Amiya Kumar Samanta, Kolkata V. ITO, Ward - 34(2), Kolkata, Kolkata

ITA 1044/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6739 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-02-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 17-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH JCITSRDR
• Assessee Lawyers: U DASGUPTA
• Keywords: Rejection of books of accounts; Commercial expediency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC KOLKATA BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.1044/KOL/2018 ASSESSMENT YEAR:2013-14 AMIYA KUMAR SAMANTA 35, ARMENIAN STREET KOLKATA-700001 [ PAN NO.ALXPS 9225 M ] / V/S . INCOME TAX OFFICER, WARD-34(2), AYAKAR BHAWAN, POORVA, SANTIPALLY, KOLKATA-107 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI U. DASGUPTA, AR /BY RESPONDENT SHRI C.J. SINGH, JCIT-SR-DR /DATE OF HEARING 25-02-2019 /DATE OF PRONOUNCEMENT 28-02-2019 /O R D E R THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2013-14 , ARISES AGAINST THE COMMISSIONER OF INCOME-TAX (APPEALS)-10, KOLKATAS ORDER DATED 28.09.2016 PASSED IN CASE NO.32/CIT(A)/WD 34-(2)/2016-17/KOL, INVOLV ING PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES TWIN SUBSTANTIVE GROUNDS SEEK TO REVERSE BOTH THE LOWER AUTHORITIES ACTION DISALLOWING /ADDING ADJUSTMENT AMOUNT AGAINST THE DAMAGED GOODS PROVIDED TO VARIOUS RETAILERS AS WELL AS DISPLAY AN D SHOP ESTABLISHMENT AND DEVELOPMENT HEAD EXPENDITURE INVOLVING SUMS OF 13,45,480/- AND 18,16,099/- MADE IN BOTH THE LOWER PROCEEDINGS. 3. THE ASSESSEE AS WELL AS REVENUE REITERATE THEIR RESPECTIVE PLEADINGS AGAINST AND IN SUPPORT OF IMPUGNED DISALLOWANCE / ADDITION. IT TRANSPIRES DURING THE COURSE OF ITA NO.1044/KOL/2018 A.Y. 2013-14 AMIYA KR. SAMANTA VS. ITO WD-34(2), KOL PAGE 2 HEARING THAT ASSESSEE HAD FILED HIS APPEAL ITA NO.2019/KOL/2016 AS ACCEPTED IN ORDER DATED 29.08.2018 VIDE ITS FOLLOWING DETAILED DISCUS SION:- 9. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RI VAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE NOTE THAT M/S HIND USTHAN UNILEVER LTD (HUL) RAISED CREDIT NOTES IN FAVOUR OF THE ASSESSEE ONLY ON PROP ER VERIFICATION OF THEIR REPORT. THE HUL NEVER ALLOWED DAMAGE CLAIM ON THEIR OWN ACCORD AND SWEET WILL. THE SALESMEN ARE MOSTLY ILLITERATE. SOMETIMES GOODS ARE RECEIVED BACK FOR REPLACEMENT ON VERBAL ASSURANCE BY THE SALESMEN. IN ANY CASE, HUL NEVER I SSUED CREDIT NOTES WITHOUT EVIDENCE AND PROPER VERIFICATION OF CLAIM. IN ASSES SEES BUSINESS SCENARIO IT HAPPENED MANY A TIMES THAT RETAILERS MAY NOT ACCEPT GOODS AS PER INVOICE FOR VARIOUS REASONS. SO THEY RETURN THE SAME TO THE DISTRIBUTOR (ASSESSE E). THE ASSESSEE, IN TURN THROUGH SOFTWARE, COMMUNICATES THE SAME TO HUL. IN TURN HUL ON RECEIPT OF INTIMATION THROUGH SOFTWARE SHOW IN THE DATEWISE SALES REGISTE R AND SALES RETURN. WE NOTE THAT THE PURCHASE AND SALES RETURN HAVE NOT BEEN SHOWN ON TH E FACE OF THE ACCOUNT. BOTH PURCHASE AND SALES RETURNS HAVE BEEN DEDUCTED FROM PURCHASES AND SALES WHICH HAS NO IMPACT ON PROFIT. 10. WE NOTE THAT CREDIT NOTES HAV E BEEN PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPELL ATE PROCEEDINGS. WE NOTE THAT AS REGARDS CLAIM OF RS.46,71,583/- ALLOWED TO THE RETA ILERS, IT WAS ON ACCOUNT OF ADJUSTMENT FOR DISPLAY AND BUSINESS PROMOTION. THE ASSESSEE IN ORDER TO RETAIN HIS RETAILERS AND COMPETE IN THE MARKET, ACCEPTS LESS P AYMENTS BEING GIVEN BY THE RETAILERS THAN THE BILL AMOUNT. ON FESTIVE SEASONS, THE RETAI LERS MAKE CONTRIBUTIONS TOWARDS SOCIAL FUNCTIONS BEING ORGANISED BY THE LOCAL CLUB, ASSOCIATION ETC AND DISPLAY BANNERS OF HUL IN THESE FUNCTIONS AND THEY REALISE THE EXPE NDITURE FROM THE ASSESSEE BY MAKING LESS PAYMENT THAN THE BILL AMOUNT. THE ASSES SEE ALSO STATED THAT THE RECEIPTS FOR ACTUAL EXPENDITURE CANNOT BE OBTAINED FROM THE RETAILERS SINCE THE PRACTICE OF ISSUANCE OF RECEIPTS GENERALLY IS NOT IN VOGUE. WE NOTE THAT NEITHER THE LD. CIT(A) NOR THE AO BROUGHT ANY EVIDENCE ON RECORD TO DISPROVE T HAT DISPLAY AND BUSINESS PROMOTION EXPENDITURE INCURRED BY THE ASSESSEE. THE LD AO AND LD CIT(A) BOTH HAVE FAILED TO DEMONSTRATE THAT DEBIT NOTES ISSUED BY AS SESSEE IN FAVOUR OF HUL AND CREDIT NOTES ISSUED BY HUL IN FAVOUR OF ASSESSEE ARE BOGUS AND NOT SUPPORTED BY BOOKS OF ACCOUNTS . THE AO HAS ALSO NOT BROUGHT ANY COGENT E VIDENCE TO SHOW THAT THE ADDITION TO THE TUNE OF RS.30,08,787/- IS BOGUS AND WITHOUT MAKING ANY ENTRY IN THE BOOKS OF ACCOUNTS IN RESPECT OF DEBIT NOTES AND CREDIT NOTES . WE NOTE THAT THE LD AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND HE HAS ACCEPTED THE PROFIT DECLARED BY THE ASSESSEE. CONSIDERING THE NATURE OF THE BUSI NESS AND THE PRODUCTS INVOLVED, IT IS NECESSARY FOR THE ASSESSEE TO INCUR EXPENSES ON DIS PLAY AND BUSINESS PROMOTION. IF THE ASSESSEE DOES NOT INCUR EXPENSES ON BUSINESS PROMOT ION, THE PRODUCT WILL NOT BE SOLD IN THE MARKET AND THERE WOULD BE BUSINESS LOSS. THE REFORE, CONSIDERING THE ASPECT OF COMMERCIAL EXPEDIENCY AND CUSTOMS PREVAILING IN THE RETAIL TRADE, WE NOTE THAT THE ASSESSEE HAS TO INCUR THESE EXPENSES, IN ORDER TO R UN THE BUSINESS AND THESE EXPENSES ARE RELATED TO THE BUSINESS ACTIVITY. THE ASSESSEE HAS BEEN DEALING WITH APPROXIMATELY 1400 RETAILERS, AND THAT THE ASSESSEE HAD TO BEAR R S.200/- OR RS.300/- PER MONTH FOR EACH SHOP (DEBTOR) TO PUSH PRODUCTS OF M/S HINDUSTA N UNILEVER LTD. IN THE MARKET, AND THIS IS A CUSTOMARY PRACTICE IN THIS TYPE OF WH OLESALE TRADE. OTHERWISE THE WHOLESALER CANNOT RETAIN HIS RETAILERS. WE NOTE THA T THE ASSESSEE HAS PROVED THE BONA FIDE OF HIS CLAIM BY SUBMITTING THE LEDGER ACCOUNT, DEBIT NOTES, CREDIT NOTES. WE ALSO NOTE THE PRACTICE PREVAILING IN THE MARKET IN RETAI L TRADE. CONSIDERING ALL THE FACTS AND CIRCUMSTANCES AND PRACTICAL ASPECTS IN RETAIL TRAD E, AS EXPLAINED ABOVE, WE DELETE BOTH THE ADDITIONS TO THE TUNE OF RS. 76,80,370/-( RS.30 ,08,787 + RS.46,71,583). ITA NO.1044/KOL/2018 A.Y. 2013-14 AMIYA KR. SAMANTA VS. ITO WD-34(2), KOL PAGE 3 LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITS THAT BO TH THE INSTANT ISSUE REQUIRES FACTUAL VERIFICATION IN VIEW OF LEARNED CO-ORDINATE BENCHS FINDINGS. MR.DASGUPTA IS FAIR ENOUGH IN NOT OBJECTING OF THIS FACTUAL VERIFI CATION OF PLEA. I THEREFORE RESTORE BOTH THE INSTANT ISSUES BACK TO THE ASSESSING OFFICER FO R FACTUAL VERIFICATION IN TERMS OF LEARNED CO-ORDINATE BENCHS DECISION IN ASSESSEES FAVOUR IN PRECEDING ASSESSMENT YEAR. 4. THIS ASSESSEES APPEAL IS ALLOWED FOR STATISTICA L PURPOSE IN ABOVE TERMS. ORDER PRONOUNCED IN OPEN COURT ON 28/02/2019 SD/- (S.S. GODARA) JUDICIAL MEMBE R KOLKATA, *DKP/SR.PS - 28/02/2019 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-AMIYA KR. SAMANTA, 35, ARMENIAN STREET, KOLKATAA-001 2. /RESPONDENT-ITO WARD-34(2), AYAKAR BHAWAN, POORVA, SANTIPALLY, KOL-107 3. ' % / CONCERNED CIT 4. % - / CIT (A) 5. & ))' , ' / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORDER/ , /TRUE COPY/ / ',