M/s Hahnemann Pharmacy and Laboratory, Kolkata V. ITO, WD-55(3), KOLKATA, Kolkata

ITA 77/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1298 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 19-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 143(3); 142(1); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI ABY. T. VARKEY, JM & SHRI M. BALAGANESH, AM ] I.T.A NO. 77/KOL/2016 ASSESSMENT YEAR : 2007-0 8 HAHNEMAN PHARMACY AND LABORATORY. -V S- ITO, WARD-55(3),KOLKATA [PAN: AABFH 6326 H] (APPELLANT) ( RESPONDENT) FOR THE APPELLANT : SHRI V.N. PUROHIT, FCA FOR THE RESPONDENT : SHRI ARINDAM BHATTACHARJ EE, ADDL. CIT DATE OF HEARING : 20.02.2018 DATE OF PRONOUNCEMENT : 07.03.2018 ORDER PER M.BALAGANESH, AM 1. THIS IS AN APPEAL OF THE ASSESSEE DIRECTED AGAIN ST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 6, KOLKATA (I N SHORT THE LD CITA) IN APPEAL NO. 18/CIT(A)-6/KOL/2013-14 DATED 27.11.2015 AGAINS T THE ORDER OF ASSESSMENT FRAMED BY THE LEARNED INCOME TAX OFFICER, WARD -55( 3), KOLKATA (IN SHORT THE LD AO) U/S 143(3)/ 263 OF THE ACT DATED 03.03.2013 FOR THE ASST YEAR 2007-08. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS NOT ENTIT LED TO AGITATE THE ISSUE BEFORE HIM , IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THEREBY U PHOLDING THE ADDITION OF RS 6,33,344/- ON ACCOUNT OF FREIGHT AND FORWARDING CHA RGES. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF HOMEOPATHIC M EDICINES AND HAD FILED ITS RETURN OF INCOME FOR THE ASST YEAR 2007-08 ON 31.10.2007 D ECLARING TOTAL INCOME OF RS 2 ITA NO.77/KOL/2016 HAHNEMAN PHARMACY AND LABORATORY A.YR.2007-08 2 8,36,313/-. THE ENTIRE BOOKS OF ACCOUNTS WERE PRO DUCED AND THERE IS NO ALLEGATION THAT THEY SUFFER FROM ANY DEFECT LIABLE TO BE REJECTED. THE LD AO DID NOT REJECT THE BOOKS OF ACCOUNTS IN THE ASSESSMENT PROCEEDINGS. THE ASSESSM ENT WAS COMPLETED U/S 143(3) OF THE ACT ON 29.12.2009 DETERMINING TOTAL INCOME AT R S 11,09,145/-. LATER THE LD CIT SOUGHT TO REVISE THIS ASSESSMENT AS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF THE REVENUE ON THE GROUND THAT THE ASSESSEE HAD CLAIMED DOUBLE DEDUCTION ON ACCOUNT OF FREIGHT AND FORWARDING CHARGES IN THE SUM OF RS 6,3 3,344/-. THE ASSESSEE SUBMITTED BEFORE THE LD CIT AS UNDER:- THE TOTAL FREIGHT AND FORWARDING CHARGES WERE PAID FOR GOODS CONSIGNED THROUGH TRANSPORTERS TO THE VARIOUS PARTIES AND THESE CHARG ES WERE PAID BY THE PARTIES ON OUR BEHALF AS CONSIGNMENT NOTES ARE ON TO PAY BASIS A ND FOR WHICH THE ASSESSEE HAS CREDITED THE PARTIES ACCORDINGLY. HENCE, THE ASSESS EE HAS DEBITED THE FREIGHT AND FORWARDING CHARGES TO THE PROFIT AND LOSS ACCOUNT. THE GROSS SALES AMOUNTING TO RS. 1,25,34,107/- HAVE BEEN CREDITED TO THE MANUFACTURI NG ACCOUNT BEFORE DEDUCTION OF FREIGHT AND FORWARDING CHARGES. THE STATEMENT OF SA LES AND A SAMPLE SALE INVOICE COPY ARE ENCLOSED HEREWITH FOR CORROBORATION OF THE ASSE SSEES CLAIM. THE DETAILS SO FILED CLEARLY REVEAL THAT FREIGHT AND FORWARDING CHARGES WERE NOT CLAIMED BY THE ASSESSEE TWICE. THE ASSESSEE HAS NEITHER CONCEALED ANY TURNO VER NOR HAS CLAIMED ANY DOUBLE DEDUCTION OF THE SAME EXPENDITURE WITH A VIEW TO R EDUCING THE NET PROFIT. 4. THE LD CIT PASSED AN ORDER U/S 263 OF THE ACT ON 19.3.2012 BY OBSERVING AS UNDER:- 5. THE ARGUMENTS PUT FORWARD BY THE LD. AR HAVE CA REFULLY BEEN EXAMINED IN THE LIGHT OF THE ASSESSEES AUDITED ACCOUNTS, DETAILS O F SALE AND CONSIGNMENT NOTES RAISED ON ITS CLIENTS. IT IS PERTINENT TO MENTION THAT FRE IGHT AND FORWARDING CHARGE IS AN INDIRECT EXPENDITURE IN THE HANDS OF THE ASSESSEE F IRM WHICH IS REQUIRED TO BE CLAIMED IN THE PROFIT AND LOSS ACCOUNT. ONLY THE DIRECT EXP ENSES ATTRIBUTABLE TO THE MANUFACTURING PROCESS ARE DEBITABLE TO THE MANUFACT URING ACCOUNT. IN CONSONANCE WITH THIS USUAL PRACTICE THE TURNOVER CREDITED TO T HE PROFIT AND LOSS ACCOUNT SHOULD HAVE ONLY INCLUDED THE DIRECT EXPENDITURE COMPONENT S. BUT SURPRISINGLY THE ASSESSEE FIRM CLAIMS THAT THE SALE CREDITED TO THE MANUFACTU RING ACCOUNT FOR THE YEAR INCLUDED FREIGHT AND FORWARDING CHARGES WHICH IS QUITE ANOMA LOUS AND HENCE NOT RELIABLE/TENABLE. THE LD. AR HAS ARGUED THAT THIS A CCOUNTING SYSTEM HAS BEEN FOLLOWED BY THE ASSESSEE IN CONFORMITY WITH THE PROCEDURE AD OPTED FOR FILING THE SALES TAX RETURNS. HOWEVER, THE ACCOUNTING TREATMENT FOLLOWED BY THE ASSESSEE FOR THE SALES TAX PURPOSE IS FOUND TO BE NOT CONSISTENT WITH THE PRA CTICE OUGHT TO BE ADOPTED BY THE ASSESSEE FOR THE INCOME TAX PURPOSE. THE GROSS TURN OVER CREDITED TO THE PROFIT AND LOSS ACCOUNT SHOULD NOT HAVE IN ANY WAY INCLUDED THE IND IRECT FREIGHT AND FORWARDING EXPENDITURE. SIMILAR TO CENTRAL SALES TAX THIS INDI RECT EXPENDITURE HAS BEEN BORNE BY THE PARTIES TO WHOM THE GOODS WERE SOLD BY THE ASS ESSEE. IT IS WORTHWHILE TO NOTE THAT 3 ITA NO.77/KOL/2016 HAHNEMAN PHARMACY AND LABORATORY A.YR.2007-08 3 CENTRAL SALES TAX HAS NEITHER BEEN INCLUDED IN THE TURNOVER NOR HAS BEEN CLAIMED BY THE ASSESSEE AS EXPENDITURE BY WAY OF DEBIT TO THE PROFIT AND LOSS ACCOUNT. IN THE SAME MANNER THE ASSESSEE SHOULD NOT HAVE ALSO DEBITED TH E FREIGHT AND FORWARDING CHARGES TO THE PROFIT AND LOSS ACCOUNT. THE REPORTED INCLUS ION OF THE FREIGHT AND FORWARDING CHARGES IN THE SALE AMOUNT CREDITED TO THE MANUFACT URING ACCOUNT GIVES RISE TO AN ANOMALY BECAUSE THE OUTWARD FREIGHT CHARGE PARTAKE S THE CHARACTER OF AN INDIRECT EXPENDITURE WHICH HAS BEEN BORNE BY THE CONSIGNEES. THE ASSESSEES CONTENTION ON THE IMPUGNED ISSUE SMACKS OF A THOROUGHLY INCONSISTENT ACCOUNTING PRACTICE WHICH DEFIES COMMON LOGIC. THIS APPELLANT FALLACY/DISCREPANCY EM BEDDED IN THE ASSESSEES ACCOUNTING TREATMENT COULD NOT AT ALL BE SATISFACTO RILY EXPLAINED BY THE LD. AR. ON THE CONTRARY, HE FAIRLY CONCEDED THAT THE FREIGHT AND F ORWARDING CHARGES SHOULD NOT HAVE BEEN INCLUDED IN THE TURNOVER AND THAT THIS ERRONEO US INCLUSION AROSE OUT OF EMANATED FROM THE METHOD OF RAISING THE SALE INVOICES AS PER THE SALES TAX ACT. IN OTHER WORDS, THE LD. AR FAILED TO REFUTE THE AFORESAID DISCREPAN CY. THERE IS NO AMBIGUITY AS TO THE ASSESSEES CLAIM OF DOUBLE DEDUCTION OF THE SAME EX PENDITURE I.E. FREIGHT AND FORWARDING CHARGES. ONCE THE LIABILITY OF THE FREIG HT AND FORWARDING EXPENDITURE HAS BEEN BORNE BY THE CONSIGNEE, THE ASSESSEE FIRM IS P RECLUDED FROM CLAIMING THE SAME EXPENDITURE IN ITS PROFIT AND LOSS ACCOUNT. THIS GL ARING DISCREPANCY IN THE ASSESSEES ACCOUNTING TREATMENT COULD NOT BE DETECTED BY THE A O WHILE COMPLETING THE ASSESSMENT PROCEEDING. THE FAILURE ON HIS PART TO U NEARTH THIS ANOMALY HAS RENDERED THE ASSESSMENT ORDER ERRONEOUS AS WELL AS PREJUDICI AL TO THE INTEREST OF REVENUE BECAUSE ALLOWING THE FREIGHT AND FORWARDING CHARGES HAS RESULTED IN DOUBLE DEDUCTION OF THE SAME EXPENDITURE AND CONSEQUENT UNDER ASSESS MENT INCOME BY A SUM OF RS. 6,33,344/-. IN THIS REGARD, I PLACE RELIANCE ON TH E FOLLOWING JUDICIAL PRONOUNCEMENTS: A) M/S ASHOKE LEYLAND LTD. VS. CIT REPORTED IN 260 IT R 599 (MAD) B) M/S JAI BHARATH TANNERS VS. CIT REPORTED IN 264 ITR 673(MAD.) C) M/S MALABAR INDUSTRIAL CO. LTD. VS. CIT REPORTED IN 243 ITR 83(S C) THE HON'BLE SUPREME COURT AND THE MADRAS HIGH COURT HAVE HELD IN THE ABOVE CASES THAT THE AOS FAILURE TO CONDUCT ENQUIRY ON THE ISS UES DEPICTED IN THE ASSESSEES FINAL ACCOUNTS WOULD RENDER AN ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. EXACTLY, THE SAME HAS HAPPENED IN T HE INSTANT CASE ALSO. THEREFORE, I HAVE NO HESITATION IS SETTING ASIDE THE ASSESSMENT ORDER DATED 29.12.2009 U/S 263 OF THE I.T. ACT WITH A DIRECTION TO THE AO TO FRAME TH E ASSESSMENT ORDER DE NOVO IN THE LIGHT OF THE OBSERVATIONS MADE ABOVE. NEEDLESS TO M ENTION THAT IN THE COURSE OF THE REASSESSMENT PROCEEDING THE AO SHALL GRANT A REASON ABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE FIRM. 5. THE ASSESSEE DID NOT PREFER ANY APPEAL BEFORE TH IS TRIBUNAL AGAINST THE SAID ORDER PASSED BY THE LD CIT U/S 263 OF THE ACT. 4 ITA NO.77/KOL/2016 HAHNEMAN PHARMACY AND LABORATORY A.YR.2007-08 4 6. THE LD AO IN THE GIVING EFFECT TO SECTION 263 PR OCEEDINGS, ISSUED NOTICE U/S 142(1) OF THE ACT ON 5.12.2012 TO THE ASSESSEE. THE ASSES SEE PRODUCED THE ENTIRE BOOKS OF ACCOUNTS BEFORE THE LD AO AGAIN. THE LD AO ASKED THE ASSESSEE TO EXPLAIN WHY THE FREIGHT & FORWARDING CHARGES AMOUNTING TO RS 6,33,3 44/- WAS AGAIN DEBITED TO THE PROFIT AND LOSS ACCOUNT , WHEREAS IN THE INVOICES R EGARDING OUTSTATION SALES, SUBMITTED DURING THE ASSESSMENT PROCEEDINGS, SHOW THAT THE FR EIGHT AND FORWARDING CHARGES WERE DEDUCTED TO ARRIVE AT THE OUTSTATION SALE AMOUNT. THE ASSESSEE EXPLAINED THAT OUTSTATION SALES FIGURE WAS ARRIVED AT WITHOUT DEDU CTION OF FREIGHT AND FORWARDING CHARGES AND THEREFORE THERE WAS NO MISTAKE IN CLAIM OF THE SAME IN THE PROFIT AND LOSS ACCOUNT BY IT. THE ASSESSEE REFERRED TO THE STATEM ENT OF SALES SUBMITTED ON 16.2.2012. THE LD AO OBSERVED THAT THIS VIEW OF THE ASSESSEE C ANNOT BE ACCEPTED AS THE COPIES OF INVOICE OF SALE SUBMITTED DURING THE COURSE OF ASSE SSMENT PROCEEDINGS CLEARLY SHOW THAT THE TOTAL OUTSTATION SALE WAS ARRIVED AT AFTER DEDUCTION OF FREIGHT AND FORWARDING CHARGES AMOUNTING TO RS 6,33,344/- AND AGAIN DEBITE D THE SAME AMOUNT TO PROFIT AND LOSS ACCOUNT LEADING TO CLAIM OF DOUBLE DEDUCTION . ACCORDINGLY, THE LD AO DISALLOWED THE SAME IN THE RE-ASSESSMENT. 7. THE LD CITA HELD THAT THE LD CIT U/S 263 OF THE ACT HAD DIRECTED THE LD AO TO MAKE DISALLOWANCE OF RS 6,33,344/- TOWARDS FREIGHT AND F ORWARDING CHARGES AND THE LD AO HAD ONLY FOLLOWED THE DIRECTIONS OF THE LD CIT WHIC H IS BINDING ON HIM. ONCE THE LD AO FOLLOWS THE ORDERS OF HIS SUPERIOR, BY MAKING AN ADDITION, THE ASSESSEE CANNOT BE AGGRIEVED ON THE SAME. THE ASSESSEE SHOULD HAVE PR EFERRED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER PASSED BY THE LD CIT U/S 263 OF THE ACT, WHICH WAS ADMITTEDLY NOT DONE BY THE ASSESSEE HEREIN. HENCE THE ASSESSEE HAS TO SUFFER IN THE INSTANT SCENARIO AND ACCORDINGLY THE APPEAL FILED B Y THE ASSESSEE BEFORE HIM IS NOT MAINTAINABLE AS PER LAW. ON THESE OBSERVATIONS, THE LD CITA DISMISSED THE APPEAL OF THE ASSESSEE . AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 5 ITA NO.77/KOL/2016 HAHNEMAN PHARMACY AND LABORATORY A.YR.2007-08 5 1. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AS WELL AS IN LAW, THE LD. CIT(A)-6, KOLKATA ERRED IN CONCLUDING THAT THE APPE LLANT CANNOT BE ALLOWED TO AGITATE THE ISSUE BEFORE HIM, EVEN THOUGH THE APPEA L WAS FILED AGAINST THE ORDER OF LOWER AUTHORITY. 2. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AS WELL AS IN LAW TO REJECT AND DISMISS THE APPEAL WHEN THERE IS SPECIFIC PROVI SIONS IN THE INCOME TAX ACT, 1961 EMPOWERING THE LD. CIT(A) TO PASS SUCH ORDER, EVEN WHEN THE LD. CIT(A) DISCUSSED IN DETAILS THE ARGUMENTS OF THE APPELLANT AND NOT CONTRADICTED SUCH ADJUSTMENTS IN THE APPEAL ORDER. 3. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE APPELLANT PRAYS BEFORE THE HONBLE ITAT TO DELETE THE UNJUSTIFIED A DDITION OF RS. 6,33,344/- ON ACCOUNT OF FREIGHT AND FORWARDING CHARGES. 4. THE APPELLANT CRAVES LEAVE TO ADD TO MODIFY THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE OUT SET, WE FIND THAT THE MAIN OBSERVATIONS OF THE LD CIT IN HIS ORDER U/S 263 OF THE ACT ARE AS UNDER:- THEREFORE, I HAVE NO HESITATION IN SETTING ASIDE TH E ASSESSMENT ORDER DATED 29.12.2009 U/S 263 OF THE I.T.ACT WITH A DIRECTION TO THE AO TO FRAME THE ASSESSMENT ORDER DENOVO IN THE LIGHT OF THE OBSERVA TIONS MADE ABOVE. NEEDLESS TO MENTION THAT IN THE COURSE OF THE REASSESSMENT P ROCEEDING THE A.O. SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE FIRM. HENCE IT COULD BE SAFELY CONCLUDED THAT THE LD CIT IN HIS SECTION 263 ORDER HAD NOT DIRECTED THE LD AO TO MAKE DISALLOWANCE OF FREIGHT AND FORWARDING CHARGES IN THE SUM OF RS 6,33,344/- ON ACCOUNT OF DOUBLE DEDUCTION. WE FIND THAT THE LD CIT HAD ONLY DIRECTED THE LD AO TO MAKE NECESSARY ENQUIRIES WITH REGARD TO THE DISPUTED DOUBLE CLAIM OF DEDUCTION OF FREIGHT AND FORWARDING CHARGE S. WE ALSO FIND THAT THE LD CIT HAD ALSO DIRECTED THE LD AO TO GRANT SUFFICIENT OPPORTU NITY TO THE ASSESSEE IN THIS REGARD, WHICH IS VERY CRUCIAL FOR MAINTAINABILITY OF THE AP PEAL BEFORE THE LD CITA. IN THIS REGARD , HAD THE INTENTION OF THE LD CIT U/S 263 O F THE ACT IS TO MERELY GIVE DIRECTIONS 6 ITA NO.77/KOL/2016 HAHNEMAN PHARMACY AND LABORATORY A.YR.2007-08 6 TO THE LD AO TO MAKE DISALLOWANCE OF RS 6,33,344/- , THEN THERE IS NO NEED FOR THE LD CIT TO MENTION IN HIS ORDER DIRECTING THE LD AO TO GIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE FURTHER FIND THAT THE LD AO ALSO HAD UNDERSTOOD THE LANGUAGE OF SECTION 263 ORDER PASSED BY THE LD CIT AS A DENOVO PROCEEDING ONLY. THIS IS EVIDENT FROM THE FACT THAT THE LD AO HAD ISSUED FRESH NOTIC E U/S 142(1) OF THE ACT ON 5.12.2012 AND HAD CALLED FOR THE ENTIRE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE ASSESSEE HAD ALSO APPEARED BEFORE THE LD AO AND PRODUCED THE BOOKS OF ACCOUNTS BEFORE THE LD AO IN THE GIVING EFFECT PROCEEDINGS TO SECTION 263 OF THE ACT . HENCE IT IS ONLY A DENOVO ASSESSMENT DIRECTED BY THE LD CIT U/S 263 OF THE AC T. HENCE THE ASSESSEE HAD NOT LOST ITS LEGAL RIGHT TO PREFER AN APPEAL BEFORE THE LD C ITA IN CASE IF HE IS AGGRIEVED ON A DISALLOWANCE / ADDITION MADE BY THE LD AO IN THE SE COND ROUND OF PROCEEDINGS. THIS IS IRRESPECTIVE OF THE FACT THAT THE ASSESSEE HAD NOT PREFERRED ANY APPEAL AGAINST THE SECTION 263 ORDER BEFORE THIS TRIBUNAL. HENCE WE HOLD THAT THE APPEAL FILED BY THE ASSESSEE BEFORE THE LD CITA IS MAINTAINABLE AND THE LD CITA OUGHT NOT TO HAVE DISMISSED THE APPEAL IN THE INSTANT CASE. WE FIN D THAT THE RELIANCE PLACED BY THE LD AR ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS H.H.SIR RAMA VARMA & ORS REPORTED IN 203 ITR 398 (KER) DIRECTLY SUPPORTS OUR UNDERSTANDING OF THE LANGUAGE OF SECTION 263 OF THE ACT . THE OPERATIVE PORTION OF THE SAID JUDGEMENT IS REPRODUCED BELOW:- HELD WHEN THE COMMISSIONER HAS CANCELLED THE ORDER AND H AS DIRECTED A FRESH ASSESSMENT TO BE MADE THE ENTIRE ASSESSMENT IS BEFORE THE OFFI CER. HE IS WITHIN HIS POWERS TO CONSIDER ALL CLAIMS EVEN THE ONE NOT TAKEN UP EARLI ER. THE ENTIRE MATTER IS AFRESH BEFORE THE ASSESSING AUTHORITY AND ALL RELEVANT ASP ECTS SHOULD BE CONSIDERED BY HIM WHILE MAKING THE ASSESSMENT AFRESH. THE POSITION WI LL BE DIFFERENT IF THE ASSESSING AUTHORITY HAS BEEN DIRECTED TO MAKE ONLY AN ASSESSM ENT FOLLOWING SOME DIRECTIONS ISSUED BY THE COMMISSIONER. THAT THE ASSESSEE WAS G IVEN AN OPPORTUNITY TO PLACE BEFORE THE ITO ALL MATERIALS REGARDING THE QUESTION RELATING TO TAXATION OF CAPITAL GAINS INDICATED IN THE ORDER DOES NOT BY ITSELF RES TRICT THE POWER OF THE ASSESSING AUTHORITY WHILE MAKING A FRESH ASSESSMENT. THE ENTI RE ASSESSMENT HAD BEEN CANCELLED AND THE DIRECTION WAS TO MAKE A FRESH ASSESSMENT. T HE CIT(A) WAS, THEREFORE, RIGHT IN OBSERVING THAT THE ASSESSEE IS LEGITIMATELY ENTITLE D TO CLAIM THE DEDUCTION. NO ERROR HAS, THEREFORE, BEEN COMMITTED BY THE TRIBUNAL IN U PHOLDING THE ORDER OF THE COMMISSIONER (A). 7 ITA NO.77/KOL/2016 HAHNEMAN PHARMACY AND LABORATORY A.YR.2007-08 7 8.1. ON MERITS, WE FIND THAT THE FREIGHT AND FORWAR DING CHARGES OF RS 6,33,344/- IS TO BE PAID BY THE ASSESSEE WHICH WAS PAID BY THE CUSTO MERS ON BEHALF OF THE ASSESSEE. HENCE THE ASSESSEE ABSORBED THE FREIGHT AND FORWARD ING CHARGES AS ITS EXPENDITURE BY DEBITING TO PROFIT AND LOSS ACCOUNT BY GIVING CORRE SPONDING CREDIT TO THE CUSTOMERS ACCOUNT AS THE ASSESSEE HAD TO REIMBURSE THE FREIGH T AND FORWARDING CHARGES TO THE CUSTOMERS. THIS FACT IS ALSO EVIDENT FROM THE ST ATEMENT OF SALES FURNISHED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES WHICH IS ENCL OSED IN PAGE 46 OF THE PAPER BOOK OF THE ASSESSEE. WE ALSO FIND FROM THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE THAT A SUM OF RS 1,25,34,106.76 IS CREDITED TOWARDS GROSS SALE S BEFORE DEDUCTION OF FREIGHT AND FORWARDING CHARGES. WE ALSO FIND THAT THE TOTAL F REIGHT AND FORWARDING CHARGES WERE PAID FOR GOODS CONSIGNED THROUGH TRANSPORTERS TO VA RIOUS PARTIES AND THESE CHARGES WERE PAID BY THE CUSTOMERS ON BEHALF OF THE ASSESSE E AS CONSIGNMENT NOTES ARE ON TO PAY BASIS AND FOR WHICH, THE ASSESSEE HAD CREDITED THE CUSTOMERS ACCOUNT ACCORDINGLY. HENCE WE DO NOT FIND ANY INFIRMITY IN THE ACCOUNTIN G TREATMENT GIVEN BY THE ASSESSEE AND THE CLAIM OF DEDUCTION OF FREIGHT AND FORWARDIN G CHARGES IN THE SUM OF RS 6,33,344/- IS IN ORDER. WE ALSO HOLD THAT THE ASSE SSEE HAD NOT MADE ANY DOUBLE DEDUCTION CLAIM TOWARDS FREIGHT AND FORWARDING CHAR GES AS WRONGLY SUSPECTED BY THE LD CIT IN HIS SECTION 263 ORDER AND BY THE LD AO IN THE GIVING EFFECT PROCEEDINGS. THE LD DR PRAYED FOR SETTING ASIDE OF THIS APPEAL TO TH E FILE OF LD CITA FOR ADJUDICATION OF THE ISSUE ON MERITS. IN OUR CONSIDERED OPINION, WE DO NOT DEEM IT FIT AND NECESSARY AS THE FACTS AND THE TREATMENT OF GROSS SALES BEFORE F REIGHT AND FORWARDING CHARGES CREDITED IN THE MANUFACTURING ACCOUNT AND THE STATE MENT OF SALES SUBMITTED BEFORE THE LOWER AUTHORITIES, ARE STARING ON US. ABSOLUTELY T HERE IS NO SCOPE FOR TAKING A DIFFERENT VIEW IN THE IMPUGNED ISSUE. WE FIND THAT THE ASSES SEE HAD PLEADED THE SAME BEFORE THE LD CIT IN SECTION 263 PROCEEDINGS ; BEFORE THE LD A O AND BEFORE THE LD CITA BY WAY OF WRITTEN SUBMISSIONS TOGETHER WITH EVIDENCES IN S UPPORT OF ITS SUBMISSIONS, WHICH 8 ITA NO.77/KOL/2016 HAHNEMAN PHARMACY AND LABORATORY A.YR.2007-08 8 HAS NOT APPRECIATED BY THE AUTHORITIES BELOW. ACCO RDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 07.03. 2018 SD/- SD/- [A.T. VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.03.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. HAHNEMAN PHARMACY AND LABORATORY, 159B, BIPIN BE HARI GANGULI STREET, KOLKATA- 700012 2. ITO, WARD-55(3), KOLKATA, 54/1, RAFI AHMED KIDWA I ROAD, KOLKATA-700016 3. C.I.T(A)- , KOLKATA 4. C.I.T.- K OLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S