Appeal details
Counselvise Citation
[2017] 130 COUNSELVISE.COM (IT) 7238 (ITAT-CUTTACK)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
03-01-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Next Hearing Date
03-01-2017
Assessment Year
2010-2011
Appeal Filed On
15-02-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.41 /CTK/2016 ASSESSMENT YEAR : 2010 - 2011 SMT. SARITA BHARALAWALA, CHOUDHARY BAZAR, CUTTACK. VS. ACIT, CIRCLE 2(2), CUTTACK PAN/GIR NO. AAWPB 4453 E (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI MAHAVIR PRASAD MUNDHRA, AR REVENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 03 /01/ 2017 DATE OF PRONOUNCEMENT : 0 3 /01/ 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 16.11.2015 , FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. IN GROUND NOS.2 & 3 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.68,447/ - OUT OF CLAIM OF RS.2,69,804/ - UNDER THE HEAD TRAVELLING AND CONVEYANCE AND RS.74,429/ - UNDER THE HEAD VEHICLE MAINTENANCE AND FUEL CHARGES AND RS.23,382/ - @ 10% UNDER THE HEAD SALES PROMOTION EXPENSES OF RS.2,33 ,820/ - . 2 ITA NO.41 /CTK/2016 ASSESSMENT YEAR :2010 - 2011 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED RS.6,68,868/ - I.E. UNDER THE HEAD TRAVELLING & CONVEYANCE OF RS.2,69,804/ - , VEHICLE MAINTENANCE AND FUEL EXPENSES OF RS. 74,429/ - AND SALES PROMOTION EXPENSES OF RS.2,33,820/ - . THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD NOT FURNISH SUPPORTING DOCUMENTARY EVID ENCE SUCH AS BILLS/VOUCHERS TO SUBSTANTIATE THE CLAIM OF EXPENSES INCURRED WHOLLY FOR THE PURPOSES OF BUSINESS AND HENCE, DISALLOWED 20% OUT OF TOTAL EXPENSES AND ADDED RS.1,15,610/ - TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL, LD CIT(A) CONFIRMED THE DISA LLOWANCE MADE BY THE ASSESSING OFFICER UNDER THE HEAD TRAVELLING AND CONVEYANCE VEHICLE MAINTENANCE AND FUEL EXPENSES ON THE GROUND THAT IT CONTAINED PERSONAL ELEMENT IN SUCH EXPENSES. AS REGARDS SALES PROMOTION EXPENSES, HE RESTRICTED THE DISALLOWAN CE TO 10% OF THE TOTAL EXPENSES OF RS.2,33,820/ - IN PLACE OF 20% MADE BY THE ASSESSING OFFICER. 5. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. BEFORE ME, LD A.R. OF THE ASSESSEE SUBMITTED THAT ALL THE EXPENSES CLAIMED BY THE ASSESSEE ARE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE. HE SUBMITTED THAT THE TRAVELLING & CONVEYANCE 3 ITA NO.41 /CTK/2016 ASSESSMENT YEAR :2010 - 2011 EXPENSES ARE INCURRED BY THE STAFF OF THE ASSESSEE COMPANY. HE SUBMITTED THAT THERE ARE HOTEL BILLS FOR THE SAME. ON A QUERY BY THE BENCH THAT WHETHER THE PERSON WHO STAYED IN THE HOTEL AS PER THE BILL SHOWN IS STAFF AS PER MUSTER ROLL MAINTAINED BY THE ASSESSEE COMPANY, HE SUBMITTED THAT NO SUCH MUSTER ROLL IS MAINTAINED AND THE SALARY IS PAID BY CASH. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, AS THE EXPENSES CLAIMED BY THE ASSESSEE IS BEING INCURRED OTHERWISE THAN THE BUSINESS PURPOSES OF THE ASSESSEE, PERSONAL USES CANNOT BE RULED OUT. HENCE, I DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE LD CIT(A), WHICH IS HEREBY CONFIRMED AND GROUND NOS.3 & 4 ARE DISMISSED. 7. IN GROUND NO.4 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OUT OF DISCOUNT OF RS.2,06095/ - @ 10% IN PLACE OF 20% MADE BY THE ASSESSING OFFICER. 8. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . IN THE INSTANT CASE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DEBITED RS.10,30,477/ - TOWARDS DISC OUNT FROM THE GROSS TURNOVER FOR ARRIVING AT THE NET TURNOVER. THE ASSESSING OFFICER FOUND THAT THE AVERAGE RATE OF DISCOUNT AS COMPARED TO THE NET SALES OF THE ASSESSEE WORKS OUT TO 2.5%. DURING THE COURSE OF ASSESSMENT, THE ASSESSEE WAS ASKED TO PRODUC E THE DETAILS OF SUCH DISCOUNT DEDUCTED FROM THE GROSS SALES, LEDGER COPIES AND SALE INVOICE COPIES FOR 4 ITA NO.41 /CTK/2016 ASSESSMENT YEAR :2010 - 2011 VERIFICATION, WHICH WAS COMPLIED WITH BY THE ASSESSEE. AFTER VERIFYING THE LEDGER COPIES, THE ASSESSING OFFICER FOUND THAT THE PERCENTAGE OF DISCOUNT G IVEN ON THE SALES VARIES FROM 2% TO 2.5%. HENCE, HE DISALLOWED 20% OUT OF THE TOTAL DISCOUNT CLAIMED BY THE ASSESSEE. 9. ON APPEAL, LD CIT(A) OBSERVED THAT THE ASSESSING OFFICER IN THE REMAND REPORT HAS OBSERVED THAT THE DISCOUNT IS FOUND TO HAVE BEEN AL LOWED THROUGH ISSUE OF CREDIT NOTE THERE BEING NO SPECIFIC CONTRACT, AGREEMENT FOR SUCH PURPOSE.. APPARENTLY IT IS AN UNILATERAL ACCOUNTING ENTRY. AS THE DISCOUNT IS NOT ALLOWED IN BILLS, IT IS NOT VERIFIABLE WHETHER THE DEBTOR IS ACTUAL RECIPIENT OF TH E DISCOUNT. THERE MAY BE OCCASIONS WHEN CASH RECEIPTS FROM THE DEBTORS COULD HAVE BEEN SUPPRESSED WITH THE ENTRY OF DISCOUNT IN THE LEDGER ACCOUNT AND HENCE, HE RESTRICTED THE DISALLOWANCE TO 10% OUT OF TOTAL DISCOUNT CLAIMED BY THE ASSESSEE. 10. BEFORE M E, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE DISCOUNTS HAVE BEEN GIVEN BY WAY OF ISSUE OF CREDIT NOTE AND HENCE, THE OBSERVATION OF THE ASSESSING OFFICER THAT IT CAN BE CASH RECEIVED FROM THE DEBTORS WHICH HAVE BEEN SUPPRESSED WITH THE ENTRY OF DISCOUNT I N THE LEDGER ACCOUNT IS WITHOUT ANY BASIS AND, THEREFORE, THE DISALLOWANCE SHOULD BE DELETED. 11. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDER OF THE LD CIT(A). 5 ITA NO.41 /CTK/2016 ASSESSMENT YEAR :2010 - 2011 12. I FIND FORCE IN THE ARGUMENTS OF LD A.R. OF THE ASSESSEE. NO MATERIAL HAS BEEN BROUGHT O N RECORD EITHER BY THE ASSESSING OFFICER OR BY THE LD CIT(A) TO SHOW THAT THE CREDIT NOTES ISSUES BY THE ASSESSEE REPRESENT THE CASH RECEIPTS FROM THE DEBTORS, WHICH HAVE BEEN SUPPRESSED WITH THE ENTRY OF DISCOUNT IN THE LEDGER ACCOUNT. THE DISALLOWANCE H AS BEEN MADE ONLY ON CONJECTURES AND SURMISES BY THE ASSESSING OFFICER, WHICH CANNOT BE SUSTAINED IN LAW WITHOUT BRINGING CREDIBLE EVIDENCE ON RECORD. HENCE, I SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND DELETE THE DISALLOWANCE MADE @ 10% OUT OF DISCOUNT OF RS.2,06,095/ - AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 03 /01/2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 03 /01 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT :SMT. SARITA BHARALAWALA, CHOUDHARY BAZAR, CUTTACK. 2. THE RESPONDENT: ACIT, CIRCLE 2(2), CUTTACK 3. THE CIT(A), CUTTACK 4. CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//
