Bhooma Automobiles Pvt. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1248/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81120 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Section: 143(3); 133(6)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CH ENNAI. . . . , . !' !' !' !' , # # # # $% $% $% $% $& $& $& $& BEFORE DR.O.K. NARAYANAN, VICE-PRESIDENT & SHRI V. DURGA RAO, JUDICIAL MEMBER $ ./ I.T.A.NOS.1248 AND 1249/MDS/2014 # ' '' / ASSESSMENT YEAR :2008-09 & 2009-10 M/S. BHOOMA AUTOMOBILES PVT. LTD., F2, 1 FLOOR, OLD NO.18, NEW NO. 23, 3 RD STREET, ZACKARIA COLONY, CHOOLAIMEDU, CHENNAI 600 094. [PAN : AADCM1555G] VS. THE ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(2), CHENNAI 600 034. ( () () () () /APPELLANT ) ( *+() *+() *+() *+() / RESPONDENT ) () , $ / APPELLANT BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE *+() , $ / RESPONDENT BY : SHRI GURU BHASHYAM, JCIT $ , -. / DATE OF HEARING : 23.07.2014 /0' , -. /DATE OF PRONOUNCEMENT : 18.08.2014 1 1 1 1 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THESE TWO APPEALS FILED BY THE SAME ASSESSEE ARE DI RECTED AGAINST THE CONSOLIDATED ORDER OF THE LD. COMMISSIO NER OF INCOME TAX (APPEALS) II, CHENNAI, DATED 04.02.2014 RELEVANT TO THE ASSESSMENT YEARS 2008-09 AND 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S IN THE AUTOMOBILE BUSINESS, FILED RETURN DECLARING TOTAL INCOME OF .73,90,680/- FOR THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1248 & 1249 1248 & 1249 1248 & 1249 1248 & 1249 /M/ /M/ /M/ /M/1 11 14 44 4 2 ASSESSMENT YEAR 2008-09 AND ASSESSMENT WAS COMPLETE D UNDER SECTION 143(3) OF THE INCOME TAX ACT BY DETERMINING TOTAL INCOME OF .1,66,14,275/-. IN THE ASSESSMENT ORDER, THE ASSESS ING OFFICER STATED THAT ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAS DEBITED A SUM OF .3,68,94,380/- TOWARDS TRADE DISCOUNT ON SALE OF CARS. NOTICE UNDER SECTION 133(6) OF THE ACT WAS SE RVED ON SOME CUSTOMERS WHOM THE ASSESSEE HAS RECEIVED DISCOUNT. OUT OF 16 CUSTOMERS TO WHOM NOTICES WERE SENT, 3 CUSTOMERS CO NFIRMED HAVING RECEIVED DISCOUNT, 4 CUSTOMERS DENIED HAVING RECEIV ED ANY DISCOUNT AND IN CASE OF 5 CUSTOMERS, POSTAL DEPARTMENT RETUR NED THE NOTICES AS NOT SERVED. AFTER CONSIDERING THE ABOVE FACTS, THE ASSESSING OFFICER DISALLOWED A SUM OF .92,23,595/- BEING 25% OF THE TRADE DISCOUNT ALLOWED BY THE ASSESSEE TO ITS CUSTOMERS. 3. ON APPEAL BEFORE THE LD. CIT(APPEALS), SINCE NO NE APPEARED ON BEHALF OF THE ASSESSEE, THE LD. CIT(APPEALS), PROCE EDED TO DECIDE THE APPEAL ON MERITS AND DISMISSED THE APPEAL BY OBSERV ING AS UNDER: 6.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F THE APPELLANT AS CONTAINED IN THE GROUNDS OF APPEAL VIS-A-VIS THE RE ASONING OF THE AO FOR MAKING THE AFORESAID DISALLOWANCE. THOUGH GIVING DI SCOUNTS OR TRADE DISCOUNTS MAY BE A COMMON PRACTICE IN THE BUSINESS THAT THE APPELLANT IS ENGAGED IN, HOWEVER, THE APPELLANT HAS NOT CONTR OVERTED THE FACTS RECORDED IN THE ASSESSMENT ORDER THAT THE AO HAD IS SUED NOTICE UNDER SECTION 133(6) OF THE ACT TO 16 CUSTOMERS OF THE AP PELLANT WHOM THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1248 & 1249 1248 & 1249 1248 & 1249 1248 & 1249 /M/ /M/ /M/ /M/1 11 14 44 4 3 APPELLANT HAS CLAIMED TO HAVE GIVEN THE AFORESAID T RADE DISCOUNTS, 4 PERSONS HAD CATEGORICALLY DENIED HAVING RECEIVED AN Y SUCH DISCOUNTS. IN SUCH A CIRCUMSTANCE IT BECOMES IMPERATIVE FOR TH E APPELLANT TO SUBSTANTIATE THEIR CLAIM OF SUCH EXPENDITURE WITH S OME AUTHENTIC DOCUMENTARY EVIDENCE OR BY PRODUCING THE PERSONS/PA RTIES WHOM SUCH LIMITS ARE CLAIMED TO HAVE BEEN MADE. EVEN BEFORE M E NO MATERIAL OR EVIDENCE HAS BEEN BROUGHT ON RECORD EITHER TO CONTR OVERT THE AFORESAID FINDING OF THE AO OR TO SUBSTANTIATE THE APPELLANT' S CLAIM THAT THE TRADE DISCOUNTS WERE ACTUALLY PAID TO THE PERSONS/PARTIES WHOM THE SAME HAVE BEEN CLAIMED TO BE PAID. SINCE NOTHING HAS BEE N SET OFF SUBSTANTIATED IN THIS REGARD DURING THE COURSE OF A PPEAL PROCEEDINGS, I DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE AO IN DISALLOWING 25% OF THE CLAIM OF THE EXPENDITURE OF TRADE DISCOU NTS MADE BY THE APPELLANT. THE DISALLOWANCE MADE BY THE AO, THEREFO RE, IS UPHELD AND THE GROUNDS OF APPEAL TAKEN BY THE APPELLANT IN THI S REGARD ARE DISMISSED. ITA NO. 348/13-14 A.Y. 2009-10 7. THE ISSUE INVOLVED IN THIS YEAR IS SIMILAR AND WE ARE ALSO THE DISALLOWANCE HAS BEEN MADE AT THE RATE OF 25% OF TH E CLAIM OF THE EXPENDITURE OF TRADE DISCOUNTS. HENCE, FOR THE REAS ONS GIVEN IN ITA NO.348/13-14 FOR THE A.Y.2008-09 DISCUSSED ABOVE, T HE ORDER OF THE AO IN DISALLOWING 25% OF THE TRADE DISCOUNTS IS UPHELD AND THE GROUNDS OF APPEAL TAKEN BY THE APPELLANT IN THIS REGARD ARE AL SO DISMISSED. AFTER CONSIDERING THE SUBMISSION ON ALL GROUNDS OF APPEALS, BOTH THE APPEALS ARE DISMISSED. 4. ON APPEAL BEFORE US, THE LD. COUNSEL FOR THE AS SESSEE HAS SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE IN I.T.A. N O 774/MDS/2008, I.T.A. NO. 1427/MDS/2009 & I.T.A. NO. 258/MDS/2010 FOR ASSESSMENT YEARS 2004-05 TO 2006-07. 5. ON THE OTHER HAND, THE LD. DR HAS DUTIFULLY SUP PORTED THE ORDER PASSED BY THE LD. CIT(APPEALS). I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1248 & 1249 1248 & 1249 1248 & 1249 1248 & 1249 /M/ /M/ /M/ /M/1 11 14 44 4 4 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE AL SO PERUSED THE COPY ORDER OF THE COORDINATE BENCH IN ASSESSEES OW N CASE IN I.T.A. NO 774/MDS/2008, I.T.A. NO. 1427/MDS/2009 & I.T.A. NO. 258/MDS/2010 FOR ASSESSMENT YEARS 2004-05 TO 2006-0 7 VIDE ORDER DATED 17.07.2012, WHEREIN THE TRIBUNAL HAS HELD AS UNDER: 9. WE HAVE HEARD BOTH THE REPRESENTATIVES AT LENG TH AND ALSO PERUSED THE RELEVANT FINDINGS AS WELL AS NECESSARY CONTENTS OF THE PAPER BOOK ON RECORD. IT TRANSPIRES THAT ASSESSEE, BEING DEALER OF PASSENGER VEHICLES, HAD OFFERED SOME DISCOUNTS TO ITS NUMEROU S CUSTOMERS. THE REGISTRATION CERTIFICATES OF THE SAID CUSTOMERS IN RESPECT OF THE CLAIM WERE ALSO PRODUCED BEFORE THE ASSESSING OFFICER BY THE ASSESSEE. THE SAID DOCUMENTS WERE ALSO SUPPORTED BY OTHER DETAILS VIZ., SALE INVOICES ETC. THE ASSESSING OFFICER, AS IT EMERGES FROM THE RECORD, ALSO ISSUED NOTICES TO 23 CUSTOMERS AMONGST WHOM ONLY FEW RESPO NDED. SOME OF THEM DENIED THE ASSESSEES CLAIM AS WELL. WE NOTICE FROM THE RECORD THAT THE SAID DENIALS WERE NOT CONFRONTED TO THE AS SESSEE. THE ASSESSEE BEING DEALER, HAD NO OTHER OPTION EXCEPT TO PRODUCE THE RELEVANT RECORD AVAILABLE IN THE RESPECTIVE FILES OF THE CUSTOMERS. IN OUR OPINION, SINCE THE VEHICLES SOLD TO THE CUSTOMERS STOOD DULY REGIS TERED, THE SAME RAISES PRESUMPTION THAT THE BILLS SUBMITTED BY THE ASSESSE E IN SUPPORT OF DETAILS OF CUSTOMERS WERE AUTHENTIC WHICH HAD NOT B EEN REBUTTED. MORE SO, UNDER THE PROVISIONS OF MOTOR VEHICLES ACT, 198 7, A VEHICLE IS REGISTERED ONLY AFTER COMPLIANCE OF NECESSARY FORMA LITIES AND SUBMISSION OF ALL CONCERNED DOCUMENTS IN RESPECT OF THE APPLICATION SEEKING REGISTRATION OF A VEHICLE. AFTER GOING THRO UGH THE ORDER OF THE CIT(APPEALS), WE OBSERVE THAT THIS ASPECT HAS BEEN DULY APPRECIATED. THEREFORE, WE FIND NO REASON TO INTERFERE IN THE OR DER OF THE CIT(APPEALS). 10. AT THE SAME TIME, AS FAR AS THE CROSS OBJECTIO N IS CONCERNED, IN OUR OPINION, THE ASSESSEE HAS FAILED TO SUBSTANTIAT E ITS CLAIM ON THE BASIS OF ANY MATERIAL ON RECORD TO PROVE THE GENUIN ENESS OF THE CLAIM OF H.1,94,787/- (SUPRA). HENCE, THE SAID DISALLOWANCE HAS BEEN RIGHTLY CONFIRMED BY THE CIT(APPEALS). I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1248 & 1249 1248 & 1249 1248 & 1249 1248 & 1249 /M/ /M/ /M/ /M/1 11 14 44 4 5 11. ITA NO.1427/MDS/09 & ITA NO.258/MDS/10 - ASST. YEARS : 2005-06 AND 2006-07 RESPECTIVELY : BOTH THE REPRESE NTATIVES ARE IN UNISON THAT OUR FINDINGS HEREIN ABOVE REGARDING THE ASST. YEAR 2004-05 SQUARELY COVERS THE SOLE ISSUE IN BOTH THE APPEALS IE., TRADING DISCOUNT. THE ONLY DIFFERENCE IN ASST. YEAR 2005-06 IS THAT T HE ASSESSING OFFICER HAD ADOPTED RATIO OF 5 : 3 IN MAKING THE DISALLOWAN CE OF H. 89,25,265/- SOLELY ON THE GROUND THAT OUT OF 1517 CUSTOMERS HAV ING AVAILED THE DISCOUNT OF H.10,000/- OR MORE, HE HAD ISSUED NOTIC E TO 8 CUSTOMERS, OUT OF WHICH ONLY 3 OF THEM HAD NOT CONFIRMED THE R ECEIPT OF DISCOUNT OFFERED BY THE ASSESSEE WHEREAS 5 OF THEM GOT RECOR DED THEIR STATEMENTS. IN THIS MANNER, THE ASSESSING OFFICER H AD PROCEEDED TO MAKE DISALLOWANCE TO THE EXTENT OF THE RATIO STATED ABOVE. 12. IN APPEAL, THE CIT(APPEALS) HAS HELD THAT THE ASSESSEES EVIDENCE FILED IN SUPPORT OF THE CLAIM ENJOYED CRED IBILITY. THEREFORE, THE DISALLOWANCE HAS BEEN DELETED. 13. IN THE SAME MANNER, IN THE ASST. YEAR 2006-07 AS WELL INTER-ALIA THE ASSESSING OFFICER HAD MADE DISALLOWANCE UNDER T HIS VERY HEAD OF TRADING DISCOUNT ON ESTIMATION BASIS AT THE RATE OF 25% TO THE TUNE OF RS.49,66,919/- AND THE SAME HAS BEEN DELETED BY THE CIT(APPEALS), FOLLOWING THE ORDER PASSED ON 19.01.2009 FOR THE AS ST. YEAR 2005-06 (SUPRA). 14. AFTER PERUSING THE RELEVANT FINDINGS AND KEEPI NG IN MIND THE SUBMISSIONS OF BOTH THE PARTIES, WE ARE OF THE OPIN ION THAT THE ISSUE IN HAND IS SQUARELY COVERED BY OUR DISCUSSION HEREIN A BOVE PERTAINING TO APPEAL OF ASST. YEAR 2004-05. THEREFORE, NO SEPARAT E ADJUDICATION IS REQUIRED. 15. CONSEQUENTLY, IN VIEW OF OUR DISCUSSION HEREIN ABOVE, WE FIND NO MERIT EITHER IN THE APPEALS FILED BY THE REVENUE OR THE CROSS OBJECTION PREFERRED BY THE ASSESSEE. THE SAME ARE, THEREFORE, DISMISSED. THE LD. DR COULD NOT CONTROVERT THE ABOVE FINDINGS OF THE TRIBUNAL AND NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE ABOVE DECISION OF THE TRIBUNAL HAS BEEN EITHER MODIFIED O R REVERSED BY ANY HIGH COURT. RESPECTFULLY FOLLOWING THE ABOVE DECISI ON OF THE COORDINATE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1248 & 1249 1248 & 1249 1248 & 1249 1248 & 1249 /M/ /M/ /M/ /M/1 11 14 44 4 6 BENCH, THE DISALLOWANCE OF 25% MADE BY THE ASSESSIN G OFFICER ON TRADE DISCOUNTS STANDS DELETED. ACCORDINGLY, THE AP PEAL FILED BY THE ASSESSEE IS ALLOWED. 7. FOR THE ASSESSMENT YEAR 2009-10 ALSO, THE ISSUE RAISED BY THE ASSESSEE IS SIMILAR ON IDENTICAL FACTS. BY FOLLOWIN G OUR ABOVE DECISION, THE DISALLOWANCE OF 25% IS DELETED AND THE APPEAL O F THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 18 TH OF AUGUST, 2014 AT CHENNAI. SD/ - SD/ - ( . . . ) (DR. O.K. NARAYANAN) / VICE-PRESIDENT ( . !' !' !' !' ) (V. DURGA RAO) # # # # $% $% $% $% / JUDICIAL MEMBER DATED: 18.08.2014. VM/- 1 , *#-23 43'- /COPY TO: 1. () / APPELLANT, 2. *+() / RESPONDENT, 3. 5 ( ) /CIT(A), 4. 5 /CIT, 5. 36! *#-# /DR & 6. !' 7 /GF.