Appeal details
Counselvise Citation
[2010] 135 COUNSELVISE.COM (IT) 9016 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 10 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-12-2010
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Next Hearing Date
08-12-2010
Assessment Year
2005-2006
Appeal Filed On
16-02-2009
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD (BEFORE HONBLE SHRI G.D. AGRAWAL, V.P. (AZ) & HON 'BLE SHRI T.K. SHARMA, J.M. ) I.T.A. NO. 500/AHD./2009 ASSESSMENT YEAR : 2005-2006 SWATI AUTO LINK PVT. LTD., AHMEDABAD -VS.-INCOME TA X OFFICER, WARD-8(2), AHMEDABAD (PAN : AACCS 1328 L) (APPELLANT) (RESP ONDENT) APPELLANT BY : SHRI BANDISH SOPARKAR RESPONDENT BY : SHRI K. MADHUSUDAN, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 18.11.2008 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XIV, AHMEDABAD FOR THE ASSESSMENT YEAR 2005-06. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IN ITS AP PEAL READS AS UNDER :- THE LEARNED CIT(APPEAL) HAS ERRED IN CONFIRMING TH E DISALLOWANCE OF DISCOUNT OF RS.2,96,329/- OUT OF TOTAL DISCOUNT OF RS.5,92,657/-. 3. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED IN THIS GROUND OF APPEAL ARE THAT FOR THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE FILED TH E RETURN OF INCOME DECLARING TOTAL INCOME AT RS.5,59,810/-. THE ASSESSING OFFICER FRAMED THE ASS ESSMENT UNDER SECTION 143(3) ON 12.12.2007, WHEREIN HE DISALLOWED RS.3,23,685/- BEING 50% OF DI SCOUNT EXPENSES OF RS.5,92,657/-. IN THIS ORDER, THE ASSESSING OFFICER OBSERVED THAT IN THE A SSESSMENT YEARS 2003-04 AND 2004-05 ALSO, EXCESS DISCOUNT CLAIMED THAN THE DISCOUNT MENTIONED IN CIRCULARS RECEIVED FROM TELCO WAS DISALLOWED. FOR THIS YEAR ALSO, THE ASSESSING OFFIC ER AFTER EXAMINING THE DETAILS AND INQUIRIES OBSERVED THAT THE FACTS OF THE CASE UNDER CONSIDERA TION ARE IDENTICAL WITH THAT OF THE EARLIER YEAR AND THIS IS ALSO CONFIRMED BY THE DIRECTOR AND THE AUTHORIZED REPRESENTATIVE. THE ASSESSING OFFICER ALSO NOTED THAT IN THIS YEAR ALSO, HIS OFFI CE APPROACHED CERTAIN CLIENTS AND THE DETAILS WERE 2 ITA NO. 500-AHD-2009 GATHERED. THE ASSESSEES CLIENTS HAVE DENIED TO HAV E RECEIVED EXCESS DISCOUNT THAN THE AMOUNT DECLARED IN THE BILL. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER ALSO FURNISHED SOME EXAMPLES, I.E. OF SHRI BHARATBHAI A. VADHER, WHO PURCHASED A CAR ON 18.06.2004 AND DISCOUNT OF RS.4,500/- WAS SHOWN BY VOUCHER. ON BEING ENQUIRED, HE DENIED TO HAVE RECEIVED SUCH DISCOUNT. SIMILARLY, SHRI NANDLAL K. PATEL DATED 24.07.2004, SHILPABEN N . NAI DATED 31.07.2004, SHRI RAMCHODBHAI P. THAKORE DATED 31.08.2004 HAVE DENIED RECEIPT OF ADDITIONAL DISCOUNT OTHER THAN THAT THE DECLARED IN THE BILL. HE ACCORDINGLY CONCLUDED THAT THE FACTS ARE IDENTICAL WITH THE FACTS OF EARLIER YEAR AND FOR THIS REASON HE DISALLOWED RS.2,96,329/ - BEING 50% OF THE DISCOUNT OF RS.5,92.657/-. 4. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE SAME FOLLOWING HIS ORDER FOR THE EARL IER TWO ASSESSMENT YEARS, I.E. ASSESSMENT YEAR 2003-04 & 2004-05. AGGRIEVED WITH THE ORDER OF LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI BANDISH SOPARKAR, LD. COUNSEL APPEARED AND POINTED OUT THAT THE APPEALS OF THE AS SESSEE FOR THE ASSESSMENT YEARS 2003-04 & 2004-05 BEING ITA NOS. 1213/AHD/2007 & 358/AHD/2008 HAVE ALREADY BEEN HEARD, THEREFORE, TRIBUNAL MAY FOLLOW THE DECISION DATED 10.12.2010 R ENDERED IN THE ASSESSMENT YEARS 2003-04 & 2004-05. 6. ON THE OTHER HAND, SHRI K. MADHUSUDAN, LD. SR. D .R. APPEARING ON BEHALF OF THE REVENUE STATED THAT HE HAS NO OBJECTION FOR THE SAME. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. FOR THE ASSESSMENT YEAR 2003-04, ITAT, C B ENCH, AHMEDABAD HAS DECIDED THE APPEAL OF THE ASSESSEE IN ITA NO. 1213/AHD/2007 VIDE ORDER DATED 10.12.2010. IN THAT ORDER, THIS ISSUE HAS BEEN RESTORED TO THE FILE OF ASSESSING OFFICER FOR THE DETAILED REASONS GIVEN IN PARA 5 ON PAGES 5-8 OF THE IMPUGNED ORDER, WHICH READS AS UND ER :- 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS OF THE CASE. WE FIND THAT FACTS ARE NOT IN DISPUTE AS REGARDS CL AIM OF DISCOUNT. AS ARGUED BY LD. COUNSEL FOR ASSESSEE THAT THIS ISSUE IS SQUARELY CO VERED IN FAVOUR OF ASSESSEE AND 3 ITA NO. 500-AHD-2009 AGAINST THE REVENUE BY THE DECISION OF THIS TRIBUNA L EXACTLY ON IDENTICAL FACTS IN ITA NO.2979/AHD/2009 IN THE CASE OF ACIT V. M/S. NANAVATI MOTORS FOR AS SESSMENT YEAR 2001-02, WHEREIN THE TRIBUNAL HELD IN PARA-4-5 HAS ALLOWED THE CLAIM AS UNDER:- 4. WE FIND THAT THE ASSESSING OFFICER IN THE SECON D ROUND OBSERVED THAT THE DISCOUNT ALLOWED TO THE PURCHASERS OF THE CARS BY THE ASSESSEE OF TWO TYPES AND IN SOME CASES, THE ASSESSEE RECEIVED LESS ER AMOUNTS THAN THE BILL VALUES AND THE BALANCE AMOUNTS NOT RECEIVED FROM TH E PURCHASERS OF THE CARS WERE TRANSFERRED TO COMMISSION (DISCOUNT) ACCO UNT. IN ANOTHER CASE THE ASSESSEE INITIALLY RECEIVED FULL SALE VALUES AG AINST THE SALE BILLS AND THEREAFTER RETURNED THE AGREED DISCOUNT AMOUNT TO T HE PURCHASERS OF THE CARS AGAINST OBTAINING OF THE SIGNATURE OF THE CUST OMERS ON THE DISCOUNT VOUCHERS. THE ASSESSING OFFICER HAS OBSERVED THAT CERTAIN DETAILS SUCH AS THE SALES INVOICES FOR THE SALE OF CARS, DELIVERY N OTES 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 CONTAINED ONLY ONE SALES BILL AND THE REST OF THE D OCUMENTS IN THE FILE WERE THE COPIES OF DELIVERY NOTES WHICH DID NOT CONTAIN ANY DETAILS OF DISCOUNTS ALLOWED TO THE CUSTOMERS AND SHORT PAYMENTS RECEIVE D FROM THE CUSTOMERS. IT HAS BEEN STATED BY THE AO THAT THE FILING OF DEL IVERY NOTES IS OF NO USE. THE AO ALSO OBSERVED THAT THE ASSESSEE SHOULD HAVE BEEN SHOWN DISCOUNTS ALLOWED BY WAY OF DEDUCTION. THE AO 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 NOT ACCEPTABLE THAT THE SIGNATURES OF THE CUSTOMERS ON THE DISCOUNT VOU CHERS WOULD MATCH WITH THE SIGNATURES OF THE CUSTOMERS ON DELIVERY NOTES F OR THE CARS IN ALL CASES SINCE THE HUMAN PROBABILITY MANDATES THAT IN SOME C ASES THE RECIPIENT OF THE DISCOUNT FROM THE ASSESSEE WOULD BE DIFFERENT T HEN THE PERSONS TAKING THE DELIVERY OF THE CARS FROM THE ASSESSEE. ACCORDI NG TO THE AO SINCE THE ASSESSEE HAS SHOWN THAT THE SIGNATURES ON THE DISCO UNT VOUCHERS INVARIABLY TALLY WITH THE SIGNATURES OF THE CUSTOMERS ON THE D ELIVERY NOTES, THE DISCOUNT VOUCHERS PRODUCED BY THE ASSESSEE BECOME D OUBTFUL. THE AO FURTHER OBSERVED THAT IN THE INSTANT CASE, THE DISC OUNTS ALLOWED DO NOT REPRESENT THE EXPENDITURE WHOLLY AND EXCLUSIVELY IN CURRED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. AGGRIEVED, THE AS SESSEE 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 PA YMENTS OF DISCOUNTS AMOUNTS TO THEM SINCE THEY HAD MADE FULL PAYMENTS A GAINST THE BILL VALUE 4 ITA NO. 500-AHD-2009 OF SALE OF CARS ON ACCOUNT OF OBTAINING 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 DISCOUN T ACCOUNT. IT HAS BEEN CONTENDED THAT THE PURCHASERS OF THE CARS WOULD NOT OBLIGE TH E ASSESSEE BY MAKING PAYMENT OF 95% TO 98% OF THE BILL VALUE OF THE CARS THROUGH CH EQUES / DRAFTS AND BY MAKING PAYMENT OF BALANCE SMALL SU9MS TO THE TUNE OF 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 REC ORD ANY MATERIAL / EVIDENCES INDICATIVE OF THE FACT THAT IN RESPECT OF SUCH CUST OMERS, THE ASSESSEE RECEIVED MORE AMOUNTS THAN THOSE RECORDED IN THE CUSTOMERS ACCOU NTS AND THAT THE SALES CONSIDERATIONS HAVE BEEN UNDERSTATED. THE CIT(A) D ELETED 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 APPELLANT. IN REGARD TO THE CASES WHERE THE SHORT PAYMENTS ARE RECEIVED FROM THE CUSTOMERS AND THE SMALL BALANCE AMOUNTS ARE TRANSFERRED TO TH E DISCOUNT WHICH TOTALED TO RS.15,95,088/-, I AGREE WITH THE APPELLANT THAT IT CANNOT BE THE CASE THAT HUNDREDS OF CUSTOMERS WOULD COLLIDE WITH THE APPELLANT BY MA KING 95% TO 98% OF THE BILL VALUE THROUGH CHEQUES/DEMAND DRAFTS AND BY MAKING P AYMENTS 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 C ONTRARY, SINCE AS PER THE INCOME-TAX RULES, THE DEPRECIATION IS ALLOWED ON TH E VALUE OF CARS, THE CUSTOMERS WOULD NOT BE INCLINED TO UNDER-STATE THE PURCHASE P RICE OF THE VEHICLE BY MAKING PART PAYMENT OF PURCHASE VALUE IN CASH TO OBLIGE TH E APPELLANT. BESIDES, NEITHER 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 ACCOUNTS. THE COPY OF SALES BILLS AND THE COPY OF LEDGER ACCOUNTS FILED BY THE APPELLANT BEFO RE THE A.O AND ALSO BEFORE ME CLEARLY SHOW THAT WHILE THE APPELLANT RECEIVED MAJO RITY FOR THE SALE VALUE THROUGH CHEQUES/DEMAND DRAFTS, THE SMALL PORTION 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 VARIOUS CAR DEALERS OF THE VARIOUS COMPANIES AND ALSO AMONGST MORE THAN ONE CAR DEALERS OF THE SAME COMPA NY. IN THAT VIEW OF THE 5 ITA NO. 500-AHD-2009 MATTER, WHAT THE APPELLANT 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 CUSTOM ERS THOUGH THE FULL SALE VALUE OF THE CARS WERE DEBITED IN THE CUSTOMERS A/C, THE CO NCERNED CUSTOMER PAID LESSER AMOUNT BY CHEQUES/DRAFT AND THE BALANCE AMOUNT IN T HE CUSTOMERS ACCOUNTS WERE 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. WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVO UR OF ASSESSEE AND AGAINST THE REVENUE IN PRINCIPLE BUT THE ASSESSEE IN THE PRESENT CASE BEFO RE US IS UNABLE TO SUBSTANTIATE ITS CLAIM OF DISCOUNT FULLY AS NOTED ABOVE IN THIS ORDER THAT TH E ENQUIRIES CONDUCTED IN THE CASE OF SHRI ASHISH P PATEL & SHRI DINESH L SOMANI WHERE, THEY H AVE DENIED OF ANY DISCOUNT. AS THESE TWO PARTIES HAD DENIED DISCOUNT, THE ONUS IS ON THE ASSESSEE TO ESTABLISH THE DISCOUNT ALLOWED. AS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE THAT HE IS READY TO PRODUCE 20 PARTIES TO WHOM DISCOUNT WAS ALLOWED ON RANDOM BASIS AND ASSESSING OFFICER CAN MAKE INQUIRIES AND CAN VERIFY. WE FIND THAT THE PLEA OF THE ASSESSEE IS QU ITE REASONABLE AND ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO VERIFY 20 PARTIES OF HIS CHOIC E AND IN CASE MAJORITY OF THESE TWENTY PARTIES DENY THE CLAIM OF THE ASSESSEE, HE WILL DIS ALLOW THE ENTIRE CLAIM AND IN CASE, THESE PARTIES ADMITS, HE WILL ALLOW THE CLAIM OF THE ASSE SSEE. SIMILARLY, THE OTHER ASSESSMENT YEAR ALSO ON FACTS BEING EXACTLY IDENTICAL WE ALLOW THE CLAIM OF ASSESSEE IN TERMS OF THE ABOVE THIS COMMON ISSUE IN THESE APPEALS OF ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES AS THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER . 7.1. IN VIEW OF THE ABOVE, WE SET ASIDE THE IMPUGNE D ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND RESTORE THE ISSUE OF DISALLOWANCE OF DISCOUNT AMOUNTING TO RS.2,96,329/- TO THE FILE OF ASSESSING OFFICER W ITH THE DIRECTION THAT HE WILL MAKE NECESSARY 6 ITA NO. 500-AHD-2009 VERIFICATION/ ENQUIRY AS DIRECTED BY THE TRIBUNAL I N ASSESSEES OWN CASE FOR THE EARLIER TWO ASSESSMENT YEARS (SUPRA) AND RE-ADJUDICATE THIS ADD ITION AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 16.12.20 10 SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 16/ 12 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A.) CONCERNED, (4) CIT CONCERNED, (5) D.R. , ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGIS TRAR, ITAT, AHMEDABAD LAHA/SR.P.S.
