DCIT, Madurai V. Milan, Madurai

ITA 2231/CHNY/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4975 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-11-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 07-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S BHARATH
• Assessee Lawyers: S SRIDHAR
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . , ! BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NOS. 2231 TO 2234/MDS/2015 ' #' / ASSESSMENT YEARS: 2005-06 TO 2008-09 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, MADURAI V. M/S. MILAN, NO.12-13-14, AMMAN SANNADHI, MADURAI 625001. PAN: AACFM7251P ( $% /APPELLANT) ( &'$% /RESPONDENT) ./ ITA NOS. 521 TO 523/MDS/2016 ' #' / ASSESSMENT YEARS: 2009-10 TO 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, MADURAI V. M/S. MILAN TEXTILE ENTERPRISES PVT. LTD., NO.12-13-14, AMMAN SANNADHI, MADURAI 625001. PAN: AAFCM 4554 M ( $% /APPELLANT) ( &'$% /RESPONDENT) $% ( ) /APPELLANT BY : SHRI S. BHARATH, CIT &'$% ( ) /RESPONDENT BY : SHRI S. SRIDHAR, A DVOCATE * ( + /DATE OF HEARING : 23.11.2017 ,-# ( + /DATE OF PRONOUNCEMENT : 18.01.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: ALL THE APPEALS OF THE REVENUE ARE DIRECTED AGAINST THE TWO COMMON ORDERS PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-19, CHENNAI DATED 28.09.2015 AND 21.12.20 15 AND PERTAINS TO THE ASSESSMENT YEARS 2005-06 TO 2008-09, 2009-10 TO 2011-12. 2 I.T.A. NOS. 2231 TO 2234/MDS/2015 I.T.A. NOS. 521 TO 523/MDS/2016 SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THE APPEALS, WE HEARD THE SAME TOGETHER AND DISPOSING OF BY THIS CO MMON ORDER. 2. THERE WAS A DELAY OF 3 DAYS IN FILING THE APPEAL FO R THE ASSESSMENT YEARS 2005-06 TO 2008-09 BY THE REVENUE. THE REVENUE HAS FILED A PETITION FOR CONDONATION OF DEL AY. WE HAVE HEARD THE LD. REPRESENTATIVE FOR THE ASSESSEE AND T HE LD. DEPARTMENTAL REPRESENTATIVE. WE FIND THAT THERE WAS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL BEFORE THE STIPULAT ED TIME. THEREFORE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. SHRI S. BHARATH, THE LD. DEPARTMENTAL REPRESENTA TIVE SUBMITTED THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF READYMADE TEXTILE ITEMS. THERE WAS A SEARCH OPERATION IN THE PREMISES OF THE ASSESSEE ON 23.02.2011. ON THE BAS IS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION, NOTICE WAS ISSUED TO THE ASSESSEE CALLING UPON THE ASSESSEE TO FILE THE RETU RN OF INCOME. ACCORDING TO THE LD.DR, DURING THE COURSE OF SEARCH OPERATION, DATA WHICH CONTAINS YEAR-WISE DISCOUNT SAID TO BE GIVEN BY THE ASSESSEE FOR THE PERIODS 2005-06 TO 2010-11 WAS FOUND. BOOK S RELATING TO DATA- WISE SALES WERE ALSO FOUND. DURING THE COURSE OF S EARCH OPERATION, A STATEMENT WAS RECORDED FROM SHRI LALJI G. VORA, MAN AGING DIRECTOR OF M/S. MILAN TEXTILE ENTERPRISES PVT. LTD. THE MANAGIN G DIRECTOR 3 I.T.A. NOS. 2231 TO 2234/MDS/2015 I.T.A. NOS. 521 TO 523/MDS/2016 ADMITTED THAT THEY ARE CONTINUING THE PRACTICE OF G IVING DISCOUNT VOUCHER FOR A LONG TIME. ULTIMATELY, THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER ATLEAST 4% OF THE GROSS SALES MAY BE ALLOWED AS GENUINE DISCOUNT. THE LD.DR FURTHER SUBMITTED THAT T HE DISCOUNT CLAIMED BY THE ASSESSEE IS NOT ACTUAL DISCOUNT GIVE N TO THE CUSTOMERS ON SALES. THE ASSESSEE ALSO FILED THE RETURN UNDER VALUE ADDED TAX (VAT) ACT. THE ASSESSEE ADMITTED THE ACTUAL SALES IN THE RETURN OF INCOME AS RS.5,46,46,955/-. BUT BEFORE DISCOUNT IT WAS DETERMINED AS RS.5,74,82,355/-. THE DIFFERENCE OF RS.28,35,400/- FOR THE ASSESSMENT YEAR 2005-06 AND SIMILAR ADDITION WAS MADE FOR OTHE R YEARS IN RESPECT OF THE DIFFERENCES. HOWEVER, ON APPEAL BY THE ASSE SSEE, THE CIT(APPEALS) DIRECTED THE AO TO ALLOW 4% ON GROSS SA LES AS DISCOUNT. THE CIT(APPEALS) FAILED TO CONSIDER THAT THE CLAIM O F DISCOUNT ARE BOGUS. ACCORDING TO THE LD.DR, NO SYSTEMATIC RECOR D WAS MAINTAINED BY THE ASSESSEE WITH REGARD TO DISCOUNTED SALES. T HE DISCOUNT VOUCHERS WERE PREPARED ARBITRATEDLY IN ORDER TO RED UCE THE TAXABLE INCOME OF THE ASSESSEE. IN THE REMAND REPORT FILED BY THE AO BEFORE THE CIT(APPEALS), IT WAS CLEARLY STATED THAT THERE W AS NO INDICATION OF ANY DISCOUNT GIVEN TO THE CUSTOMERS. THE LD.DR FURT HER SUBMITTED THAT THERE WAS NO NEXUS BETWEEN THE CREDIT CARD PAY MENT SALES BILL AND DISCOUNT VOUCHERS GIVEN BY THE ASSESSEE. ACCOR DING TO THE LD.DR, WHEN THE ASSESSEE ADMITTED THE SALES AS PER SALES BILL AND 4 I.T.A. NOS. 2231 TO 2234/MDS/2015 I.T.A. NOS. 521 TO 523/MDS/2016 FILED THE RETURN UNDER VAT ACT, THE SAME HAS TO BE T REATED AS ACTUAL SALES. THEREFORE, MAKING FURTHER CLAIM OF DISCOUNT IS NOT JUSTIFIED. 4. ON THE CONTRARY, SHRI S.SRIDHAR, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE ADMITTEDLY ENG AGED IN THE BUSINESS OF PURCHASE AND SALE OF READYMADE GARMENTS . THE AO MADE AN ADDITION ON THE DIFFERENCE BETWEEN THE ADMI TTED SALES IN THE INCOMES RETURN AND THE VALUE DISCLOSED BEFORE DISCO UNT. ACCORDING TO THE LD. COUNSEL, IN THIS KIND OF BUSINESS AFTER BIL LS ARE GENERATED AT THE RESPECTIVE SALES COUNTER, THE CUSTOMER REQUEST FOR DISCOUNT. THEREFORE THE DISCOUNT IS NOT SHOWN IN THE SALES BIL L. BUT A SEPARATE DISCOUNT VOUCHERS WERE MADE. THE AO DISBELIEVED THE CLAIM OF DISCOUNT ONLY ON THE GROUND THAT THE CUSTOMER SIGNA TURE WAS NOT FOUND IN THE DISCOUNT VOUCHERS. THE CREDIT CARD SCROLLED FILED BY THE ASSESSEE, THE REMAND REPORT SUBMITTED BY THE AO PRO VED THAT THE DISCOUNT WAS ALLOWED BY THE ASSESSEE. ACCORDING TO THE LD. COUNSEL, THE CREDIT CARD SALES SCROLLED IS INDEPENDENT EVIDE NCE. THEREFORE, THE AO CANNOT DOUBT THE SAME. ACCORDING TO THE LD. COU NSEL TOTAL SALES WERE TAKEN IN TO CONSIDERATION AND PERCENTAGE WAS D EDUCTED FROM THE SALES. UNLESS AND UNTIL, THE ASSESSEE GAVE A DISCO UNT TO THE CUSTOMER WHO ARE REQUESTING FOR DISCOUNT, THE ASSESSEE MAY N OT ABLE TO CARRY ON THE BUSINESS. THE ASSESSEES CLAIM BEFORE THE A O THAT AVERAGE OF 5 I.T.A. NOS. 2231 TO 2234/MDS/2015 I.T.A. NOS. 521 TO 523/MDS/2016 5.5% OF TOTAL SALES VALUE WAS GIVEN AS DISCOUNT. H OWEVER, THE CIT(APPEALS) BY CONSIDERING THE ORDER FOR THE ASSESS MENT YEAR 2004- 05 ALLOWED DISCOUNT OF 4%. THIS TRIBUNAL IN I.T.A. NO.1203/MDS/2007 BY AN ORDER DATED 23.01.2009 CONFIRMED THE ORDER OF THE CIT(APPEALS) FOR THE ASSESSMENT YEAR 2004-05. THEREFORE, THE 4% OF THE DISCOUNT ALLOWED BY THE CIT(APPEALS) IS REASONABLE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESS EE IS ADMITTEDLY ENGAGED IN THE BUSINESS OF READYMADE GARMENTS. IT IS COMMON KNOWLEDGE THAT WHEN THE CUSTOMERS PURCHASE THE READ YMADE GARMENTS, THEY REQUEST FOR DISCOUNTS AFTER PURCHASI NG THE SAME. NORMALLY THE REQUESTS ARE MADE TO THE OWNER OF THE BUSINESS PREMISES AFTER THE SALES BILLS WERE GENERATED. THE DISCOUNTS ARE GIVEN TO THE CUSTOMERS. IT WOULD BE GIVEN TO THE ONLY CU STOMERS WHO ARE REQUESTING FOR SUCH DISCOUNTS. HOWEVER, DURING SOM E OCCASIONS LIKE STOCK CLEARANCE, ETC., DISCOUNTS WILL BE GIVEN UNIF ORMLY TO ALL THE CUSTOMERS. FROM THE ORDER OF THE ASSESSING OFFICER IT APPEARS THAT ON SUCH SPECIAL OCCASIONS, THE DISCOUNTS ARE SHOWN IN THE SALES BILL ITSELF. MOREOVER, BEFORE THE SALES TAX DEPARTMENT, THE ASSE SSEE HAS DISCLOSED HIGHER FIGURE. THE CASHIER SHRI M.N. PARM AR HAS STATED DURING THE COURSE OF EXAMINATION THAT HE WILL RECEI VE THE BILL ONLY AS 6 I.T.A. NOS. 2231 TO 2234/MDS/2015 I.T.A. NOS. 521 TO 523/MDS/2016 PER THE AMOUNT MENTIONED IN THE SALES BILL. THEREFO RE, THERE WAS A CONFUSION WHETHER THE ASSESSEE RECEIVED THE AMOUNT MENTIONED IN THE SALES BILL OR THE DISCOUNTED AMOUNT AS CLAIMED BY T HE ASSESSEE. 6. IN VIEW OF THE STATEMENT RECORDED DURING THE COU RSE OF SEARCH OPERATION, THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THE MATTER NEEDS TO BE RE-EXAMINED. ACCORDINGLY, THE ORDERS O F BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSU E IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OF FICER SHALL RE- EXAMINE THE MATTER AFRESH IN THE LIGHT OF THE MATER IAL AVAILABLE ON RECORD AND ALSO THE CUSTOMARY PRACTICE THAT IS NORM AL IN THIS KIND OF TRADE, AND THEREAFTER DECIDE THE ISSUE AFRESH IN AC CORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESS EE. 7. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 18 TH JANUARY, 2018 AT CHENNAI. SD/- SD/- ( . ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANE SAN) /ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, . /DATED, THE 18 TH JANUARY, 2018. KRI. 7 I.T.A. NOS. 2231 TO 2234/MDS/2015 I.T.A. NOS. 521 TO 523/MDS/2016 ( &+/0 10#+ /COPY TO: 1. $% /APPELLANT 2. &'$% /RESPONDENT 3. * 5+ ( )/CIT(A) 4. * 5+ /CIT 5. 06 &+ /DR 6. 7' 8 /GF