Appeal details
Counselvise Citation
[2010] 137 COUNSELVISE.COM (IT) 0177 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
18-01-2010
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
D
Assessment Year
2001-2002
Appeal Filed On
06-11-2009
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD DBENCH BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.2979/AHD/2009 [ASSTT.YEAR:2001-02] ASSTT. COMMISSIONER OF INCOME-TAX VS. M/S . NANAVATI MOTORS, CIRCLE-6, SURAT, ROOM NO.623, NEAR RAJHANS CINEMA, AAYKAR BHAVAN, MAJURA GATE, SURAT OP P. RELIANCE TOWERS PIPLOD MAIN ROAD, SURAT PAN NO.AACFN1015G REVENUE BY: SHRI C.K. MISHRA, SR. DR ASSESSEE BY: SHRI J.P. SHAH, AR DATE OF ORDER RESERVED: 06/01/10 O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE OR DER OF COMMISSIONER OF INCOME-TAX (APPEALS)-IV, SURAT IN APPEAL NO.CAS-IV/ 198/2008-09 DATED 08-07-2009. THE ASSESSMENT WAS FRAMED BY THE ACIT, CIRCLE-6, SU RAT U/S. 143(3) R.W.S. 254 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE HIS ORDER DATED 30-12-2008 FOR THE ASSESSMENT YEAR 2001-02. 2. THE ONLY ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE ON ACCOUNT OF SH ORT PAYMENT MADE BY THE CUSTOMERS AND ALSO ON ACCOUNT OF PAYMENT OF DISCOUN T. FOR THIS, THE REVENUE HAS RAISED THE FOLLOWING GROUND :- ITA NO.2979/AHD/2009 A.Y. 2001-02 ACIT CIR-6, SURAT V. M/S. NANAVATI MOTORS PAGE 2 [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE THE SHORT PAYMENTS MADE BY THE CUSTOMERS TO THE TUNE OF RS.15 ,95,088/- AND ALSO ON ACCOUNT OF PAYMENT OF DISCOUNTS MADE TO THE CUSTOME RS WHO INITIALLY MADE FULL PAYMENTS TO THE TUNE OF RS.19,24,387/- TOTALING TO RS.35,19,475/- DISALLOWED BY THE AO. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO PERUSED THE CASE RECORDS INCLUDING THE ASSESSMENT ORDER AS WELL AS THE ORDER OF CIT(A). W E FIND THAT THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED ON 27-02-2004 AND MADE THIS DISALLOWANCE. THE MATER TRAVELED UP TO TRIBUNAL AND TRIBUNAL SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE SA ME AFRESH IN ACCORDANCE WITH LAW AND THE TRIBUNAL ALSO NOTED THAT THE VOUCHERS AND C ONFIRMATION FILED BY THE ASSESSEE BE VERIFIED PROPERLY BY THE ASSESSING OFFICER. 4. WE FIND THAT THE ASSESSING OFFICER IN THE SECOND ROUND OBSERVED THAT THE DISCOUNT ALLOWED TO THE PURCHASERS OF THE CARS BY T HE ASSESSEE OF TWO TYPES AND IN SOME CASES, THE ASSESSEE RECEIVED LESSER AMOUNTS TH AN THE BILL VALUES AND THE BALANCE AMOUNTS NOT RECEIVED FROM THE PURCHASERS OF THE CARS WERE TRANSFERRED TO COMMISSION (DISCOUNT) ACCOUNT. IN ANOTHER CASE THE ASSESSEE INITIALLY RECEIVED FULL SALE VALUES AGAINST THE SALE BILLS AND THEREAFTER R ETURNED THE AGREED DISCOUNT AMOUNT TO THE PURCHASERS OF THE CARS AGAINST OBTAINING OF THE SIGNATURE OF THE CUSTOMERS ON THE DISCOUNT VOUCHERS. THE ASSESSING OFFICER HAS O BSERVED THAT CERTAIN DETAILS SUCH AS THE SALES INVOICES FOR THE SALE OF CARS, DELIVER Y NOTES AND THE DISCOUNT VOUCHERS, ETC., WERE PRODUCED BY THE ASSESSEE VERY LATE. THE AO HAS ALSO OBSERVED THAT THE FILE DENOTED AS NAM-4 PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CONTENTION OF HAVING RECEIVED SHORT PAYMENTS IN SOME CASES CONTAI NED ONLY ONE SALES BILL AND THE REST OF THE DOCUMENTS IN THE FILE WERE THE COPIES O F DELIVERY NOTES WHICH DID NOT CONTAIN ANY DETAILS OF DISCOUNTS ALLOWED TO THE CUS TOMERS AND SHORT PAYMENTS RECEIVED FROM THE CUSTOMERS. IT HAS BEEN STATED BY THE AO THAT THE FILING OF DELIVERY NOTES IS OF NO USE. THE AO ALSO OBSERVED THAT THE A SSESSEE SHOULD HAVE BEEN SHOWN DISCOUNTS ALLOWED BY WAY OF DEDUCTION. THE A O ALSO OBSERVED THAT THERE IS A DIFFERENCE OF FEW DAYS BETWEEN THE DATE OF ISSUE OF DELIVERY NOTES AND THE CASH DISCOUNT VOUCHERS. THE AO ALSO STATED THAT IT IS NO T ACCEPTABLE THAT THE SIGNATURES OF THE CUSTOMERS ON THE DISCOUNT VOUCHERS WOULD MATCH WITH THE SIGNATURES OF THE ITA NO.2979/AHD/2009 A.Y. 2001-02 ACIT CIR-6, SURAT V. M/S. NANAVATI MOTORS PAGE 3 CUSTOMERS ON DELIVERY NOTES FOR THE CARS IN ALL CAS ES SINCE THE HUMAN PROBABILITY MANDATES THAT IN SOME CASES THE RECIPIENT OF THE DI SCOUNT FROM THE ASSESSEE WOULD BE DIFFERENT THEN THE PERSONS TAKING THE DELIVERY O F THE CARS FROM THE ASSESSEE. ACCORDING TO THE AO SINCE THE ASSESSEE HAS SHOWN TH AT THE SIGNATURES ON THE DISCOUNT VOUCHERS INVARIABLY TALLY WITH THE SIGNATU RES OF THE CUSTOMERS ON THE DELIVERY NOTES, THE DISCOUNT VOUCHERS PRODUCED BY T HE ASSESSEE BECOME DOUBTFUL. THE AO FURTHER OBSERVED THAT IN THE INSTANT CASE, T HE DISCOUNTS ALLOWED DO NOT REPRESENT THE EXPENDITURE WHOLLY AND EXCLUSIVELY IN CURRED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND FILED THE DETAILS OF DISCOUNT AS UNDER:- (A) DISCOUNTS ALLOWED TO THE CUSTOMERS BY ALLOWING THEM TO MAKE SHORT PAYMENTS AGAINST THE BILL VALUE OF CARS 15,95,0 88/- (B) DISCOUNTS ALLOWED TO THE CUSTOMERS BY MAKING PAYMENTS OF DISCOUNTS AMOUNTS TO THE M SINCE THEY HAD MADE FULL PAYMENTS AGAINST T HE BILL VALUE OF SALE OF CARS ON ACCOUNT OF OBTAINI NG CAR FINANCE FROM FINANCIAL INSTITUTES / BANKS 19,24,387/ - TOTAL 35,19,475/- ===== ===== BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASSESSE E HAS FILED COPY OF SALES BILLS AND THE RESPECTIVE CUSTOMERS LEDGER ACCOUNTS, IT WAS S HOWN TO THE A.O THAT IN RESPECT OF SUCH CUSTOMERS, 95% TO 98% OF SALES VALUE OF CARS W ERE RECEIVED BY CHEQUES / DRAFTS AND THE BALANCE AMOUNTS WERE TRANSFERRED TO DISCOUNT ACCOUNT. IT HAS BEEN CONTENDED THAT THE PURCHASERS OF THE CARS WOULD NOT OBLIGE THE ASSESSEE BY MAKING PAYMENT OF 95% TO 98% OF THE BILL VALUE OF THE CARS THROUGH CHEQUES / DRAFTS AND BY MAKING PAYMENT OF BALANCE SMALL SU9MS TO THE TUNE O F 2% TO 5% OF SALE VALUE BY CASH, SO AS TO ENABLE THE ASSESSEE TO EVADE THE TAX BY CLAIMING SUCH AMOUNT AS DISCOUNTS. IT HAS ALSO BEEN ARGUED THAT THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL / EVIDENCES INDICATIVE OF THE FACT THAT IN RESPECT OF SUCH CUSTOMERS, THE ASSESSEE RECEIVED MORE AMOUNTS THAN THOSE RECORDED IN THE CUSTOMERS ACCOUNTS AND THAT THE SALES CONSIDERATIONS HAVE BEEN UNDERST ATED. THE CIT(A) DELETED THE ADDITION BY GIVING FOLLOWING FINDINGS IN PAGES-6-7 OF HIS APPELLATE ORDER:- I HAVE GONE THROUGH THE CONTENTS OF THE ASSESSMENT ORDER AND ALSO CONSIDERED THE VARIOUS CONTENTIONS RAISED BY THE AP PELLANT. ITA NO.2979/AHD/2009 A.Y. 2001-02 ACIT CIR-6, SURAT V. M/S. NANAVATI MOTORS PAGE 4 IN REGARD TO THE CASES WHERE THE SHORT PAYMENTS ARE RECEIVED FROM THE CUSTOMERS AND THE SMALL BALANCE AMOUNTS ARE TRANSFE RRED TO THE DISCOUNT WHICH TOTALED TO RS.15,95,088/-, I AGREE WITH THE A PPELLANT THAT IT CANNOT BE THE CASE THAT HUNDREDS OF CUSTOMERS WOULD COLLIDE WITH THE APPELLANT BY MAKING 95% TO 98% OF THE BILL VALUE THROUGH CHEQUES/DEMAND DRAFTS AND BY MAKING PAYMENTS OF 2% TO 5% OF THE BILL VALUES WHICH HAVE BEEN CLAIMED AS DISCOUNTS BY CASH, SO AS TO ENABLE THE APPELLANT TO EVADE PAYMENT OF INCOME- TAX. ON THE CONTRARY, SINCE AS PER THE INCOME-TAX RULES, THE DEPRECIATION IS ALLOWED ON THE VALUE OF CARS, THE CUSTOMERS WOULD N OT BE INCLINED TO UNDER- STATE THE PURCHASE PRICE OF THE VEHICLE BY MAKING P ART PAYMENT OF PURCHASE VALUE IN CASH TO OBLIGE THE APPELLANT. BESIDES, NEI THER THE A.O WHO COMPLETED THE SET ASIDE ASSESSMENT HAS BEEN ABLE TO BRING ON RECORD AN IOTA OF EVIDENCE SUGGESTIVE OF THE FACT THAT THE APPELLANT UNDER-STATED THE SALES CONSIDERATION AND THAT THE APPELLANT RECEIVED MORE AMOUNTS AGAINST THE SALES OF CARS THAN THOSE RECORDED IN THE BOOKS OF ACCOUNT S. THE COPY OF SALES BILLS AND THE COPY OF LEDGER ACCOUNTS FILED BY THE APPELL ANT BEFORE THE A.O AND ALSO BEFORE ME CLEARLY SHOW THAT WHILE THE APPELLANT REC EIVED MAJORITY FOR THE SALE VALUE THROUGH CHEQUES/DEMAND DRAFTS, THE SMALL PORT ION OF SAY RS.2,000/-, RS.3,000/-, RS.4,000/- WHICH COULD NOT BE RECEIVED FROM THE CUSTOMERS WERE TRANSFERRED TO THE DISCOUNT ACCOUNT. AGAIN, IT IS A FACT KNOWN TO ALL THAT NOW A DAYS THE CUSTOMERS BARGAIN HEAVILY WHILE PURCHASING THE CARS WITH THE DEALERS ON ACCOUNT OF CUT THROAT COMPETITION AMONGST THE VA RIOUS CAR DEALERS OF THE VARIOUS COMPANIES AND ALSO AMONGST MORE THAN ONE CA R DEALERS OF THE SAME COMPANY. IN THAT VIEW OF THE MATTER, WHAT THE APPEL LANT HAS BEEN CLAIMING IS NOT SOMETHING WHICH IS UNUSUAL OR UNACCEPTABLE. THE CLAIM OF THE APPELLANT THEREFORE THAT IF ALLOWE D DISCOUNTS OF RS.15,95,088/- REPRESENTED BY SHORT PAYMENTS MADE BY THE CUSTOMER IS FOUND TO BE CORRECT AND ACCEPTABLE. WE FURTHER FIND THAT THE CIT(A) HAS RELIED ORDERS I N THE CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2001-02 AND 2003-04 RESPECTIVELY, IN ASSESSEES OWN CASE, WHEREBY CIT(A)-IV, SURAT HAS ALLOWED THE CLAIM OF T HE ASSESSEE. 5. IN VIEW OF THE ABOVE FACTS THAT THE ASSESSEE BEI NG A DEALER OF MOTOR CAR HAS ALLOWED DISCOUNT TO THE CUSTOMERS AS WELL AS COMMIS SION, I.E. SHORT PAYMENT ACCOUNT, SALE OF VALUE OF CARS AND FOR THIS THE ASS ESSEE HAS PRODUCED ALL SALE BILLS, COPY OF ALL LEDGER A/C. OF SUCH CUSTOMERS WHICH PRO VE THAT IN THE CASES OF CUSTOMERS INITIALLY THE CUSTOMERS ACCOUNTS WERE DEBITED WITH FULL SALE VALUE OF CARS AND WITH THE HELP OF LEDGER A/C IT WAS SHOWN THAT THE CUSTOMERS THOUGH THE FULL SALE VALUE OF THE CARS WERE DEBITED IN THE CUSTOMERS A/C, THE CONCER NED CUSTOMER PAID LESSER AMOUNT BY CHEQUES/DRAFT AND THE BALANCE AMOUNT IN THE CUST OMERS ACCOUNTS WERE ITA NO.2979/AHD/2009 A.Y. 2001-02 ACIT CIR-6, SURAT V. M/S. NANAVATI MOTORS PAGE 5 TRANSFERRED TO THE COMMISSION EXPENSE/DISCOUNT A/C. THE ASSESSEE BEFORE THE LOWER AUTHORITIES HAVE PRODUCED THE LEDGER A/C. AND THE C OPY OF SALE BILLS ALONG WITH BOOKS OF ACCOUNT AND EVEN NOW THEY HAVE FILED THESE DETAI LS. THE FACT IS THAT THE DISCOUNT AND COMMISSION, I.E. SHORT PAYMENT IS MADE BY THE C USTOMERS AND THIS CAN BE EASILY VERIFIED FROM THE BOOKS OF ACCOUNT. ACCORDINGLY, C IT(A) HAS RIGHTLY DELETED THE ADDITION AS NARRATED ABOVE AND WE CONFIRM THE SAME. THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 18 TH DAY OF JANUARY 2010 SD/- SD/- (DR.O.K.NARAYANAN) (MAHAVIR SINGH) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD, DATED : 18/01/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-IV, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD
