Iliyas Moosa, CHENNAI V. ACIT, CHENNAI

ITA 738/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81184 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 26-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: PRASSAN CHAND OSTWAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 738/MDS/2014 / ASSESSMENT YEAR : 2005-06 SHRI ILILYAS MOOSA, NO.1, GAJAPATHY STREET, SHENOY NAGAR, CHENNAI [PAN: AISPM 1677 R] ( !% /APPELLANT) VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-IV(3), CHENNAI ( &'!% /RESPONDENT) / APPELLANT BY : MR.PRASSAN CHAND OSTWAL, CA / RESPONDENT BY : MR.GURU BHASHYAM, JCIT / DATE OF HEARING : 21-08-2014 ! / DATE OF PRONOUNCEMENT : 25-09-2014 #( / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX, APPEALS (CENTRAL)-I, CHENNAI DATED 30-12-2013 RELEVANT TO THE ASSESSMENT YEAR (A Y) 2005-06. I.T.A. NO. 738/MDS/2014 2 2. THE ASSESSEE IS A PROPRIETOR OF M/S.TAMIL NADU E NTERPRISES. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY. 2005-06 ON 31-10-2005 DECLARING TOTAL INCOME OF ` 2,88,490/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSEE ON 29-03-2006. THE ASSESSEE IS PRIMARILY ENGAGED IN THE DISTRIBUTION OF PRODUCTS OF M/S.DHAR IWAL INDUSTRIES LTD., PUNE. AS PER THE CONTENTIONS OF THE ASSESSEE , THE ASSESSEE IS SENDING PERIODICAL STATEMENT OF SALES TO THE PRI NCIPAL/CONSIGNER I.E., M/S.DHARIWAL INDUSTRIES LTD., (HEREIN AFTER R EFERRED TO AS THE COMPANY) AND HAS BEEN REMITTING SALE PROCEEDS THRO UGH BANKING CHANNEL. THE ASSESSEE ON BEHALF OF THE COMPANY HAS BEEN MAKING PAYMENTS TO ITS EMPLOYEES WHO ARE ENGAGED IN PROMOTING ITS BUSINESS. THE ASSESSEE IS DEBITING COMPANYS C URRENT A/C FOR PAYMENTS SO MADE. THE COMPANY INTRODUCES FREE POU CH SCHEME FROM TIME TO TIME TO BOOST ITS SALES. IN ORDER TO IMPLEMENT FREE POUCH SCHEME, THE COMPANY ISSUES CRE DIT NOTE TO THE ASSESSEE WHO IN TURN TRANSFER THE BENEFIT TO TH E CUSTOMERS. THE LD.AR OF THE ASSESSEE CONTENDED THAT DURING THE AY UNDER CONSIDERATION, THE ASSESSEE PAID A SUM OF ` 2,99,280/- TO THE EMPLOYEES OF THE COMPANY AND DEBITED THE AMOUNT TO THE COMPANY. THE COMPANY ALSO CREDITED THE ACCOUNT OF THE ASSESSEE I.T.A. NO. 738/MDS/2014 3 WITH THE SAID AMOUNT. THE LD.AR FURTHER SUBMITTED T HAT ON 31-03-2005, THE COMPANY ISSUED ONE CREDIT NOTE TO T HE ASSESSEE FOR ` 15,25,147.58 IN RESPECT OF FREE POUCH SCHEME. A C REDIT NOTE WAS RECEIVED IN THE SUBSEQUENT YEAR AND THE SA ME WAS ACCOUNTED IN THE SUBSEQUENT YEAR. FOR THE PURPOSE OF DISCLOSURE, THE CREDIT NOTE WAS SHOWN IN PROFIT & LOSS A/C ON B OTH SIDES AS CONTRA. HOWEVER, THE AMOUNT WAS NOT SHOWN IN THE B ALANCE SHEET AS ON 31-03-2005 AS TRANSACTION WAS NOT ENTERED IN THE BOOKS OF ACCOUNT. 3. THE ASSESSING OFFICER DURING THE COURSE OF SCRUT INY ASSESSMENT HELD THAT THE AMOUNT OF ` 2,99,280/- HAS BEEN REDUCED AS AMOUNT IS SHOWN AS RECEIVABLE ON THE ASSET SIDE OF BALANCE SHEET OF THE ASSESSEE AS ON 31-03-2005. THE SAID P AYMENT HAS BEEN ACTUALLY MADE TO THE EMPLOYEES OF THE COMPANY TOWARDS THEIR SALARIES. ACCORDINGLY, THE AMOUNT WAS TO BE REIMBURSED BY THE COMPANY TO THE ASSESSEE. BUT THE ASSESSEE TOOK CREDIT OF THE SAME. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE RE- CONCILIATION STATEMENT OF THE ASSESSEE AND MADE ADD ITION OF ` 2,99,280/- IN THE INCOME RETURNED. I.T.A. NO. 738/MDS/2014 4 SIMILARLY, FOR THE CREDIT NOTE OF ` 15,25,147/- ISSUED BY M/S.DHARIWAL INDUSTRIES LTD., IN RESPECT OF FREE P OUCH SCHEME RELATING TO FY.2004-05, THE ASSESSING OFFICER REJEC TED THE EXPLANATION FURNISHED BY THE ASSESSEE AND HELD THAT IT IS THE INCOME OF THE ASSESSEE FOR THE FY ENDING ON 31-03-2 005 AND IS THEREFORE LIABLE TO BE TAXED IN THE AY.2005-06. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 24-12- 2007, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APP EALS). THE CIT(APPEALS) VIDE IMPUGNED ORDER UPHELD THE FINDING S OF ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE A SSESSEE IN RESPECT OF BOTH THE ADDITIONS. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASSESSE E HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE IN H IS APPEAL HAS ASSAILED THE FINDINGS OF CIT(APPEALS) IN CONFIRMING THE ADDITION OF ` 2,99,280/- I.E., AMOUNT PAID BY THE ASSESSEE TO THE EMPLOYEES OF M/S.DHARIWAL INDUSTRIES LTD., AND ` 15,25,147/- IN RESPECT OF FREE I.T.A. NO. 738/MDS/2014 5 POUCH SCHEME. THE LD.AR HAS ARGUED THAT THE AMOUN T OF ` 2,99,280/- HAS BEEN PAID BY THE ASSESSEE TO THE EMP LOYEES OF THE COMPANY AS SALARY. THE ASSESSEE HAS DEBITED CO MPANYS CURRENT A/C WHICH HAS BEEN SEPARATELY MAINTAINED IN STEAD OF COMPANYS MAIN ACCOUNT. SINCE TWO SEPARATE ACCOUNT S ARE BEING MAINTAINED, THIS HAS RESULTED IN DIFFERENCE IN CLOS ING BALANCE IN THE ASSESSEES ACCOUNT MAINTAINED BY THE COMPANY IN ITS BOOKS OF ACCOUNT. BOTH THE ACCOUNTS WERE RE-CONCILED AND TH E CLOSING BALANCE OF THE ASSESSEES ACCOUNT WITH THAT OF THE COMPANYS ACCOUNT WAS WRONGLY ASSESSED AS INCOME OF THE ASSES SEE BY THE ASSESSING OFFICER. THE LD.DR CONTROVERTING THE SUB MISSIONS OF THE ASSESSEE SUBMITTED THAT THE RE-CONCILIATION STATEME NT FILED BY THE ASSESSEE HAS BEEN EXAMINED BY THE AUTHORITIES BELOW . AFTER DUE CONSIDERATION OF THE SUBMISSIONS AND THE RE-CONCILI ATION STATEMENT, THE ASSESSING OFFICER HAS REJECTED THE SAME. THE C IT(APPEALS) IN THE IMPUGNED ORDER HAS AGAIN EXAMINED THE SUBMISSIO NS OF THE ASSESSEE AND UPHELD THE FINDINGS OF ASSESSING OFFIC ER. THE LD.AR IS MERELY REITERATING HIS SUBMISSIONS BEFORE THE TR IBUNAL WITHOUT ANY FURTHER EVIDENCE TO SUBSTANTIATE HIS CONTENTION S. WE FIND MERIT IN THE SUBMISSIONS OF THE LD.DR. THE AR HAS NOT BE EN ABLE TO SHOW FROM RECORDS ANY ERROR IN THE FINDINGS OF THE AUTHORITIES I.T.A. NO. 738/MDS/2014 6 BELOW. THE AR HAS NOT BROUGHT ON RECORD ANY MATERI AL TO SUBSTANTIATE HIS SUBMISSIONS. 5. AS REGARDS THE SECOND ADDITION OF ` 15,25,145/-, IN RESPECT OF FREE POUCH SCHEME IS CONCERNED, THE ONLY DISPUTE I S WHETHER THE INCOME IS TO BE ASSESSED IN THE IMPUGNED AY OR THE SUCCEEDING AY? THE LD.AR OF THE ASSESSEE HAS CONTENDED THAT THE A MOUNT OF ` 15,25,147/- HAS BEEN WRONGLY ASSESSED IN THE CURREN T AY AS THE INCOME OF THE ASSESSEE HAS NOT BEEN SHOWN IN THE BA LANCE SHEET FOR THE FY RELATING TO THE AY UNDER CONSIDERATION. THE ASSESSING OFFICER HAS ASSESSED THE SAID AMOUNT AS INCOME OF T HE ASSESSEE IN THE IMPUGNED AY. A PERUSAL OF THE ASSESSMENT OR DER SHOWS THAT THE ASSESSING OFFICER HAS RECORDED A FINDINGS OF THE FACT THAT IN THE PROFIT & LOSS A/C, THE ASSESSEE HAS ACCOUNTE D THE AMOUNT IN THE FY RELATING TO AY.2005-06 BY DEBITING THE SA ME TO PROFIT & LOSS A/C AND HAS ALSO SHOWING IN THE BALANCE SHEET AS PAYABLE TO THE COMPANY. THEREFORE, THE ASSESSEES CLAIM THAT THE AMOUNT HAS BEEN ACCOUNTED NEXT YEAR WAS NOT ACCEPTED BY TH E ASSESSING OFFICER. IT IS A WELL ESTABLISHED LAW THAT AN INCO ME CANNOT BE TAXED TWICE. IF THE ASSESSEE HAS RETURNED THE AMOUNT OF ` 15,25,147/- IN HIS NEXT AY AND HAS PAID TAX ON THE SAID AMOUNT, TH E SAME INCOME I.T.A. NO. 738/MDS/2014 7 CANNOT BE TAXED IN THE IMPUGNED AY. THIS ISSUE IS REMITTED BACK TO THE FILE OF ASSESSING OFFICER TO EXAMINE; WHETHE R THE ASSESSEE HAS OFFERED TO TAX THIS AMOUNT IN THE SUCCEEDING AY . IN CASE, THE ASSESSEE HAS ALREADY OFFERED THE AMOUNT OF ` 15,25,147/- IN THE NEXT AY, THE SAME MAY BE DELETED FROM THE IMPUGNED AY. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR ST ATISTICAL PURPOSE IN THE AFORESAID TERMS. ORDER PRONOUNCED ON THURSDAY, THE 25 TH SEPTEMBER, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( ! ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) '#$ / VICE PRESIDENT % &' / JUDICIAL MEMBER (% /CHENNAI, )& /DATED: 25 TH SEPTEMBER, 2014 TNMM &* +,-, /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ./0 /CIT(A) 4. . /CIT 5. ,12 3 /DR 6. 245 /GF