DCIT, New Delhi V. M/s Amar Ujala Publications Ltd., New Delhi

ITA 963/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53182 (ITAT-DELHI)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 18-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH A DELHI ] BEFORE SHRI I. P. BANSAL, JM & SHRI K. D. RANJAN, AM I. T. APPEAL NO. 963 (DEL) OF 2011. ASSESSMENT YEAR : 2005-06. DY. COMMISSIONER OF INCOME-TAX, M/S. AMAR UJALA PUBLICATIONS LTD., C I R C L E : 1 (1), VS. 19 SIDHARTHA ENCLAVE, N E W D E L H I. A S H R A M C R O S S I N G, N E W D E L H I. P A N / G I R NO. AAD CA 0275 H. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI VED JAIN, C. A.; & MS. RANO JAIN, C. A.; DEPARTMENT BY : SHRI A. K. MONGA, SR. D. R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 200 5-06 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)-II, AGRA. 2. THE SUBSTANTIVE GROUND OF APPEAL RAISED BY THE R EVENUE IS REPRODUCED AS UNDER:- THE LD. CIT (APPEALS) HAS ERRED ON FACTS AND IN LAW IN DELETING ADDITION UPTO RS.74,78,222/- ON ACCOUNT OF SALES RETURN IGNORING THAT THE AO HAS REASONABLY CONSIDERED THE SALES RETURN RATE AT 4.5% IN 3 PRIOR YEARS AS WELL AND DECISION OF CIT (A) IN RESTRICTING THE DISALLOWANCE ON THIS ACC OUNT HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL BEFORE HONBLE ITAT HAS B EEN FILED. 2 I. T. APPEAL NO. 963 (DEL) OF 2011. 3. THE ONLY ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION OF RS.74,78,222/- ON ACCOUNT OF SALES RETURN. THE FACTS OF THE CASE STA TED IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN PUBLICATION OF HINDI NEWSPAPER AMAR UJALA FROM VA RIOUS PLACES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS ACCOMPANIED WITH THE A UDITED BALANCE SHEET WITH 3 CA AND 3 CD REPORT AS PER PROVISIONS OF SECTION 44-AB OF THE I. T. ACT, 1961. THE ASSESSING OFFICER COMPARED THE SALES AND SALES RETURNS OF VARIOUS BRANCHES AND AFTER COMPARISON THEREOF HELD THAT THE SALES RETURNED IN RESPECT OF ALLAHABAD, VARANASI, NOIDA A ND JULLUNDUR BRANCHES WERE EXCESSIVE. IN THESE BRANCHES THE SALES RETURNED HAVE BEEN CLAIMED AT 6.22 PER CENT TO 11.18 PER CENT WHEREAS IN OTHER BRANCHES THE SALES RETURNED WERE RANGING BETW EEN 2.75 PER CENT TO 4.87 PER CENT. IN VIEW OF THESE FACTS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COMPANY COULD HAVE MANAGED THE SALES RETURNS TO THE MINIMUM KEEPING IN VIEW THE SA LES WHICH WERE RECORDED IN RESPECT OF VARIOUS UNITS AS IN THE PAST. THE AO FURTHER NOTED THAT IN ASSESSMENT YEAR 2003-04 SALES RETURNED TO THE EXTENT OF 4 PER CENT WERE HELD REASONABLE BY HIM WH EREAS THE LD. CIT (APPEALS) HELD THE SALES RETURNED TO THE EXTENT OF 7 PER CENT AS REASONABLE. AS PER THE ASSESSING OFFICER, THE DECISION OF THE LD. CIT (A) WAS NOT ACCEPTED BY THE DEPARTMENT AND SECOND APPEAL WAS FILED BEFORE THE ITAT. HOWEVER, SINCE THERE WAS AN INCREASE IN THE SALES IN COMPARISON TO PRECEDING YEARS, THERE MIGHT BE CHANCES OF HIGHER SALES RETURN. THE ASSES SING OFFICER, THEREFORE, GAVE CREDIT OF 4.5 PER CENT OF SALES RETURNS EACH UNIT-WISE AND MADE THE D ISALLOWANCE. ON APPEAL THE LD. CIT (A) AFTER DETAILED DISCUSSIONS DELETED THE ADDITION. 4. BEFORE US WHEN THE CASE CAME UP FOR HEARING IT W AS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT ITAT, AGRA BENCH, AGRA VIDE CONSOLIDA TED ORDER DATED 28 TH JULY, 2011 IN CROSS APPEALS IN ITA. NOS. 331, 360 (AGR.) OF 2007 & C. O. NO. 52 (AGR.) OF 2007 IN ITA. NO. 360 (AGR.) OF 2007 FOR ASSESSMENT YEAR 2003-04 HAD DELE TED THE ENTIRE SIMILAR ADDITION. ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE ASS ESSING OFFICER. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. ITAT, AGRA BENCH IN CONSOLIDATED ORDER DATED 28 TH JULY, 2011 DELETED THE ADDITION MADE ON ACCOUNT OF SALES RETURN BY OBSERVING AS UNDER :- 10. WE ALSO FIND FORCE ON THE LEGAL SUBMISSIO NS OF THE LD. AR THAT THE ASSESSEE IN THIS CASE HAS NOT CLAIMED SALES RETURN TO BE AN EXPENDITURE. THEREFORE, NO 3 I. T. APPEAL NO. 963 (DEL) OF 2011. QUESTION OF ANY DISALLOWANCE ARISES. IT IS A QUEST ION OF ACCRUAL OF INCOME. THE CLAIM OF THE ASSESSEE RELATE TO THE FACT THAT ACTUA LLY HE HAS NOT MADE SALES TO THE EXTENT OF SALES RETURN AND THEREFORE, THERE HAD BEE N NO ACCRUAL OF INCOME. THE ASSESSEE IN THIS CASE, IN OUR OPINION, CLAIMS THAT HE HAS NOT MADE THE SALES FOR A PARTICULAR QUANTITY OF THE NEWSPAPERS AS THE NEWSPA PERS SO SENT RETURNED BACK. IF THE NEWSPAPERS ARE NOT SOLD ON THE DAY FOR WHICH IT IS PUBLISHED IT WOULD BECOME OUT DATED, OBSOLETE AND REMAINS UNSOLD. THE ASSESS ING OFFICER IN THIS CASE ALLEGED THAT THE ASSESSEE HAS SOLD MUCH MORE WHAT HAS BEEN SHOWN BY THE ASSESSEE AS SALES. THIS IS THE SETTLED LAW THAT APPARENT IS RE AL. ONUS IS ON THE PERSON WHO ALLEGES APPARENT IS NOT REAL, IN VIEW OF THE DECISI ON OF SUPREME COURT IN THE CASE OF RAWATMUL DAULAT RAM, 87 ITR 349. THEREFORE, WE ARE OF THE VIEW THAT HEAVY ONUS LIES ON THE REVENUE TO PROVE THAT THE SALES RE TURN SHOWN BY THE ASSESSEE ARE NOT THE SALES RETURN AND THE ASSESSEE HAS SOLD THE NEWSPAPERS MUCH MORE THAN WHAT HAS BEEN SHOWN AS SOLD SO THAT IT CAN BE SAID THAT THE INCOME TO THAT EXTENT HAS ACCRUED TO THE ASSESSEE DURING THE YEAR. ONCE T HE ONUS GETS SHIFTED ON THE DEPARTMENT, NOW THE QUESTION ARISES WHAT MATERIAL O R EVIDENCE THE ASSESSING OFFICER HAS BROUGHT ON RECORD SO AS TO DISCHARGE TH E ONUS OF REVENUE. WE FIND THAT EXCEPT ALLEGATIONS FOR WHICH THE ASSESSEE HAS DULY SUBMITTED THE EVIDENCE, THERE IS NO IOTA OF EVIDENCE ON RECORD WHICH MAY PO INT OUT THAT THE INCOME HAS ACCRUED TO THE ASSESSEE DURING THE YEAR AS THE ASSE SSEE HAS MADE THE SALE MUCH MORE THAN WHAT HAS BEEN SHOWN IN THE BOOKS OF ACCOU NT. THERE IS DIFFERENCE BETWEEN THE DISALLOWANCE OF AN EXPENDITURE AND THE ACCRUAL OF THE INCOME. EVEN PRUDENCY CONCEPT OF THE ACCOUNTING LAYS DOWN THAT T HE INCOME CANNOT BE PROVIDED UNTIL AND UNLESS IT IS REALIZED OR ACCRUED TO THE A SSESSEE. WHAT IN FACT, THE ASSESSING OFFICER HAS TRIED TO HOLD IS THAT THE INC OME HAS ACCRUED TO THE ASSESSEE DURING THE YEAR BY DISALLOWING THE SALE RETURN. TH IS, IN OUR OPINION, IS NOT CORRECT. DISALLOWANCE OF EXPENDITURE CAN BE MADE I F THE ASSESSEE CLAIMS THE EXPENDITURE AND HE IS NOT ABLE TO FULFILL THE CONDI TIONS AS LAID DOWN UNDER SECTION 37 OR OTHER RELEVANT PROVISIONS, UNDER WHICH THE DE DUCTION HAS BEEN CLAIMED. THE ASSESSEE HAS DULY ACCOUNTED THE SALES RETURN ON THE BASIS OF EVIDENCE PRODUCED AND BROUGHT ON RECORD. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT (A) 4 I. T. APPEAL NO. 963 (DEL) OF 2011. AND DELETE THE DISALLOWANCE MADE BY THE ASSESSING O FFICER IN TOTO IN RESPECT OF THE SALES RETURN AT VARANASI AND ALLAHABAD BENCHES. TH US, THE GROUND NO. 2 TO 4 OF ASSESSEES APPEAL AND GROUND NO. 1 OF THE CROSS OBJ ECTION ARE ALLOWED WHILE GROUND NO. 1(I) OF REVENUES APPEAL IS DISMISSED. 6. SINCE THE ISSUE IS COVERED BY THE DECISION OF IT AT, AGRA BENCH IN ASSESSEES OWN CASE, RESPECTFULLY FOLLOWING THE PRECEDENT, IT IS HELD TH AT NO DISALLOWANCE CAN BE MADE IN RESPECT OF SALES RETURN. WE, THEREFORE, DELETE THE ENTIRE ADD ITION. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 18 TH NOVEMBER, 2011. SD/- SD/- [ I. P. BANSAL ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18 TH NOVEMBER, 2011 . *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. SR. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.