The ACIT, Circle 1(3), Ahmedabad V. Smt. Neetaben Rajendra Seth, Ahmedabad

ITA 2484/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8219 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 03-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT JHVERI
• Assessee Lawyers: S N SOPARKAR
• Section: 143(3)

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD L LL LOZJH OZJH OZJH OZJH OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN] U;KF;D LNL; ] U;KF;D LNL; ] U;KF;D LNL; ] U;KF;D LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.2484/AHD/2016 ( / ASSESSMENT YEAR : 2012-13) ASST. CIT, CIR 1(3), AHMEDABAD. / VS. NEETABEN RAJENDRA SETH, 456, KB COMMERCIAL CENTER, NR. DINBHAI TOWER, LALDARWAJA, AHMEDABAD 380 001 ./ ./ PAN/GIR NO. : AEQPS 9091 H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : DR. JAYANT JHVERI, SR.D.R. / RESPONDENT BY : SHRI S. N. SOPARKAR (ADV.) / DATE OF HEARING 0 9 /05/2018 !'# / DATE OF PRONOUNCEMENT 24 /05/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-10, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-10/ITO-WD/1(3)(1)/206/15-16 DATED 21/07/2 016 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF T HE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'T HE ACT') DATED 26/03/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2012-13 . ITA NO.2484/AHD/2016 ACIT V. NEETABEN RAJENDRA SETH ASST.YEAR 2012-13 - 2 - 2. THE REVENUE HAS RAISED THE FOLLOWINGS GROUNDS OF APPEAL : THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.80,00,000/- MADE ON ACCOUNT OF TRADE DEPOSIT RECEIVED BY THE ASSESSEE TREATED AS REVENUE RECEIPT. 3. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APP EAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE A O FOR RS.80,00,000/- ON ACCOUNT OF TREATING THE TRADE DEP OSIT AS REVENUE RECEIPT. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF AUTOMO BILE DEALER AND SERVICE CENTRE. THE ASSESSEE, DURING THE YEAR HAS S HOWN CERTAIN TRADE DEPOSITS OF RS. 80,00,000/- RECEIVED FROM HIS PARTIES IN ITS BALANCE SHEET AS ON 31-03-2012. THE AO TO THE ASSES SMENT PROCEEDINGS OBSERVED THAT THE AMOUNT OF TRADE DEPOS ITS ARE REPRESENTING THE VALUE/SALE PROCEEDINGS OF THE VEHI CLES, THEREFORE, THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSES SEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD. C IT(A), WHO DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: 4. THE SUBMISSIONS MADE BY THE APPELLANT, THE MAT ERIAL AVAILABLE ON RECORD AS WELL AS THE DISCUSSION UNDERSIGNED HAD WITH THE APPELLANT DURING THE COURSE OF PROCEEDINGS WERE PER USED AND CONSIDERED. THE SAME HAS ALSO BEEN PLACED ON RECORD . THE ADDITION ON ACCOUNT OF SECURITY TRADE DEPOSITS HAS BEEN MADE BY THE AO FROM THE A.Y. 2010-11 ONWARDS. THE LD. CIT(A) IN THE YEAR 20 10-11, AFTER GOING INTO THE DETAILS OF THE FACTS, HAS ALLOWED THE APPE AL OF THE APPELLANT ON THIS GROUND. THE DECISION OF CIT(A) FOR A.Y. 2010-1 1 IS REPRODUCED AS UNDER:- ITA NO.2484/AHD/2016 ACIT V. NEETABEN RAJENDRA SETH ASST.YEAR 2012-13 - 3 - '4.3 THE CONTENTION OF THE LD. AR ARE THAT THE APPE LLANT IS CARRYING ON THE BUSINESS DIRECTLY AS WELL AS TH ROUGH AUTHORIZED REPRESENTATIVE DEALERS (ARDS) APPOINTED BY THE APPELLANT AND SALES SERVICE PROVIDER (SSPS) APPOINT ED BY THE PARENT COMPANY NAMELY HERO MOTO CORP LTD. THE SALES THROUGH ARDS AND SSPS ARE MADE OF CONSIGNMENT BASIS ; THE SALES INVOICE ARE ISSUED BY THE APPELLANT AND THE E NTIRE SALES CONSIDERATION IS ALSO DIRECTLY RECEIVED BY HER; C OMMISSION IS BEING PAID TO ARDS AND SSPS ON THE SALES MADE THORO UGH THEM. SINCE THE APPELLANT'S VEHICLES ARE KEPT WITH ARDS A ND SSPS FOR DISPLAY, TEST DRIVE ETC AT DIFFERENT LOCATIONS, TRA DE DEPOSITS WERE RECEIVED FROM THEM BY WAY OF SECURITY. CONFIRMATION LETTERS IN THIS REGARD FROM ARDS AND SSP WERE FURNISHED TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WHEN THE SALE ACTUALLY TAKES PLACE, THEY ARE BOOKED BY THE APPLICANT AND CORRESPONDING TRADE DEPOSITS WERE RETURNED TO A RDS AND SSPS. THE-OPENING CREDIT BALANCE IN THE NAME OF SIX ARDS AND SSPS STOOD AT RS.44,71,107/-, DURING THE YEAR OF DE POSITS OF RS.35.5 LAKHS IS RECEIVED, AN AMOUNT OF RS. 26 LAKH S WAS REPAID LEAVING THE BALANCE OF RS 54,21,107/- IN THE BOOKS OF ACCOUNTS. AO'S ACTION IN ASSESSING THE SECURITY TRADE DEPOSIT S RECEIVED DURING THE YEAR OF RS. 35.5 LAKHS IS AGAINST THE BA SIC ACCOUNTING PRINCIPLES AS THE SECURITY TRADE DEPOSITS CANNOT BE TREATED AS SALES AND THE ACTION OF THE AO LEADS TO THE DOUBLE TAXATION, AS APPELLANT IS ADMITTING THE SALE PROCEEDS AS AND WHE N THE ACTUAL SALES TAKES PLACE. 4.4 HAVING CONSIDERED THE FACT OF THE MATTER, I AM INCLINED, TO ACCEPT THE CONTENTIONS OF THE LD. A.R. WITH VIEW TO ENSURE THE SAFETY OF VEHICLES KEPT WITH ARDS AND SSPS AT D IFFERENT LOCATIONS, APPELLANT RECEIVED AD-HOC AMOUNT BY WA Y OF SECURITY DEPOSITS. THESE AMOUNT NOTHING TO DO WITH ACTUAL MARKET PRICE OF THE VEHICLES. AS AND WHEN SALES TAK ES PLACE THROUGH THE ARDS AND SSPS, APPELLANT ACCOUNT FOR TH E SALES PROCEEDS IN THE BOOKS OF ACCOUNTS AND R EFUNDS THE CORRESPONDING DEPOSITS TO THE ARDS AND. SSPS. THI S METHOD HAS BEEN CONSISTENTLY FOLLOWED OVER THE YEARS. AS S EEN FROM THE ASSESSMENT ORDER U/S 143(3) PASSED IN THE APPELLANT 'S CASE FOR THE IMMEDIATELY PRECEDING A.Y. 2009-10, THE INCOME RETURNED IS ACCEPTED AND NO ADDITION IN RESPECT OF TRADE DEP OSITS ITA NO.2484/AHD/2016 ACIT V. NEETABEN RAJENDRA SETH ASST.YEAR 2012-13 - 4 - RECEIVED IS MADE. TREATING THE SECURITY DEPOSITS AS TRADE PROCEEDS WITHOUT THE ACTUAL SALES TAKING PLACE IS A GAINST THE PRINCIPLE OF ACCOUNTANCY. MOREOVER, GIVEN THE CON SISTENT METHOD FOLLOWED BY APPLICANT, SUCH AS EXERCISE WILL BE REVENUE NEUTRAL. TO BE SPECIFIC IN THE YEAR UNDER C ONSIDERATION AS AGAINST THE TRADE DEPOSITS OF RS. 35.5 LAKHS REC EIVED, APPELLANT HAD REPAID RS.26 LAKHS OUT OF TRADE DEPOS ITS. IN EFFECT OF THE NET TRADE DEPOSITS RECEIVED DURING THE YEAR WERE ONLY THE TUNE OF RS 9.5 LAKHS. KEEPING IN VIEW THE FACTS OF THE CASE, IMPUGNED ADDITION IS DELETED. THIS GROUND OF APPEAL IS ALLOWED.' 4.1 IN THE A.Y. 2011-12 AS WELL, THE LD. CIT(A) AN D MY PREDECESSOR HAS ALLOWED THE APPEAL OF THE APPELLANT ON THE SAME GROUND. SINCE THE FACTS OF THE CASE IN THIS YEAR ARE SAME, BY RESPECT FULLY FOLLOWING THE ORDERS OF MY PREDECESSOR FOR A.Y. 2010-11 AND 2011- 12, I AM INCLINED TO ACCEPT THE CONTENTION OF THE APPELLANT AND THE A DDITION IS DELETED. ACCORDINGLY, ORIGINAL GROUNDS NOS.1 AND 2 ARE ALLOW ED. BEING AGGRIEVED BY THE ORDER OF LD. CIT(A) REVENUE IS IN SECOND APPEAL BEFORE US. BOTH THE PARTIES BEFORE US RELIED ON THE ORDER OF AUTHORITIES BELOW AS FAVOURABLE TO THEM. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, WE OBSERVE THAT THE JURISDICTIONAL TRIBUNAL IN THE OWN CASE OF THE ASSESSEE IN THE IDE NTICAL FACTS AND CIRCUMSTANCES HAS DECIDED THE ISSUE IN FAVOUR OF TH E ASSESSEE IN ITA NO.2554/AHD/2013 PERTAINING TO ASSESSMENT YEAR 2010 -11 VIDE ORDER DT. 09-08-2016, THE RELEVANT EXTRACT OF THE O RDER IS REPRODUCED BELOW: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE O RDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO THE CONSIDERING THE TRADE DEPOSITS RECEIVED BY THE AS SESSEE AS THE INCOME OF ASSESSEE. WE FIND THAT THE LD. CIT(A) WHILE DELETING THE ADDITION HAS NOTED THAT ASSESSEE IS CARRYING ON THE BUS INESS SALES THROUGH AUTHORIZED REPRESENTATIVE DEALERS (ARDS) APPOINTED BY THE ASSESSEE ITA NO.2484/AHD/2016 ACIT V. NEETABEN RAJENDRA SETH ASST.YEAR 2012-13 - 5 - AND SALES SERVICE PROVIDERS (SSPS) APPOINTED BY HER O MOTORS LTD, SINCE ASSESSEE'S VEHICLES ARE KEPT WITH ARDS AND SS PS FOR DISPLAY, TEST DRIVE, ETC. TRADE DEPOSITS ARE RECEIVED FROM THEM B Y THE ASSESSEE BY WAY OF SECURITY DEPOSITS. THE LD.CIT(A) WHILE DELET ING THE ADDITION HAS GIVEN A FINDING THAT AS AND WHEN THE SALES TAKE PLACE THROUGH ARDS AND SSPS, THE SALE PROCEEDS ARE ACCOUNTED AS I NCOME BY THE ASSESSEE AND THIS METHOD OF ACCOUNTING HAS BEE N CONSISTENTLY FOLLOWED BY THE ASSESSEE AND HAS ALSO BEEN ACCEPTED BY THE REVENUE IN THE SCRUTINY PROCEEDINGS. HE HAS FURTHER NOTED THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAD RECEIVED TRADE DEP OSITS OF RS.35.5 LACS AND HAS REPAID RS.26 LACS OUT OF IT AND IN EFF ECT THE NET TRADE RECEIVED BY THE ASSESSEE DURING THE YEAR WAS ONLY T O THE TUNE OF RS.9.5 LACS. UNDER THESE CIRCUMSTANCES, LD.CIT(A) HAD DELE TED THE ADDITION. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL TO C ONTROVERT THE FINDINGS / OF LD.CIT(A). IN VIEW OF THE AFORESAID F ACTS, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 7. RESPECTFULLY FOLLOWING THE SAME, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). HENCE, REVENU ES GROUND OF APPEAL IS DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 24 /05 /201 8 SD/- SD/- EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LN L; L; L; L; (MAHAVIR PRASAD) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 24/05/2018 PRITI YADAV, SR.PS ITA NO.2484/AHD/2016 ACIT V. NEETABEN RAJENDRA SETH ASST.YEAR 2012-13 - 6 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-10, AHMEDABAD. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 10/05/2018 (DICTATION-PAD 1 PA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10/05/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S23/05/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT23/05/2018 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER