M/s. Trishul Motors, Surat V. The ACIT.,Circle-9, Surat

ITA 244/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5988 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 09-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 27-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S PARIDA; B L YADAV DRS
• Assessee Lawyers: J P SHAH
• Keywords: Depreciation; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER DATE OF HEARING : 09/06/2011 DRAFTED ON: 18 /07/2011 1. ITA NO.244/AHD/2009 A.Y. 2005-06 2. ITA NO.537/AHD/2009 A.Y. 2005-06 1. M/S.TRISHUL MOTORS CHANDRADEEP OPP.SADHNA SOCIETY VARACHHA ROAD SURAT 2. THE ASST.CIT CIRCLE-9, SURAT VS. 1. THE ASST.CIT CIRCLE-9 SURAT 2. M/S.TRISHUL MOTORS CHANDRADEEP VARACHHA ROAD, SURAT PAN/GIR NO. : AABFT 4110 H ( APPELLANTS ) .. ( RESPONDENTS ) ASSESSEE BY : SHRI J.P. SHAH, A.R. REVENUE BY: SHRI S.S. PARIDA & SHRI B.L.YADAV, D.RS. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THESE CROSS APPEALS ARE ARISING FROM AN ORDER OF LD.CIT(A)-V, SURAT DATED 24/11/2008 PERTAINING TO ASSESSMENT YE AR 2005-06. SINCE THE FACTS OF BOTH THE APPEALS ARE IDENTICAL THEREFO RE HEREINBELOW DECIDED BY THIS COMMON ORDER. (A) ASSESSEES APPEAL ( ITA NO. 244/AHD/2009) 2. GROUND NO.I READS AS UNDER: (I) DISALLOWANCE OF SERVICE EXPENSES :- ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 2 - (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN CONFIRMING DISALLOWANCE OF RS.11,34,942/- BEING 50% OF THE SERVICE EXPENSES WHEN THE DETAILED VOUCHERS WERE PRODUCED AND EXAMINED BY THE INSPECTORS. (2) THE APPELLANT FURTHER SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS NOT TAKEN INTO CONSIDER ATION THE FACT OF SERVICE EXPENSES HAVING BEEN INCURRED AGAINST THE SERVICE INCOME. (3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON THE BASIS OF EVIDENCE FILED, THE DISALLOWANCE OUGHT NOT TO HAVE BEEN CONFIRMED. 2.1. FACTS IS BRIEF AS EMERGED FROM THE CORRESPOND ING ASSESSMENT ORDER PASSED U/S.143(3) OF THE IT ACT DATED 14/12/2007 WE RE THAT THE ASSESSEE- FIRM IS AN AUTOMOBILE DEALER. THE ASSESSEE IS HAVING DEALERSHIP OF EICHER MOTORS . A SUM OF RS.22,69,885/- WAS CLAIMED AS EXPENSE S TOWARDS SERVICE OF VEHICLES. IN THIS REGARD, TH E OBSERVATION OF THE AO WAS THAT AS PER THE NORMAL PRACTICE, THE EXPENDITUR E OF FREE SERVICE ARE GENERALLY REIMBURSED BY THE MANUFACTURER, I.E. EICH ER MOTORS. IT HAS ALSO BEEN NOTED BY THE AO THAT THE WATER SERVICE CH ARGES AND SPARE PARTS CHARGES ARE BORNE BY THE PARTIES ONE MORE FACT HA D EMERGED FROM THE ASSESSMENT ORDER THAT UNDER THE SAID HEAD OF SERV ICE OF VEHICLES THE TOTAL RECEIPTS WERE SHOWN AT RS.29,20,616/-, AS A GAINST THAT, EXPENDITURE HAD BEEN SHOWN AT RS.22,69,885/-, HENCE THE BALANCE OF RS.6,50,731/- WAS DISCLOSED AS INCOME BY THE ASSESSEE. THE AOS OBJECTION WAS THAT THERE WAS NO GROUND FOR SEPARATELY CLAIMING AN EXPE NDITURE TOWARDS SERVICE OF VEHICLES PRIMARILY BECAUSE OF THE REASON THAT THE PAYMENTS FOR LABOUR AND TECHNICIANS HAVE ALREADY BEEN DEBITED U NDER THE HEAD SALARY & WAGES. THE ASSESSEES EXPLANATION WAS THAT THOS E CHARGES DID NOT ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 3 - RELATE TO REGULAR EXPENDITURE ON SERVICE BUT IT WAS RELATED TO OUTSIDE JOB CHARGES, SUCH AS, PAINTING, DENTING, WELDING, ETC. THE AO WAS NOT CONVINCED AND HELD THAT THE ASSESSEE HAD ALREADY DE BITED LABOUR CHARGES AT ALL THE BRANCHES TOWARDS PAYMENT OF ITS EMPLOYEE S AND THERE WAS NO JUSTIFICATION FOR FURTHER INCURRING OF THE SAID EXP ENDITURE. HE HAS ALSO COMMENTED THAT THE ASSESSEE HAD INCURRED SALARY AND WAGES ON EMPLOYEES WHICH ARE TECHNICAL LABOUR. ONLY TECHNIC AL LABOURS WERE STATED TO BE INVOLVED IN SERVICING AND REPAIR OF TR UCKS. AS PER AO, THE EXPENDITURE WAS AN ADDITIONAL CLAIM AND SINCE THE A SSESSEE HAD FAILED TO SHOW VOUCHERS AND BILLS TO PROVE THE GENUINENESS OF THE EXPENSES INCURRED, THEREFORE, HE HAD MADE A DISALLOWANCE OF 50% OF THE CLAIM WHICH WAS WORKED OUT AT RS.11,34,942/-. THE MATT ER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LD.CIT(A) HAS EXAMINED THE FACTS OF THE CAS E AND ARRIVED AT THE CONCLUSION THAT THE ASSESSEE HAD DEBITED THOSE EXPENDITURE AT ITS BRANCH OFFICES. THOSE EXPENDITURE WERE SERVICE EX PENSES WHICH INCLUDED SALARY PAID TO STAFF AT PARDI AND VAPI BR ANCHES. AS PER LD.CIT(A), THE ASSESSEE HAD EXAGGERATED THE EXPENDI TURE, THEREFORE, HELD THAT THE AO WAS JUSTIFIED IN DISALLOWING 50% OF THE EXPENDITURE. 4. FROM THE SIDE OF THE APPELLANT-ASSESSEE, LD. AR MR.J.P.SHAH APPEARED AND HIS PRELIMINARY OBJECTION WAS THAT THE REVENUE DEPARTMENT DID NOT FOLLOW THE CONSISTENCY IN THE ASSESSMENT PR OCEEDINGS. HE HAS INFORMED THAT FOR A.Y. 2004-05 AN ASSESSMENT U/S.14 3(3) WAS MADE VIDE AN ORDER DATED 29/11/2006 AND AS AGAINST THE DECL ARED INCOME OF ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 4 - RS.23,89,406/-; INCOME WAS ASSESSED AT RS.25,21,150 /- AND THE ONLY ADDITION WAS IN RESPECT OF 1/5 TH DISALLOWANCE PERTAINING TO TELEPHONE, CONVEYANCE, OFFICE EXPENSES, ETC. THE YEAR UNDER C ONSIDERATION IS A.Y. 2005-06. FOR A.Y. 2007-08, THE ASSESSMENT WAS COMP LETED U/S.143(3) DATED 31/12/2009 AND AS AGAINST THE DECLARED INCOME OF RS.25,80,770/- THE ASSESSMENT WAS MADE ON TOTAL INCOME OF RS.38,88 ,240/- AND THE ADDITIONS WERE ABOUT CERTAIN ADHOC DISALLOWANCE. LIKE-WISE, FOR AY 2008-09, THE ASSESSMENT WAS MADE U/S.143(3) VIDE AN ORDER DATED 28/12/2010 AND THE INCOME DECLARED WAS AT RS.48,24, 778/- AND THE ASSESSMENT WAS MADE AT RS.52,68,170/- IN WHICH THE ADDITION PERTAINED TO SOME EXCESS DISCOUNT DISALLOWANCE. HE HAS ALSO CLARIFIED THAT IN THE YEAR UNDER APPEAL THE EXPENDITURE WAS DULY SUPPORT ED BY BILLS AND VOUCHERS AND MOST OF THEM WERE SUBJECTED TO TDS. HE HAS PLEADED THAT THERE WAS NO SCOPE OF AN ESTIMATED 50% DISALLOWANCE . 5. FROM THE SIDE OF THE REVENUE, LD.DRS MR.S.S. PAR IDA & MR.B.L. YADAV APPEARED AND SUPPORTED THE ORDERS OF THE AUT HORITIES BELOW. 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED VIEW THAT ONCE THE IMPUGNED EXPENDITURE WAS DULY SUPPORTED BY EITHER BILLS OR VOUCHERS AND THE AO HAD NOT MADE ANY SPECIFIC COMMENT ABOUT THE GENUINENESS OF THE EXPENDITURE, T HEREFORE, MERELY ON SUSPICION AN ADHOC DISALLOWANCE WAS UNWARRANTED. MOREOVER, THE CONTENTION OF LD.AR APPEARS TO BE CORRECT THAT THE IMPUGNED PAYMENTS ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 5 - WERE SUBJECTED TO TAX DEDUCTION AT SOURCE. OUR AT TENTION HAS ALSO BEEN DRAWN ON THE MODE OF PAYMENT TO DEMONSTRATE THAT LA RGELY THE PAYMENTS WERE MADE THROUGH A/C.PAYEE CHEQUES. ABOUT THE NECESSITY AND THE EXPEDIENCY OF THE EXPENDITURE, ASSESSEE HAD EXPLAIN ED THAT IN THE AUTOMOBILE INDUSTRIES CERTAIN JOBS ARE TO BE PERFOR MED BY OUTSIDERS ON JOB-WORK BASIS AND SINCE THE SAID FACT WAS DULY VER IFIABLE, HENCE, NO DISALLOWANCE WAS REQUIRED. WE FIND FORCE IN THE SA ID SUBMISSIONS, HENCE, DIRECT TO ALLOW THE TOTAL CLAIM WITHOUT ANY RESTRICTION. IN THE RESULT, THIS GROUND IS ALLOWED. 7. GROUND NO.(II) READS AS UNDER: (II) VEHICLE DISCOUNT - (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN CONFIRMING DISALLOWANCE OF DISCOUNT OF RS.80,00,000/- . (2) THE APPELLANT SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS NOT TAKEN INTO CONSIDERATI ON THE RELATED FACTS AND CIRCUMSTANCES AND HAS BEEN INFLUE NCED BY THE FACT THAT THE DISCOUNT WAS GIVEN ON SELF MADE V OUCHERS AND THESE VOUCHERS WERE EXAMINED BY THE INSPECTOR OF TH E DEPARTMENT AND DID NOT FIND ANY REASON FOR DISSATIS FACTION. (3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DIS ALLOWANCE IS REQUIRED TO BE DELETED. 7.1. THE AO HAS OBSERVED THAT THE ASSESSEE HAD SO LD TOTAL 470 VEHICLES. HE HAS FOUND THAT ON THE PURCHASES MAD E BY THE INDIVIDUALS THE ASSESSEE HAD GRANTED DISCOUNTS OF RS.85,37,699/ -. HE HAS ALSO NOTICED THAT ON BULK PURCHASES A DISCOUNT OF RS.15, 14,396/- WAS GRANTED. A TOTAL DISCOUNT AS PER AO WAS RS.1,00,52,095/-. AS PER AO, AN ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 6 - AVERAGE RS.21,000/- DISCOUNT WAS GIVEN ON EACH VEHI CLE. AS AGAINST THAT, AS PER AO, THE MARGIN OF PROFIT ON EACH VEHICLE WAS AROUND RS.35,000/-. A DETAILED DISCUSSION WAS MADE AS PER THE ASSESSMEN T ORDER AND THEREIN AO HAD MENTIONED THAT DURING VERIFICATION OF ACCOUN T AND THE BILLS, IT WAS FOUND THAT THE AMOUNT OF DISCOUNT WAS NOT MENTIONED . THE ASSESSEES REPLY WAS THAT A SEPARATE CASH VOUCHER WAS MADE FOR EACH CUSTOMER. AFTER REFERRING FEW CASE LAWS, A.O. HAD DRAWN A CON CLUSION AS FOLLOWS:- 6.4. KEEPING IN VIEW THAT SOME OF THE DISCOUNT HAS GENUINELY PASSED ON TO CUSTOMERS WITHOUT ANY VESTED INTEREST, I DISALLOW RS.80,00,000/- CASH DISCOUNT AMOUNT ALLEGEDLY OFFER ED BY HIM TO CUSTOMERS ON INDIVIDUAL AND BULK PURCHASES FROM THE TOTAL AMOUNT OF RS.1,00,52,095/- AND ADD BACK TO HIS INCOME. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 8. BEFORE LD.CIT(A), THOSE FACTS WERE REITERATED, H OWEVER, HE WAS NOT CONVINCED AND UPHELD THE ACTION OF THE AO AS PER TH E FOLLOWING PARAGRAPH:- I HAVE GONE THROUGH THE CONTENTION OF THE APPELLAN T AS WELL AS THAT OF THE AO. AS PER THE AOS FINDINGS, DISCOUNT WAS NOT MENTIONED ON THE INVOICES AND SEPARATE SELF MADE CA SH VOUCHERS REFLECTED THE DISCOUNT ALLOWED. THIS IS NOT THE CASE WHERE THE DISCOUNT ALLOWED WAS DULY SHOWN IN THE INVOICES AND IT WAS DEDUCTED FROM THE PRICE OF THE VEHICLE SOLD AND THE APPELLANT HAD ACTUALLY RECEIVED THE NET AMOUNT AFTER DISCOUNT. THE APPELLANT HAS ACTUALLY RECEIVED THE FULL PAYMENT AND IMPARTED DISCOUNT BY RENDERING BACK CASH TO ITS CUSTOMER. THE APPELLANT HAS NO CORROBORATIVE EVIDENCE EXCEPT SELF MADE CASH VOUCHE RS TO PROVE ITS CLAIM. THIS SURELY OFFERS AN IMMENSE SCOPE FOR MAN IPULATION OF ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 7 - EXPENSES. THE FACT OF THE MATTER IS THAT THE RECEI PT OF FULL SALE PRICE IS DOCUMENTED AND EVIDENCED, HOWEVER DISCOUNT GIVEN IS ONLY BACKED BY SELF MADE VOUCHERS PREPARED UNILATERALLY. ADMITTEDLY THERE ARE NO STANDARD OR FIXED NORMS FOR DISCOUNTS AS PER THE AR AS MENTIONED IN PARA 11 ON PAGE 11 OF THE WRITTEN S UBMISSIONS. IT IS FURTHER MENTIONED ON PAGE 14 THAT DISCOUNT FACTOR IS ALWAYS NEGOTIABLE AND DEPENDS ON EXIGENCY OF CUSTOMER AND APPELLANTS EAGERNESS TO SELL (AS MENTIONED IN PARA 11). DISCOUNT VARIES FROM CUSTOMER TO CUSTOMER AND VEHICLE TO VEHICLE AS PER APPELLANTS CLAIM. IN SUCH SITUATION THE NATURE OF EVIDENCE HA S TO BE VERY DEFINITE AND SURELY SELF MADE VOUCHERS FOR SUCH HUG E EXPENSE (DISCOUNT) ARE INADEQUATE AND DO NOT JUSTIFY ALLOWA NCE OF EXPENSES. IF THE SALE IS BILLED FOR THE FIXED PRIC E EXCLUDING DISCOUNT, THE RECIPIENT HAS TO NOT ONLY CLAIM DEPRECIATION ON THE NET PURCHASE VALUE BUT ALSO SHOW THE DISCOUNT RECEI PTS AS INCOME. THE AR SAYS IT IS NOT VERY RELEVANT BUT IN MY OPINI ON IT HAS A CRUCIAL BEARING ON THE ALLOWANCE OF THE DISCOUNT AS EXPENSE. SURELY THIS RS.80,00,000 REQUIRES TO BE TAXED AND C ANNOT GO UNTAXED AT BOTH ENDS. TAKING THE ABOVE DISCUSSION INTO CONSIDERATION IT IS HELD THAT THERE IS NO EVIDENCE WHICH WOULD BE THE BASIS TO TREAT THE DISCOUNTS AS AN ALLOWABLE EX PENDITURE. MERELY BECAUSE THE PREDECESSOR ASSESSING OFFICER DI D NOT MAKE THE ADDITION ON THIS ACCOUNT DOES NOT BIND THE AO TO FO LLOW THE SAME DECISION. THE AOS ACTION IS THEREFORE SUSTAINED A ND THE APPELLANTS APPEAL ON THIS GROUND IS DISMISSED. 9. PARTIES HEARD. CASE RECORDS PERUSED. AT THE OU TSET, AN ORDER OF ITAT D BENCH AHMEDABAD IN THE CASE OF ACIT VS. N ANAVATI MOTORS (ITA NO.2979/AHD/2009 FOR A.Y. 2001-02) DATED 18/0 1/2010 AND AN ANOTHER ORDER OF ITAT B BENCH AHMEDABAD BEARING I TA NO.1609/AHD/2006 FOR A.Y. 2002-03 OF M/S.NANAVATI M OTORS DATED 23/04/2010 ARE PLACED ON RECORD. THROUGH THESE ORDE RS, IT WAS COMMUNICATED THAT THE ISSUE OF DISCOUNT TO THE CU STOMERS BY A MOTOR CAR ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 8 - DEALER WAS HELD AS AN ALLOWABLE CLAIM. RELEVANT PARAGRAPH FROM THE ORDER OF 2001-02 IS REPRODUCED BELOW:- 5. IN VIEW OF THE ABOVE FACTS THAT THE ASSESSEE B EING A DEALER OF MOTOR CAR HAS ALLOWED DISCOUNT TO THE CUSTOMERS AS WELL AS COMMISSION, I.E. SHORT PAYMENT ACCOUNT, SALE OF VAL UE OF CARS AND FOR THIS THE ASSESSEE HAS PRODUCED ALL SALES BILLS, COPY OF ALL LEDGER A/C. OF SUCH CUSTOMERS WHICH PROVE THAT IN THE CASE S OF CUSTOMERS INITIALLY THE CUSTOMERS ACCOUNTS WERE DEBITED WITH FULL SALE VALUE OF CARS AND WITH THE HELP OF LEDGER A/C IT WAS SHOW N THAT THE CUSTOMERS THOUGH THE FULL SALE VALUE OF THE CARS WE RE DEBITED IN THE CUSTOMERS A/C, THE CONCERNED CUSTOMER PAID LESSER AMOUNT BY CHEQUES/DRAFT AND THE BALANCE AMOUNT IN THE CUSTOME RS ACCOUNTS WERE TRANSFERRED TO THE COMMISSION EXPENSE/DISCOUNT A/C. THE ASSESSEE BEFORE THE LOWER AUTHORITIES HAVE PRODUCED THE LEDGER A/C AND THE COPY OF SALE BILLS ALONG WITH BOOKS OF ACCO UNT AND EVEN NOW THEY HAVE FILED THESE DETAILS. THE FACT IS THA T THE DISCOUNT AND COMMISSION, I.E. SHORT PAYMENT IS MADE BY THE CUSTO MERS AND THIS CAN BE EASILY VERIFIED FROM THE BOOKS OF ACCOUNT. ACCORDINGLY, CIT(A) HAS RIGHTLY DELETED THE ADDITION AS NARRATED ABOVE AND WE CONFIRM THE SAME. THIS ISSUE OF THE REVENUES APPE AL IS DISMISSED. 10. WE HAVE CAREFULLY PERUSED THE CITED DECISIONS, HOWEVER, AS FAR AS ASSESSEES CASE IS CONCERNED, THE CONTENTION OF LD. MR. SHAH IS THAT THE ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 9 - IMPUGNED DISCOUNT WAS MADE AS A MEASURE OF SALES PR OMOTION AND TO COMPETE AGAINST OTHER BRANDS LIKE, TATA AND ASHOK LEYLAND. LD. MR. J.P. SHAH HAS ALSO BEEN CONTESTED THAT THE NAMES A ND THE ADDRESSES OF THE CUSTOMERS, SALES INVOICE, DETAILS OF THE VEHICLE SO LD AND SIGNATURE OF THE CUSTOMER ON THE DISCOUNT VOUCHER WERE MADE AVAILABL E TO THE AUTHORITIES BELOW. IT WAS ALSO INFORMED THAT THE ASSESSEE US ED TO GET AN AMOUNT FROM THE PARENT COMPANY, I.E. EML WHICH IS PASSED O N TO THE PURCHASER. LD. A.R. HAS VEHEMENTLY PLEADED THAT THERE WAS NO O CCASION TO DEVIATE, FROM THE PAST ACCEPTED BOOK-RESULT, FOR THE YEAR UN DER CONSIDERATION. 10.1 LD. D.R. HAS PLACED STRONG RELIANCE ON T HE FINDINGS OF THE AUTHORITIES BELOW. THEY HAVE POINTED OUT CERTAIN DI SCREPANCIES IN THE EVIDENCES PLACED IN THE COMPILATION, WHICH SHALL BE DEALT WITH HEREIN- BELOW. 11. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE PLEADINGS OF BOTH THE SIDES. THOUGH THE ABOVE DECISION OF THE TR IBUNAL HAS BEEN CITED BEFORE US BUT AS FAR AS THE FACTS OF THE PRESENT CA SE IS CONCERNED, IT WAS NOTICED BY US, DURING THE COURSE OF HEARING, THAT T HE CONFIRMATION GIVEN BY THE PURCHASERS, PHOTOCOPIES AS PLACED IN THE COM PILATION, HAVE CERTAIN DISCREPANCY PARTICULARLY IN RESPECT OF THE AMOUNT O F DISCOUNT MENTIONED THEREIN. ON PAGE NO.20, THERE IS AN ORDER REGIS TRATION FORM OF ONE CUSTOMER MR. ARIFBHAI WHO HAS BOUGHT EICHER TRUCK A ND AS PER THE REVERSE OF THAT DOCUMENT, THE PRICE WAS QUOTED AS R S.6,67,113/-. AT THE END, THE CASH DISCOUNT NOTED AS RS.15,000/- AND THE BIFURCATION NOTED AS (RS.13,000 + RS.2,000 BROKER). AS AGAINST THAT, AS PER THE CONFIRMATION OF DISCOUNT, PLACED ON PAGE 21 OF PAPER-BOOK, STA TED AN AMOUNT OF RS.15,000/- GIVEN AS DISCOUNT. THERE WAS NO SATIS FACTORY ANSWER THAT ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 10 - WHY THE AMOUNT OF RS.2,000/- WHICH WAS FOUND TO BE IN THE NAME OF BROKER HAS BEEN CONFIRMED BY THE SAID PARTY. LIKEW ISE, ON PAGE NO.30 OF COMPILATION, AS PER THE ORDER REGISTRATION FORM T HE CUSTOMERS NAME IS NARAYANBHAI KALURAM, WHO HAD BOUGHT EICHER TRUCK AN D THE COST MENTIONED AS RS.6,06,382/-. AT THE REVERSE OF THIS DOCUMENT, THERE IS NO MENTION OF ANY GRANT OF DISCOUNT. HOWEVER, ON PAG E NO.31 OF COMPILATION, THERE IS A CONFIRMATION ON DISCOUNT OF RS.12,000/-. WE HAVE ALSO NOTED THAT IN SOME OF THE CASES, SUCH AS, ON PAGE 36 THERE IS A CONFIRMATION OF DISCOUNT OF A CUSTOMER, VIZ. VALSAD GAS DISTRIBUTORS OF RS.16,479/- BUT THE FIGURE DID NOT MATCH WITH THE ORDER REGISTRATION FORM. AGAIN ON PAGE 40, THERE IS ORDER REGISTR ATION FORM OF CUSTOMER KISHORBHAI BHIMRAJBHAI WHO HAS NOT MADE ANY SIGNATU RE ON THE REVERSE OF THE FORM AND THE AMOUNT OF RS.18,000/- WAS GIVEN TO SOME DEEPAK SILVASIA AS NOTED IN THE REVERSE OF THE FORM, BUT T HE CONFIRMATION IS MADE BY SOME OTHER PERSON. APART FROM THESE OBSERVATIONS, THE MOST IMPORTANT THING WHICH WE HAVE NOTED IS THAT THE SIG NATURES ON THE CONFIRMATIONS DID NOT MATCH WITH THE SIGNATURES FOU ND ON ORDER REGISTRATION FORM. THE DISTINCTION IS GLARING A ND CAN BE OBSERVED AT ONE GLANCE. AN ANOTHER IMPORTANT FEATURE NOTED BY US ABOUT AL L THE CONFIRMATIONS IS THAT NONE OF THEM BEAR ANY DAT E. THE CONFIRMATIONS AS PLACED BEFORE US ARE UNDATED. TH ESE FACTS AND INSTANCES AS WITNESSED BY US THUS GIVE RISE TO A DOUBT ABOU T THE GENUINENESS OF THE DOCUMENTS. IN THIS CONNECTION , VIDE PARAGRAPH NO. 6.2 OF THE ASSESSMENT ORDER, THE AO HAS ALSO NOTED AS FOLLOWS:- ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 11 - 6.2. THE INSPECTOR HAD VISITED THE PREMISES ON 29. 11.2007 AND CHECKED SOME OF THE VOUCHERS BUT COPIES OF THE VOUC HERS BROUGHT BY HIM WAS SELF MADE VOUCHERS OF TRISHUL MOTORS AND MOST OF THE DISCOUNT IS GIVEN THROUGH THOSE VOUCHERS ONLY. NOT HING WAS MENTIONED IN THE BILLS OR INVOICES PROVIDED TO CUST OMERS. HENCE, THE GENUINETY OF DISCOUNT EXTENDED BY ASSESSEE IS Q UESTIONABLE AND IT IS DIFFICULT TO ASCERTAIN WHETHER HE IS REALLY E XTENDING THAT DISCOUNT TO THE CUSTOMERS OR NOT. BY SHOWING VEHICLE DISCOUNT IN HIS BOOKS OF A/CS, HE IS SUPPRESSING THE PROFIT RAT IO IN THE SALES OF THE FIRM. THE OTHER ANGLE OBSERVED IN THIS ASPECT IS ASSESSEE IS EXTENDING BILLS / INVOICES IN THE ACTUAL PRICE WITH OUT MENTIONING DISCOUNT... 12. IN THE LIGHT OF OUR ABOVE OBSERVATIONS, WE ARE OF THE CONSCIENTIOUS VIEW THAT THIS IS A SERIOUS MATTER WHICH REQUIRES A THOROUGH INVESTIGATION. WE ARE OF THE CONSIDERED OPINION THAT THE PRACTICE OF GRANTING DISCOUNT TO THE PURCHASER OF THE VEHICLE, THAT TOO IN CASH, REQ UIRES AN IN-DEPTH ENQUIRY. THE AO HAS TO INVESTIGATE THE GENUINENESS OF THE CONFIRMATIONS CLAIMED TO HAVE BEEN OBTAINED FROM THE CUSTOMERS W HO HAVE PURCHASED THE VEHICLES FROM THIS DEALER. WE ALSO EXPECT TH AT THE AO SHALL TAKE PROPER ACTION OF VERIFICATION OF SIGNATURES AS PRES CRIBED UNDER LAW AFTER TAKING THE POSSESSION OF THE ORDER REGISTRATION FORMS FOR THE PURPOSE OF MATCHING THE SIGNATURE WITH THE SIGNATURES FOUN D ON THE CONFIRMATIONS ALLEGED TO HAVE BEEN SIGNED BY THOSE VERY CUSTOMERS . THE AO SHALL ALSO ENQUIRE FROM THE PARENT COMPANY, I.E. EITHER MOTORS LTD. ABOUT THE POLICY OF GRANTING OF CASH DISCOUNT TO THE CUSTOMERS. A S FAR AS THE DECISION OF ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 12 - THE RESPECTED CO-ORDINATE BENCH IS CONCERNED, A CAT EGORICAL FINDING WAS GIVEN THAT THE SALES BILLS WERE PRODUCED AND ON TH E BASIS OF OTHER CORROBORATIVE EVIDENCES, IT WAS PROVED THAT THE CON CERNED CUSTOMER HAD PAID THE LESSER AMOUNT THAN THE SALE VALUE OF THE V EHICLE. AS AGAINST THAT IN THE PRESENT APPEAL, THE EVIDENCES ARE PRIMA-FACIE DOUBTFUL AND THE ASSESSEE HAS NOT ESTABLISHED THAT IN FACT HE HAS RE CEIVED THE SHORT PAYMENT FROM THE CUSTOMERS. THEREFORE, WE HEREBY DIRECT TH E AO TO VERIFY THE GENUINENESS AS ALSO THE CORRECTNESS OF THE CLAIM. B EFORE WE CONCLUDE, WE MAY LIKE TO MENTION THAT WHILE DECIDING ONE OF T HE GROUND OF THIS ASSESSEE HEREINABOVE, WE HAVE COMMENTED THAT A CONS ISTENCY HAS TO BE FOLLOWED IN RESPECT OF CLAIM OF EXPENDITURE. THIS IS A RULE WHICH HAS TO BE APPLIED IN GENERAL IN THE ORDINARY COURSE OF ASS ESSMENT PROCEEDINGS, BUT THIS RULE HAS AN EXCEPTION FOR INCOME-TAX PRO CEEDINGS THAT EACH ASSESSMENT PROCEEDING IS AN INDEPENDENT PROCEEDING, THEREFORE, THE RULE OF RES JUDICATA DO NOT APPLY. IN THE CASE OF RADHA SWAMY SATSANG REPORTED AT 193 ITR 321 (SC) THE HONBLE SUPREME CO URT HAS PRONOUNCED THIS RULE. IN THE TOTALITY OF THE CIRCU MSTANCES AND THE DISCUSSION MADE HEREINABOVE, WE HEREBY RESTORE THIS ISSUE BACK TO THE FILE OF AO TO INVESTIGATE AND DECIDE DE NOVO AS PER LAW. 13. GROUND NO.(III) READS AS UNDER: (III) MISCELLANEOUS : (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE DELETED INTEREST CHARGED U/S.234B OF THE ACT. (2) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE DELETED INTEREST CHARGED U/S.234C OF THE ACT. ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 13 - 13.1. THESE GROUNDS ARE CONSEQUENTIAL IN NATURE AN D NEED NOT TO BE ADJUDICATED UPON AT THIS STAGE BECAUSE ONE OF THE QUANTUM ADDITION HAS ALREADY BEEN RESTORED TO THE STAGE OF ASSESSMENT. IN THE RESULT, THESE GROUNDS ARE PRE-MATURE, HENCE DISMISSED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. (B) REVENUES APPEAL, I.E. ITA NO. 537/AHD/2009 15. GROUND NO.1 READS AS UNDER: I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.10,32,606/- MADE BY THE A.O. ON ACCOUNT OF LOSS AT BRANCH OFFICES, WITHOUT APPRECIATING THE FACTS OF THE CASE. 15.1. THE AO HAD NOTICED THAT THE ASSESSEE WAS CLA IMING A LOSS FOR FREE SERVICES IN RESPECT OF PARDI AND VAPI BRANCHES. THE OBJECT ION OF THE AO WAS THAT IN SPITE OF THE PROVISIONS OF REIMBURSEMEN T OF EXPENSES FOR FREE SERVICES AS PROVIDED BY THOSE BRANCHES FOR NEW VEHI CLES PURCHASES, THEN WHY A LOSS HAD INCURRED. THE ASSESSEE HAS ALSO FA ILED TO PLACE ON RECORD SOME OF THE BOOKS OF ACCOUNT. CONSEQUENTLY, THE C LAIM OF LOSS WAS DISALLOWED. THE MATTER WAS CARRIED BEFORE THE FIRS T APPELLATE AUTHORITY. 16. THE LD.CIT(A) HAS DISCUSSED THE ISSUE AT LENGTH AND ALLOWED THE CLAIM AS PER THE FOLLOWING OBSERVATION:- ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 14 - I HAVE CAREFULLY CONSIDERED THE DETAILED FINDINGS OF THE AO AND HIS CONCLUSION ALONG WITH THE SUBMISSIONS OF THE AP PELLANT. THE ARGUMENT OF THE APPELLANT HAS FORCE AS THE METHOD A DOPTED FOR ACCOUNTING WAS TO CREDIT ALL THE INCOME EVEN FROM B RANCH OFFICES AT HEAD OFFICE AND ITS ONLY THE EXPENSES WHICH WERE DEBITED AT THE BRANCHES WITH NO CORRESPONDING INCOME. THIS METHOD ADOPTED BY THE APPELLANT WAS TO JUDGE THE EFFICIENCY OF THE BR ANCHES, AND WHAT IS TERMED AS LOSS IS THE EXPENSES INCURRED BY THE B RANCHES. THEREFORE THE BRANCHES SHOWED THE LOSS. THE INCOME BEING SHOWN AT SURAT OFFICE THE ADDITION MADE ON ACCOUNT OF THE LOSS AT BRANCHES IS NOT JUSTIFIED, THEREFORE THE SAME IS AL LOWED. 17. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, SINCE LD.CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE METHOD OF ACCOUNTING AS ADOPTED BY THE ASSESSEE IN RESPECT OF THE BRANCH OFFICE WAS CORRECT, THEREFORE, AT THIS STAGE WHEN NO CONTRARY MATERIAL IS PLACED BEFO RE US, WE FIND NO FALLACY IN THE SAID FACTUAL FINDING. THE SAME IS HEREBY CONFIRMED AND THIS GROUND OF THE REVENUE IS DISMISSED . 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED, WHEREAS APPEAL OF THE REVENUE IS DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 29 TH JULY, 2011. SD/- SD/- ( A.N. PAHUJA ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED / /2011 T.C. NAIR, SR. PS ITA NO.244/AHD/2009 (BY ASSESSEE) & ITA NO.537/AHD/2009 (BY REVENUE) M/S.TRISHUL MOTORS VS. ACIT ASST.YEAR 2005-06 - 15 - COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-V, SURAT 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION..18/7/2011 & 27.7.11 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19/07/11 & 27.7.11 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S29.7.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 29.7.11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER