JVC Industrial Corporation, New Delhi V. ITO, Ward-24(2), New Delhi

ITA 4470/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2852 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 05-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU MUKHERJEE
• Assessee Lawyers: VED JAIN ADV SHRI ASHISH CHADA
• Keywords: Opportunity of being heard; Additional evidence; Onus to prove
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO.4470/DEL/2017 ASSESSMENT YEAR : 2008-09 JVC INDUSTRIAL CORPORATION, A-21, HAUZ KHAS, NEW DELHI. VS. ITO, WARD- 24(2), NEW DELHI. PAN : AAFPJ3600P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADV. SHRI ASHISH CHADA DEPARTMENT BY : MS. RANU MUKHERJEE, SR.DR DATE OF HEARING : 17-01-2018 DATE OF PRONOUNCEMENT : 21-03-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 05.05.2017 OF CIT(A)- 11, NEW DELHI RELATING TO ASS ESSMENT YEAR 2008-09. 2. LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEAR ING DID NOT PRESS GROUND NO.3 AND 4 DUE TO SMALLNESS OF THE AMOUNT FOR WHICH LD. DR HAS NO OBJECTION. ACCORDINGLY, THE GROUND NO.3 AND 4 ARE DISMISSED AS NOT PRESSED. 3. GROUND NO.1 AND 6 BEING GENERAL IN NATURE ARE DI SMISSED. 4. IN GROUND NO.2.(I) AND 2.(II), THE ASSESSEE HAS CHALLENGED THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.13, 13,431/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEALER INCENTIVE PA ID BY THE ASSESSEE. 2 ITA NO.4470/DEL/2017 5. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN AOP AND DERIVES INCOME FROM MANUFACTURE OF STABILIZERS, TRANSFORMER S AND BATTERY CHARGERS, TRADING IN VACUUM CLEANERS, UPS/BATTERY/INVERTORS, WATER PURIFIERS/AUTO ELECTRICAL ETC. IT FILED ITS RETURN OF INCOME ON 2 8.09.2008 DISCLOSING TOTAL INCOME OF RS.89,860/-. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS DEBITED AN AMOU NT OF RS.13,13,431/- UNDER THE HEAD DEALER INCENTIVE SCHEME. HOWEVER, NO BAS IS OF THE SAME WAS FILED. THE ASSESSEE COULD NOT EXPLAIN AS TO HOW THE SAME I S ALLOWABLE TO VARIOUS DEALERS AND ALSO THE MODE OF PAYMENT OF THE SAME. HE, THEREFORE, ASKED THE ASSESSEE TO PROVIDE THE DETAILS OF PARTIES ALONG WI TH NAME, ADDRESS AND CONFIRMATION IN RELATION TO THE SALE INCENTIVE/DISC OUNT/SCHEME. HOWEVER, THE ASSESSEE ACCORDING TO THE ASSESSING OFFICER SIMPLY SUBMITTED THE LEDGER COPY OF THE DEALER INCENTIVES SCHEME AND NO DETAILS OF THE PARTIES, THEIR ADDRESS, BASIS OF ALLOWING THE SAME, CONFIRMATIONS, ETC. WERE FILED A ND THE ASSESSEE FAILED TO SUBSTANTIATE THE ONUS CAST ON IT. THE ASSESSING OF FICER THEREFORE MADE ADDITION OF RS.13,13,431/-. 6. IN APPEAL, THE LD. CIT(A) UPHELD THE ACTION OF T HE ASSESSING OFFICER BY OBSERVING AS UNDER :- 6.4 I HAVE GONE THROUGH THE FACTS OF THE CASE. TH E AR HAS CONTENDED THAT HE HAS FILED CONFIRMED LEDGER ACCOUNTS FROM THE DEALERS AS ADDITIONAL EVIDENCE AT PAGES 9 TO 20 OF THE PAPER BOOK. HOWEVER, IT IS NOTICED THAT THE APPELLANT HAS FILED COPIES OF LEDGER ACCOUNTS OF FIVE PARTIES ONLY AND THE SAME H AVE NOT BEEN VERIFIED PROPERLY BY THE SAID PARTIES. NO SEAL/STAMP OF THE CONCERN HAS BEEN PUT AND ALSO THE NAME OF THE 3 ITA NO.4470/DEL/2017 AUTHORIZED SIGNATORY HAS NOT BEEN MENTIONED. ONLY SOME INITIALS HAVE BEEN PUT AND THE ORIGINAL DOCUMENTS HAVE NOT BEEN PRODUCED FOR V ERIFICATION. MOREOVER, OUT OF THE TOTAL INCENTIVE AMOUNTING TO RS.13,13,431/-, THE IN CENTIVE PAID TO THESE FIVE PARTIES AMOUNTS TO ONLY RS.1,06,666/-. IT IS OBSERVED THAT THE APPELLANT HAS NOT BEEN ABLE TO PROVE THE GENUINENESS OF THE INCENTIVE PAID TO THE DEALERS. THE AR WAS ALSO ASKED TO FURNISH THE BASIS/POLICY BASED ON WHICH INCENTIVE I S DETERMINED IN RESPECT OF VARIOUS DEALERS. THE AR HAS VIDE HIS LETTER FILED ON 01.05 .2017 STATED THAT THE INCENTIVE IS GIVEN ON THE BASIS OF PERFORMANCE OF THE DEALERS AN D THERE IS NO WRITTEN POLICY FOR THE SAME. THE AR HAS AGAIN FAILED TO EXPLAIN THE BASIS OF DETERMINATION OF INCENTIVE IN RESPECT OF VARIOUS DEALERS. IT IS OBSERVED THAT TH E APPELLANT HAS FAILED TO DISCHARGE ITS PRIMARY ONUS TO PROVE THE GENUINENESS OF THE DEALER INCENTIVE CLAIMED TO HAVE BEEN PAID BY IT. IN VIEW OF THIS, THE DISALLOWANCE MADE BY THE AO IS CONFIRMED AND THE GROUND OF THE APPEAL IS DISMISSED. 7. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 8. LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLENGED THE ORDER OF THE LD. CIT(A). REFERRING TO PAGE 14 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE SALE INCENTIVES TO DEALERS SHOWN AT RS .13,13,431/- AND PURCHASE INCENTIVES RECEIVED AMOUNTING TO RS.43,31,295/-. R EFERRING TO PAGE 43 TO 48 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE LEDGER ACCOUNT OF THE DEALER INCENTIVE SCHEMES ACCORDING TO WHICH, THE IN CENTIVES HAVE BEEN GIVEN TO VARIOUS DEALERS ON DIFFERENT DATES. HE SUBMITTED T HAT THE ASSESSEE HAS NOT ONLY GIVEN THE INCENTIVES 13.13 LAKHS BUT ALSO HAS RECEI VED INCENTIVES OF RS.43.31 LAKHS WHICH HAS NOT BEEN CONSIDERED BY THE LOWER AU THORITIES. HE SUBMITTED THAT IT IS THE NORMAL BUSINESS PRACTICE TO GIVE INCENTIV ES TO DEALERS OUT OF THE INCENTIVES RECEIVED FROM THE PRINCIPALS. HE ACCORD INGLY SUBMITTED THAT THE AMOUNTS SUSTAINED BY THE LD. CIT(A) SHOULD BE DELET ED. 4 ITA NO.4470/DEL/2017 9. LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE O RDER OF THE LD. CIT(A). 10. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE PROFIT AND LOSS ACCOUNT SHOWS THAT WHILE ASSESSEE HAS GIVEN INCENTIVES TO THE DEA LER AT RS.13,13,431/-, IT HAS ALSO RECEIVED PURCHASE INCENTIVES OF RS.41,31,295/- . THE ASSESSEE HAS FILED THE LEDGER ACCOUNT OF THE INCENTIVES GIVEN TO DEALERS C OPY OF WHICH IS PLACED AT PAGE 43 TO 48 OF THE PAPER BOOK. ALL THESE INCENTIVES A RE ON THE BASIS OF THE PURCHASE EFFECTED BY THOSE PARTIES. THE DEALER INCENTIVE IN THE INSTANT CASE, IN MY OPINION, IS A NORMAL TRADE PRACTICE. FURTHER IN NO RMAL TRADE PRACTICE INCENTIVES ARE GIVEN TO DEALERS FOR LIFTING HIGHER QUANTITY OF PRODUCT. MERELY BECAUSE NO STAMP WITH SIGNATURE OF THE AUTHORIZED SIGNATORY IS THERE, THE SAME CANNOT BE DISBELIEVED WHEN THOSE INCENTIVES HAVE BEEN CREDITE D IN THE ACCOUNT OF THE RESPECTIVE PARTIES. NO EFFORT HAS BEEN MADE BY THE ASSESSING OFFICER TO OBTAIN CONFIRMATIONS U/S 133(6) TO DISPROVE THE AUTHENTICI TY OF THE INCENTIVES PAID TO DEALERS BY CREDITING THEIR ACCOUNTS. UNDER THESE C IRCUMSTANCES AND CONSIDERING THE FACT THAT THE ASSESSEE HAS ALSO RECEIVED PURCHA SE INCENTIVES OF RS.43.31 LAKHS DURING THE ASSESSMENT YEAR, THE DEALER INCENTIVES O F RS.13,13,431/-, IN MY OPINION, UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE CANNOT BE DISBELIEVED. I, THEREFORE, SET-ASIDE THE ORDER OF THE LD. CIT(A) AN D DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE. THE GROUND RAISED BY T HE ASSESSEE ON THIS ISSUE IS ACCORDINGLY ALLOWED. 5 ITA NO.4470/DEL/2017 11. GROUND NO.5 RELATES TO THE ORDER OF THE LD. CIT (A) IN CONFIRMING THE ADDITION OF RS.1,73,660/- ON ACCOUNT OF CUSTOMER SU SPENSE ACCOUNT. 12. AFTER HEARING BOTH THE SIDES, I FIND THE ASSESS ING OFFICER MADE ADDITION OF RS.1,73,660/- UNDER THE PROVISIONS OF SECTION 68 OF THE I.T. ACT ON THE GROUND THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE IDENTI TY AND CREDITWORTHINESS, ETC. OF THE SAID PARTIES AND/OR THEIR CONFIRMATIONS UNDER T HE HEAD CUSTOMER SUSPENSE ACCOUNT. 13. IN APPEAL, THE LD. CIT(A) SUSTAINED THE ADDITIO N SO MADE BY THE ASSESSING OFFICER. IT IS THE SUBMISSION OF THE LD. COUNSEL F OR THE ASSESSEE THAT THE ASSESSEE IS OPERATING A CURRENT ACCOUNT WHEREIN ALL THE DAY- TO-DAY BUSINESS ACTIVITIES ARE CONDUCTED. THE ASSESSEE HAS MANY ACCOUNT OF ITS AS SOCIATE CONCERNS AS WELL WITH THE SAME BRANCH OF THE BANK. ACCORDING TO HIM , THE ENTRIES APPEARING IN THE CUSTOMER SUSPENSE ACCOUNT ARE NOTHING BUT WRONG CREDIT ENTRIES WHICH HAVE BEEN POSTED BY THE BANK IN THE CURRENT ACCOUNT OF T HE ASSESSEE. IT IS ALSO HIS SUBMISSION THAT THESE ACCOUNTS ARE SUBSEQUENTLY BEI NG REVERSED BY THE BANK IN SUBSEQUENT YEARS. HOWEVER, THIS FACT HAS NOT BEEN PROPERLY CONSIDERED BY THE LOWER AUTHORITIES. UNDER THESE CIRCUMSTANCES, I AM OF THE CONSIDERED OPINION THAT THE MATTER REQUIRES A REVISIT TO THE FILE OF T HE ASSESSING OFFICER WITH A DIRECTION TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION THAT SUCH ENTRIES HAVE BEEN REVERS ED IN THE SUBSEQUENT YEARS. IF THE ASSESSEE CAN PROVE TO THE SATISFACTION OF THE A SSESSING OFFICER THAT THE 6 ITA NO.4470/DEL/2017 ENTRIES IN THE SUSPENSE ACCOUNT HAVE IN-FACT BEEN R EVERSED IN THE SUBSEQUENT YEARS BY THE BANK THEN THE ADDITION SO MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) HAS TO BE DELETED. NEE DLESS TO SAY, THE ASSESSING OFFICER SHALL GIVE AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND DECIDE THE ISSUE AS PER FACT AND LAW. I HOLD AND DIRECT ACCOR DINGLY. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST MARCH, 2018. SD/- (R. K. PANDA) ACCOUNTANT MEMBER DATED: 21-03-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI