF THERE WAS NO FAILURE ON PART O F THE ASSESSEE TO MAKE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, THE NOTICE ISSUED AFTER EXPIRY OF 4 YEARS WAS BARRED BY THE LIMITATIO N. V. LUCKY VALLEY INVESTMENTS & HOLDINGS LTD. VS. DCI T (2005) 98 TTJ 491 WHEREIN HELD THAT FACT WAS CLEARLY STATED I N THE STATEMENT OF ACCOUNTS AND NOTES ON ACCOUNTS FILED B Y THE ASSESSEE ALONG WITH THE RETURN. THESE NOTES ON ACCO UNTS WERE AVAILABLE WITH THE AU WHILE FRAMING THE ASSESSMENT UNDER SECTION 143(3). AU HAS NOT BROUGHT ON RECORD ANY NE W MATERIAL TO SUPPORT HIS FINDING THAT INCOME HAS ESCAPED ASSE SSMENT AND IT AMOUNTS TO ONLY MERE CHANGE OF OPINION AND REASSESSMENT WAS BAD IN LAW AS HELD BY THE TRIBUNAL . VI. TUBE INVESTMENTS OF INDIA LTD. VS. ASSISTANT CO MMISSIONER OF INCOME TAX(2008) 11 DTR 225 WHEREIN HELD THAT NOTIC E ISSUED FOR REOPENING OF THE ASSESSMENT AFTER EXPIRY OF FOU R YEARS FROM ITA NO489./MDS/2014 CO NO.43/MDS./2014 13 THE END OF THE RELEVANT ASSESSMENT YEAR WAS NOT VAL ID AS PER PROVISO TO S. 147 IF THERE IS NO FAILURE ON PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS AND THESE FACTS WERE VE RY MUCH WITHIN THE KNOWLEDGE OF THE AO. IT WAS FURTHER HELD BY THIS TRIBUNAL THAT IN THE CASE OF THAT REOPENING OF ASS ESSMENT IS NOT PERMISSIBLE IN LAW ON THE BASIS OF MERE CHANGE OF OPINION. VII. CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 IT R 561(SC) WHEREIN HELD THAT AO HAS POWER TO REOPEN THE ASSESS MENT UNDER S. 147 PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT AND REASONS MUST HAVE A LIVE LINK WITH T HE FORMATION OF THE BELIEF. 6.2 LD.A.R FURTHER REITERATED THAT WHERE A NOTICE UNDER SECTION 148 WAS ISSUED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT FOR WHICH INCOME ESCAPED ASSESSMENT, IT WAS HELD THAT FULL AND TRUE DISCLOSURE OF MATERIAL FACTS MEANS THAT THE DISCLOSURE SHOULD NOT BE GARBLED OR HIDDEN IN THE CREVICES OF THE DOCUMENTARY ITA NO489./MDS/2014 CO NO.43/MDS./2014 14 MATERIAL WHICH HAS BEEN FILED BY THE ASSESSEE WITH THE AO. THE ASSESSEE MUST ACT WITH CANDOR. A FULL DISCLOSURE IS A DISCLOSURE OF ALL MATERIAL FACTS WHICH DOES NOT CONTAIN ANY HIDDEN MA TERIAL OR SUPPRESSION OF FACT. IT MUST BE TRUTHFUL IN ALL RES PECTS. IN THIS CASE, THE FACT THAT THE DISCOUNT ON PURCHASE OF DURBAR BA THIS WAS CLAIMED DURING A.Y.2003-04 WAS SHOWN IN THE STATEMENT OF TO TAL INCOME ITSELF WHICH WAS ATTACHED AS PART OF THE RETURN OF INCOME (FORM 1) FILED. HENCE, THE LEARNED ASSESSING OFFICERS CLAIM THAT T HIS INFORMATION WAS GATHERED ONLY FROM THE RETURN FILED FOR THE SUB SEQUENT YEAR IS NOT JUSTIFIED. THE LD.A.R SUBMITTED THAT THE ASSESSEE HAD CONSIDERED DISCOUNT ON PURCHASE OF DURBAR BATHIS IN ITS PROFIT & LOSS ACCOUNT FOR THE A.Y.2003-04, BUT ON SUBSEQUENT DENIAL OF DISCOU NT BY THE SUPPLIER, IT WAS REVERSED IN THE A.Y.2004-O5. THIS IS EVIDENT FROM THE FACE OF THE AUDITED PROFIT & LOSS A/C UNDER THE HEA D PRIOR PERIOD EXPENDITURE. IN THIS CONNECTION, A.R PLACED RELIA NCE IN THE JUDGEMENT OF CIT VS BOKARO STEEL LTD 236 ITR 315 (S C) WHEREIN IT WAS HELD THAT WHEN THE ENTRY WHICH WAS REVERSED IN NEXT ASSESSMENT YEAR IS NOT REFLECTING REAL INCOME OF TH E ASSESSEE ITA NO489./MDS/2014 CO NO.43/MDS./2014 15 BECAUSE THE NATURE OF TRANSACTION WAS CHANGED, THEN THE SAME IS NOT EXIGIBLE TO INCOME-TAX. 6.3 THE TRADE DISCOUNT WAS CLAIMED AS A DEDUCTION FOR TAX PURPOSE DURING THE A.Y.2003-04 AS THE EXPENDITURE R ELATES TO THE IMPUGNED YEAR. 6.4 SHE SUBMITTED THAT THE AO ERRED IN STATING THA T THE TRADE DISCOUNT OF RS.1 CRORE WAS NOT REVERSED IN THE BOOK S OF ACCOUNT FOR THE A.Y.2003-04 AND HENCE THE STATED EXPENDITURE CA NNOT BE ALLOWED AS DEDUCTION FOR TAX PURPOSES. THE RESPONDENT HAD S TRESSED ON THE FACT THAT IT HAD NOT CLAIMED ANY EXPENDITURE BUT HA S ONLY DELETED THE UN-ACCRUED TRADE DISCOUNT. DURING THE A.Y.2004-05, THE ASSESSEE TO GIVE EFFECT TO THE ABOVE MENTIONED TRADE DISCOUNT I N THE BOOKS OF ACCOUNT, SHOWED IT AS PRIOR PERIOD EXPENDITURE IN THE FACE OF THE STATEMENT OF PROFIT AND LOSS ACCOUNT AND THE SAME W AS ADDED BACK WHILE COMPUTING THE TAXABLE INCOME FOR A Y.2004-05. HENCE, IN THE PRESENT CASE, IT IS CONCLUSIVE THAT THERE IS NO INT ENTION TO EVADE TAX NOR THERE IS ANY REVENUE LEAKAGE TO THE INCOME-TAX AUTHORITIES. THE ITA NO489./MDS/2014 CO NO.43/MDS./2014 16 LEARNED ASSESSING OFFICER ERRED IN NOT ALLOWING THE TRADE DISCOUNT WITHOUT CONSIDERING THE FACT THAT THERE IS NO LOSS TO REVENUE AS THE SAME HAS BEEN DISALLOWED FOR TAX PURPOSE DURING THE SUCCEEDING ASSESSMENT YEAR. FURTHER, SHE POINTED OUT THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN STATING THAT NO EVID ENCE IN THIS REGARD HAS BEEN PROVIDED, WHEREIN THE ASSESSEE HAD THROUGH ITS LETTER DATED 19.10.2010, SUBMITTED VARIOUS FACTS EVIDENCING THE INCURRING OF THE EXPENDITURE, A LETTER FROM THE SUPPLIER DENYING THE TRADE DISCOUNT. THE LEARNED ASSESSING OFFICER HAS FAILED TO CONSIDER TH AT ENTITLEMENT TO DEDUCTIONS IS NOT DEPENDENT ON BOOK ENTRIES. SHE RE LIED ON THE FOLLOWING JUDGEMENTS. I. COMMISSIONER OF INCOME TAX, DELHI VS BHARAT CARB ON AND RIBBON MFG, CO [ 1981] 127 ITR 239 , WHEREIN THE HONBLE SUPREME COURT HELD THAT: EXPENDITURE WHICH IS DEDUCTIBLE FOR INCOME TAX PURPOSE IS ONE WHICH IS TOWARDS A LIABILITY ACTUALLY EXISTING AT THE TIME, BUT THE PUTTING ASIDE OF MONEY WHICH MAY BECOME EXPENDITURE ON THE HAPPENING OF AN EVENT IS NOT EXPENDITURE. 7. LD.D.R ON THE OTHER HAND, STRONGLY SUPPORTED T HE ORDER OF THE LD. ASSESSING OFFICER. ITA NO489./MDS/2014 CO NO.43/MDS./2014 17 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS A SETTLED LAW THAT ON THE BASIS OF M ATERIAL, PRIMA FACIE, AVAILABLE BEFORE THE ASSESSING OFFICER, OPINED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT CAN BE FOR MED. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WOULD ME AN CAUSE OR JUSTIFICATION. IN CASE THE ASSESSING OFFICER HAS A CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAS ESCAPED ASSESSME NT , ACTION U/S 148 CAN BE TAKEN. BUT OBVIOUSLY, THERE SHOULD BE RE LEVANT MATERIAL ON WHICH A REASONABLE MAN COULD HAVE FORMED A REQUISIT E BELIEF. WHETHER THIS MATERIAL(S) WOULD CONCLUSIVELY PROVE T HE ESCAPEMENT OF INCOME IS NOT THE CONCERN AT THAT PARTICULAR STAGE. SO WHAT IS REQUIRED IS THE SUBJECTIVE SATISFACTION OF THE ASSESSING OFF ICER BASED ON OBJECTIVE MATERIAL EVIDENCE. IN THE GIVEN CASE, ASS ESSMENT WAS COMPLETED ON 07.12.2010 U/S.143(3) R.W.SEC.147 OF T HE ACT. THE REASON WAS RECORDED AS DISCUSSED HEREIN BELOW. ASSESSEE IN ITS COMPUTATION STATEMENT HAS R EDUCED FROM THE ITS SHOWN IN THE PROFIT & LOSS ACCOUNT AN AMOUNT OF RS.1 CRORE UNDER THE HEAD TRADE DISCOUNT ON PURCHA SE OF ITA NO489./MDS/2014 CO NO.43/MDS./2014 18 DURBAR BATHIS UNILATERALLY CLAIMED BY A COMPANY, BU T NOT ACCEPTED BY THE SUPPLIER THIS SUM HAS NOT BEEN CLA IMED IN THE PROFIT & LOSS ACCOUNT AS AN EXPENDITURE. ONLY I N THE COMPUTATION OF TAXABLE INCOME, THIS SUM IS CLAIMED AS EXPENDITURE. A SEEN FROM THE RETURNS OF INCOME FILE D FOR THE SUBSEQUENT YEARS VIZ, ASSESSMENT YEAR 2004-05 AND ASSESSMENT YEAR 2005-06, THIS SUM OF TRADE DISCOUNT (ON PURCHASE OF DURBAR BATHIS UNILATERALLY CLAIMED BY T HE COMPANY, BUT NOT ACCEPTED BY THE SUPPLIER) HAS NOT BEEN CLAIMED AS AN EXPENDITURE IN THE PROFIT & LOSS ACCO UNT IN THE SUBSEQUENT YEARS AS WELL. IF IT HAD NOT BEEN CLAIME D AS EXPENDITURE IN THE BOOKS OF ACCOUNT DURING THE YEAR UNDER QUESTION OR IN ANY OF THE SUBSEQUENT YEARS, THE SAI D EXPENDITURE IS NOT ALLOWABLE IN COMPUTATION OF THE TAXABLE INCOME. THE FACT THAT THE SAID EXPENDITURE HAS NOT BEEN CLAIMED IN THE SUBSEQUENT YEARS ONLY GOES TO SHOW T HAT THE TRADE DISCOUNT CLAIMED BY THE COMPANY HAD SUBSEQUEN TLY BEEN ACCEPTED BY ITS SUPPLIERS SUCH BEING THE CASE, THE EXPENDITURE CLAIMED ONLY FOR COMPUTING THE TAXABLE INCOME, ITA NO489./MDS/2014 CO NO.43/MDS./2014 19 REQUIRES TO BE DISALLOWED. THE ABOVE INFORMATION C OULD BE GATHERED ONLY FROM THE RETURN OF INCOME FILED FOR T HE SUBSEQUENT YEARS. THEREFORE, FOR THE FAILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL INFORMATION, THE INCOME CH ARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE ARGUMENT OF THE LD.AR IS THAT U/S 147 IN CASE T HE ASSESSMENT ORDER IS COMPLETED U/S 143(3), AS HAS BEEN DONE IN THIS CASE, NO ACTION COULD BE TAKEN AFTER THE EXPIRY OF FOUR YEAR S FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE ASSESSEE HAS DI SCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSE SSMENT FOR THAT ASSESSMENT YEAR, INTER ALIA. AS SEEN FROM THE REASO NS RECORDED WHICH GIVES A CLEAR PICTURE THAT THE ASSESSING OFFI CER HAS GOT MATERIAL EVIDENCE TO FORM HIS OPINION FOR TAKING RECOURSE TO SECTION 147 R.W.S 148 OF THE ACT. THERE CANNOT BE TWO OPINIONS. THE P OINT OF TIME WHEN THE REASONS ARE RECORDED AFTER FORMING OPINION OF ESCAPEMENT OF INCOME IS ONLY RELEVANT. HENCE, THIS PLEA OF THE L D.AR IS NOT TENABLE IN THE EYES OF LAW. IT IS TRUE THAT U/S.147, THE AS SESSING OFFICER CAN EITHER ASSESS OR RE-ASSESS BUT FOR TAKING ACTION TH ERE UNDER, HE HAS TO RECORD REASONS THAT INCOME CHARGEABLE TO TAX HAS ES CAPED ITA NO489./MDS/2014 CO NO.43/MDS./2014 20 ASSESSMENT . IT IS ALSO MANDATED BY SECTION 148(2) TO RECORD REASONS IN WRITING. THE REASSESSMENT PROCEEDINGS U/S 147 AR E FURTHER SUBJECT TO SECTIONS 148,149,150,151,152 AND 153. BUT IN THE PRESENT CASE, WE ARE REQUIRED TO DECIDE THE LIMITED ISSUE REGARDI NG THE VALIDITY OF PROCEEDINGS UNDERTAKEN AFTER FOUR YEARS OF THE ASSE SSMENT YEAR IN QUESTION. THE ASSESSING OFFICER IS REQUIRED TO SEE IF THE CONDITIONS LAID IN EXPLANATION 2(C) BECAUSE IN THIS CASE THE A SSESSMENT WAS COMPLETED U/S 143(3) ARE SATISFIED OR NOT. IN CASE, (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW RATE; OR(III) SUCH INCOME HAS BEEN MADE THE SUBJECTIVE OF EXCESS RELIEF UNDER THIS ACT; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED, THE ASSESSING OFFICER WOULD HAVE VAL ID COGNIZANCE U/S 147 OF THE ACT. THE REASONS RECORDED BY THE ASS ESSING OFFICER CLEARLY SPEAK FOR THE UNDER ASSESSMENT OF TAX HENCE , THE CONDITIONS LAID ABOVE STAND FULFILLED IN SO FAR AS RE-ASSESSME NT PROCEEDINGS ARE CONCERNED. IN SO FAR AS THE REASONS RECORDED, EXTRA CTED IN THE ABOVE PORTION OF THIS ORDER, WE ARE SATISFIED THAT THE AS SESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSM ENT. THIS FACT ITA NO489./MDS/2014 CO NO.43/MDS./2014 21 CONFERS JURISDICTION ON HIM TO REOPEN THE ASSESSMEN T. THE POWER TO RE-ASSESS POST 1ST APRIL, 1989 ARE MUCH WIDER THAN THESE USED TO BE BEFORE. BUT STILL THE SCHEMATIC INTERPRETATION OF T HE WORDS REASON TO BELIEVE FAILING WHICH SECTION 147 WOULD GIVE ARBIT RARILY POWERS TO THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT ON THE B ASIS OF MERE CHANGE OF OPINION, WHICH CANNOT BE, PER SE A REASON TO REOPEN THE CASE. THE ACT HAS NOT GIVEN POWER TO THE ASSESSING OFFICER TO REVIEW BUT HAS ONLY GIVEN POWER TO RE-ASSESS. THERE IS A C ONCEPTUAL DIFFERENCE BETWEEN THE TWO ASPECTS AS THE ASSESSING OFFICER HAS NO POWER AT ALL TO REVIEW THE ASSESSMENT. THE REASSESS MENT, AS STATED ABOVE, HAS TO BE BASED ON FULFILLMENT OF CERTAIN PR E-CONDITIONS BUT THE CONCEPT CHANGE OF OPINION HAS TO BE TAKEN INTO CO NSIDERATION OTHERWISE IT MAY GIVE UNBRIDLED POWER TO AN ASSESSI NG OFFICER TO REOPEN ANY AND EVERY ASSESSMENT ORDER WHICH WOULD S IMPLY AMOUNT TO A REVIEW. THE CONCEPT CHANGE OF OPINION IS AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER BY THE ASSESSING OFFICER. SO, NOW ONLY WHEN THE ASSESSING OFFICER HAS A TANGIBLE MATERIAL TO BASE HIS CONCLUSION THAT THERE IS AN ESCAPEMENT OF INCOME FR OM ASSESSMENT ITA NO489./MDS/2014 CO NO.43/MDS./2014 22 AND THE REASONS RECORDED HAVE A LINK WITH THE FORMA TION OF HIS BELIEF, HE HAS THE POWER U/S 147 OF THE ACT. 9. NOW THE MOST MATERIAL PART WHICH WAS ARGUED BY THE LD.AR IS REGARDING THE TIME LAG WHICH IS PROVIDED IN FIRST P ROVISO TO SECTION 147 WHICH STATES THAT WHERE AN ASSESSMENT U/S SUB-SECTI ON(3) OF SECTION 143 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, WHICH IS 2003- 04, IN THIS CASE, NO ACTION SHALL BE TAKEN U/S 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY THE REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. THERE ARE TWO OTHER CONDITIONS WHICH ARE NOT RELEVANT FOR DECIDING THE LEGAL ISSUE UNDER APPEAL. WE HAVE TO SEE AS TO WHAT FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS SIGNIFY. THE EXPRESSION F AILURE TO DISCLOSE MATERIAL FACTS HAS BEEN EXPLAINED IN THE TAXMANS DIRECT TAXES MANUAL VOLUME 3. IT IS TRUE THAT EVERY DISCLOSURE IS NOT AND CANNOT BE TREATED TO BE A TRUE AND FULL DISCLOSURE. A DISC LOSURE CAN BE EVEN FALSE OR TRUE. IT MAY BE A FULL DISCLOSURE OR IT MA Y NOT BE A FULL ONE. A ITA NO489./MDS/2014 CO NO.43/MDS./2014 23 PART DISCLOSURE MANY A TIMES MAY BE MISLEADING ONE. WHAT IS REQUIRED UNDER THE LAW IS A FULL AND TRUE DISCLOSUR E OF ALL MATERIAL FACTS NECESSARY FOR MAKING ASSESSMENT FOR THAT YEAR. THI S LAW WAS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SR I KRISHNA PVT. LTD ETC VS ITO & OTHERS, 221 ITR 538. THE WORDS OM ISSION OR FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR ASSESSMENT FOR THAT YEAR POSTULATES A FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESS MENT. WHAT FACTS ARE MATERIAL AND NECESSARY FOR ASSESSMENT WILL DIFF ER FROM CASE TO CASE. THE MATERIAL SHOULD NOT ONLY BE FULL BUT ALSO BE TRUE. IF SOME MATERIAL FOUND IN THE EVIDENCE PRODUCED BEFORE THE ASSESSING OFFICER WHICH THE ASSESSING OFFICER COULD HAVE UNCOVERED BU T DID NOT, THEN IT IS THE DUTY OF THE ASSESSEE TO BRING IT TO THE NOTI CE OF THE ASSESSING AUTHORITY. THIS OMISSION OR FAILURE MAY BE EITHER D ELIBERATE, OR EVEN INADVERTENT, THAT IS IMMATERIAL, BUT IN CASE THERE IS OMISSION TO DISCLOSE THE MATERIAL FACTS THEN SUBJECT TO THE OTH ER CONDITIONS JURISDICTION TO REOPEN IS ATTRACTED. ITA NO489./MDS/2014 CO NO.43/MDS./2014 24 10. IN THE PRESENT CASE, THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT ON 31.03.2005. LATER, FIRST TIME NOTICE U/S.148 OF ACT DATED 27.07.2007 WAS ISSUED AND THE ASSESSMENT WAS REOPE NED. THE SAID ASSESSMENT WAS COMPLETED U/S.143(3) R.W.S. 14 7 OF THE ACT ON 28.11.2008. LATER, ONCE AGAIN ASSESSMENT WAS REO PENED U/S.147 ON 29.03.2010 AFTER RECORDING REASONS. IN THE FIRS T RE-OPENING OF ASSESSMENT VIDE ORDER DATED 28.11.08, THERE WAS N O DISCUSSION OF WHATSOEVER ON THIS ISSUE. THE DETAILS RELATING TO ` 1 CRORE REDUCED IN THE BUSINESS INCOME OF ASSESSEE STATING THAT TRADE DISCOUNT ON PURCHASE OF DURBAR BHATIS BY THE ASSESSEE, BUT NOT ACCEPTED BY THE SUPPLIER. THERE IS NO INFIRMITY IN ADDING BACK THI S AMOUNT BY THE AO TO THE BUSINESS INCOME OF ASSESSEE IN THE ABSENCE O F EVIDENCE AVAILABLE IN THE RETURN OF INCOME. AS PER THE DESC RIPTION GIVEN IN THE COMPUTATION STATEMENT OF THE NEXT ASSESSMENT YEAR 2 004-05, AN AMOUNT OF ` 1,00,57,021/- WAS ADDED BACK UNDER THE HEAD DISALLOWANCE UNDER CLAUSE 22(B) OF 3CD. IN THE COMPUTATION STATEMENT FOR ASSESSMENT YEAR 2003-04, THE ASSESSE E INCLUDED ` 1 CRORE UNDER THE HEAD TRADE DISCOUNT. THE AMOUNT D OES NOT FIND PLACE IN PROFIT AND LOSS ACCOUNT. FURTHER THE ASSE SSEE RAISED AN ITA NO489./MDS/2014 CO NO.43/MDS./2014 25 OBJECTION IS THAT THERE WAS AN EARLIER REOPENING OF THE ASSESSMENT IN THIS CASE WHEREIN THE ISSUE WAS NOT RAISED. IN OUR OPINION, NON- RAISING OF THIS ISSUE IN EARLIER ASSESSMENT DOES NO T DISENTITLE TO REOPEN THE ASSESSMENT TO DISALLOW THE TRADE DISCOUNT. THEREFORE, IN OUR OPINION AO JUSTIFIED IN REOPENING THE ASSESSMENT TO CONSIDER THIS ESCAPED INCOME FOR TAXATION. ACCORDIN GLY THIS ADDITIONAL GROUND RAISED BY THE ASSESSEE IS DISMISSED. 11. NOW COMING TO THE MERIT OF THE ISSUE IN THE RE VENUES APPEAL. LD.D.R SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED ANY PROOF FOR SETTLEMENT OF ` 1,00,57,021/- UNDER THE HEAD TRADE DISCOUNT ON PURCHASE OF DURBAR BATHIS UNILATERALLY CLAIMED BY A COMPANY, BUT NOT ACCEPTED BY THE SUPPLIER. THE LD.A.R SUBMITTED THA T THERE WAS A TRADE DISCOUNT ACCEPTED BY THE SUPPLIER ON EARLIER OCCASIONS. THE SAME WAS SHOWN IN THE BOOKS OF ACCOUNT. HOWEVER, A FTER THE CLOSE OF THE FINANCIAL YEAR ENDING 31.03.2005, THE SAME W AS NOT AVAILABLE TO THE ASSESSEE. AS SUCH IT WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS. HOWEVER, IT WAS CLAIMED AS DEDUCTION AS AN EXPENDITURE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HE SUBMITTE D THAT THE ITA NO489./MDS/2014 CO NO.43/MDS./2014 26 ASSESSEE HAS FURNISHED A COPY OF LETTER ALONG WITH THE CONFIRMATION FROM THE SUPPLIER M/S.ACP INDUSTRIES LTD., AND BEIN G SO, IT IS TO BE ALLOWED AS BUSINESS EXPENDITURE. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE MAIN PLEAS OF ASSESSEES COUNSEL IS THAT THE TRADE DISCOUNT WAS EARLIER MADE AVAILABLE TO THE AS SESSEE AT RS.1 CRORE BY M/S.ACP INDUSTRIES LTD. HOWEVER, THE SAM E WAS WITHDRAWN BY THEM AFTER ENDING OF THE FINANCIAL YEAR 31.02.20 03. AS SUCH THERE WAS NO ENTRY IN THE BOOKS OF ACCOUNT IN THE ASSESS MENT YEAR 2003- 04 AND CLAIMED AS A DEDUCTION FOR TAX PURPOSE AND SUPPORTED BY THE CONFIRMATION LETTER RECEIVED FROM THE PARTIES. HOWE VER, AS SEEN FROM THE ASSESSMENT YEAR, THE ASSESSEE HAS BEEN GIVEN AN OPPORTUNITY TO PRODUCE EVIDENCE REGARDING THE CLAIM OF DISCOUNT OF RS.1 CRORE. FOR THE QUERY RAISED BY THE AO, THE ASSESSEE PRODUCED C OPY OF SUPPLIERS ACCOUNT IN ASSESSEES BOOKS OF ACCOUNTS ALONG WITH THE EXTRACT OF OUR PUBLISHED P&L A/C FOR THE F.Y.2002-03. IT WAS STATED BEFORE THE AO THAT WHILE COST OF PURCHASES NET OF DISCOUNTS A CCOUNTED BY ASSESSEE WAS ` 10,02,99,935/- AS AGAINST THE SALES, NET OF ALL DISCOUNTS AS ACCOUNTED BY THE SUPPLIER IS ` 11,02,99,935/-, THE ITA NO489./MDS/2014 CO NO.43/MDS./2014 27 DIFFERENCE BEING THE UNILATERAL DISCOUNTS OF ` 1 CRORE CLAIMED BY ASSESSEE BUT NOT ACCEPTED BY THE SUPPLIER. HOWEVER , THE ASSESSEE HAS NOT PRODUCED ANY PROOF OF SETTLEMENT OF THE ACC OUNT AT ` 11,02,99,935/- AS IS SAID TO BE SUPPLIERS CLAIM, EVEN AFTER THE PASSAGE OF SO MANY YEARS, THE ASSESSEE HAS NOT PROD UCED ANY DOCUMENTS TO PROVE ACTUALLY RECEIVED BY THE ASSESSE E. HOWEVER, THE LD. CIT(A) GIVEN A FINDING THAT THE ASSESSEE HAS PR ODUCED A COPY OF THE LETTER FILED BEFORE HIM ALONG WITH CONFIRMATION FROM SUPPLIER M/S.ACP INDUSTRIES LTD., WHEREIN THE SUPPLIER CONFI RMED THE DENIAL OF TRADE DISCOUNT TO THE ASSESSEE. THE FINDINGS OF TH E CIT(A) IS CONTRARY OF THE FINDINGS RECORDED BY THE AO. HENCE WE ARE N OT IN A POSITION TO APPRECIATE EITHER OF THESE FINDINGS. ACCORDINGLY, IN THE INTEREST OF JUSTICE, WE REMIT THE ENTIRE ISSUE TO THE FILE OF A O TO CARRY ON NECESSARY ENQUIRY, IF IT IS REQUIRED AND HE COULD S UMMON THE PARTIES INVOLVED HEREIN AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 13. SINCE THE MAIN GROUNDS RAISED IN THE CROSS OB JECTIONS BY THE ASSESSEE IS ONLY IN SUPPORTIVE OF CIT(A)S ORDER, T HESE GROUNDS ARE ITA NO489./MDS/2014 CO NO.43/MDS./2014 28 DISMISSED AS INFRUCTUOUS AND REMITTED THE ENTIRE I SSUE IN THE DISPUTE TO THE FILE OF THE LD. ASSESSING OFFICER. 14. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTIONS FIL ED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 29 TH OF FEBRUARY,2016 AT CHENNAI. SD/- SD/- ( . ) (G.PAVAN KUMAR) ( ( $% & ) ) ' CHANDRA POOJARI () JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 29 TH FEBRUARY,2016 . K S SUNDARAM. *+)),-).- /COPY TO: ) 1. /APPELLANT 2. /RESPONDENT 3. ) /)'( /CIT(A) 4. ) / /CIT 5. -01 )2 /DR 6. 13)4 /GF