Shri Kailash Mohandas Dewani, Ahmedabad V. The Income tax Officer,Ward-2(4), Ahmedabad

ITA 2534/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9728 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 13-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 11-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Onus to prove
• Section: 143(3)

Judgement Text

IT A NO. 2534 / AHD/ 201 1 ASSESSMENT YEAR: 200 8 - 09 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND KUL BHARAT JM] I TA NO. 2534 /AHD/201 1 A SSESSMENT Y EAR : 20 0 8 - 09 KAILASH MOHANDAS DEWANI, .APPELLANT C/O. KETAN H. SHAH, ADVOCATE, 903, SAPPHIRE COMPLEX, C.G. ROAD, NAVRANGPURA, A HMEDABAD . [ P AN: AB PPD 0875 N ] VS. INCOME TAX OFFICER, . RESPONDENT WARD 2(4), AHMEDABAD. APPEARANCES BY: KETAN SHAH , FOR THE A PPELLANT R.K. GUPTA , FOR THE RESPONDENT D ATE OF CONCLUDING THE HEARI NG: OCTOBER 28 TH , 201 5 DATE OF PRONOUNCING THE ORDER : JANUARY 27 TH , 201 6 O R D E R PER PRAMOD KUMAR , AM : BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 17 TH AUGUST, 2011, PASSED BY THE LEARNED CIT(A) , IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER), FOR THE ASSESSMENT YEAR 2008 - 09. 2. GRIEVANCE OF THE ASSESSEE, IN SHORT, IS THAT THE LEARNED CIT(A) ERRED IN UP - HOLDING THE DISALLOWANCE OF RS.8 ,35,499/ - ON ACCOUNT OF CASH DISCOUNT. IT A NO. 2534 / AHD/ 201 1 ASSESSMENT YEAR: 200 8 - 09 PAGE 2 OF 4 3. THE ASSESSEE BEFORE US IS ENGAGED IN WHOLESALE BUSINESS OF CASHEW AND OTHER DRY FRUITS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION FOR CASH DISCOUNT AGGREGATING TO RS.8,35,499/ - . IT WAS ALSO NOTED THAT SUCH A DEDUCTION WAS NOT CLAIMED IN THE EARLIER YEARS. WHEN THE MATTER WAS PROBED FURTHER, IT WAS EXPLAINED BY THE ASSESSEE THAT THIS IS FIRST YEAR OF ASSESSEE DOING BUSINESS WITH ASI ATIC EXPORT CORPORATION, HIS COCHI BASED PRINCIPAL, AND THAT HIS TURNOVER HAS GONE UP SUBSTANTIALLY. THE ASSESSEE ALSO FURNISHED COPIES OF 24 BILLS IN SUPPORT OF CASH DISCOUNT. THE ASSESSING OFFICER, HOWEVER, PROCEEDED TO DISALLOW THE CLAIM. WHILE DOING SO, HE OBSERVED AS FOLLOWS : - 4.5 THE FOLLOWING OBSERVATION ARE ALSO TO BE CONSIDERED ON TH E ISSUE OF C A SH DISCOUNT. 1. ON VERIFICATION OF THE SALES REGISTER PRODUCED DURING THE ASSESSMENT PROCEEDINGS, IT IS FOUND THAT CASH SALES FORMS ABOUT 80% TO 90 % OF TOTAL SALES. 2. THE CASH SALES SHOWN IN THE REGISTER ARE OF HIGH VALUE AS AGAINST NORMALLY RETAIL SAL E S WHICH AR E SMALL IN VALUE. 3. ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE FOR HAVING PAID HUG E CASH DISCOUNT TO THE CUSTOMERS . 4. THE REVIEW OF THE S A MPLE CASH MEMO SUBMITTED BY THE ASSESSEE REVEAL THAT CASH DISCOUNTS GIVEN @ 2%. AS PER CONSIGNMENT AGREEMENT FILED BY THE ASSESSEE WITH ASIATIC EXPORT ENTERPRISES, THE ASSESSEE IS ENTITLED TO A COMMISSION @ 2% AND INCENTIVE @ 1.25% FOR PROMPT P A YMENT. NO PRUDENT BUSINESS MAN WOULD PASS ON HIS 100% COMMISSION EARNED ON CASH SALES ON GIVING 2% CASH DISCOUNT. 5. AS PER REPLY FILED BY ASSESSEE DATED 29.12.2010, THE ASSESSEE HAS CONTENDED THAT THE BILLS AR E PREPAR E D AT KALUPUR AND THE DELIVERY WAS T AKEN BY THE CUSTOMERS ON THE SAME DAY A T ASLALI. HOWEVER, NO DELIVERY SLIPS ARE PRODUCED, NOR A NY EVIDENCE OF DELIVERY OF GOODS SUCH A S TRANSPORT RECEIPT OR COURIER RE CEIPT S AR E GIVEN. 4.6 UNDER THE CIRCUMSTANCES, CASH SALES INVOICES ARE NOT CONSIDERED A S GENUINE AND DISCOUNT PAID ON THE SALES IS ALSO TREATED AS NOT GENUINE FOR W A NT OF ANY EVIDENCE FOR GIVING C A SH DISCOUNT . PENALTY PROC EE DINGS U/S . 274 R.W.S. 271(1)(C) ARE SEPARATELY INITIATED FOR FURNISHING INACCURATE PARTICULARS. IT A NO. 2534 / AHD/ 201 1 ASSESSMENT YEAR: 200 8 - 09 PAGE 3 OF 4 4. AGGRIEVED, ASSESSE E CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT ( A ) JUSTIFIED HIS CONCLUSIONS AS FOLLOWS : - 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSMENT O RDER AND APPELLANT S SUBMISSION. APPELLANT IS A CONSIGNMENT AGE NT OF MESSERS ASIATIC EXPORT ENTERPRISE, SELLING THEIR PRODUCTS ON COMMISSION BASIS. APPELLANT WAS GETTING SALES COMMISSION @ 2% AND INCENTIVE FOR E ARLY PAYMENT @ 1.25%. APART FROM TH ESE , A S P E R AGREEMENT WITH THE CONSIGNOR, APPELLANT W A S ENTITLED TO GET REIMBURSEMENT OF EXP ENSES INCIDENTAL TO SALE OR PROMOTION OF GOODS TO THE EXT E NT OF UP TO 1.5% OF GROSS SALES VALUE. SINCE APPELLANT IS SELLING GOODS OF THE CONSIGNOR ON CONSIGNMENT BASIS AT THE SALE PRICE FIXED BY T HE CONSIGNOR AND ALL NORMAL EXPENSES A RE BORNE BY THE CONSIGNOR, THERE IS NO QUESTION OF SPENDING ANY MONEY ON CONSIGNMENT SALE B Y THE APPELLANT. SINCE ANY KIND OF DISCOUNT CAN BE GIVEN ONLY ON THE ACCOUNT OF CONSIGNOR, APPELLANT IS NOT LIABLE FOR ANY DISCOUNT OR OTHER SALES PROMOTION RELATED EXPENSES . APPELLANT S CASE IS DIFFERENT THAN THE CASE OF A NORMAL TRADER WHO IS INDEPENDENTLY SELLING GOODS AND CHARGING SALE PRICE ON HIS OWN. T HEREFORE PRIMARILY APPELLANT IS NOT SUPPOSED TO INCUR ANY EXPENSE FOR PROMOTING SALES OR GIVING ANY DISCOUNT . IN THE LIGHT OF THIS, IF APPELLANT CL A IMS ANY EXPENSE LIKE CASH DISCOUNT, ONUS TO PROVE THE EXPANSE IS VERY HEAVY ON THE APPELLANT . IN VIEW OF THE FACT MENTIONED IN THE ASSESSMENT ORDER, MOST OF THE SALES WERE MAD E BY THE APPELLANT IN CASH AND THE INVO ICES DO NOT HAVE ADDRESS DETAILS OF PURCHASERS . APPELLANT WAS AL SO NOT A BLE T O PROVE TRANSPORTATION AND DELIVER Y SLIPS ETC. TO THE PARTIES . IN VIEW OF THIS IT IS CLEAR T HAT APPELLANT MISERABLY F A ILED IN ESTABLISHING T HE GENUINENESS OF CASH DISCOUNT. JUS T WITH NAMES OF THE PARTIES , NO VERIFICATION CAN BE MADE BY THE ASSESSING OFFICER. IN ANY CASE WHERE APPELLANT CLAIMED ANY EXPENSE , ONUS IS ON HIM TO PROVE THE GENUINENESS AND BUSINESS PURPOSE. THIS BURDEN CANNOT B E SHIFTED ON ASSESSING OFFICER. SINCE A PPELLANT DID NOT HAVE ADEQUATE DETAILS TO PROVE THE GENUINENESS OF THIS CLAIM, I AGREE WITH THE ASSESSING OFFICER T H A T THIS I S MADE JUST TO REDUCE THE TAXABLE INCOME. THE DECISION RILED UPON BY THE APPELLANT IS NOT RELEVANT TO THE FACTS OF THIS C A SE SINCE A PPELLANT IS A CONSIGNMENT AGENT AND NOT AN INDEPENDENT TRADER. THE ADDITION MADE BY THE ASSESSING OFFICER IS ACCORDINGLY CONFIRMED. 5. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS , PERUSED T HE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 7. WE FIND THAT THE ASSESSEE HAS FILED EVIDENCES BEFORE US BY WAY OF COPIES OF INVOICES WHICH CLEARLY SHOW THAT THE CASH DISCOUNT IS REDUCED TO ARRI VE AT THE NET VALUE OF SAL E S. AS A IT A NO. 2534 / AHD/ 201 1 ASSESSMENT YEAR: 200 8 - 09 PAGE 4 OF 4 MATTER OF FACT, CASH DISCOUNT IS NOTHING OTHER THAN REDUCTION IN SALE PRICES FOR CASH PAYMENTS. IT IS NOT AN INDEPENDENT PAYMENT FOR WHICH SEPARATE SUPPORTING EVIDENCES ARE CALLED FOR. THERE IS NO REASON FOR THE ASSESS ING OFFICER TO ACCEPT ONE PART OF THE SALES INVOICE AS GENUINE AND REJECT THE OTHER PART AS IMPROBABLE. AS TO WHAT IS THE BUSINESS COMPULSION OF GIVING THIS DISCOUNT, IT IS NOT FOR THE REVENUE AUTHORITIES TO JUDGE THE SAME. THE FACT OF SHARING COMMISSION INCOME, BY PASSING OVER A PART OF 3.25% THAT THE ASSESSEE EARNED, IS NOT ALIEN TO THE ACTUAL COMMERCIAL PRACTICES IN TRADE AND COMMERCE. IN VIEW OF THESE DISCUSSIONS AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE UPHOLD THE PLEA OF THE ASSESSEE. THE A SSESSING OFFICER IS ACCORDINGLY, DIRECTED TO DELETE THE IMPUGNED DISALLOWANCE OF RS.8,35,499/ - . 8. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERMS INDICATED ABOVE. P RONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF JANUARY, 2016. S D/ - SD/ - KUL BHARAT PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 2 7 TH DAY OF JANUARY , 201 6 . PBN/ * COPIES TO : (1) THE APPE LLANT ( 2) T HE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD