SANE RETAILS PRIVATE LIMITED,PANCHKULA V. INCOME TAX OFFICER, WARD-4, PANCHKULA, PANCHKULA

SA 19/CHANDI/2025

AI Insights

The case involves Sane Retails Pvt. Ltd., a company engaged in online trading, which faced a substantial tax demand following a scrutiny assessment under section 143(3) of the Income Tax Act. The primary issues leading to the demand were an adhoc disallowance of 5% expenditure and disallowance of provision for sale returns, which the assessee argued were scientifically analyzed and justifiable. The Tribunal considered the arguments and the precedent set by the Hon'ble Supreme Court in Rotork Controls Pvt. Ltd. 314 ITR 62, which supported the assessee's position on provisions made based on scientific analysis.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669474 (ITAT-CHANDIGARH)
• Appeal Type: Stay Application
• Pronouncement Date: 26-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: Rotork Controls Pvt. Ltd. 314 ITR 62
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: AJAY VOHRA
• Keywords: Application of stay
• Section: 143(3)

Judgement Text

"आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ S.A.No. 19/CHD/2025 in ITA No. 798/CHD/2025 Ǔनधा[रण वष[ / Assessment Year: 2017-18 Sane Retails Pvt. Ltd., SCO 22, Ist & IInd Floor, Sector 4-C, MDC, Panchkula. Vs The ITO, Ward -4, Panchkula. èथायी लेखा सं./PAN NO: AAXCS0974R अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Assessee by : Shri Ajay Vohra, Sr. Advocate Mr. Kishore Kunal, Ms. Ankita Parkash, Mr. Rishab Singla and Mr. Atharav Prabhakar, Advocates Revenue by : Dr. Ranjit Kaur, Addl. CIT Sr.DR Date of Hearing : 26.06.2025 Date of Pronouncement : 26.06.2025 HYBRID HEARING O R D E R PER RAJ PAL YADAV, VP The present Stay Application is directed at the instance of the assessee for grant of stay of the outstanding demand amounting to Rs.22,34,35,843/-. 2. The brief facts of the case are that assessee is a Private Limited company engaged in the business of online trading of SA 19/CHD/2025 in ITA 798/CHD/2025 A.Y. 2017-18 2 goods. It has filed its return of income on 14.10.2017 declaring total income of Rs.21,88,860/-. The ld. AO has passed a scrutiny assessment u/s 143(3) on 28.12.2019. The ld. counsel for the assessee has filed the details in tabular form exhibiting the income declared by the assessee, determined by the AO and the income remained after the order of the CIT (Appeals). Such details read as under : Particulars Amount Income Declared by the Assessee in the ITR 21,88,860/- Tax Paid 6,97,450/- Total Income assessed by the Assessing Officer in the Original Order 65,12,88,790/- Total Additions made in the Original Order 64,90,99,930/- Total Income assessed by the CIT(A) in Appellate Order 62,40,74,728/- Total Additions made in the Appellate Order 62,18,85,870/- Additions disputed in the Appeal before ITAT 62,18,85,870/- Tax Demand 28,64,35,843 - 3. The ld. counsel for the assessee, at the outset submitted that though ld. CIT (Appeals) has granted part relief to the assessee, but there are two major issues which give rise to this huge demand. The first major issue is adhoc disallowance of expenditure at 5% and the second issue is disallowance of provision for sale return. According to the ld. counsel for the assessee, since assessee is selling the goods on an on-line platform with a policy that goods can be returned within three months, they have made a scientific SA 19/CHD/2025 in ITA 798/CHD/2025 A.Y. 2017-18 3 policy which would deal with such sale returns. The assessee has made a provision for a year to year basis which has not been disturbed except this year. The un-utilized provision is being given effect in the next year while making the provision. In other words, for example, if 60% of the provision is un- utilized, then next year provision would be adjusted by that amount. On the strength of these details, he submitted that; a) Assessee has paid more than 20% of the tax demand, b) The two major issues are having prima-facie merit in favour of the assessee, therefore, assessee prayed for stay of the outstanding demand 4. On the other hand, ld. Sr.DR submitted that instead of making provision, assessee could adjust its sales or it can reduce the next year sales by that amount. She also submitted that assessee failed to demonstrate its financial position exhibiting the fact that it cannot pay the outstanding demand. 5. We have duly considered the rival contentions and gone through the record. We find that assessee has a prima-facie arguable case on the strength of decision of Hon'ble Supreme SA 19/CHD/2025 in ITA 798/CHD/2025 A.Y. 2017-18 4 Court in the case of Rotork Controls Pvt. Ltd. 314 ITR 62 wherein it has been propounded by the Hon'ble Supreme Court that if a provision is being made on scientific analysis of the business of the assessee, then it would be allowable. Similarly, other major issue is adhoc disallowance out of the expenditure. Considering these two aspects, we deem it appropriate to stay the outstanding demand for a period of 180 days or till the disposal of the appeal, whichever event occurs first. 6. The assessee will not seek adjournment unless unavoidable circumstances warrant so. The assessee will submit necessary Paper Books before the next date of hearing. 7. The Registry is directed to list the appeal for hearing on 07.08.2025. Order pronounced on 26th June,2025. Sd/- Sd/- (KRINWANT SAHAY) (RAJ PAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” SA 19/CHD/2025 in ITA 798/CHD/2025 A.Y. 2017-18 5 Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. Concerned CIT 4. The CIT(A) 5. DR, ITAT, Chandigarh. Assistant Registrar "