DEPUTY COMMISSIONER OF INCOME TAX Vs. VIJAY SALES
LAWS(IT)-2014-6-30
INCOME TAX APPELLATE TRIBUNAL
Decided on June 30,2014

DEPUTY COMMISSIONER OF INCOME TAX Appellant
VERSUS
VIJAY SALES Respondents

JUDGEMENT

Rajendra, Member (A) - (1.) CHALLENGING the orders dated January 18, 2012, November 19, 2010 and October 16, 2012 of the Commissioner of Income -tax (Appeals) -29, the Assessing Officer (AO) has raised following grounds of appeal for the assessment years (AYs.) 2007 -08, 2008 -09 and 2009 -10 respectively: "1. On the facts and circumstances of the case and in law, the learned Commissioner of Income -tax (Appeals) has erred in deleting the addition of Rs. 48,17,497 made on account of trade discount without appreciating the fact that the assessee is following mercantile system of accounting and therefore the discount received by the assessee is liable to be accounted for the year when related sales have been affected and not in any subsequent years.
(2.) ON the facts and circumstances of the case and in law, the learned Commissioner of Income -tax (Appeals) has erred in deleting the addition of Rs. 6,05,548 made by the Assessing Officer on account of commission received without appreciating the fact that the assessee is following mercantile system of accounting and therefore the commission received by the assessee is liable to be accounted for the year when related sales have been affected and not in any subsequent years. On the facts and circumstances of the case and in law, the learned Commissioner of Income -tax (Appeals) has erred in restricting the disallowance of Rs. 19,50,328 being 5 per cent to Rs. 3,90,065 being one per cent of an amount of Rs. 3,90,06,556 made on account of expenses without appreciating the fact that many vouchers relating to some expenses were self -made and were not used for purpose of business.
(3.) THE appellant craves leave to amend or alter any ground or add a new ground which may be necessary." I.T.A. No. 1896/Mum/2012 - -assessment year 2008 -09 "1. On the facts and in the circumstances of the case and in law, the Commissioner of Income -tax (Appeals) has erred in allowing the appeal of the assessee and deleting the addition of Rs. 20,55,521 out of the total addition of Rs. 25,69,401 made under section 37(1) of the Income -tax Act, 1961. 2. On the facts and circumstances of the case and in law, the learned Commissioner of Income -tax (Appeals) failed to appreciate that the assessee failed to furnish any corroborative evidence in respect of the cash expenses so as to make the same allowable under section 37(1) of the Act. 3. The appellant prays that for these and other reasons it is submitted that the order of the Commissioner of Income -tax (Appeals) on the grounds be set aside and that of the Assessing Officer be restored. 4. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." I.T.A. No. 7266/Mum/2012 - -assessment year 2009 -10 2. "1. On the facts and in the circumstances of the case and in law, the Commissioner of Income -tax (Appeals) has erred in restricting the disallowance in respect of cash expenses from five per cent to one per cent without appreciating the fact that the assessee has not given corroborative evidence in respect of the cash expenses claimed. 2. The appellant prays that for this and other reasons it is submitted that the order of the Commissioner of Income -tax (Appeals) on the grounds be set aside and that of the Assessing Officer be restored. 3. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 3. The assessee -firm is engaged in the business of reselling of the electrical and electronics goods. Details of dates of filing of returns, incomes returned, dates of assessment and assessed incomes for the all the three assessment years can be summarised as under: I.T.A. No. 1301/Mum/2011 - -assessment year 2007 -08 4. During the assessment proceedings, the Assessing Officer issued notice under section 133(6) of the Act to various major suppliers from whom the assessee had made purchases for the year under appeal. In response, those parties sent ledger accounts of the assessee as appearing in their books of account to the Assessing Officer. He found that apart from effecting sales to the assessee from time to time suppliers had issued credit notes to the assessee, that it had shown the income from the credit notes under the head discount received and had offered the same for taxation. During the reconciliation of account, he found that discount amounting to Rs. 48,17,497 was received by the assessee from the suppliers during the year under consideration, that same was not disclosed in the year under appeal but was shown as income for the subsequent two assessment years. Since the assessee was following mercantile system of accounting, the Assessing Officer, vide his order -sheet entry dated December 18, 2009, asked the assessee as to why the same should not be included in the income for the year. After considering the submission of the assessee, the Assessing Officer held that discount received by the assessee of Rs. 14.17 lakhs was to be assessed for the year under appeal. Accordingly, he added Rs. 14,17,497 to the total income of the assessee.;


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