ACIT, New Delhi V. M/s. Mudita Marketing, New Delhi

ITA 4028/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86739 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 04-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 28-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: MA HESHWARI GUPTA
• Keywords: Commercial expediency
• Section: 37(1); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI SH. N.K.SAINI, ACCOUNTANT MEMBER & SHRI A.T.VARKEY, JUDICIAL MEMBER ITA NO. 4028/DEL/2013 ASSESSMENT YEAR: 2008-09 ACIT CIRCLE 23 (1), ROOM NO. 1302, 13 TH FLOOR, E-2, PRATYKSHYA KAR BHAWAN, SHYAMA PRASAD MUKHERJEE CIVIC CENTRE, JAWAHAR LAL NEHRU MARG, MINTO ROAD NEW DELHI PIN : 110002 (APPELLANT) VS. MUDITA MARKETING M-66,2 ND FLOOR GREATER KAILASH-II N. DELHI AABFM5595M PIN : 110048 (RESPONDENT) ASSESSEE BY : SH. MA HESHWARI GUPTA, C.A. REVENUE BY : SH. P. DAM KANUNJNA, SR. DR DATE OF HEARING : 04/02/2015 DATE OF PRO NOUNCEMENT : 13/ 02/2015 ORDER . ITA NO. 4028/DEL/2 013 2 PER N.K.SAINI, A.M. : THE APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST TH E ORDER DATED 29/04/2013 OF C.I.T.(A) XXIII, NEW DELHI. THE ON LY EFFECTIVE GROUND RAISED IN THIS APPEAL READS AS UNDER : ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) HAS ERRED IN DELETING DISALLOWANCE OF RS. 83 ,20,174/- AS THE AO WAS JUSTIFIED IN MAKING DISALLOWANCE OF 20% OF THE DISCOUNT AND CREDIT NOTES ALLOWED BY THE ASSESSEE T O HIS CLIENTS, WITHOUT ANY MATERIAL BASIS. 2. FACTS OF THE CASE IN BRIEF OF THAT THE ASS ESSSEE WAS ENGAGED IN THE BUSINESS OF CARGO AGENCY OF VARIOUS AIRLINES AN D THE RECEIVED COMMISSION AS PER FREIGHT BOOKED. THE ASSESSEE FILE D THE RETURN OF INCOME ON 29.9.2008 DECLARING TOTAL INCOME AT RS. 3,99,37, 890/-. LATER ON THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE O F ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE TOTAL RECEIPTS FROM COMMISSION AS PER TDS CERTIFICATE WAS AT RS. 55,80,92,528/-, BUT THE COMMISSION DISCLOSED BY THE ASSESSEE WAS AT RS. 10,72,32,586/-. THE ASSE SSEE EXPLAINED TO THE AO THAT THE CLIENTS HAD DEDUCTED TAX ON THE AMOUNT OF FREIGHT COLLECTED BY THE ASSESSEE ON THEIR BEHALF. IT WAS, FURTHER, STAT ED THAT THE CBDT CIRCULAR NO. 452 DATED 17.3.1986 CLARIFIED THAT FOR THE PURP OSES OF SECTION 44 AB OF ON I.T.ACT 1961 (HERE IN AFTER REFERRED AS THE AC T IN SHORT) IN THE CASE OF COMMISSION AGENTS, THE TURN OVER DOES NOT INCLUDE T HE SALES EFFECTED ON BEHALF OF THE PRINCIPALS. THE AO NOTED THAT THE A MOUNT OF CREDIT NOTES / DISCOUNTS WAS NOT COMMENSURATE WITH THE BUSINESS PR OVIDED BY EACH PARTY AND THAT THE CREDIT NOTES WERE ISSUED ON ONLY DUR ING THE LAST FEW DAYS OF THE PREVIOUS YEAR AND WERE NOT ACCOUNTED IN CHRONOL OGICAL ORDER. THE AO . ITA NO. 4028/DEL/2 013 3 DISALLOWED 20% OF THE CLAIM OF THE CREDIT NOTES / D ISCOUNTS WHICH WORKED OUT TO RS. 83,20,174/- AND MADE THE ADDITION IN TH E HANDS OF THE ASSESSEE. 3. BEING AGGRIEVED THE ASSESSEE CARRIED TH E MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER : - 1. THE LD. A.O. HAS MERELY BASED HIS FINDINGS ON HYPOTHETICAL GROUNDS AND HAS NOT GIVEN ANY BASIS FO R SUCH ESTIMATIONS. THE LD. A.O. SIMPLY IGNORED THE SUBMIS SIONS OF THE ASSESSEE, WHEREIN NATURE OF EXPENDITURE WAS EXP LAINED AS ALSO VARIOUS DOCUMENTS WERE SUBMITTED. 2. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS G ENERATED BUSINESS OF MORE THAN RS. 50 CRORES DURING THE YEAR AND HAVE EARNED GROSS INCOME OF RS. 14.88 CRORES. TO GENERAT E SUCH INCOME, IT HAS PASSED ON CREDIT NOTES AND DISCOUNTS TO ITS DEALERS AMOUNTING TO ONLY RS. 4.16 CRORES, WHICH CA NT BE TERMED UNREASONABLE FROM ANY PERSPECTIVE. 3. MOREOVER, AGAINST SUCH GROSS INCOME, I T HAS CLAIMED TWO DIRECT EXPENDITURE NAMELY CREDIT NOTES AND DISC OUNT GIVEN TO PARTIES OF RS. 4.16 CRORES AND CARGO BOOKING AND DIRECT EXPENSES OF RS. 3.90 CRORES. IT IMPLIES THAT ASSESS EE HAS OFFERED GROSS PROFIT OF RS. 6.82 CRORES I.E. 45.83% , WHEREAS NET PROFIT PERCENTAGE IS ALSO AS HIGH AS 29.50%. 4. IT IS ALSO WORTHWHILE TO MENTION HERE THAT WE A RE FOLLOWING THE SAME PRACTICE SINCE LAST MANY YEARS. FURTHER, O NE SCRUTINY ASSESSMENT WAS ALSO COMPLETED FOR THE A.Y. 2005-06, WHEREIN THE SAME EXPENSES WERE DULY ALLOWED AND NO MAJOR AD DITIONS WERE DONE BY THE LD. A.O. THE COPY OF ASSESSMENT OR DER IS ENCLOSED HEREWITH FOR YOUR PERUSAL. (PAGE NO. 35-37 OF PAPER BOOK-I) IN THE IMMEDIATE PREVIOUS YEAR ALSO, WE HAV E EARNED GROSS INCOME OF RS. 11.79 CRORES AND HAVE GIVEN DIS COUNTS AND CREDIT NOTES OF RS. 2.60 CRORES. (PAGE NO. 81 O F PAPER BOOK). 5. FURTHER, ADDITION MADE BY THE LD. A.O. IS M ERELY BASED ON SURMISES AND CONJECTURES AND HE HAS NOT GI VEN ANY CONCRETE FINDINGS TO PROVE THAT SUCH EXPENDITURES A RE BOGUS OR ILLEGITIMATE. HE HAS TOTALLY OVERLOOKED THE DETAILS AND SUBMISSIONS FILED BY THE ASSESSEE. THIS FACT IS PRO VED BY FOLLOWING TWO INSTANCES :- . ITA NO. 4028/DEL/2 013 4 A. THE LD. A.O. HAS ALLEGED THAT CREDIT NOTES ALLO WED BY YOU TO VARIOUS ARE NOT ISSUED IN A PROPER AND SEQUENTIA L MANNER. IN THIS REGARD, WE HAVE CLEARLY MENTIONED IN POINT NO. 5 OF OUR REPLY DATED 31/12/2010 (PAGE NO. 46-49 OF PAPER BOO K-I) THAT DIFFERENT BOOKLETS HAVE BEEN ISSUED TO MARKETING PE OPLE REGION WISE OR CLIENT WISE AND THE SYSTEM OF ISSUING CREDI T NOTE IS NOT CENTRALIZED, THEREFORE, SEQUENCE OF S.NO. SHALL NOT MATCH. DESPITE THE ABOVE SUBMISSIONS, THE LD. A.O. HAS NOT CONSIDERED THE SAME AND WITHOUT VERIFYING THE FACTS , MADE THE ADDITION ON THE BASIS OF THE SAME OBSERVATIONS. B. SIMILARLY, THE LD. A.O. HAS ALLEGED THAT THE DISCOUNTS/CREDIT NOTES GIVEN TO PARTY ARE NOT COMME NSURATE WITH THE BUSINESS GENERATED BY THEM. TO SUPPORT THIS OBS ERVATION, HE HAS POINTED OUT THAT GROSS RECEIPT BY THE PARTY FROM M/S KASTURI & SONS AMOUNTED TO RS. 2,69, 28,427/-, NO C REDIT NOTE OR DISCOUNT WAS ALLOWED TO IT IN THIS REGARD, WE W OULD AGAIN LIKE TO BRING YOUR HONORS ATTENTION TO OUR REPLY DATED 31/12/2010 (PAGE NO. 46049 OF PAPER BOOK-I), WHEREIN IN PARA 2 , ASSESSEE HAS CLARIFIED THAT DETAILS ENCLOSED WITH OUR LETTE R DT. 7/12/2010 MENTIONS THE NAMES OF PARTIES AS APPEARING IN FORM 16A OF TDS ISSUED, WHICH HAPPENS TO BE THE NAME AS APPEARI NG IN THEIR TAN OR PAN PARTICULARS. WHEREAS, IN OUR BOOKS OF ACCOUNTS WE ARE SOMETIMES MAINTAINING THE LEDGER ACCOUNTS FO R A PARTICULAR GROUP ALONGWITH THEIR ASSOCIATE CONCERN IN ONE ACCOUNT. ALSO SOMETIMES THE LEDGER ACCOUNT HAS BEEN MAINTAINED FOR CONSIGNER OR AGENT WHEREAS TDS HAS B EEN DEDUCTED ON PRINCIPALS ACCOUNT. WE ARE ENCLOSING HEREWITH BOTH THE ABOVE LISTS ON P AGE NO. 69-70 & 74-75 RESPECTIVELY OF PAPER BOOK, WHEREIN W E CAN OBSERVE THAT THE NAME M/S KASTURI & SONS IS APPEARI NG IN FIRST LIST (PG.69) WITH GROSS AMOUNT OF RS. 2,69,28,427/- , WHEREAS IN THE SECOND LIST, THE SAME AMOUNT HAS BEEN MENTIONED AGAINST THE NAME THE HINDU(PG. 75), TO WHOM ASSESSEE HAS GIVEN DISCOUNT & CREDIT NOTE OF RS. 8,09,553/- (WHICH CAN BE VERIFIED FROM THE LIST OF CREDIT NOTES GIVEN AS APPEARING ON PG. NO. 77-78 OF PAPER BOOK). FROM THIS CLARIFICATION, IT IS EVID ENT THAT THE FACTS ON THE BASIS OF WHICH ADDITION HAS BEEN MADE BY THE LD. A.O. ARE WRONGLY UNDERSTOOD BY THE LD. A.O. IF AT ALL, H E HAD VERIFIED THE LISTS IN THE CONTEXT OF THE ABOVE SUBMISSION OF THE ASSESSEE . ITA NO. 4028/DEL/2 013 5 OR HAVE ASKED THE ASSESSEE THE REASON OF SUCH DISPA RITY, THE SAME COULD HAVE BEEN CLEARED AT THE TIME OF ASSESSM ENT PROCEEDINGS ITSELF. C. FURTHER, THE LD. A.O. HAS ALSO ALLEGED THAT MOST OF THE CREDIT NOTES WERE ISSUED DURING THE LAST FEW DAYS O F THE PREVIOUS YEAR. IN THIS REGARD, WE WOULD LIKE TO BRI NG YOUR HONORS ATTENTION TO MONTHLY SUMMARY OF DISCOUNT AND CREDIT NOTES (PAGE NO. 76 OF PAPER BOOK-I), WHEREIN IT MAY BE OB SERVED THAT AMOUNT IS EVENLY DISTRIBUTED THROUGH OUT THE YEAR A ND THE LD. A.O. IS NOT CORRECT IN ALLEGING THAT THE CREDIT NOT ES ARE ISSUED ONLY DURING THE LAST FEW DAYS. IN THE REPLY DATED 3 1.03.2010 ALSO WE HAVE SUBMITTED THAT FURTHER, IT IS NOT TRUE THA T CREDIT NOTES HAVE BEEN ISSUED IN LAST FEW DAYS OF THE PREVIOUS Y EAR AS CREDIT NOTES ARE BEING ISSUED FROM TIME TO TIME ON THE BAS IS OF TARGETS BEING ACHIEVED. 6. BEFORE MAKING SUCH A HUGE ESTIMATED ADDITIO N, THE LD. A.O. HAS MERELY RELIED ON ABOVE THREE OBSERVATI ONS, WHICH ARE WRONG IN VIEW OF THE ABOVE SUBMISSIONS. THEREFO RE, IT IS PROVED THAT LD. A.O. HAS MADE THE ADDITIONS WITHOUT PROPERLY VERIFYING THE FACTS. NEITHER, HE HAS TRIED TO CONFR ONT THE ASSESSEE OR THE RELATED PARTIES TO VERIFY THE FACTS NOR HE HAS CALLED FOR ANY CONFIRMATIONS OF THE PARTIES. 7. AS FAR AS, ALLOWING DIFFERENT RAT ES OF COMMISSION OR DISCOUNT TO DIFFERENT PARTIES IS CONCERNED, IT WAS CLARIFIED DURING ASSESSMENT PROCEEDINGS ITSELF THAT DECISION OF ALLOWING DISCOUNTS/CREDIT NOTES TO CUSTOMERS DEPEND ON MANY CRITERION APART FROM THE TURNOVER GENERATED FROM THEM. 8. FURTHER, IT IS THE BUSINESSMAN HIMSELF, WHO CAN DETERMINE THE COMMERCIAL EXPEDIENCY OF ANY EXPENDIT URE AND CAN TAKE DECISION AS TO WHETHER SUCH EXPENDITURE IS NECESSARY FOR THE OVERALL GROWTH OF THE BUSINESS OR NOT. APAR T FROM THAT, WE ARE LOOKING ONLY THE FINANCIAL EXPEDIENCY OF THE EXPENDITURE, WHEREAS THERE MAY BE MANY OTHER FACTOR , WHICH A BUSINESSMAN WILL TAKE INTO CONSIDERATION BEFORE INC URRING ANY EXPENDITURE LIKE LONG TERM BENEFIT TO THE BUSINESS, DEVELOPMENT OF RELATIONSHIPS WITH DEALER, ESTABLISH ING GOOD IMAGE IN THE MARKET ETC. THE DECISION OF INCURRING SUCH HUGE EXPENSES WAS TAKEN BY THE ASSESSEE AFTER TAKING SO MANY POINTS INTO CONSIDERATION AND HAS EVEN EARNED PROFI T OF RS. 439.30 LACS @ 29.50% OF GROSS RECEIPTS. IN THESE CIRCUMSTANCES, THE LD. A.O. IS NOT JUSTIFIED IN QUE STIONING THE GENUINENESS OF EXPENSES AND DISALLOWING THE SAME. . ITA NO. 4028/DEL/2 013 6 9. IT IS ALSO PERTINENT TO MENTION THAT EXPEN SES ARE INCURRED PURELY FOR BUSINESS PURPOSES AND ARE FULLY ALLOWABLE U/S 37(1) OF THE ACT. 3. RELIANCE WAS PLACED ON THE FOLLOWING CASES :- 1. INDIA MARKETING (P) LIMITED VS. ASSESSING OFFIC ER 10 TAXMANN 18. 2. UDAIPUR DISTILLERY CO. LTD. 224 CTR 32 (SC) 3. CIT VS. DHANRAJGIRJI RAJA NARASINGIRJI (1973) 9 1 ITR 544(SC). 4. NEBHOMAL SONS VS. CIT [2005] 146 TAXMAN 345/27 8 ITR 345 (MP). 5. RAVI MARKETING (P) LTD. V. CIT [2006] 280 ITR 519 (CAL). 4. THE LD. CIT(A) ASKED THE REMAND REPORT F ROM THE AO WHO SUBMITTED THE REPORT ON 15.3.2013 WHICH HAS BEEN RE PRODUCED BY THE LD. CIT(A) AT PAGE NO. 19 TO 29 OF THE IMPUGNED ORDER, FOR THE COST OF REPETITION, THE SAME IS NOT REPRODUCED HEREIN. THE LD. CIT(A) ALSO ASKED THE COMMENT OF THE ASSESSEE ON THE REMAND REPORT OF THE AO. IN RESPONSE, THE ASSESSEE FURNISHED COMMENTS VIDE REPLY DATED 1 4.2.2013 WHICH HAS BEEN DISCUSSED BY THE LD. CIT(A) AT PAGE NO. 29 TO 35 OF THE IMPUGNED ORDER, FOR THE COST OF REPETITION, THE SAME IS NO T REPRODUCED HEREIN. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, REMAND REPORT OF THE AO AND THE COMMENTS ON THE REMAND REPORT BY THE ASSESSEE DELETED THE ADDITION MADE BY THE AO BY OBSERVING MADE IN PA RA 4 & 4.1 OF THE IMPUGNED ORDER AS UNDER :- 4. THE ABOVE WRITTEN SUBMISSIONS HAVE BEEN CAR EFULLY CONSIDERED. GROUNDS OF APPEAL NOS. 1,2,3 AND 6 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY SEPARATE ADJUDICATION . AT GROUND OF APPEAL NO. 4, THE APPELLANT HAS CONTESTED THE DI SALLOWANCE OF 20% OF CREDIT NOTES/DISCOUNTS ALLOWED, OF AN AMO UNT OF RS. 83,20,174/-. THE ALLEGATION OF THE ASSESSING OFFICE R IS THAT THE CREDIT NOTES AND DISCOUNTS HAVE NOT BEEN ALLOWED PROPORTIONATE TO THE BUSINESS GENERATED BY THE VARI OUS PARTIES, . ITA NO. 4028/DEL/2 013 7 AND THAT THE CREDIT NOTES ISSUED ARE NOT IN SEQUENC E. THE APPELLANT HAS FILED THE DETAILS OF CREDIT NOTES ISS UED TO THE VARIOUS PARTIES, AND EXPLAINED THAT CREDIT NOTES HA VE BEEN ISSUED AS PER THE VOLUME OF BUSINESS, BUT ALSO DEPE NDING UPON VARIABLES SUCH AS WHETHER THE CARGO BOOKING IS AT PEAK TIMES, PLACE AND SECTOR OF BOOKING, URGENCY OF DELI VERY, ETC. THE COUNSEL FOR THE APPELLANT HAS VEHEMENTLY ARGUED THAT THE BOOKS OF ACCOUNT HAVE BEEN AUDITED, AND THE PRACTIC E OF ALLOWING CREDIT NOTES/DISCOUNTS TO THEIR CLIENTS HA S BEEN ITS REGULAR BUSINESS PRACTICE OVER THE YEARS. IT IS ALS O ARGUED THAT THE EXPENDITURE FULFILS ALL THE CONDITIONS LAID DOW N IN SECTION 37(1) OF THE INCOME TAX ACT FOR ALOWABILITY OF BUSI NESS EXPENDITURE, AND NO PAYMENT HAS BEEN MADE TO ANY RE LATED PARTY AS WOULD ATTRACT THE PROVISIONS OF SECTION 40 A(2)(B). IT IS SUBMITTED THAT AS AGAINST DISCOUNTS ALLOWED TO ITS DEALERS OF RS. 4.16 CRORES OUT OF GROSS INCOME OF RS. 14.88 CR ORES IN THE YEAR UNDER CONSIDERATION, IT HAD ALLOWED DISCOUNTS OF RS. 2.60 CRORES OUT OF GROSS INCOME OF RS. 11.79 CRORES IN T HE IMMEDIATELY PRECEDING YEAR. IT IS ALSO ARGUED WITH REFERENCE TO A NUMBER OF CASE LAWS THAT COMMERCIAL EXPEDIENCY IS A MATTER TO BE LEFT TO THE JUDGEMENT OF THE ASSESSEE, AND IT IS NOT FOR THE REVENUE TO QUESTION THE EXPEDIENCY OF EXPENDITURE. AS HELD BY THE CALCUTTA HIGH COURT IN THE CASE OF RAVI MARK ETING PVT. LTD. VS. CIT(2006) 280 ITR 519, WHETHER AN EXPENDIT URE IS EXPEDIENT FOR THE PURPOSE OF BUSINESS IS TO BE LOOK ED AT BY THE INCOME TAX AUTHORITIES OR THE COURT FROM THE VIEW P OINT OF THE ASSESSEE, NOT FROM ITS ARMCHAIR. IT IS NOT FOR THE COURT OR THE INCOME TAX AUTHORITIES TO SUGGEST OR ADVISE, TO PRE SUME OR SURMISE AS TO THE EXPEDIENCE. THE BOMBAY HIGH COURT HELD IN THE CASE OF CIT VS. SALES MAGNESITE PVT. LTD. (1995 ) 214 ITR 1 THAT THE QUESTION WHETHER EXPENDITURE WAS NECESSA RY OR COMMERCIALLY EXPEDIENTS IS NOT TO BE DECIDED BY THE SUBJECTIVE STANDARD OF REASONABLENESS OF THE REVENUE, BUT FROM THE POINT OF VIEW OF THE BUSINESSMAN. 4.1 THE ASSESSING OFFICER HAS OBSERVED THAT NO CREDIT NOTE OR DISCOUNT WAS ALLOWED TO M/S KASTURI & SONS LTD. ON BUSINESS OF RS. 2,69,28,427/- WHEREAS DISCOUNT O F RS. 5,38,586/- WAS ALLOWED TO M/S QUICK N SAVE SERVICES PVT. LTD. WHO HAD PROVIDED BUSINESS OF ONLY RS. 87,58,395/-. THE APPELLANT HAS EXPLAINED THAT M/S KASTURI & SONS LTD . IS THE OWNER OF THE HINDU NEWSPAPER, AND DETAILS OF DISCOU NTS AND CREDIT NOTES SUBMITTED SHOWS DISCOUNT OF RS. 8,09,5 53/- . ITA NO. 4028/DEL/2 013 8 ALLOWED TO THE HINDU. THE ASSESSING OFFICER HAS A LSO OBSERVED THAT THE CREDIT NOTES WERE MAINLY ISSUED D URING THE LAST FEW DAYS OF THE PREVIOUS YEAR. HOWEVER, THE AP PELLANT HAS SUBMITTED A MONTHLY SUMMARY OF CREDIT NOTES AND DIS COUNTS ALLOWED WHICH SHOWS THAT DISCOUNTS OF RS. 46,20,867 /- HAVE BEEN ACCOUNTED FOR IN MARCH 2008, OUT OF THE TOTAL DISCOUNTS AND CREDIT NOTES CLAIMED OF RS. 4,16,00,621/-. CRED IT NOTES AND DISCOUNTS HAVE BEEN ALLOWED IN EACH OF THE MONTHS O F THE FINANCIAL YEAR, WITH THE HIGHEST DEBIT OF RS. 75,29 ,113/- IN THE MONTH OF OCTOBER 2007. THERE ARE MONTHWISE VARIATIO NS, BUT NO SURGE IN EXPENDITURE AT THE END OF THE YEAR. FUR THER THE ASSESSING OFFICER HAS ALLEGED THAT THE CREDIT NOTES APPEAR SUSPICIOUS BECAUSE THE SERIAL NOS. OF THE CREDIT NO TES HAVE NOT BEEN ISSUED IN CHRONOLOGICAL OR SEQUENTIAL ORDER. T HE APPELLANT HAS EXPLAINED THAT THE CREDIT NOTES HAVE BEEN ISSUED BY THE VARIOUS BRANCH OFFICES AND THERE IS NO CENTR ALIZED SYSTEM FOR ISSUE OF CREDIT NOTES, HENCE THE SEQUENC E OF SERIAL NOS. IS NOT CHRONOLOGICAL. THIS CONTENTION HAS ALSO BEEN VERIFIED WITH RELATION TO THE VARIOUS CREDIT NOTES MENTIONED BY THE ASSESSING OFFICER, WHICH ARE ISSUED FROM DIFFER ENT BOOKLETS PERTAINING TO DIFFERENT REGIONS AND DIFFERENT CLIEN TS. HENCE THE REASONS STATED BY THE ASSESSING OFFICER FOR MAKING AN ADHOC DISALLOWANCE OF 20% OF THE DISCOUNTS AND CREDIT NOT ES ALLOWED BY THE APPELLANT ARE FOUND TO BE WITHOUT ANY MATERI AL BASIS. IN THE REMAND PROCEEDINGS, NO COMMENTS HAVE BEEN OFFE RED BY THE ASSESSING OFFICER ON THE WRITTEN SUBMISSIONS FI LED IN THIS CONNECTION, OR WITH RELATION TO THE LEDGER ACCOUNTS OF CUSTOMERS TO WHOM CREDIT NOTES/DISCOUNTS OF OVER RS . 10,00,000/- HAD BEEN ALLOWED. AFTER CAREFUL CONSIDE RATION, THE DISALLOWANCE MADE OF RS. 83,20,174/- IS DELETED. 5. NOW, THE DEPARTMENT IS IN APPEAL. THE LD. D.R. FOR THE REVENUE REITERATED THE OBSERVATIONS OF THE AO MADE IN THE A SSESSMENT ORDER DATED 31/12/2010 AND THE REMAND REPORT DATED 15.3.2013. I N HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE REIT ERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND STRONGLY SUPP ORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). . ITA NO. 4028/DEL/2 013 9 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BO TH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE WAS RECEIVING THE COMMISSION FROM VARIOUS AIRLINES. THE AO NOTED THE DISCREPANCY IN THE AMOUNT SHOWN IN P & L ACCOUNT VIS--VIS THE AMOUNT MENTIONED IN THE TDS CERTIFICATES. THE ASSESSEE ALSO GAVE CREDIT NOTES AND DISCOUNT TO THE PARTIES THROUGH WHOM CARGO BOOKINGS WERE DONE. IN THE INSTANT CASE, THE AO DID NOT POINT OUT ANY SPECIFIC INSTANCE WERE THE EXPENSES INCURR ED BY THE ASSESSEE WERE NOT FOR THE BUSINESS PURPOSES OR THOSE WERE NO T INCURRED IN REGULAR COURSE OF BUSINESS. THE AO DOUBTED THE CREDIT NOT ES ISSUED BY THE ASSESSEE ONLY ON THIS BASIS THAT THOSE WERE NOT ISS UED IN CHRONOLOGICAL OR SEQUENTIAL ORDER BUT NOWHERE HE STATED THAT THE CLA IM OF THE ASSESSEE WAS NOT GENUINENESS. EVEN IN THE REMAND REPORT SOUGHT B Y THE LD. CIT(A), THE AO DID NOT OFFER ANY COMMENTS WITH REGARD TO THE SU BMISSIONS FILED BY THE ASSESSEE IN CONNECTION OR WITH RELATION TO THE LEDG ER ACCOUNTS OF THE CUSTOMERS TO WHOM CREDIT NOTES / DISCOUNTS HAD BEEN GIVEN. THE AO ALSO DID NOT REJECT THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECTION 145 (3) OF THE ACT, HE MADE AD HOC DISALLOWANCE @ 2 0% BUT WITHOUT ANY BASIS. ON THE OTHER HAND, THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNTS WHICH HAD BEEN DULY AUDITED AND THE PRACTICE TO ALL OW IN CREDIT NOTES / DISCOUNTS TO THE CLIENTS HAD BEEN THE REGULAR BUSIN ESS PRACTICE OF THE ASSESSEE OVER THE YEARS. IN THE PRESENT CASE SINCE THE AO HAD ACCEPTED THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE IN REGULAR COUR SE OF BUSINESS AND ALSO DID NOT BRING ANY MATERIAL ON RECORD TO SUBSTA NTIATE THAT THE EXPENSES ON ACCOUNT OF CREDIT NOTES / DISCOUNTS WERE NOT RE LATED TO THE BUSINESS OF . ITA NO. 4028/DEL/2 013 10 THE ASSESSEE. THEREFORE, THE AD HOC DISALLOWANCE MA DE BY THE AO WAS NOT JUSTIFIED AND THE LD. CIT(A) RIGHTLY DELETED THE SAME. IN THAT VIEW OF THE MATTER AND BY CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE, WE DO NOT SEE ANY MERIT IN THIS APPEA L OF THE DEPARTMENT. 7. IN THE RESULT APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 /02/2 015. SD/- SD/- (A.T.VARKEY) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 13 FEB. 2015 B.RUKHAIYAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. CIT (ITAT), NEW DELHI